Instigator / Pro
3
1496
rating
1
debates
0.0%
won
Topic
#3854

If the gold standard was to remain, would have we had a more economically stable world?

Status
Finished

The debate is finished. The distribution of the voting points and the winner are presented below.

Winner & statistics
Better arguments
0
6
Better sources
2
4
Better legibility
1
2
Better conduct
0
2

After 2 votes and with 11 points ahead, the winner is...

RationalMadman
Parameters
Publication date
Last updated date
Type
Standard
Number of rounds
4
Time for argument
Two days
Max argument characters
10,000
Voting period
One week
Point system
Multiple criterions
Voting system
Open
Contender / Con
14
1702
rating
568
debates
68.13%
won
Description

No information

Round 1
Pro
#1
The gold standard wasn’t the best for businesses, and specifically it would have been worse for the current modern technology.

But what we always fail to note is, the gold standard offered stability, it offered a value, it wasn’t controlled by some men doing what’s best for the rich and corrupt, extreme inflation is the major cause for all governments collapsing, and it’s only getting  worse,  whether we like it or not, we aren’t capable of controlling the value of our currency, the value of our goods and so on. We should be able to understand by now that we have done a terrible job at securing the live-hoods of those who are living each day on the critical line, perhaps the gold standard didn’t offer the best chance or opportunity, but their was a potential in expanding the gold standard itself, using different precious metals, rather than switching to the fait system, that drove developing  countries to an even darker poverty.


The dollar is a beautiful thing for some, and a crisis for others, understand that! 


The US has went out of its way to protect the dollar supremacy, the dollar, as a currency, was what drove more than 8 countries to a complete destruction, gold was a metal that could have been used for all of foreign trade, it worked perfectly, but using the dollar has only benefited the US and their close allies.

I’m one of those who believe that at a given point, countries will leave the fiat system, its unlikely that they will return to the gold standard, but we definitely won’t have the fiat system for an eternal time, the more the seconds pass, the more people realize this system will be the one that takes away all their work….
Con
#2
The gold standard wasn’t the best for businesses, and specifically it would have been worse for the current modern technology.
Thank you Pro, I completely agree.

Let's explore why this was the case.

Under a gold standard, inflation, growth and the financial system are all less stable. There are more recessions, larger swings in consumer prices and more banking crises. When things go wrong in one part of the world, the distress will be transmitted more quickly and completely to others. In short, re-creating a gold standard would be a colossal mistake.

What Are the Disadvantages of the Gold Standard?
Under the gold standard, the supply of gold cannot keep pace with its demand, and it is not flexible under trying economic times. Also, mining gold is costly and creates negative environmental externalities.

Why Did the U.S. Abandon the Gold Standard?
The U.S. abandoned the gold standard in 1971 to curb inflation and prevent foreign nations from overburdening the system by redeeming their dollars for gold.

What Countries Are on the Gold Standard Today?
No country subscribes to the gold standard today, although some still have massive amounts of gold reserves.

==

But what we always fail to note is, the gold standard offered stability, it offered a value
This is not true, that is why Pro didn't back it up with even an iota of proof.

Changes in the world's money supply were dependent not on economic conditions, but on the amount on new gold that was mined. This meant that on the one hand, monetary policy could not be used to respond to recessions and booms; but on the other, significant rises in gold production would lead to faster money supply growth and ultimately inflation, regardless of a country's underlying economic conditions.

WWI saw the end of the gold standard as governments suspended the convertibility of their currencies into gold in order to freely finance rapidly escalating military expenditure. It was briefly reintroduced in some countries after the War, including the UK from 1925-1931, but fell apart again during the Great Depression. After WWII, a form of gold standard under the Bretton Woods system – involving the dollar being fixed to gold and other currencies being fixed to the dollar – was in operation until 1971.

The lack of ability for governments to shift their individual currency to events that affect their country different to others, leads to them being incapable of adaptation.

Now, I will respond the the rest of Pro's baseless case. I call it baseless as it had absolutely no proof and even some outright false statements.

==

it wasn’t controlled by some men doing what’s best for the rich and corrupt
That's a bad thing for stability. The rich and corrupt tend to enjoy stability for their nation's economy. If the government can't control things in favour of this, that's less stable.

extreme inflation is the major cause for all governments collapsing
No it is not, in fact I think absolutely 0 governments in the history of humankind have collapsed due to this. Even in Zimbabwe all that happened was a leader eventually was ousted, the government didn't collapse. I don't understand what exactly this means anyway, relative to the debate, since inflation can be much better handled if a country can tweak its fiat currency to match the current situation. The gold standard makes inflation seem impossible because the prices are fixed but the problem with that is if a country's economic situation relative to the world shifts, the country/nation cannot possibly shift their currency's value nor prices within the nation to adapt to it. This means they can have severe issues and that is why essentially zero nations have the gold standard anymore, it's terrible to adapt in the name of economic stability and instead all you have is superficial price stability.

whether we like it or not, we aren’t capable of controlling the value of our currency, the value of our goods and so on.
We are even less capable of doing so under gold standard than under fiat currency. Pro has just supported the Con side of the debate.

