Although to many the idea of getting the dollar back into the gold standard is far fetched, there has been more and more discussions and debates about this recently. The reason for talks of pegging the dollar back to the precious metal is the threat of coming hyperinflation.

The central bank has been printing trillions of dollars out of thin air and the result will be “some type of a nominal uptick in economic statistics” as the National Inflation Association has put it. The government is proud of the 1 million jobs that were created, however, it seems to forget that it also has an annual cash budget deficit of over $1 trillion that is impossible to balance just by raising taxes, and therefore massive inflation is an inevitable result. This result is only if you calculate the budget deficit as over $1 trillion. The truth is, when you include social security, medicare and medicaid it is already over $5 trillion dollars.

While the government is still denying the problem of the US fiat currency system, the fear of economic collapse has triggered many discussions and considerations of going back to the gold standard or using an alternative gold currency.

One interesting statement recently came from Alan Greenspan, former head of the Federal Reserve, the very person who first destroyed the US dollar, supporting the gold standard. In a recent radio episode of The Voice America with Jay Taylor, the radio show guests, Ron Paul, Robert Prechter, Ian Gordon, Bob Hoye, John Williams, Larry Parks and Eric Sprott are debating about the Constitution’s requirements to use gold and silver as money. In the debate, Bob Hoye believes that the severity of the US deflationary future will force policymakers to return to a gold-based currency. (Source: The Voice America)

In the debate Ron Paul and and Larry Parks believe that the problem is not deflation but inflation. However, all guests seem to agree that the only way to preserve wealth, whatever threat is coming whether inflation or deflation, is by using gold and silver.

The idea of going back to the gold-standard did not stop in discussion or debates in Virginia. January 12, 2011 a resolution was introduced in Virginia legislature to create a subcommittee in order to officially consider an alternative currency. The bill also notes that the fiat currency system is continuing to worsen and the reason for this is the dollar’s lack of precious metals backing it. In the bill is also the explanation that the US Constitution has forced all states to make gold and silver a tender in payment of debts. (Source: The New American)

Another outcry to use the gold standard comes from the mortgage industry. Federal financial regulators received a letter today by Attorney General of Illinois, Lisa Madigan, which was also signed by her counterparts in 10 other states. The letter requests that standards for servicing a mortgage loan be included in new rules that would define when a loan meets “qualified residential mortgage” safety standard. Madigan said, “Federal regulators are in the process of setting the gold standard for home loans. If a loan meets that standard, banks and lenders won’t have to keep any skin in the game for that loan.” (Source: ENewsPF.com)

The idea of going back to the gold standard may be a good one. Considering that some other countries, especially in Asia, such as Indonesia, have been using gold and silver as alternative currency, I am curious about how this will develop in the US and whether it is ever possible to do so as well. Time will tell.

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