I’ve heard people declaim that America should return to the Gold Standard. What would that mean to us? Well, it depends…
If ONLY America returned the Gold Standard, then the nation would be put in dangerous circumstances.
Under a Gold Standard (as that term is normally and historically used), we’d have to set the American dollar equal to a certain amount of Gold. That would mean that whenever an American citizen or a foreign government or group wanted, they could demand to exchange dollars for the equivalent amount of Gold. This could be bad if foreign interests began manipulating the value of Gold so that we had to payout Gold-for-Dollars at an exorbitant rate. In another scenario, several foreign countries could collude to present their dollar inventories at once, demanding them to be exchanged for Gold– which could destabilize the American economy by shaking faith in the country’s ability to fully back its currency.
In other words, if America were to unilaterally go on the Gold Standard, it would be our ruin.