The Gold Standard: When Money Meant Something

13:45Josh Clark:We were talking about all those different currencies, like one town might have a currency and then two miles down the road, the next town might have their own currency, which, you know, within that town, as long as every again, if everyone agrees what something is worth, it's working out. OK, but that's a mess if you're trying to be a country, which we despite the Civil War, we were trying to be a country. Right. And so the Civil War starts and the federal government was like, hey, like, you know, Josh Clark will say one day wars are expensive. And so they issued war bonds. I think about half of five hundred billion dollars in war bonds.

14:22Josh Clark:War bonds are what you buy to basically, you know, or you sell as a government and people buy to kind of finance the world and saying, hey, I'll loan you money to go fight this war because that bond is insured. I know for a fact that eventually I'm going to get repaid with interest for lending you that money to fight this war. Right. So it's like it's super safe on the investor side, but it's just a long term payout. Yeah.

14:47Chuck Bryant:The thing is, is when they issued those, as far as I know, they weren't backed with gold. And then they went even further. They just started issuing straight up paper currency that had, it wasn't pegged to gold or silver backed up by any of it. It was the first fiat currency in the United States. And fiat, like you said, is just basically the government saying this has value because we say it has value. You can use this to buy stuff. You can use this to pay your taxes. It is currency, even though it's not backed by anything. And the reason they did that is because it was so expensive. They literally had to print money, say it had worth, and then start using it to pay their debts to basically fight this war.

15:29Chuck Bryant:And so the market, the United States, well, the United States just became flooded with all this paper currency. So the paper currency plus all the goldback currency just became less and less valuable. And I think the inflation that came about after the Civil War, because inflation happens when the value of your currency is weak because there's too much of it like out there. It was at like 25 % during the Civil War. And just for a reference, in 2022, at the peak of the most recent inflation in June, it was at 9%. And that was pretty uncomfortable. I can't imagine 25%.

16:14Josh Clark:No, we were in a pretty bad way. And this was also a time when the country started dabbling in national debt and saying like, hey, like as a country, we can go into deep debt. And like, let's see if anybody really cares. It went, these are pretty staggering numbers. The national debt in 1860 was 65 million. Six years later, it was$2.76 billion. And this is when gold standard, or what are they called? Gold bugs started saying, hey, I think you've just proved our point. Like you printed all this money, this fiat currency, and we're in real trouble now. Yeah.

16:52Chuck Bryant:And so Lincoln says, hold on, hold on. And he rolls up his sleeves a little bit and gets to work, spits in his hand, rubs them together, picks up an ax for no reason just to kind of look tough.

17:03Josh Clark:Yeah, sure. It works.

17:05Chuck Bryant:And he says, we're going to take all of those, all of the bills out there, all the dollars on the market and just take them back and start destroying them. And by doing that, we're going to actually lower the supply of dollars, which increases their value. Right. And so problem solved. That's going to fight inflation because the dollar is stronger again because there's less dollars on there. And on just a basic economic basis of supply and demand, it makes sense. But what the government didn't realize all the way back in the 1860s is that it takes a little more finesse than that to not just screw up the economy like a pendulum from one problem to the opposite problem.

17:49Josh Clark:Yeah. Like, can you imagine being a citizen of the United States back then in those early days when they're just trying to figure this stuff out? And, you know, I bet a lot of people didn't have a real understanding of this. But if you did, could you imagine just seeing your country be like, hey, let's print a bunch of paper and say it's really valuable. Right. And then when they got in trouble, be like, hey, let's burn all that stuff that we printed and said was valuable.

18:14Chuck Bryant:Yeah. Like they would just come up behind, like congressmen would come up behind people counting their money and just yank it out of their hand and run off. And you couldn't do anything about it. Yeah.

18:25Josh Clark:Paper football. So that was a real hot item at the time.

18:27Chuck Bryant:So, OK, a bunch of bills, a bunch of money just gets taken back, burned, destroyed, taken off of the market. It's just not there anymore. And the value of the dollar strengthens. The problem is because the dollar is worth more than it was before and seems like it's just going to keep going up in value, people are like, well, I'm going to hang on to my dollar because it's going to increase in value. So I'll be able to buy more later. The problem is in the current term, that means that people aren't out buying stuff. And if you're making, say, pre-industrial televisions, which were just boxes that, you know, like somebody with a puppet could get in and make a little show, but they called them TVs back then.

19:14Chuck Bryant:If you're making those and people are not spending money on the pre-industrial televisions, your profits are going to start to go down. You have less reason to produce more and more of those, which means you need less workers, which means you start laying people off, which means those workers have less wages to spend money on. And the whole thing becomes this self-feeding cycle that just gets worse and worse and worse. And we call them recessions. And when they're really bad, we call them depressions. And that happened from the government soaking up all of those bills after the Civil War. and it caused what's called the long depression from 1873 to 1879.

