Why was Gold Currency made illegal? Will it return?

Society Pakistan & World Affairs
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The use of Gold as currency was officially made illegal by an Executive order, and notification to Congress.

To: The United States Congress
Dated: 5 April, 1933
Presidential Executive Order 6102

So the question that arises is Why? What caused Gold and Silver to become non-transactional currency and Fiat Currency was introduced instead?

As recently as 2011, the State of Utah has legalized the use of Gold and Silver as currency. More at this link. Does this mean we’re going to see the return of Gold and Silver as common trade currency throughout the nation at some point?

For those who have an Economics, or History background and know the subject matter in greater detail, would be much appreciated for sharing their perspective and shed some light on it. Also, the feasibility, the good, the bad, the pros and the cons.

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Re: Why was Gold Currency made illegal? Will it return?

i think paper money replaced bullion because, that way governments could hold on to the gold reservices, and print money. they could then "promise to pay the bearer the sum of XXX dollars, rupees, pounds etc.
previously, by minting gold coins the government would buy goods & services, but would lose the gold while paying for these. now they pay by paper money, and hold on to the gold.
over time, goverments, realised they needed to hold only a percentage of the gold, but could print much more money. if a government prints too much money, this causes inflation in the economy - as there is too much money, but not enough goods available. Prices then rise.
so the good points, are that governments can increase their spending many times their actual wealth, however the bad thing is that most goverments just keep printing money, to pay for goods, this reduces the value of the money. that is another reason, why currencies flactuate everday. that shows the demand & supply of currencies. the worst case is when governments overprint their money, and this causes a crash in the value of money, which can become worthless. entire families and nations can be ruined.

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Re: Why was Gold Currency made illegal? Will it return?

I can’t imagine it returning. Not that I know anything about economics etc. It’s just seems so outdated. Buchpan mein stories parha karte the about badshahs and sonay ki asharfiyan :hehe:

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Re: Why was Gold Currency made illegal? Will it return?

What if we have a Monetary Balloon burst like the Housing Market, Financial Fiasco of 2008, etc. Wouldn’t it make sense to revive currency that is backed with actual value? I reckon the Fed. Reserve probably hates the idea, because paper money is its’ bread and butter in a way I suppose.

Sidenote, Malaysia also tried the concept too. It was perhaps limited to one state. More details here.

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Re: Why was Gold Currency made illegal? Will it return?

Thanks for the insight, Aussindian. Much appreciated. Any thoughts on Fiat vs. Precious Metals being used as currency from a personal perspective? (Are you for one or the other?)

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Re: Why was Gold Currency made illegal? Will it return?

Trading in paper is cheaper, easier to store, and is viable unlike gold.

The simple fact is there isn't enough gold and causes supply issues which could have problematic issues when governments want to increase or decrease supply. This can be done through paper. Gold is a commodity and was never meant to be a currency in the first place.

The collapse of the Bretton-Woods system was another issue when they try to fix exchange rates among certain countries it has many monetary implications.

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Re: Why was Gold Currency made illegal? Will it return?

Most trade is done with numbers on a computer, not paper. The simple truth is, this was done to rob the nation and enslave everyone. If you see the bank of england admitting that its notes are promisorry notes, if you see that banks treat accept 4 values as valid securities, and lord denning statement/ruling that prom. notes are to be treated as cash you conclude this:

You're duped into working for an inflationary currency, while those in the know, but esp. with banking power sign like This piece of paper is worth 1 million dollars and deposit it, you understand why Guru Gobind Singh Ji said remain tyaar for war at all times. Whether you are his chela or not.

Resource control, is the name of the game; they essentially have a system, and a group of beliefs (lies) created to maintain their control and use the militaries of the world to yank more and more away from regular people.

There's no global conspiracy, the fact is this banking system was creating 2-300+ years ago in London. The Us war was primarily to get away from it, and the reason you don't need a conspiracy is because the system is already in place.

The kanjars of the world already have an environment that rewards, deciet and dacoitry so you already have scum rise to the top, you don't need to push it anymore.

Someone called America a melting pot: the scum rises to the top, and the bottom gets burned.

I'd say the world is like that.

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Re: Why was Gold Currency made illegal? Will it return?

^ welcome to GS, Singh.

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Re: Why was Gold Currency made illegal? Will it return?

becoz there is not enough gold

becoz those haraami bankers wouldn't be able to leech off the masses otherwise..

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Re: Why was Gold Currency made illegal? Will it return?

