A monetary question for the supporters of Ron Paul
By Neil Stevens Posted in 2008 — Comments (234) / Email this page » / Leave a comment »
Ron Paul says he wants to abolish the Federal Reserve, and return the US from having a fiat currency to one backed by gold. But I have one question for Representative Paul and his supporters: where is the US government going to get the gold to put us back firmly on the gold standard?
According to the Federal Reserve, the M2* measure of the money supply stands at about $7,243,000,000,000.
In order to back all of that money with gold, at a price of even $35/ounce, the price of gold when the gold standard was doing well, we would need about 206,900,000,000 ounces of gold. At a more current price of about $660/ounce, we would still need about 10,970,000,000 ounces of gold. That's about 460,000 tons of the shiny stuff. [Updated: I used the wrong conversion rate at first. Fixed now though.]
Where does Ron Paul intend to get 460,000 tons of gold in order to back our money supply, without printing more money to buy the gold?
* Surely we can't look at M1 to consider the issue, because we're not going to leave the savings accounts of Americans hanging, are we?