19:54Josh Clark:Yeah. And some say it almost went to like 1900, like 1897 before we were fully out of that. And it was a real, like, I think it was a real wake up call early on to the United States of like, hey, you can't, um, there's gotta be a better way than just printing a bunch of money when you think you need it, like kind of artificially manipulating the value of the dollar like that is only going to lead to trouble. So, boy, that's a great first act, I think.

20:22Chuck Bryant:I think so, too.

20:24Josh Clark:Back in form after vacation. Yeah.

20:27Chuck Bryant:Yeah. I feel pretty good.

20:29Josh Clark:OK. You feeling good?

20:31Chuck Bryant:Yeah. And you're doing great. You're looking sharp, man.

20:33Josh Clark:I appreciate it. So let's let's take a break and we'll come back and we'll talk about the golden age. We love our golden ages. The golden age of the gold standard right after this.

20:57Josh Clark:Hey, listeners, let me ask you a question. When you're choosing a cola, are you making your decision based purely on taste or based on the brand that you think you like? That's the question at the heart of the Pepsi paradox.

21:07Chuck Bryant:Yeah, this idea shows that when labels and bias disappear, people actually prefer the taste of Pepsi Zero Sugar. Pepsi's been demonstrating this since the original Pepsi Challenge back in the 70s, when people at malls and grocery stores discovered that in blind taste tests, they preferred the taste of Pepsi.

21:22Josh Clark:Right, but it's not just some relic of the past. Last year, Pepsi revived the iconic Pepsi Challenge, this time with Pepsi Zero Sugar, and took the challenge across the country. When taste was the only thing that mattered in that challenge, 66 % of participants preferred the taste of Pepsi Zero Sugar over Coke Zero Sugar, And Pepsi Zero Sugar won every single market that the challenge visited.

21:43Chuck Bryant:So let us take you back to that simple question that we posed at the top. Are you choosing the Zero Sugar Cola that you actually prefer? Or are you settling for the label that you think you prefer? Go out and try Pepsi Zero Sugar today. You deserve taste. You deserve Pepsi.

22:04Josh Clark:You know what phone calls are always super important to me are the phone calls that I have with my mom. She's the only parent I have left, and I always look forward to those calls. Here's something you might not know. 2026 will mark the 150th anniversary of the first ever phone call. That took place on March 10th, 1876. And from the call that sparked it all to the first long distance phone lines, the first line across America, the first line across the Atlantic, the first round the world call, the first commercial cell service, and the first 911 system, AT &T has been connecting people for 150 years in so many different ways.

22:39Chuck Bryant:So congrats on 150 years of connecting people, AT &T.

22:43Josh Clark:Connecting changes everything. AT &T.

22:50Chuck Bryant:Imagine never buying gas again. Well, you can with an electric vehicle. EVs are easy to charge as your phone and perfect for everyday life. You can drive daily with confidence everywhere you go. Most Americans drive just 40 miles a day, and most EVs are equipped with 200 to 400 miles of range. Plus, they've got fewer parts, they require fewer repairs, and they produce fewer headaches. And with all those pluses, it's no surprise that we're seeing more and more EVs on the road, which makes the planet happier and happier. The way forward is electric. You can learn more about EVs at electricforall.org.

23:40Chuck Bryant:So the United States is basically just stepping in it and then stepping out of it and stepping in another pile of it in the 1870s.

23:50Josh Clark:We're not talking about gold either, right?

23:52Chuck Bryant:No. No. No. I couldn't come up with something that wasn't just absolutely gross. So I'll keep moving on. But this was the time when the world was globalizing for kind of the first time. And so other countries are taking note of this and they're like, yeah, this gold standard might be a good thing. And like you said, it kicked off a golden age from 1871 to basically through about to World War I. It was a golden age for gold. There's no other way to put it. I didn't want to say that, but there's no other way to put it.

24:24Josh Clark:yeah it was like what 40 something years uh where everyone was sort of agreeing that the gold standard was the place to be uh because there was debate like after the the mess you know post-civil war uh of like what we're even allowed to do as a country and like can the government even um print money like that the supreme court came along in 1871 they said yes they can print money Maybe they need to, you know, we need to rethink our process. But the government printing money is okay.

24:56Chuck Bryant:Yeah, it's constitutional. It's legal. Yeah.

24:58Josh Clark:Yeah.

