"Wes" wrote in message
...
"Ed Huntress" wrote:

A very good question. And the answer is...nothing would stop them.

France tried it in 1971. That's one reason why we have fiat money now.

In response to the Great Depression, and at the request of President
Franklin D.
Roosevelt, Congress passed the Gold Reserve Act on 30 January 1934; the
measure
nationalized all gold by ordering the Federal Reserve banks to turn over
their supply to
the U.S. Treasury. In return the banks received gold certificates to be
used as reserves
against deposits and Federal Reserve notes. The act also authorized the
president to
devalue the gold dollar so that it would have no more than 60 percent of
its existing
weight. Under this authority the president, on 31 January 1934, fixed the
value of the
gold dollar at 59.06 cents.

Bibliography

Friedman, Milton, and Anna Jacobson Schwartz. A Monetary History of the
United States,
1867-1960. Princeton, N.J.: Princeton University Press, 1963.

Don't start doing a Gunner on us, Wes. g From then until 1971, central
banks of all countries member of the Breton Woods Agreement were empowered
to demand gold of other countries in exchange for their currency. France
took a run at ours, and Nixon responded by taking us off the gold standard
so the French couldn't bleed our reserves.

Meantime, as you may recall from an earlier discussion, there are two issues
he One is being on a gold standard, like we had until 1971, and the other
is allowing free exchange by individuals between gold and currency. That's
what FDR shut off -- of necessity, during the Depression. But we remained on
a gold standard. That limited our monetary policy and made us vulnerable to
actions by unfriendly or semi-friendly countries, like France at the time,
should they try to beggar us.

Most of the sophisticated gold bugs with a background in economics want the
latter, but care less about the former. The hard-bitten ones want both.

BTW, unless there is some newer law of which I'm unaware, the states can
mint gold coins.

--
Ed Huntress