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Abigail Gonzales
Mrs. Resin
Accelerated English II
21 November 2014
Gold Standard
The United States national debt is about eighteen trillion dollars as of November 11,
2014. With that money, the most expensive diamond in the world, the Cullinan diamond worth
about four hundred million dollars, could be bought forty-five thousand times! It is believed by
some that returning to a gold standard could help with this issue. The gold standard is a monetary
system where a countrys money has a value linked to gold. The gold standard ended in the
United States in 1933, but all official links of gold to dollars ended in 1976. The United States is
now on a fiat monetary system which means the current currency is backed by the full faith and
credit of the government (Should the United States). Some believe this monetary system is
better for the country than a gold standard. The gold standard should not be reinstated as the
United States monetary system because returning to a gold standard would be extremely
difficult, if not impossible; it would increase the environmental and cultural harms created by
gold mining; and it would not provide a stable economy for the country.
To start, the gold standard should not be reinstated as the United States monetary system
because returning to a gold standard would be extremely difficult, if not impossible. What would
make going back to a gold standard so difficult is the scarcity of gold and the huge amount of
money already in circulation. Matthew Philips states that, According to the U.S. Treasury, the
U.S. hold about 260 million ounces of gold reserves. At $1,655 an ounce, thats roughly $430

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billion of gold. Our money supply, including cash in circulation and bank deposits, is six times
that sizemore than $2.6 trillion. (2012). What this means is that currently, the United States
does not have enough gold to cover the amount of money in circulation. If the United States were
to try and revert back to a gold standard with what it had, it would have to do one, or a
combination of, three tasks. The first task would be to greatly increase the amount of gold
owned: the more gold there is, the more money there would be. The second task would be to
bump the value of gold sky high. Lastly, the third task would be to suffer a massive deflation in
the money supply. In reality though, none of these things are really practical and most likely
would not settle well with many citizens. The scarcity of gold would not just be in the United
States though; it would be in the world. According to Thomas Zaleski and Gregory Hilton, The
total amount of gold that has ever been mined has been estimated at around 142,000 metric tons.
Assuming a gold price of US $1,000 per ounce, or $32,500 per kilogram, the total value of all the
gold ever mined would be around $4.5 trillion. This is less than the value of circulating money in
the U.S. alone, where more than $8.3 trillion is in circulation or deposit. (2012). So if the
United States were to somehow obtain all the gold in the world, the value of gold would still
have to be increased just to cover the amount of money in circulation. If all the gold in the world
cannot cover just the amount of money in circulation, then it would not be reasonable to believe
that the United States could return to a gold standard with the amount it currently has right now.
So far, in order for the country to change back to a gold standard, a lot more gold would have to
be obtained, the value of gold would have to go up, or a deflation in money would have to occur.
The increased demand for gold would mean an increase in gold mining; an increase in gold
mining and the effects of it would also be a prevalent issue.

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Another reason the gold standard should not be reinstated as the United States monetary
system is because it would increase the environmental and cultural harms created by gold
mining. Earthworks and Oxfam America, et al as cited from ProCon.org state that, Many gold
mines use a process called cyanide leach mining that creates large scale water pollution and
massive open-pit scars on the land (Should the United States). The amount of gold that would
be needed to back the amount of money the country would need would cause an increase in gold
mining. An increase in gold mining would not be a good thing for the environment whatsoever
according to the facts in the previous citation. If water is being polluting with cyanide, which is
poisonous, that would negatively affect all of the people and animals living in the area by
potentially taking away their water source. Also, massive open-pit scars are not great for the
environment because it is not likely they would repair themselves overnight. Open-pit scars
would take years upon years to repair themselves; they would then restrict any further
development of the land or any usage that could be made from it.
Switching to the cultural harms that gold mining has, according to Earthworks and
Oxfam America, et al as cited from ProCon.org, In addition nearly 50% of global gold mining
occurs on indigenous lands, where the communities land rights are often violated. For example,
in Nevada, Barrick Gold is currently engaged in a legal fight to dig out a 2,000 foot open-pit gold
mine on Mt. Tenabo, a sacred mountain of the Western Shoshone (Should the United States).
This is an example of the cultural harms gold mining can cause because a lot of it is done on
indigenous lands with their rights and customs being violated. The case where a gold mining
company wants to dig out a huge pit on a sacred mountain to the people that live there just shows
how little consideration for these people and their beliefs there really is. Overall, gold mining
negatively affects the lives of the people who around. If the country went back to a gold standard