24:59Chuck Bryant:So that was settled, but that still didn't mean like that the government should do that. There was still this question, should we keep going this way as supported by the Greenback Party, who were like, yes, this actually makes a lot of sense. Or there are other groups like the silver movement, the gold bugs were out there who were like, no, we need a commodity backed currency. Right. Yeah. Apparently the Wizard of Oz, and I'm sure we've mentioned this before, but it was supposed to be an allegory for this debate over whether to go with the greenbacks, Emerald City, go with the gold standard, the yellow brick road, or to go with the ruby standard.

25:41Chuck Bryant:which were the slippers.

25:43Josh Clark:Right, or there were wheat, like you suggested. That would be the scarecrow.

25:48Chuck Bryant:Exactly. Yeah. So all of those scarecrow, rubies, gold, the greenbacks, all of those were part of this national debate. And finally, it was settled in 1900 when William McKinley was made president. He said, no, it's gold. We're just going with gold. And even more than that, you cannot print a dollar beyond the amount of gold we have to back it up.

26:15Josh Clark:Yeah, that was that was key to that whole declaration. He was a pro gold candidate, pro gold standard. And like you said, in nineteen hundred when he won, he was like, we got to have some real teeth behind this. I can't just say it as president and make it so. So they passed the Gold Standard Act of 1900, and that had some language in there that said exactly that is, hey, that circulation, it's got to be tied to gold. We can't print one dollar more than we have in equal amounts of gold. And that was it. You know, that was the classic gold standard period. It meant that nations were trading with one another on equal ground, and it was dependent on sending like physical gold to one another.

27:01Josh Clark:if you were producing more and exporting more, then you had a lot of gold stockpiled in your country. If you had a trade deficit, you had a lot less gold. And it was everyone kind of knew what that meant. And it worked for a long time.

27:15Chuck Bryant:It did work. I mean, there were dozens of nations all on the gold standard at the same time. So you knew how much you were going to get paid for your for your shipment of pre-industrial televisions overseas, right? Because they were bonkers for them in Portugal. But the reason why you knew is because there was such stability among your currency and international currency pegged to gold that when you ship that shipment out, by the time it arrived, it was the same price. With fiat currency, the price of stuff can fluctuate so much over a day or a week that when you send a shipment out, if you hadn't already settle the contract, which you probably did.

28:00Chuck Bryant:But by the time it arrived, you might be making way less than you were going to when you shipped it out. That's not really what happened during the classic golden age of the gold standard. It was all much more stable than that.

28:13Josh Clark:That's right. But like you said, we pegged the end of that to basically World War I, because as you mentioned earlier, wars are really expensive. They're going to spike your national debt if you get involved in one. And in Europe and World War I, they were like, this war is really, really expensive. And our supply of gold is being constrained. So we have to leave it. So the international gold standard dissolved basically, mostly worldwide, except for the U.S. and U.K. We stayed on that gold standard. And because of that, for a while, Well, the British pound and the U.S. dollar were basically the global reserve currencies because, you know, they had gold to back them.

28:57Josh Clark:So they were they were the gold standard, the dollar and the pound.

29:01Chuck Bryant:Yeah, because it's not I mean, it's not figurative when you're saying like you had to use your gold to buy back your currency if you were in a trade deficit. Right. You actually had to ship gold to the country you were buying your dollars or your pounds back from.

29:15Josh Clark:Yeah.

29:15Chuck Bryant:So with the U.S. and the U.K. having currencies pegged to gold and them being the global reserve currency, you could just ship currency overseas, which is so much easier than shipping gold. So that was a huge— So much lighter. It is super light. So the U.S. and England both ended up with the vast majority of the world's gold because you could take a dollar or you could take a pound to the U.S. and the U.K. and say, give me some gold for this. And those those notes, those paper dollars were good as gold, essentially, which is I'm pretty sure where that came from.

29:52Josh Clark:Yeah. I mean, it's funny. The gold standard and good as gold, like a lot of these terms, like literally come from this these weird monetary policies.

29:59Chuck Bryant:Yeah. Yeah. William McKinley.

30:04Yeah.

30:05Josh Clark:Old gold gold back. So things were going along OK after that. And then the 1929 stock market crash came and banks started failing all over the world. And everyone, you know, those you know, when stuff like this happens, there's it seems like it used to happen more. But there can be a real panic and people start converting their dollars and their pounds to gold because they were like, we know gold is worth something. I don't want to have like this paper currency on hand that's like clearly losing value very quickly. Right.

30:39Chuck Bryant:If I wait a day, I might get less gold than I will if I cash my bank account in today. And remember earlier I said like how this is all, it all kind of self-regulates. It all moves naturally from one place to another. But still humans can screw things up just because we're human. This is how we screwed it up. There were banking panics after banking panics where people just made runs on banks and said, give me all my money. And the bank would be like, we don't have it. They would shell out all their money and end up closing. And there were like 10 ,000 bank closures in the early 1930s in the United States alone between 1930 and 1932 because people would run in and like just take all their money out.

