The Gold Standard versus Fiat Money | Joseph T. Salerno

Mises University 2017. Recorded at the Mises Institute in Auburn, Alabama, on 27 July 2017.

[@choosiewhoo1700]

An outstanding lecture on money delivered by a learned man

[@theministryofmoney4237]

Thanks Joseph. It is surprisingly difficult to find an honest accurate account of monetary history in particular the willful destruction of the gold standard.

[@Cotswolds1913]

Incredible video, and I watch a lot of financial/economic videos lord knows lol. Thank you Mr. Salerno.

[@redtroika8264]

Great lecture. Gold is like terra firm and not like the sun which is really moving, rising in the east and setting in the west till the end of time.

[@ivainyamutsamba8540]

Here to understand for my country 🇿🇼

[@fareskazemi2841]

Gold has hit 2,500 usd oz aug 2024 , the muses institute should be the replacement for the fed. Thankyou for you work !

[@LibertarianRF]

Mind blown, thank you.

[@KIDWITDEGUN]

MAKE. GOLD. STANDARD. AGAIN.

[@cyberjunk2002]

How do central banks cause inflation during times of the gold standard (war of 1812 and civil war)?

[@ALEXANDER1318]

Either loaning lots of money (thus increasing the money supply if they loan the gold from other countries), or reducing the gold content of the money, or allowing a different reserve ratio % for the banks. That last one works like this: For every dollar the central bank throws into the economy, they would only need (for example) 40 cents worth of gold in their vaults. Regular banks would create their own money bills to hand out to their customers, doing basically the same thing by keeping (for example) 12 cents worth of gold (dollars) in their vaults. So if the central bank had 2 billion dollars worth of gold, the banks would have 5 billion dollars, and the market would receive 25 billion dollars for the people to spend in the economy. This is why everyone was always trying to prevent bank runs on gold; since there was nowhere near enough gold to cash out all the accounts. But this was nessecary to get enough money for the economy. If the central bank (as proxy of the government) were to decrease their reserve ratio, this would trickle down, increasing the amount of paper money in circulation, thus leading to inflation. But this would usually be short-term, and rebound after a while. The point he makes is that inflation is not really good, and in the gold standard days, there was usually deflation. As production techniques increased, goods became cheaper and people could buy more with the money they had. He explains it pretty well in this video: kzbin.info/www/bejne/eaTGeGSua5KEi80&ab_channel=misesmedia The part about reserve ratios starts at 17:52. EDIT: Actually, never mind. He talks about the same things in this video. Sorry.

[@edwaggonersr.7446]

Joe you are great, "That is mucking things up with an M."

[@neilanderson891]

At 29:21, Dr Salerno says that un-named newspaper editors omitted the word "big" from the subtitle of the 1913 article, *"PRESIDENT 'S* (i.e., President Wilson's) *SIGNATURE ENACTS CURRENCY LAW"* as in subtitle, *"Wilson Declares It the First of Series of Constructive Acts to Aid *[Big]* Business" ... I do believe the "1913 Act" (establishing the Federal Reserve) helped big business ... but I'm not sure how, because it seems the 1913 Act would also help small business, and once you've accomplished that feat, then you've helped everyone ... right? It'd would've been nice of Dr. Salerno to explain how. (I also suspect it helped "Big Government" ... but again, no clue as to "how".) Finally, I think Salerno should've watched his language more carefully, because saying that the word "big" was "left-out" implies that the newspaper editors (or owner) were part of a "Conspiracy Of Silence". I guess I'll have to read the article to see if it explains "how" ... anyone know where to find it?

[@genyalyons1707]

This is great. Thank u so much this

[@LucVNO]

What ever we use as money needs to be derived from work, not ledger tricks. Gold & silver have to be physically removed from the earth, labour must be paid to create more money & that money enters the economy from the bottom. Its the workers money like capitalism is the workers ideology.

[@LibertarianRF]

LucVNO great comment

[@LucVNO]

ty

[@liuzhen2008]

Sounds like bitcoin is the way to go!

[@TheSkullConference]

@@liuzhen2008 it's time to transition into currencies that cannot be artificially inflated like fiat. Precious metals, cryptocurrencies, and even food or other industry credits or tender (like how ancient Egypt used grains as a currency.)

