I ran across a letter written in 1948 by Warren Buffet's father, Howard Buffett, a Nebraska congressman. This letter to congress was an appeal to return to the gold standard and why fiat currency is dangerous; even to one's liberty and freedom.

Also interesting, how the taxpayer would exchange their fiat for gold (perhaps via a bank run) when they were displeased with congress' frivolous spending and complete lack of responsible stewardship of their taxes. A vote cast not at the polls, but with one's wallet or bank account. It also touches on entitlements a bit.

As I read through the letter, I found little, if anything I could openly disagree with, and much of it true today as it was in 1948. Historically, fiat currencies have a life span. I don't know where the US dollar is on the fiat timeline. I just know that the Fed has few tools in the toolbox to curb inflation and a whole lot of reckless government spending which causes the Fed to open the spigot on cheap money, which continues to deteriorate the purchasing power of our dollar.

Here's the link if you care to read...about 5 pages long.

https://www.fgmr.com/wp-content/uploads/2017/02/Howard-Buffett-explains-sound-money-4-May-1948.pdf

Bitcoin has proven this thought experiment many times over.

It does seem that errors always pop up in administering a fiat currency

Adverse Event said:

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Bitcoin has proven this thought experiment many times over.

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Decentralization of currency is definitely a way forward. Mass adoption of crypto payments and transfers is the real sticking point. That doesn't even address volatility concerns.

Early on, I black-holed a couple hundred bucks on the block-chain just by putting in the wrong memo. This was back when I was learning how to use crypto for payment. Until using crypto becomes brainless for the average user, it's going to be an uphill battle.

Your point still stands though. The Fed needs to end. There are no reins on congressional spending...really not even a budget these days...just lifting debt ceilings.

Adverse Event said:

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Bitcoin has proven this thought experiment many times over.

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FIAT has problems but Bitcoin isn't the solution.

RIP Jimmy

Fiat currencies run by central banks will always fail.

The most prosperous time in American history was a result of gold backed currency with no central bank from 1879-1913

Thomas Jefferson ended the first iteration of the federal reserve by, wait for it..

Paying off our debts.

Turns out, when you don't owe anyone anything, nobody can control you from outside.

Abolish the fed. Now.

There's not enough gold on earth to back the dollar at $35/ounce which means there's not enough gold on earth to back a global reserve currency at current economic activity. I'm not saying the fiat model is good I'm just saying it's not that simple.

LOYAL AG said:

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There's not enough gold on earth to back the dollar at $35/ounce which means there's not enough gold on earth to back a global reserve currency at current economic activity. I'm not saying the fiat model is good I'm just saying it's not that simple.

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Fair enough. Any good reasons why we shouldn't re-value the price of gold, silver, or other precious metals? Not sure what the oz silver to gold ratio is right now but, I think it used to be somewhere around 15:1 or maybe as low as 8:1.

LOYAL AG said:

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There's not enough gold on earth to back the dollar at $35/ounce which means there's not enough gold on earth to back a global reserve currency at current economic activity. I'm not saying the fiat model is good I'm just saying it's not that simple.

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Maybe I'm not understanding you correctly, but this does not make sense. There's plenty of gold to back a reserve currency. It just needs to be divisible into smaller units. If we were to continue to use the US dollar on a gold standard, the exchange rate would have to be revalued MUCH higher. That is still better than what we currently have. The dollar has already lost 99+% of its purchasing power. Every single fiat currency in history has gone to zero and ultimately been discarded. Ours will be no different. Eventually sound money will return again in some form. And that wjll mark the official end of the economic powerhouse the US once was.

TTUArmy said:

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LOYAL AG said:

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There's not enough gold on earth to back the dollar at $35/ounce which means there's not enough gold on earth to back a global reserve currency at current economic activity. I'm not saying the fiat model is good I'm just saying it's not that simple.

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Fair enough. Any good reasons why we shouldn't re-value the price of gold, silver, or other precious metals? Not sure what the oz silver to gold ratio is right now but, I think it used to be somewhere around 15:1 or maybe as low as 8:1.

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Historically, the ratio has been less than 15:1. Currently, it is around 80:1

There's probably some more math to consider, but the total amount of money in the world is worth about 4 times what the total amount of gold in the world is worth.

And you need to add money all the time since it's just a stand in for the value of stuff exchanged in economies, and as long as we keep making more stuff the total value keeps going up.

Helicopter Ben said:

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LOYAL AG said:

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There's not enough gold on earth to back the dollar at $35/ounce which means there's not enough gold on earth to back a global reserve currency at current economic activity. I'm not saying the fiat model is good I'm just saying it's not that simple.