31:21Chuck Bryant:And so banks were failing. This was before the FDIC. So if you had a bunch of money and the bank closed forever before you could cash it in, you were broke. Like that money was worthless, right? And that caused even more people to make runs on banks, which created this huge, terrible ripple effect. And so the U.K. and the U.S. were both faced with this challenge. Like, what do you do? Do you stay on the gold standard or do you go off the gold standard? And the U.K. was up first.

31:52Josh Clark:Yeah, they abandoned the gold standard in 1931. Apparently, there's a story that their central banker, a guy named Montague Norman at the time, suffered a nervous breakdown because he was, you know, it was kind of up to him to make that final call. And can you imagine the pressure to be in charge of like a kind of a worldwide economy almost? Right. And how important these decisions are. Wait, wait, I want to answer your question.

32:20Chuck Bryant:No, no, I cannot. imagine that kind of pressure.

32:23Josh Clark:You can't either. So the pounds value, of course, immediately drops even further than it already was. So people that had lost faith in the paper money were saying, see there, good thing we traded in our pounds for gold. And America, and of course, everywhere around the world is seeing this happen. So everyone else is losing confidence. And this is when further runs on banks happen. And we had a president, a lame duck named Herbert Hoover, who was leaving office in 1933 and told incoming FDR, he was like, hey, you know, we're in real trouble here. The reason we have gold is because we can't trust governments.

33:02Josh Clark:And FDR was like, you know what, I think I've got this. So he went in office and he said, I'm going to fix this crisis for good.

33:12Chuck Bryant:Yeah. One of the first things he did was I think the day after he was inaugurated, he declared a four-day banking holiday. So all the banks were closed, right, for four days. That's a nice word for it. So there couldn't be any runs on banks. And I was watching this. There's this dude who's a YouTuber named the Casual Historian, and he bills himself as a conservatarian, which I take to being a combination of a conservative and a vegetarian. Right. Yeah, probably. But he was explaining that this actually didn't do much. in real terms, like the banks that were about to fail before the banking holiday still failed afterward.

33:52Chuck Bryant:But as far as the public was concerned, it was a huge signal for essentially the first time that the government was going to step in. Because one thing that you cannot argue against with the gold standard is because you're constrained, you cannot print more money than you have gold to back it. There is nothing you can do in an economic crisis except sit there and watch it happen. You can't do anything. There's no levers for you to pull, to pull the country out of it. The only way that you can pull your country out of a recession or a depression is by printing more money and actually devaluing the money that people are hoarding.

34:31Chuck Bryant:So you're basically saying, you got all this money that you're stashed away because it's so valuable. Well, guess what? It's not so valuable anymore. So you might as well get out there and spend it.

34:42Josh Clark:Yeah, for sure. And, you know, we were in big trouble, obviously, in the 1930s. You know, you mentioned earlier sort of that cycle that happens when companies are producing less and fewer customers and not hiring people or firing people. And in 1933, the unemployment in the United States was 25 percent.

35:02Chuck Bryant:That's so crazy.

35:03Josh Clark:I know it's staggering. And I think worldwide, almost one in three people were out of work in 1932. So it wasn't just the United States. It's like that many people being out at work at once. And that's the thing that I always, you know, thankfully it hasn't happened yet. But with the AI conversations and people, I've had conversations with people in my sphere. Are you sure they were people and not bots? They think it's such a great thing. And I was like, you know, I'm not even arguing the merits of art or not and things like that. But I said, I just worry about what what would happen if like 20 percent of the workforce was laid off in the span of like a year or so because of A.I.

35:41Josh Clark:It's like, that's what I worry about. And we haven't seen that yet, thankfully, but I guess we'll see.

35:46Chuck Bryant:Yeah. Yumi and I were talking about the same thing and she brought up a really great question, which is like one of the things that a lot of the AI proponents say is like, eventually we're going to create this utopia where like no one has to work and everybody's wealthy. And her question is like, if that's your goal, why don't we take some of that wealth and just start now before AI? Why do we have to wait for AI to do that? We can do it now. I thought that was rather clever. I stood up and clapped and went, whoo.

36:15Josh Clark:She was like, that's weird. We're in our living room.

36:17Chuck Bryant:She left the room.

36:20Josh Clark:All right. So things are bad. They had that banking holiday. Congress passes what's called the Emergency Banking Act at the time. which basically, like you said, allowed them to, in an emergency issue, just start printing money, basically, that's not pegged to the gold standard. But we had that gold standard because the Gold Standard Act of 1900. So they had to create this banking act, I guess, to work around that, right?

