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So, let us begin. First and foremost, a government-guaranteed gold standard is a rotten idea. It is just a little better than a fiat-money standard. But advocates of "the gold standard" almost always mean "a government-guaranteed gold standard." Therein lies the problem. Governments lie. They cheat. They steal.
http://www.lewrockwell.com/north/north924.html
Gary North is an authority on economics, even by my standard; however I see a very serious error in those words above, and I'm going to explain why, from my view, those words express a very serious error.
Then I want to explain my view of a problem with a "gold standard", and then I'll read the rest of the report by Gary North - and comment if inspired.
Governments don't steal. People steal.
Blaming anything, or any one, other than the one who steals, for stealing, is a transfer of power from affective defense against theft to that one thief who stole, by letting him, or her, get away with it - again.
If anyone is less inclined to defend against theft by the thief who stole, and more inclined to defend against theft by something incapable of theft (such as a government), the power shifts by that exact measure.
There may be greater shifts of power as more and more people are weakened by this type of misdirection, and as more and more thieves steal, and go unrecognized, unaccounted for, and allowed to continue stealing perpetually.
The error is very serious, as it builds the curtain, it builds the false front, and it maintains the illusion covering the crimes committed by the criminals upon their clueless victims.
Power that could be expended toward a non-criminal government is lessened by the false identification of "government" as a thing that steals.
Government is nothing without a person operating it. If a lying, stealing, torturing, and mass murdering person operates it, what can be expected?
Blame the government?
That is a fools errand.
Don't be fooled, it can cost you everything.
On to a Gold Standard, in my own words, and then I'll read the rest of the article by the economics authority.
A gold standard may result from a competition of many different forms of money whereby gold becomes the highest quality money, at the lowest cost, and all the other competitors fail at winning this competition because all other competitors are lower in quality and cost more, over time, as the competition perpetuates, and gold remains to be, despite all competition, the highest quality money, at the lowest cost; thereby establishing, and maintaining, a gold standard.
That must be what Gary North is saying, and I just use my own words to introduce the rest of the article by Gary North.
If Gary North doesn't say that, then what force is the force that causes a gold standard to be - in force?
As soon as one person begins to accumulate large amounts of gold, during a gold standard, is the moment that gold becomes more scarce, and as someone, or some group, continues to accumulate more and more gold, will be the moment that gold scarcity increases.
What happens when gold is accumulated to a point where one group owns most of it and everyone else has very little of it?
Answer:
The quality of gold as money shifts dramatically in this way:
Part 1
Gold as money becomes a very high quality for those who have accumulated it - to them it is no longer scarce.
Gold as money becomes a very low quality for those who can't get it, and therefore they will look for money they can get, and the money they can get will be higher quality because they can get it.
Part 2
Gold as money becomes a very low cost to those who have it, because they accumulate it, and thereby control it, and they can then sell gold to other people, and charge other people to use gold, and the charge is called: interest.
Gold as money becomes a very high cost to those who don't have it and in order to get some of it they have to pay the price, pay the interest payments, and if any other money charges less interest, they will buy the less costly money instead.
Cost is a quality, quality is a cost.
If the people who accumulate the gold and do so to a point whereby these people can charge interest to other people who "borrow" the gold, then a competitor (black market) will emerge.
This has happened in history.
As far as I know: Gary North does not claim that gold can generate interest, or produce interest, or inspire interest, and therefore I am curious about what Gary North has to say about this non-government gold standard.
I'll read on.
I read the rest and am happy to report that Gary North, despite the misdirection, maintains authority on economic understanding - in my opinion.
The only force that would, if it could, create and maintain a gold standard is competition - not lying, thieving, torturing, and mass murdering people running a criminal government.
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The government would specify the form of acceptable currency for the payment of taxes -- nothing else.
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Hold on; that can be trouble. If the people running the government demand payment in one, and only one, form of money then that one form of money is thereby made exceptionally more valuable than any other competitor. Such an error would transfer power from the people who create wealth to the people who demand payment of taxes with that one single form of money.
The demand for only that one money, by the people who run the government, create a monopoly, and destroy competition, they effectively nullify the force that forces quality higher and they effectively destroy the force that forces cost lower.
Why would they do that?
Why would the people running the government want to destroy the force that forces quality higher and cost lower?
Why would they seize the power that forces quality higher and costs lower, and why would they then destroy that power by creating and enforcing a single money monopoly?
Gary North is wrong, or ambiguous to a point of inaccuracy.
If government out-laws competition, and government ( the people running it) demand only one form of money as payment of taxes, what do you think will be the result of such a demand upon the people who create wealth?
Think about it - please.
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Now, if I can just persuade the self-doubters of the legitimacy and wisdom of the free market. . . .
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Competition may be the thing (the force) that Gary North has in mind when he types the term "free market" - I can't know unless he tells me, and I'm not on his list of correspondents.
Competition is easy to understand when anyone ever has a choice between a product that is of poor quality and high price next to a product that is of high quality and low price on the same shelf.
Competition forces the producer of the low quality product to a higher quality - or their product stays on the shelf while the higher quality producer continues to produce enough high quality products to fill the same shelf.
Competition can also inspire the producer of the low quality stuff to a criminal act, such as the willful injury of the competition, so as to eliminate the competition.
That is what criminals do, they eliminate competition, they eliminate the force that demands higher quality and lower cost.
This is easy to see once a person can dig their way out of the falsehoods that bury them.