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The Gold Standard Most people who consider themselves left wing are against the gold standards. Many of them, I suspect, oppose it because it smacks of a bygone age; it belongs with the British Empire and Slavery. The real reason why the left opposes the gold standard, however, is that it limits the power of governments. First, let me explain simply how the gold standard works. Money, in the form of notes or bills, is really only worth what people allow it to be worth. For example, if people perceive that the Russian economy is collapsing then they will require more Russian Roubles in exchange for, say, a US dollar. If the Russian economy is perceived to be buoyant people will take less Roubles because they think they will go up in value. The currency does not have any 'real' worth. With the gold standard, the notes, or bills, are actually promissory notes issued by the central bank. Until around the 1980s English Pound notes had the words 'I promise to pay the bearer on demand the sum of 1 Pound'. What this obscure phrase meant was that the note was a promissory note from the bank that could be redeemed for 1 pound's worth of gold. Of course, in the 1980s Britain had long since come off the gold standard and the government could no more fulfil that promise than any other promises that governments make. With the gold standard, because the notes were backed up by gold, governments could only spend money to the value that they had in gold reserves. This was also true internationally and all international trade was calculated in terms of gold. When the US came off the gold standard, Nixon dealt the final blow in 1971, the US Dollar replaced gold as the denominator for international currency and it meant that the US government was no longer limited as to the amount of money they could print. If a government has control of the money, without the bother of having to back it up by gold, it gives them tremendous power. The left, who generally are in favour of more government power, approve of this. However, it's worth noting that not only does it give governments the ability to spend more money on social security, it also gives them money to spend on wars. The US could never have gone into Iraq without the ability to simply print more money. It also gives large countries the ability to manipulate international currency rates in their favour, at the expense of what is euphemistically called developing countries. All this comes at a price. I've mentioned before (' US Dollar stupidity') that economic stresses are like earthquake stresses and the longer they build up, the greater the forces when they finally give way. We are, I believe, heading for an economic disaster that will make the depression of the 1930s seem tame by comparison and the only currency that will have any worth will be gold. Why, you may ask, should gold, rather than, say, titanium, have this quality? The answer to some extent lies in the human psyche. More on this later.