36:47Chuck Bryant:Yeah. They basically said, OK, this is just emergency measures and we're just printing this money to give to banks to keep them from going under. So the government is signaling all over the place. We're stepping in. We're going to make sure that this, that like, we're going to do something about this for the first time. I think that was my point before I got off on the tangent for a little while, a minute ago. But the government is signaling all over the place that they're going to back up banks so you don't have to run and get all of your money out. Right. And just keep making this whole thing worse.

37:20Chuck Bryant:So that was like a first step. But the problem is, is there was still plenty of gold out there that people were hoarding. They're like, yeah, that's great. Thanks a lot. But I'm not taking this gold back to the bank right now because I don't have any confidence in the banking system. So the government figured out how to deal with this. they said, well, you know what? We will put you in jail for 10 years and find you the modern equivalent of$250 ,000 if you don't give us your gold. We'll give you the equal amount of paper dollars back, but you can't legally own gold anymore.

37:57Josh Clark:Yeah, and that was it. I think it was about a month after they sort of restored that public confidence with the Emergency Banking Act. Like FDR was moving very quickly and said, all right, we're suspending the gold standard officially. And then the next year was that Gold Reserve Act of 1934 that you were talking about where they were like, yeah, you can't. I mean, you can keep your rings. And if you got like collectible coins and stuff, we're not coming after those. Yeah. But you can't have bars of gold in a safe in your house anymore.

38:27Chuck Bryant:Yeah. And Jimmy the Greek was like, whew, that's close. so uh yeah so now you had to have you had to use paper currency so this is this was the shift in the united states and this had already happened in other countries like you said especially in europe after world war one um and the the gold standard was um was dead and one of the things that demonstrated the death of the gold standard was economists generally today say that the u.s being able to print money and basically kickstart inflation to pull us out of the deflationary spiral, aka the depression, that's basically 90 % of the reason that the U.S.

39:13Chuck Bryant:got out of the Great Depression. It was leaving the gold standard, being able to print money, because if you can just print money and take money off the market and put more money on the market when you need it, you can adjust the economy enough to get it out of crises one way or the other. And that that's that's actually the better way of doing it. And so the gold standard never came back again.

39:37Josh Clark:That's right. And so that could be the end of our show. But that would be weird because we haven't had our second ad break yet. So we're going to do that and we're going to come back and just say, see you later and read a listener mail. Right. Because the gold standard's gone forever.

39:50Chuck Bryant:Gone forever.

39:52Josh Clark:All right, we'll be right back.

40:09Josh Clark:Hey, listeners, let me ask you a question. When you're choosing a cola, are you making your decision based purely on taste or based on the brand that you think you like? That's the question at the heart of the Pepsi paradox.

40:19Chuck Bryant:Yeah, this idea shows that when labels and bias disappear, people actually prefer the taste of Pepsi Zero Sugar. Pepsi's been demonstrating this since the original Pepsi Challenge back in the 70s, when people at malls and grocery stores discovered that in blind taste tests, they preferred the taste of Pepsi.

40:35Josh Clark:Right, but it's not just some relic of the past. Last year, Pepsi revived the iconic Pepsi Challenge, this time with Pepsi Zero Sugar, and took the challenge across the country. When taste was the only thing that mattered in that challenge, 66 % of participants preferred the taste of Pepsi Zero Sugar over Coke Zero Sugar. And Pepsi Zero Sugar won every single market that the challenge visited.

40:55Chuck Bryant:So, let us take you back to that simple question that we posed at the top. Are you choosing the Zero Sugar Cola that you actually prefer? Or are you settling for the label that you think you prefer? Go out and try Pepsi Zero Sugar today. You deserve taste. You deserve Pepsi.

41:14Chuck Bryant:Imagine never buying gas again. Well, you can with an electric vehicle. EVs are easy to charge as your phone and perfect for everyday life. You can drive daily with confidence everywhere you go. Most Americans drive just 40 miles a day, and most EVs are equipped with 200 to 400 miles of range. Plus, they've got fewer parts, they require fewer repairs, and they produce fewer headaches. And with all those pluses, it's no surprise that we're seeing more and more EVs on the road, which makes the planet happier and happier. The way forward is electric. You can learn more about EVs at electricforall.org.

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43:05Josh Clark:okay we're back here for act three uh which means it's time for listener mail because the gold standard is dead this is where the golden gun goes off that's right because no the gold standard is not dead. It actually had another sort of brief, not even stint, like it kind of had a, maybe not a golden age, but maybe a heyday when the Bretton Woods Agreement came around, which was a UN, a United Nations Agreement that came around in 1944 in Bretton Woods, New Hampshire, that had a whole brand new system that was really kind of like that original gold standard with 44 Four countries signed on, along with the U.S., that said, all right, the U.S.