We should be able to understand by now that we have done a terrible job at securing the live-hoods of those who are living each day on the critical line
This point is about poverty, which can occur under both gold standard and fiat currency.

perhaps the gold standard didn’t offer the best chance or opportunity, but their was a potential in expanding the gold standard itself, using different precious metals, rather than switching to the fait system, that drove developing  countries to an even darker poverty.
Pro has not given us an example of a country who experienced further impoverishment due to switching from the gold standard to fiat currency. I am unsure how to respond as I have nothing to disprove here as nothing has been proven.

The dollar is a beautiful thing for some, and a crisis for others, understand that! 
This debate would not only push out fiat dollar, it would push out pound, euros, dinar and whatever currency you can think of. The countries can even have currencies but they'll be tied to a gold standard that is fixed per country.

The US has went out of its way to protect the dollar supremacy,
That makes sense for the US to do, it is in its best interest to do this.
the dollar, as a currency, was what drove more than 8 countries to a complete destruction
Can you name them and prove this?
gold was a metal that could have been used for all of foreign trade, it worked perfectly, but using the dollar has only benefited the US and their close allies.
I am extremely unsure what Pro is debating here, it seems Pro supports sabotaging the US's best economic interests and those of its allies on some mission for a gold standard. I don't see how that helps anything to do with stability or is relevant to the debate.

==

I shall now explain how the gold standard works, it doesn't increase stability of economies at all, it sacrifices that for stability of prices.

The gold standard is a monetary system where a country's currency or paper money has a value directly linked to gold. With the gold standard, countries agreed to convert paper money into a fixed amount of gold. A country that uses the gold standard sets a fixed price for gold and buys and sells gold at that price. That fixed price is used to determine the value of the currency. For example, if the U.S. sets the price of gold at $500 an ounce, the value of the dollar would be 1/500th of an ounce of gold.

The appeal of a gold standard is that it arrests control of the issuance of money out of the hands of imperfect human beings. With the physical quantity of gold acting as a limit to that issuance, a society can follow a simple rule to avoid the evils of inflation. The goal of monetary policy is not just to prevent inflation, but also deflation, and to help promote a stable monetary environment in which full employment can be achieved.

A brief history of the U.S. gold standard is enough to show that when such a simple rule is adopted, inflation can be avoided, but strict adherence to that rule can create economic instability, if not political unrest.

The gold standard was a domestic standard regulating the quantity and growth rate of a country’s money supply. Because new production of gold would add only a small fraction to the accumulated stock, and because the authorities guaranteed free convertibility of gold into nongold money, the gold standard ensured that the money supply, and hence the price level, would not vary much. But periodic surges in the world’s gold stock, such as the gold discoveries in Australia and California around 1850, caused price levels to be very unstable in the short run.

The gold standard was also an international standard determining the value of a country’s currency in terms of other countries’ currencies. Because adherents to the standard maintained a fixed price for gold, rates of exchange between currencies tied to gold were necessarily fixed. For example, the United States fixed the price of gold at $20.67 per ounce, and Britain fixed the price at £3 17s. 10½ per ounce. Therefore, the exchange rate between dollars and pounds—the “par exchange rate”—necessarily equaled $4.867 per pound.

Because exchange rates were fixed, the gold standard caused price levels around the world to move together. This comovement occurred mainly through an automatic balance-of-payments adjustment process called the price-specie-flow mechanism. Here is how the mechanism worked. Suppose that a technological innovation brought about faster real economic growth in the United States. Because the supply of money (gold) essentially was fixed in the short run, U.S. prices fell. Prices of U.S. exports then fell relative to the prices of imports. This caused the British to demand more U.S. exports and Americans to demand fewer imports. A U.S. balance-of-payments surplus was created, causing gold (specie) to flow from the United Kingdom to the United States. The gold inflow increased the U.S. money supply, reversing the initial fall in prices. In the United Kingdom, the gold outflow reduced the money supply and, hence, lowered the price level. The net result was balanced prices among countries.

The fixed exchange rate also caused both monetary and nonmonetary (real) shocks to be transmitted via flows of gold and capital between countries. Therefore, a shock in one country affected the domestic money supply, expenditure, price level, and real income in another country.
Round 2
Pro
#3
Forfeited
Con
#4
Economic stability is not the same thing as price stability.

Under the gold standard, two problems occur with regards to economic stability:

  1. Any fluctuation regarding the gold and economy of one nation has direct impact on the value of others' currency instantly and the other countries affects cannot tweak or adapt their currency value at all, leading to regular internationally-encompassing alterations.
  2. Whether a nation is in any situation regarding its relative need to import vs export or its personal economy, it is forced to have the currency at the same value. So, unless all shops in the nation were to tweak their prices regularly and instantly to match the new gold values what instead happens is that since inflation and deflation of prices isn't happening, the economy is crushed when for whatever reason gold value is very high vs the availability of it in the nation (or something like that, see even this isn't very clear) and people basically can't afford anything. Then, when it's low every retailer is suddenly selling dirt cheap and that fluctuation can happen regularly over a span of just 3 days because what happens in one country affects the world instantly.
This is confusing to explain because the gold standard really doesn't make any actual sense, no nation would have power over its own currency in any way we currently function and imagine.

Round 3
Pro
#5
Forfeited
Con
#6
Bodied
Round 4
Pro
#7
Forfeited
Con
#8
win secured