American have fought over banking policy since Jefferson said, "Banking establishments are more dangerous than standing armies". Banking policy was the major issue in 1832's election, "Jackson and no bank or bank and no Jackson" was Andrew Jackson's (AJ) 1832 campaign slogan. Jackson called the Second Bank of the United States (SBUS) a "Monster". If interested, read Remini, Robert, Andrew Jackson and the Bank War, 1967. Will Bush call the Fed a "monster? See my 13 August post.
"Every monopoly and all exclusive privileges are granted at the expense of the public, which ought to receive a fair equivalent. ... To the extent of [the SBUS] practical effects it is a bond of union among the banking establishments of the nation, erecting them into an interest separate from that of the people, and its necessary tendency is to unite the [SBUS] and the State Banks in any measure which may be thought conducive to their common interest. ... Under such circumstances the bank comes forward and asks for a renewal of its charter for a term of fifteen years upon conditions which not only operate as a gratuity to the stockholders of many millions of dollars, but will sanction any abuses and legalize any encroachments. ... It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. ... In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the law undertakes to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society-the farmers, mechanics, and laborers-who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. ... Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress. By attempting to gratify their desires we have in the results of our legislation arrayed section against section, interest against interest, and man against man, in a fearful commotion which threatens to shake the foundations of our Union", AJ's SBUS recharter veto message at www.yale.edu/lawweb/avalon/presiden/veto/ajveto01.htm, 10 July 1832 It is inconceivable we could elect an AJ today.
I've said since January 1980 with gold at $875, $2,300 today, in official CPI terms, $3,500 by my estimates, that the US will remonitize gold. What happened in 1980? I assumed gold was "just" a commodity, like wheat or soybeans. Then I realized: the Fed didn't sell at $875! Why not? If the Fed is just another speculator in the market, it believed gold was worth more than $875! I can't explain it any other way.
"On June 22, according to the Federal Reserve Bulletin, the notes issued were covered by gold to the extent of 72.4; while the ratio of gold reserve ... to notes in actual circulation ... was 79.8 per cent", NYT, 17 February 1918. 1918? Gold "cover"? Percentage? What? Once upon a time the Fed needed gold to "cover" Federal Reserve Note (FRN) redemption. You could exchange 20 FRNs at a bank for a "double eagle" containing .9675 of an ounce of gold, which meant the "gold price" was $20.67 per ounce, or a dollar was .048379 ounce of gold. So? Today: the US has 261.5 million ounces of gold, M1 is $820 billion, M2 $7,457 billion and M3, no longer published, about $12,000 billion. If the Fed needs a 100% "gold cover" for M1, M2 and M3, we get "prices" of $3,136; $28,516 and $45,889 per ounce. JR's $20,000 estimate is in this range.
A "repectable" person suggested a 100% gold reserve, Graham, Frank, American Economics Review, 428-440, (September, 1936), "Partial Reserve Money And The 100 Per Cent Proposal". What, 1936? A Princeton professor? Yes. After Ludwig Von Mises, Murray Rothbard (MR) is my favorite economist. I highly recommend MR's Mystery of Banking, 1983, available at http://www.mises.org/.