43:46Josh Clark:dollar now is pegged to gold at$35 an ounce. And everybody else that's signing on is tying their currency to our dollar.

43:55Chuck Bryant:Right. So there's a fixed rate. Like there's 15 pesos for$1 and$1 equals this much gold. So it's essentially the world going back on a gold standard. They just figured out a good way around it to make it much easier. Right. And again, just like the first time, if everybody's playing by the rules, then this keeps you from monkeying with interest rates to make your exports more attractive. It prevents trade wars. It does all sorts of calm, peaceful stuff. But the problem is there's just and this is the same problem today. There just wasn't enough gold in the world to cover the increasing expense of modern life.

44:37Josh Clark:Yeah, for sure. And they had put things in place because, you know. They were a little smarter this time around. They were like, all right, we'll create the International Monetary Fund. We'll create the World Bank. So that means that there are official worldwide bodies kind of coordinating this monetary policy between all the countries to make sure that no one's doing hinky stuff. And it took a long time. This wasn't like, you know, they reached this agreement in 1944 and by 1945 it was all set in stone. I think it didn't actually take effect until 14 years later in 1958. um by the 1960s like shortly thereafter uh the u.s was was spending like a like a drunk 10 year old um military spending was in foreign aid we're all just like ramping up uh spending on imports foreign investment there are a lot of dollars from the united states in worldwide circulation yeah and even though we held a lot of the world's gold reserves like 75 at the time Like you said, we still didn't have enough gold to cover all that kind of money.

45:38Chuck Bryant:No. And this is the I mean, this is what keeps governments honest. There is a possibility of a worst case scenario where all of the people holding those dollars can all come back at once and say, hey, we want this. We want our gold. We're turning in our currency. Give us our gold. And, you know, it's bad enough when you're talking about citizens making runs on banks. If you're talking about entire foreign governments bringing all of their cash reserves to you and saying we want gold, you've got a really big problem. And finally, in 1971, Nixon admitted like we don't have enough gold to cover the currency out there.

46:15Chuck Bryant:Sorry, guys, you can't turn that in for gold anymore. Sorry. And just kind of backed out of the room.

46:22Josh Clark:Yeah, he backed out of the room. And it was it was a big deal because this isn't the kind of thing that we could. We had pegged our dollar to like worldwide value. So we couldn't just say that by ourselves. In 1973, the monetary fund, they went off the gold standard. They basically kind of came along for the ride. Yeah. And said, all right, everybody should kind of go to this fiat currency system. and like that was the true real end of the gold standard and like there's just that ship is so far out of the harbor now there's no way they could go back to it now and it eventually kind of became

47:01Chuck Bryant:a fringe right-wing position um for some reason they're they just kind of adopted it but that doesn't mean all um of the right wing agrees with it in fact Milton Friedman who's a right-wing conservative economist hero um he was even like that's a terrible idea to go back on it he wrote I wrote a paper in, I think, 1990, or co-wrote one, that basically demonstrated just how bad of an idea it would be. But there's still plenty of people who are like, no, gold is where I want to put my faith in. One of the reasons why it's still around is because people believe that if there's a social collapse, afterward, people will still accept gold.

47:44Chuck Bryant:They won't accept dollars or pounds or euros, but they'll take gold in return. So that's one reason a lot of people still have faith in gold as an investment. There's other people who are like gold's always going to become more and more valuable because there's a finite amount of it, right? And that actually is the same thing for Bitcoin. There's a finite amount of Bitcoins, which means that over time it's going to become more and more valuable. It's going to buy more and more stuff, which makes it a deflationary currency, which actually makes it dangerous because that means people are more likely to buy and hoard bitcoins or buy and hoard gold because eventually it's going to become more valuable.

48:26Chuck Bryant:And that's how you go into a recession.

48:29Josh Clark:Yeah, I've never I'm just, you know, me and economics and money. I'm just a big dummy with all that. But so cryptocurrency is something that even though we podcasted on it, I just it's not like I'm saying like, I don't trust cryptocurrency. I just I don't understand it. And I have no interest in understanding it.

48:46Chuck Bryant:Yeah. Yeah. Although it does seem to have gained a lot of legitimacy, especially. Sure. But I mean, it's a wild ride. Like it was like 16 ,000 earlier this year or like last year. And now it's at like 61 and 61 is down from 90 something a month or two ago. Like maybe it's a long term thing, but that's not something you want to. I mean, you would have to be so insane to trade that stuff on a daily basis.

49:15Josh Clark:I don't have the stomach. I'm just that's not who I am.