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Maybe I'm not understanding you correctly, but this does not make sense. There's plenty of gold to back a reserve currency. It just needs to be divisible into smaller units. If we were to continue to use the US dollar on a gold standard, the exchange rate would have to be revalued MUCH higher. That is still better than what we currently have. The dollar has already lost 99+% of its purchasing power. Every single fiat currency in history has gone to zero and ultimately been discarded. Ours will be no different. Eventually sound money will return again in some form. And that wjll mark the official end of the economic powerhouse the US once was.

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Nothing says that money has to be gold exclusively. I think a case could be made to bring back silver and introduce other precious metals for exchange of paper currency, if you so desired a PM for exchange. Banks would have to get their house in order to keep metals on hand but, it wouldn't be impossible.

TTUArmy said:

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LOYAL AG said:

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There's not enough gold on earth to back the dollar at $35/ounce which means there's not enough gold on earth to back a global reserve currency at current economic activity. I'm not saying the fiat model is good I'm just saying it's not that simple.

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Fair enough. Any good reasons why we shouldn't re-value the price of gold, silver, or other precious metals? Not sure what the oz silver to gold ratio is right now but, I think it used to be somewhere around 15:1 or maybe as low as 8:1.

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Yes we could revalue gold but that's effectively what's happening now with them untethered. Would we have gold at $2000/ounce, I don't know but in terms of purchasing power vis a vis inflation isn't the outcome the same? Would a gold standard force Congress to adopt a budget and eliminate deficit spending to fund vote buying schemes, i.e. welfare. Could we still borrow money even if the value of the dollar was fixed to a tangible asset? As the economy has expanded so has the volume of dollars needed to facilitate the additional activity which is necessary to avoid currency driven deflation.

I guess what I'm asking is what's the real problem? The absence of fiscal discipline in Congress or currency expansion? Currency expansion to keep the currency stable as the economy grows is arguably necessary whereas deficit spending is never good except in times of war.

Helicopter Ben said:

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LOYAL AG said:

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There's not enough gold on earth to back the dollar at $35/ounce which means there's not enough gold on earth to back a global reserve currency at current economic activity. I'm not saying the fiat model is good I'm just saying it's not that simple.

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Maybe I'm not understanding you correctly, but this does not make sense. There's plenty of gold to back a reserve currency. It just needs to be divisible into smaller units. If we were to continue to use the US dollar on a gold standard, the exchange rate would have to be revalued MUCH higher. That is still better than what we currently have. The dollar has already lost 99+% of its purchasing power. Every single fiat currency in history has gone to zero and ultimately been discarded. Ours will be no different. Eventually sound money will return again in some form. And that wjll mark the official end of the economic powerhouse the US once was.

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Reread what you posted. In one sentence you said the dollar/gold exchange rate would have to be much higher then in the next you complained about the loss of purchasing power. Revaluing the dollar against gold IS the destruction of purchasing power. In other words had we kept the gold standard yet had regular changes in the exchange rates to support currency expansion are we in a different place than we are now in terms of purchasing power?

The US was the worlds largest economy well before the dollar became the global reserve. If everyone abandoned it tomorrow we're still the biggest economy on earth, we're still the biggest producer of energy and the biggest producer of food and we'd still have the most powerful military by many multiples. The end of the dollar as global reserve would force some fiscal discipline on us for sure but if it accelerated the end of globalization that would only make us stronger and nearly everyone else weaker. We aren't collapsing in that scenario.

LOYAL AG said:

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Reread what you posted. In one sentence you said the dollar/gold exchange rate would have to be much higher then in the next you complained about the loss of purchasing power. Revaluing the dollar against gold IS the destruction of purchasing power.

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I still don't understand what your point is and there's nothing contradictory about what I said. Revaluing the dollar to gold is NOT the destruction of purchasing power. Decoupling from gold IS what caused it. You have it backwards. The loss in PP is a direct result of removing the gold standard. It's all the damn money printing and reckless spending piled up over decades. Revaluing at a true exchange given all the trillions of extra currency is just the reality of all the disastrous money printing.

Would I be happier if we had an honest government and left it at $20.67 an ounce? Yes, we would all be much happier. The amount of wealth that was stolen from us is truly staggering to even try to comprehend. It is what allowed our government to enter so many useless wars. It is what allowed them to print into oblivion. It's what allowed the government to grow into the behemoth monster it is today.

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The amount of wealth that was stolen from us is truly staggering to even try to comprehend. It is what allowed our government to enter so many useless wars. It is what allowed them to print into oblivion. It's what allowed the government to grow into the behemoth monster it is today.

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This right here, Ben. Gold seemed to be an inconvenience for the world money changers and politicians. We speak in terms of the "wealth" destruction as a consequence of moving off the gold standard but, even more than that, it seems we lost an important check on government...according to the letter.