What Scherbatsky said. Gold is a commodity (meaning it has uses in manufacturing etc, but gold from one person is the same as gold from another). It's considered valuable because we consider it to be valuable, just like currency. Why not trade in diamonds instead? Any form of currency relies on confidence: confidence that the currency's value is underwritten by someone. It was commonly accepted that since gold is relatively rare, everyone values it. Similarly, currency is underwritten by the government and citizens that issue it: the people place their trust in the government to honor the value of the currency.

There's nothing inherently wrong with it. Economics is based on market confidence and the concept of nominal value. Only actual, tangible good have "real" value (real value is an economic concept), but trading using real goods is highly impractical. How many contact lenses is one big mac worth? How many apples is a back massage worth? Currency facilitates trade and any form of currency requires the trust of the people in its value.

What's irresponsible is how the US dollar is treated. The US was ingenious in tying its currency to oil, meaning that oil is traded primarily in US dollars. Since the entire world demands oil, the world also demands US dollars. Thus, many countries actually hold onto US dollar reserves. This is one of the reasons the US attacked Saddam. Saddam wanted to price oil in Euros (a new currency at the time), which threatened the hegemony of the US dollar. Gaddafi was also considering implementing an "oil for gold" plan (again, he's placing value on gold, which is just like a piece of paper, it has no "real" value).

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Re: Why was Gold Currency made illegal? Will it return?

That was CEO. :hehe: I know, one of them needs a new avatar.

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Oh snap. I think I've been confusing the two of them for a while now :(

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Re: Why was Gold Currency made illegal? Will it return?

@Ghost. Learnt a lot reading your post. One comment and one question.

Comment: Gold not used in manufacturing. To that extent it differs from silver copper and even Pt.
Question: what Sherbatsky said?

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That was me confusing ceo and scherbatsky. Fail.

As for gold in manufacturing, I meant that it has practical uses besides jewellery, as a conductor in electroplating or a malleable metal for an afm tip. Other than that, we keep gold because it's valuable, and only because everyone else considers it valuable.

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Re: Why was Gold Currency made illegal? Will it return?

^ the irony abt gold-

It was unpopulat circa 2002 at 250$/ounce. No one wnanted it. At its peak ar $1900/ounce, the bullishness peaked. Now it is at 1580$/ounce.

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Re: Why was Gold Currency made illegal? Will it return?

Gold does have value, because you can hold it in your hand. Go ask for what the dollar is backed by and they'll give you a slap and rob you; cuz that's what it's backed by, robbery.

Google money as debt, and also go to getoutofdebtfree.org stuff like accept 4 value is what dollars are. A promise to pay at a later date, well pay what? Dollars, what are dollars; promissory notes.

A dollar, is the promise you'll get another dollar, which is another promise..

Why do you think the federal reserve has a limited leash? Common law states debts last 99 years, America takes one then goes for the next one.

The only thing backing up the dollar is the American military and people's ignorance that statutory authority is legitimate.

I have the police and crown admit in CANADA, in court that I can walk around with a ak-47 and they can't do nothing. :D

I'll post on what real law is, cuz I found that out and spreading for a quick Canadian perspective look at section 32 of the charter, and case r v dell 2005.

It clearly says the laws of 'Canada' only apply to those working for the government.

Regular people need only follow the laws of the commonwealth, enshrined in the magna carta; aka do no damage to property, cause no injury to someone, and commit no fraud(lie).

10 maxims of law, is how you can get out of sharia in any country too. :D

All of these fraudulent countries use the same set of lies, with a different political spin.

I was looking at the constitutions of Pakistan and India and it's the same thing. You can win in court against them, every time; just make sure you don't encountered coming out of court. :P

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Re: Why was Gold Currency made illegal? Will it return?

Gold currency cannot return. There isnt enough gold in the world as much wealth there is just in one big country.

If it is forced to return then poor will suffer the most as they wont have anything to get gold with. Current system is just fine, even paper money is disappearing now with electronic money.

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Re: Why was Gold Currency made illegal? Will it return?

Fair enough, kaka.

Let me pose another question, will the emerging forms of currency be backed with anything substantial? i.e. Bitcoins can be purchased for money. They're pegged higher than dollar.

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Re: Why was Gold Currency made illegal? Will it return?

About 10 years ago, no one talked about Gold. Now even Ramu the cab driver discusses Gold and its relevance.

Today New York Times had article on Gold. The wing nuts in Fox News have been pumping it. The paranoid right wing is a big proponent of Gold. The hapless ditto heads who follow the pumpers - limbaugh, beck, palin et al get led to the slaughter house.

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Re: Why was Gold Currency made illegal? Will it return?

what do you mean poor will suffer? as if poor are not suffering with paper? Things will remain same, today if you have a currency note reading "100" or "1000" it might be replaced with 0.10g or 1.00g of coin, so what, your purchasing power will be same.