49:18Chuck Bryant:Me either.

49:19Josh Clark:You know, I want to I want to sit around and you and I want to sit around and listen to elevator music. That's right. not track the currency, cryptocurrency.

49:27Chuck Bryant:No, but for some people, that is quite thrilling.

49:29Josh Clark:Oh, I bet it is. Have fun with that, if that's your thing.

49:32Chuck Bryant:For Larry David.

49:34Josh Clark:Right. So like we said, I think in Act 1, that there are still people that argue for the gold standard and people that argue against it, even though that ship has sailed. And there are some pretty good arguments each way. If you're for the gold standard, you can say like, hey, that's going to definitely put a lid on this crazy government spending that we have had going on. And it'll stabilize the money supply. We've seen it do that literally. So, you know, that's a pretty decent like they got a lot of like data to back those claims up for sure.

50:11Chuck Bryant:Yeah. One of them is it's just basically throwing shade at how out of control government spending gets when the government is allowed to literally just print money when it wants to. one of those things that you'll see a lot is that the purchasing power of the dollar has declined by more than 85 percent since the U.S. left the gold standard in 1971. The reason why is because the government just keeps printing money anytime it likes, which causes inflation. Well, that's purposeful. Like a fiat currency is an inflationary currency as opposed to a deflationary currency like gold. They want inflation to happen because inflation you can keep on top of.

50:54Chuck Bryant:It's deflation that's really hard to come out of. So yeah, it's not really a problem if you can buy less with a dollar than you did before because you're adjusting for inflation. It's not a problem as long as your wages are keeping up with it. The problem is wages haven't kept up with it. And so people are being paid the same amount as before and are able to buy less because they have less money, even though the cost of living has increased. Their wages, our wages haven't gone up commensurate to it.

51:23Josh Clark:Yeah, for sure. And if you want to talk about like, you know, we're talking about printing money and a spike in the cash supply. Here's a pretty staggering statistic. The supply of money in 1970, this is what they call the M2 money supply, which is all the cash, all the money in checking accounts, all the traveler's checks, was about$600 billion in 1970. The year before I was born. In August of last year, it was$22 trillion, which is an increase of 3 ,566 % over whatever, 54 years. And 20 % of that was created in 2020.

52:05Chuck Bryant:Yeah, just that year. Yeah. Yeah. So there's this, I mean, there's clear evidence that like the government will just print money as much as it can whenever it wants to. Part of the problem is, is that also increases the national debt because more money out there, if you can print money, make new money, you can spend that new money. If you're the organization that is creating the money. So the national debt increased tremendously, too, over that same time period from 1970 to 2025.

52:37Josh Clark:Yeah, it increased 9000 percent. It was three hundred ninety eight billion back then. And now it is over thirty six trillion dollars. And it's a number that is just hard to even comprehend that seemingly nobody. Well, not nobody, but the right people aren't concerned enough about. Right.

52:57Chuck Bryant:So gold bugs are like, see, if you let the government print money, they're going to print money and they're going to spend more money. The gold standard keeps them from being able to do that. End of story.

53:08Josh Clark:that's right but there are anti-gold bugs there are people who prefer fiat currency and the ability for the government to step in and throw levers and and control monetary policy through uh through debate and and decision making and that's one of the big arguments it's like hey we need to be able to um to to make these decisions sort of on the fly and move quickly to to save ourselves in times of doubt and in times of economic stress. And they can also combat a lot of that data, too. They can also say, well, yeah, but you really should look at these numbers instead.

53:44Chuck Bryant:Yeah. So gold bugs always say that there's stability in gold currency, right? But the problem is, is that if you look at the gold markets, they fluctuate tremendously. So that's actually kind of out the window. Another one, this one I couldn't find an answer to that I can't wrap my head around, though, is the total value of all the gold in the world is$36 trillion, which is eye-popping. That's our national debt. Yeah, exactly.

54:14Josh Clark:Ironically.

54:15Chuck Bryant:But if you took the entire global economy and valued that, that's more like$126 trillion. So if the world went on a gold standard again, how would you shrink$126 trillion into$36 trillion? That right there, That's what we've been saying. The ship has left the harbor. That train has left the station. It's just there's again, there's not enough gold to cover the value of everything in the world.

54:42Josh Clark:Yeah, for sure. Another big sort of argument that people against the gold standard point to is like, hey, look at our stock market. People aren't putting their money in their mattress anymore and making runs on banks. They're shifting that money, their cash dollars into the stock market. And those dollars have have grown and grown and grown. I mean, there are always dips in the stock markets. And even, you know, there have been some very bad days in a row with the stock market. and the crash of 2008 and the dot-com bubble and all that stuff always affects the stock market. But it's proven to be a pretty stable thing over time.

