But any time you have a fixed amount of dollars what your basically doing is moving dollars/gold from one person to another, its basically a zero sum game you play.
No, it is not. This is a fallacy people hold about money. The amount of money in a system may be a series of zero sum exchanges, but the amount of production increases and decreases. Production is not a zero sum. And this is from where the fixed money size derives it's value. If the government created new money, and distributed it equally, then there would be an increase in aggregate pricing to accommodate the increase in money supply, and it would be pointless. You have $2, I have $2. $2 buys an apple, and there are two apples for sale. We each can buy an apple. The government increases the money supply, and we each get an extra $1. You have $3, I have $3. Scenario 1, the apple grower is oblivious to the increase in the monetary supply, pricing and supply have not adjusted yet to the new money. We can each buy one apple, with $1 left over. The apple grower loses because he is only receiving 2/3 of his previous revenue for the same product. Scenario 2, with more money in circulation, the apple grower anticipates an increase in demand, and increases price instead of supply. The apples are worth $3. We can each buy one apple. There is no net gain for anyone. Scenario 3, with more money, the apple grower increases supply to meet an anticipated increase in demand, and adjusts price for the new currency in circulation. The apples are worth $2.50. We each buy one apple with money to spare. The grower loses again, as he now has a surplus and less relative income because he misread the market. This is a very bad situation, but can be expected when entrepreneurs misread the market due to intervention, which sends unclear signals. But what happens if we each have $2, and the government creates $2 more dollars and gives them to you? You can now buy both apples, or one apple and have $2 left over. I can only buy one apple. If the grower increases prices, I cannot afford a $2+ apple. If he increases supply, you can buy your one apple and have more money for future consumption, or buy both apples and possibly a third. Now tell me, when the government prints more money, do we each get it in equal proportion, either as individuals, or relative to the money we already have on hand? Of course not. This is why inflating or deflating the currency levels artificially creates moral hazard. You confuse consumers and entreprenuers when you give them more money in the system. They over consume, over leverage, and over invest. When you artificially contract, they hoard, they stop taking risks, and they under develop. Human action plays a role, beyond the numbers game Keynesians like to play. Printing money is counterfeiting. Gold cannot be (easily) counterfeited. If it is diluted, Gresham's Law comes into play. That is why there is a case for gold. It limits moral hazard. From Thomas Jefferson, Jefferson understood this because he was on the Continental Congress, and lived through the demise of the Continental Dollar to inflation. The Anti-Federalists were very intelligent about monetary policy, hence why it is clearly spelled out in the Constitution.
What about the apple grower across the street who will undercut the apple grower in your story. Leaving the consumer with more money. What about If I don't want an apple but an orange and the apple grower has two apples but only one buyer? There are hundreds of little factors that change your outcome which is what real time economics looks like
My point is that if there are $10 dollars available you have 5 and I have 5 and you need 7 to build out the new production (raw materials) you take 3 of those dollars from me and invest it in increase in production, but charge $4 for the goods where is the money going to come from to buy your goods?
Exactly. It's a game that the rich wins by default. It's a foolish game of monopoly. Besides, ceteris paribus, bringing back the gold standard will destabilize the banking system since the supply of money will be much grater than the supply gold in the economy. Britain got in trouble under the gold standard zero-sum game because its gold reserves drained due to trade imbalances. Consequently, their money supply decreased and their economy went to hell. Were people happy about deflation? Of course not; they hated it. That's why they ditched the gold standard.
Assume they are the same grower. The economy doesn't work on infinite hypothetical producers and consumers. Demand is ordinal, not cardinal.
If I understand your example, this is simply a bad business decision, when I invest more than I can earn.
Fine, lest change that $4 to $10, it really doesn't matter what you change it to, you don't have the money to buy the goods
intrinsic: Inherent or inside. People placing value on things is extrinsic value. Intrinsic value means it has value of itself. Unless you can think of some reason why gold fills some necessary need it has no more intrinsic value than dirt. As we've found out, it's not even suitable as currency any more. There's simply not enough of it. In another hundred years gold will be even more useless as currency. Society has evolved past using shiney things as money.
It's already been addressed in this thread that Ron Paul does not want to bring back a "gold standard" as you understand it. The argument that there is not enough gold is also disingenuous. Let's say the current value of gold in dollars is doubled by using gold as money. Then the equivalent of a dollar would be 1/1800 of an ounce. Easily put into a coin. Not to mention that gold does not preclude the use of silver, copper or platinum as well. What's truly foolish is that $25,000 in 1913 only has the purchasing power of just over $1,000 today. That is a stupid idea.
Again, I'm not sure the example holds. If you produce something no one can afford to buy, it's a bad example of commerce. The entrepreneur goes bankrupt, or sells his good at a loss. In a free market, bad decisions evoke negative consequences, good decisions, positive rewards.
It is universally excepted as having value. As we've seen recently with the dollar, confidence waxes and wanes in fiat currency. It is malleable, durable and also has productive uses as jewelry, in industry etc. Paper money is only good for heating or ass wiping when it's value as a medium of exchange is removed. The proof is, gold is no longer legal tender in the US, and yet it is traded and highly collectable. Remove the legal status of money, and watch how quickly it disappears as an object of value.
If you don't think your paper money is worth anything, I'll gladly take it off your hands if its such a burden for you.
Yeah, I know that RP doesn't want the gold standard back. That's not the argument that I was making. The supply of money in the economy will be greater than the supply of gold due to fractional-reserve banking, not because there's "not enough gold" to back the money that's currently in circulation. If you had invested that money properly, it would be worth millions today.
You're not responding to the point, and we're back to a previous argument. Investment = risk. Why should I have to risk my deferred consumption, to maintain it's value? Why is a dollar earned today, potentially worth less tomorrow?