On Bob Murphy Failing to Understand the Gold Standard

Bob Murphy is apparently objecting to my call for the dollar to be made redeemable into gold.

Here are his grounds:

First, he quotes me:

Thus, the call on gold is clear here, it belongs to the holders of US dollars. The current supply of gold owned by the United Sates should be divided by the number of dollars (Some version of M1) and made fully redeemable to those holders.

Notice I say FULLY REDEEMABLE, not sold to the public. This will become extremely important as Murphy slyly twists my call for redeemability:

So I think in practice Wenzel is saying the government should sell the gold at way way way above market prices, in order to stick it to The Man.

For the record, if the government tries to give me an ounce of gold while subtracting (say) $5,000 from my checking account, I will pass on the reparations. Please give my portion to Bob Wenzel.

If, on the other hand, Wenzel is saying the gold should just be given to people, in proportion to how many US dollars they possess (on what date?), then my particular objection falls away, but then I think it raises a bunch of different problems

Notice, how Murphy switches my call for redeemability into the government just going in and grabbing money out of his checking account for a small amount of gold. This is certainly not what redeemability means, or if Murphy thinks that's what redeemability means, I am about to issue him a coupon that can be redeemed for 10,000 subscriptions to the EPJ Daily Alert at a dollar off. The real esate agent will be over to  your my house in the morning, Bob, putting up the For Sale signs, as you liquidate everything to pay for my redeemable coupon.

The real question before us is what should be done with the gold in Fort Knox.

Selling it and using it to continue running the Empire appears to be Ron Utt's answer.

Bob Murphy's and Ron Paul's answer seems to be to sell off the gold and pay down the debt. But this fails to take into account my objection that most assets the government controls are stolen assets, and thus belong to taxpayers, rather than cash the government can use to payoff the scoundrels who buy Treasury securities which end up supporting the war efforts and general government expansion. Let them wait at the end of the line.

My proposal, that the dollar should be redeemable into gold, does not in itself mean that dollars would immediately or ever actually be redeemed into gold. It would mean that there is a fixed amount of gold behind each dollar and this ultimately puts a check on how many dollars the Federal Reserve could then issue. For a guy like Bob, who is predicting the eventual crack-up of the dollar, I would think he would welcome this collar on potential money printing.

Keep in mind, dollars were initially issued as a receipt for gold. Since the Fed printed gold receipts (dollars) far beyond the amount gold they had available, the Fed should not be allowed to print any more dollars until that reedemability is restored, which was $20.67 for an ounce of gold.

Bob is thinking a little bit like Tim Geithner in his attack on my proposal. In actuality, the Fed and Treasury have a long way to go to restore things to where they were, before they started committing fraud and printing more warehouse receipts than gold to back them. The government, under the gold standard I foresee,  won't be able to come in and take money out of any one's account, and they won't be able to print anymore warehouse receipts (dollars) until they restore the proper gold backing to the current warehouse receipts (dollars) at $20.67 per ounce---although you could make a case for the Federal Reserve notes post-1933 being redeemable at the rate of $35.00 per ounce.

Bottom lime: Making the dollar redeemable in gold stops Fed printing in its tracks right now. And may actually have the further benefit of putting Bernanke, Greenspan, Volcker, Geithner, Paulson and Bob Rubin  in the Nevada desert working a gold mine for the rest of their lives digging for gold that they owe dollars holders. I am really confused why Murphy is against this.