Moving Back to a Gold Standard for the US currency

The US Dollar has been the reserve currency for the world ever since World War II ended in 1944. As the most widely used “anchor currency”, it is held by many different foreign governments around the world as part of their reserves.

Until recently, the Dollar has remained the favorite reserve currency because of the stability of the currency and the government-backed assets the secure it. The dollar has come under increased pressure lately as its price has slipped against the Euro and speculation that the Federal Reserve has been printing to much money and therefore weakening the US dollar further.

There has even been a call by the UN to replace the Dollar as the dominant reserve currency and replace it with a system that would create greater global stability.

In the recent 2010 presidential campaign there has be substantial talk about how the Federal Reserve operates and discussion regarding returning to a “Gold Standard” for US currency.

Proponents of a gold standard argue that it increases stability in the currency markets and therefore creates an atmosphere of economic stability where business can thrive. In addition, proponents insist that it protects the monetary system because the Federal Reserve cannot devalue existing wealth simply by printing more currency.

While the reasons for adopting a US Money Reserve Gold standard are compelling there is also a large list of drawbacks to gold backed Dollar. Many economists today blame the length and depth of the Great Depression on the Gold Standard. They argue that the government could not expand credit far enough because of the monetary policy to offset the deflationary pressures of the depression.

Whether the US returns to a strict gold standard or some other basket of commodities to back the US Dollar, it seems fairly evident that the current policy to continue to print more and more money will only weaken the US dollar and destroy the savings and wealth the middleclass have worked so hard to create.

These are complicated issues and the average American knows very little about how the monetary policy of the US directly affects them and the other countries around the world. Until more people realize that the government is devaluing our current savings by continuing the policy of allowing the Federal Reserve to take on more and more debt and continuing to print more and more currency.

It will take a revolution for any change in the current policy, but tides seem to be changing and change is on the way.