Politicians Push Gold Standard: Have Americans Totally Lost Trust in Our Institutions?

The sudden public interest in reforming banking and money signals a loss of trust in our future.

Joshua Holland
AlterNet

People across the United States are losing trust in the dollar. Georgia, Virginia and 9 other states have considered so-called “Constitutional tender” laws that would require, in at least some cases, that state governments collect and make payments only in gold or silver. South Carolina and Virginia are considering creating their own currencies. Utah legislators just passed a bill allowing the use of gold and silver currency.

Animated by doomsday scenarios about crashing currencies and wild hyperinflation, speculators have sent the prices of gold, silver and other precious metals skyrocketing.

At the same time, a growing movement to establish state-chartered banks that could better serve the needs of their communities – and act as “mini-feds” to help stabilize local economies — is also taking hold across the country.

But what explains this sudden fascination with radically reshaping the contours of a monetary system to which few people gave much thought just a few short years ago?

While the words “In God We Trust” appear on the back of every dollar in circulation, in reality it should read, “In Institutions We Trust.” Our money, after all, is what’s known as “fiat currency,” meaning that it’s created out of thin air, unmoored from any tangible good. The dollar has value because we believe it has value – we work for green pieces of paper only because we have confidence that we’ll be able to exchange those slips for food and shelter and whatever else we need to get by.

That’s the way modern economies work, which allows central bankers to respond to turns in the economy by adjusting the money supply. Yet, policy-makers are human, and can err, meaning that we not only have to have a belief in the value of a dollar for the system to work, but also in the competency and motivation of those central bankers. And while they’re supposed to be detached technocrats calmly steering our ship through troubled waters, the reality is that the interests of bankers and workers are anything but overlapping.

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