[@liuzhen2008]

​@@TheSkullConference Food can be inflated easily, look how cheap it is under capitalism. Metals have industrial usage, therefore demands fluctuation will swing the value of that money.

[@chopsandarchie7015]

I am always surprised by how many well educated Americans think that UK monarchs had power in the post 1690. They did not. Parliament took it and still has it. The wars being fought in the late C17 were done so in the King's name, but, in reality, were entered into by Parliament. As for George III i n 1776, he really did have no power, albeit some influence. Cheers

[@Mashwag]

Well, it doesn’t make a lot of different, weather it’s the king or the parliament. It is a government after all, look at how he complains about what the US government has done to the currency while it was and is a democracy without a king or what have you.

[@redtroika8264]

Its beginning to look like Russia and maybe China will be the first nations to return to a gold standard.

[@huntervolcan9218]

How does one make change in a classical gold standard system. If a dollar is 1/20 of an ounce of gold ($70 ish) today and all I wanted was a toothbrush from the store. How would the store give me change if I have already given them the smallest unit of weight? I love the classical gold standard in theory but I have a hard time seeing how it would be applied in today's world. I have had this question for years. Someone please answer!

[@huntervolcan9218]

Thats not a classical gold standard that Mises advocates for though. Mises advocates for a gold standard where there is just gold and no paper. In that system, how would make change in the example that I gave? You can not have paper currency and expect people's wealth to be protected. Banker's will always abuse the power to create more paper than there is gold. Mises' theory is the best there is but I don't know how to it would work in practice.

[@huntervolcan9218]

Where in any of Mises' writings does he advocate for paper money? Rather, in his writing he advocates for gold to be used as money, not paper. In his book The Theory of Money and Credit, he , first labeled an entire section of a chapter "A Return to Gold Currency" (not gold standard, there is a difference). And then goes on to say, "One thing alone would recommend the abandonment of the gold-exchange standard and the re-introduction of the actual use of gold; this is the necessity for making a recurrence of inflationary policies if not impossible at least substantially more difficult." The master speaks for himself.

[@ORaddlyispissedoff]

Hunter Volcan I'm not an economist and I understand this comment is at least a month old but as I understand it, in a theoretical free market economy there would also be competition of coins and even a market for "smaller" currencies like silver for example, there would naturally appear a comodity currency for smaller purchases. I think the Mises Institute has some lectures on that especific issue. Hope that helps

[@huntervolcan9218]

But if we did have other currencies, silver, or copper, etc, the value of these currencies would sky rocket, to a point where the smallest weight of these currencies would be too valuable to provide change back on something small like a toothbrush. The market will adjust in a very profound way if we were to make gold and silver money once again, in a good way, but it is important for Austrians to know what this new monetary system would look like, to convince others to be on our side. It is something the Mises Institute should talk more about.

[@TrevorHamberger]

You can quite easily obtain pre 1963 dimes and nickles and any savage on earth would recognize its value in silver. The value of metals skyrocketing changes nothing.

[@SchwarzeBananen]

The or in Bancor is not Greek, but French for gold from the Latin aurum.

[@Fray2221]

Economic history 101: A One Pound Banknote is equal to a pound of Silver. No we will not redeem your banknote. It was all a lie.

[@cynthiaaiken2424]

My life falling slowly

[@tristonlacross4275]

Make our money great again

[@MAJORONETHREESEVENx]

❕❕

[@philipme2073]

The Bitcoin Standard.

[@nickdeaynov1247]

Brutish pound sterling not gold sterling is 92.5% silver Silver is the real money for 5000 y not the gold Silver restore the decision of labor not gold Silver is real money but was de monitored to transfer the wealth from middle clas to the top check yo7 books prophesied

[@liuzhen2008]

Embrace bitcoin, the new standard

[@ludwigvonmiseswasright4380]

Read Murray Rothbard. He explains how money must be a commodity. Bitcoin is merely a unit of account, a claim on future wealth

[@liuzhen2008]

Sarah Isles Mises thought money must start as a commodity because it gives it a price in the open market, which later as liquidity increases it becomes money, Bitcoin was able to obtain a price already therefore all that matters is liquidity from now on. I think they were clearly wrong in terms of commodity origination of money. Or rather, the idea that ONLY way something obtains price is due to their utility.