55:21Chuck Bryant:It has. And in fact, there's this comparison I found. I can't remember where I found it. But if you took$5 ,000 in 1971 to celebrate the birth of Chuck, and you said, I'm going to go buy$5 ,000 worth of gold, It's going to be a great present for Chuck. I'm also going to bring a little myrrh, a little frankincense. It's going to get biblical in here. The gold actually would have increased about 7 ,500%. And this is gold. Gold prices are so all over the place. This is probably already out of date. But I think at the end of 2025, you would have had$379 ,500 worth of gold from that$5 ,000 worth of gold you bought in 1971.

56:09Chuck Bryant:So that makes it seem like, okay, great. Gold's a good investment. What happens if you invested it in the stock market?

56:16Josh Clark:Well, if you had that same five grand after my birth and put it in the S &P 500, you would have made$271 ,500. So the gold standard wins in that case. But that is if you are just taking those dividends. If you're taking the money that you're making from the stocks and saying like, all right, that's my income or whatever. If you had kept reinvesting all that from the five grand, it would be one point one eight five million plus what? Five hundred bucks. Yeah. So that's a return of almost twenty four thousand percent rather than seventy five hundred percent.

56:53Chuck Bryant:Right. And even if you're like, OK, well, wait a minute, adjusting for inflation, how much is that? So I looked it up. I went on our beloved West Egg and something that cost$5 ,000 in 1971 would cost you$40 ,000 today. So even after you bought that$5 ,000 thing, you'd still have$1.1 million and change left over. So it would be much better to invest it in the market. As volatile as it is, as unpredictable as it is, as easy as it is to lose your shirt, over the course of time, the ability to unleash the stock market that having a fiat currency and being able to print money creates, it's a better return on investment.

57:35Josh Clark:Yeah. I'm surprised I got through this one. You did great. Well, you did great. You did great. Who wrote the original article here? Who was this?

57:44Chuck Bryant:That was Olivia Joint. She did great.

57:46Josh Clark:Yeah, she did great too. And you did a lot of great supplemental research. Everyone's doing great, everybody.

57:50Chuck Bryant:It's just great up in here. We should also say we probably got a lot of stuff wrong. We probably walked past a lot of stuff. This is such a detailed, nuanced discussion that people who are like monetary policy walks, this is one of their favorite things to do is to point out all of these nitpicky little things based on mind-boggling economics that are really hard to describe. We just glanced over the surface of this. But I think probably we got more right than you'd think.

58:19Josh Clark:Yeah, it's tough to tackle something like this because there are people that know a gazillion times more about this kind of thing than we do.

58:25Chuck Bryant:Yep, and Chuck just said tackle, so he unlocked listener mail.

58:31Josh Clark:I'm going to call this, this is from our crowds episode. And this is a classroom hack, a question hack from a, I think a teacher.

58:40Chuck Bryant:Okay.

58:41Josh Clark:Hey guys, love the episode about crowds. Yeah, I'm a middle school teacher and crowds are my standard environment. Your comments about being afraid to ask a question in class really spoke to me because a big part of my job is navigating the power of language with crowds and my students. There's a simple teacher hack that is most effective and easiest, the easiest change I've ever made to my communication with students. And Aaron from New Brunswick, Canada, I will go ahead and say that like anyone speaking in front of a crowd where you like source questions, I think this is a pretty good way to go.

59:11Chuck Bryant:Okay.

59:12Josh Clark:And here it is. Instead of saying, does anyone have any questions? What I say instead is, what questions do you have? There must be questions. It really works. completely different response from the students guys the assumption that questions are are expected always prompts at least one kid to get the courage which opens up the gates for everyone else who is too apprehensive thanks for being my first podcast in 2012 wow and for continuing to bring joy and relaxation to a tired but satisfied teacher peace and love and again that is from Aaron with an e from New Brunswick Canada thanks Aaron peace and love back to you too and thanks

59:48Chuck Bryant:for teaching. It's a good hack. It's a great hack. Questions? Who's got them? I know there's some. Don't lie.

59:56Josh Clark:Right. And then just get more aggressive.

59:58Chuck Bryant:Right. Huh? Huh? Give me a question.

1:00:01Josh Clark:Yeah, that works.

1:00:02Chuck Bryant:If you want to be like Aaron and send us a great email and say peace and love, that's awesome. You can send it off again via email to the email address stuffpodcasts at iHeartRadio.com.

1:00:17Josh Clark:Stuff You Should Know is a production of iHeartRadio. For more podcasts from iHeartRadio, visit the iHeartRadio app. Apple Podcasts are wherever you listen to your favorite shows.

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