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monetary system, more mining would be needed to be done because with the fluctuations in gold
value, the country would need all that it could get.
Lastly, the gold standard should not be reinstated as the United States monetary system
because it would not provide a stable economy for the country. John Ameriks, et al as cited from
ProCon.org states, Between 1879 and 1933, when the United States was on a full gold standard,
the inflation adjusted market price of gold fluctuated from the $700 range (1890s) to the $200
range (1920s). From 1934-1970, when the US was on a partial gold standard the inflation
adjusted price of gold went from $563 to $201 For example, a 10% increase or decrease in the
value of gold would eventually result in a 10 % rise or fall in the overall price level of goods
across the country such fluctuations would destabilize the economy (Should the United
States). Returning to the gold standard is not something the country would want to do because
the destabilization of the economy could lead to terrible consequences such as another Great
Depression. Another way the gold standard could destabilize the economy is with deflations and
contractions. As cited from ProCon.org, the US Department of Labor Bureau of Labor Statistics
states that, Under a gold standard, economic growth can outpace growth in the money supply
since more money cannot be created and circulated until more gold is first obtained to back it.
When this happens deflation and economic contraction occurs (Should the United States). So if
the economy had a chance to grow and prosper with more money, it could be held back by gold
because there would not be enough gold to cover the money. Also, there could be a deflation in
the prices of goods because the government would have more money than needed, and the
deflations would therefore add to a destabilized country. Even though the destabilization of the
economy is a very likely thing to occur if the country reverted back to a gold standard, some
people are not fazed by this issue and still want to change back.

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Although reverting back to a gold standard would cause many problems for the United
States economy, there are others who believe reverting back would be an excellent idea because
it restricts the ability of the federal government to increase the national debt. According to Ron
Paul as cited from ProCon.org, Under the fiat money system used by the United States the
government can raise money by issuing treasury bonds which the Federal Reserve can
purchase with newly printed money. These bonds count toward the national debt (Should the
United States). Having a gold standard would help with this issue because the Federal Reserve
could not just print as much money as they needed to buy the treasury bond, it would have to be
backed by gold. Even though the gold standard could potentially help with the national debt,
actually converting back to it so it could help with the national debt problem would be a colossal
hassle that is not worth it. Again, according to Thomas Zalecki and Gregory Hilton, the total
value of all the gold ever mined would be around $4.5 trillion. This is less than the value of
circulating money in the U.S. alone, where more than $8.3 trillion is in circulation or in deposit
(2012). There is not enough gold in the world to cover just the amount of money in circulation
already, so if the national debt tries to be added in thing will really take a turn for the worse.
All in all, the gold standard should not become the United States monetary system again
because returning to a gold standard would be extremely difficult, if not impossible with the
scarcity of gold. Additionally, an increase in gold mining would increase the environmental and
cultural harms created by gold mining. Finally, the gold standard would not provide the stable
economy for the country that it needs. It is important for people to know and care about the gold
standard because if the United States were to go back to it, it would affect peoples everyday
lives; the prices of goods would fluctuate and the chance of getting gold as a gift, like so many

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people love, would only be for the wealthy. The economy may have been golden when it was
on a gold standard in the past, but the same outcome would not occur in todays economy.

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Works Cited
Ameriks, John. The Gold Rush of 2010. Vanguard Blog. N.p., 26 July 2010. Web. 21 Nov.
2014. <http://vanguardblog.com/2010/07/26/gold-rush/>.
Databases, Tables & Calculators by Subject. Bureau of Labor Statistics Data. N.p., n.d. Web.

21 Nov. 2014
<http://data.bls.gov/timeseries/CUUR0000SA0?output_view=pct_12mths >.
Farrell, Leanne, Payal Sampat, Radhika Sarin, and Keith Slack. EARTHWORKS | Dirty
Metals. Dirty Metal (2004): 1-32. EARTHWORKS. 16 June 2004. Web. 20 Nov. 2014.
<www.earthworksaction.org/library/detail/dirty_metals#sthash.WsNXQjK9.dpuf>.
Gold Standard ProCon.org. ProConorg Headlines. N.p., 19 Sept. 2014. Web. 20 Nov. 2014.
<http://gold-standard.procon.org/>.
Paul, Ron. Paper Money and Tyranny LewRockwell.com. LewRockwell. N.p., 2014. Web.
21 Nov. 2014.
<http://www.lewrockwell.com/1970/01/ron-paul/paper-money-and-tyranny/>.
Philips, Matthew. GOP: In Gold We Trust. Bloomberg Business Week. Bloomberg, 31 Aug.

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2012. Web. 20 Nov. 2014.
<http://www.businessweek.com/articles/2012-08-31/gop-in-gold-we-trust>.
Zaleski, Thomas, and Gregory Hilton. The Gold Standard Pros vs Cons. Political Arena. N.p.,
08 Jan. 2012. Web. 19 Nov. 2014.
<http://politicalarena.org/2012/01/08/the-gold-standard-pros-vs-cons/>.