RS: Gold Standard

After listening to the pod cast, I realized that there are flaws with both the gold standard and the modern use of money. Back then gold had a real face value. It was not a representation of anything, but its gold value. However, with paper money, we can print out as much as we deem necessary with out the sufficient amount to back what we make. But I found that route inevitable because of globalization. There is only so much gold to go around the world and I assume that eventually (like any fate of an economy) people began to look for efficiency. Paper money not only allowed people to multiply there wealth it allowed people to promise to others what they did not have. So the supply of money will only increase as the demand for it increase and this only leads to an unavoidable dilemma-- recession. However, there is a bit of contardiction here. The podcast mentioned that the transition from gold to paper was to increase living standards, yet when the Fed decides to play with money by devaluing it, standards do increase, but it becomes ideal. It does not become a standard we can acheive but a standard we want to achieve.

I now understand what is meant by a global recession. Imagine the entire world buying and selling on paper money knowing that they do not have enough gold to back what is being loaned. The demand goes up, we print out more money, produce more commodities, and go on thinking life can't get any better, but things can only get worse. Our dollar has lost it's value, we can't pay back our debts, business operations halt. We are experiencing a perpetual stagnation. A little dramatic, but I can see this happening in little cities and town we thought never existed. Knowing that everything is connected, it wouldn't take long for it to have a national or even international effect. This isn't news of course, since we are amidst one of these recessions today. Now I'm asking how come no body ever saw it coming?