The implications of coming off the gold standard, and the massive imbalances in the current economic climate that stem from the ungrounded monetary policy of the Fed (and more broadly global financial deregulation) are of enormous importance, and are only going to become more significant as the gulf between the US's ability to actually make stuff and its ability to borrow to the hilt to continue to buy too much stuff continues to widen....
I'd love to see Curtis attempt a programme that looked at the current economic imbalances, how America has been overspending, the wave of asset bubbles we've seen, the coming inflation, and so on, but I suspect that he doesn't actually know enough about it to manage it. It's a ludicrously complicated problem, so I'm not sure who would be qualified frankly?!
I think most people that actually understand the banking system already have a vested interest in it, if only on the fundamental level of social stability and their own financial security. as Henry Ford said,
"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."
As for gold, it worked reasonably well up until the 60s or so, why no longer? As I understand it, Bretton Woods and the gold standard collapsed because of the imbalances that increasing global capital flows created.
IMO Bretton Woods was abandoned principally because of the capital flow imbalance of one country - USA - which happened to be powerful enough to abolish a system under which they owed increasing debts that were getting overdue. America emptied their treasury to pay for Vietnam and the Great New Society. When it ran out they were faced with two options: 1) immediate loss of the Vietnam War, enormous government cuts, rising taxes, the sale of assets and a huge decrease in living standards or 2) finding a way to avoid paying back what they owed (in gold or other real assets) anytime in the near future while hoping to make up for it in the long term through the production and export of goods.
They achieved #2 by getting everyone to drop Bretton Woods so they could pay their debt in dollars (I wouldn't doubt that it was foisted on other countries as their part of the common war effort against communism, a means of doing their part to finance Vietnam). They creatively refinanced their debt so that it would take a long time to call in, and would either 1) be made up for with increased production and exports (a trade surplus that would be paid for by foreigners in American dollars - currency which then could be taken out of circulation when it came back to America as payment for the trade balance - hence debt paid), or 2) if production did not increase to match the money supply, and a long term trade deficit occured with the number of excess dollars actually increasing rather than decreasing, the bad debt would be be paid by the various holders of depreciating US dollars. (The term inflation - the increasing price of goods, is actually a subtly misleading term. I prefer monetary depreciation - the decreasing value of money.)
#2 is what has happened. Now people are starting to not want the dollars anymore, so Americans will pay their debt in depreciation since they have failed to make up for it in increased productivity. This is evident in the trade and budget deficits, and massive levels of private debt being carried from the individual consumer level up to the corporate level. By avoiding market correction they were given breathing space (a kind of Chapter 11 protection from creditors), but they used it to continue borrowing for longer without fixing the society-wide problem of excessive spending and lack of production that put them into debt in the first place, thus digging an ever deepening hole through a mix of monetary corpratism and military keynsianism. Now, Bernanke actually has the gall to say (in The Economist) that the excess liquidity in the market right now represents an Orwellian "savings glut" when he knows full well that savings are at an all-time low, and the liquidity is all debt - an utterly shameless, shameless lie. A downturn was unavoidable from the beginning. Now instead of a short severe recession under the gold standard, America is headed for a long, protracted depression of far greater severity.
The much lauded "flexibility" of capital flows in the current system really means
the ability of a state to go into deep debt and stay there for a long time while concealing it from the citizenry whose children will pay that debt. In the past people would come knocking for their gold within a couple years. That was a
good thing. It kept governments
honest. It kept debt levels within reason - both in size and time-frame for repayment. It made countries actually work for what they got, and not borrow on a massive scale against future generations.
This was laid out in the Mundell-Fleming model which declared "the impossible trinity" of fixed exchange rates, free capital flow and sovereign monetary policy. Something had to give, and it was fixed exchange rates and the gold standard.
I'm for the removal of sovereign monetary policy. Sound money is the foundation of all
sustainable growth, and is not compatible with political manipulation of the money supply. In my opinion, central banks now play a role as
central speculators who base government policy (monetary policy that has a direct effect on the market) in part on their forward-looking projections of what they think the market will require in the future in terms of liquidity and in part on their
unknown political objectives that are absolutely secret and not subject to democratic review in any way whatsoever. Every bad decision made at the Fed is enormously costly, and there is absolutely no way of knowing how or why they are made. The government (or secret quasi-governmental institutions) shouldn't be in the business of creating money based on speculation about what the market will require in the unkown future or what they think may or may not be good for the country, their friends or themselves. It's just a bad idea that inevitably leads to severe contractions, or "business cycles", that in my opinion limit long-term growth (others see these cycles of extreme growth and contraction as natural). IMO it's the capitalist equivalent of 5-year plans... a subtle version of the central planning and market intervention that these economists otherwise profess to loathe so much. Once they get a taste of power they sure change their tune.
I'm not for absolute free markets, but in my opinion meddling with currency is the absolute worst form of interventionism. Its absolutely corrupting influence on all levels of society has been well documented by many thinkers over the years, particularily early Americans. "Sound currency" was once something that people thought was worth fighting for, or at least arguing over. As many warned, lack of sound currency has turned a country built on the protestant work ethic of work & save into a crass culture of borrow & spend, cheered on by its leaders... consumer confidence indexes and all that nonsense. No matter how they try to spin it, borrowing and spending cannot create wealth, only the temporary appearance of it - both on the large and small scale.
I don't think it'd be a good idea to go back to gold standard, rather it is monetary policy that needs reforming, drastically. The ability of the banks to print money and our economy being established on debt-based money is something I find equal parts baffling and unjustifiable.
I think the things you identify as debt based financing, or fractional banking, are part and parcel of of any form of central banking with floating currencies. That is how the government regulates money supply. To my knowledge, which is far from complete, the gold standard is the only viable alternative. In my opinion, most of the severe economic problems of the 20th century were caused by excessive lending and expansion of the money supply followed by severe market correction. I see the gold standard as a useful check against this tendency of politicians and bankers to over-spend and over-lend mass amounts of money that a) don't belong to them, and b) shouldn't even exist in an efficient economy. The unitas might be another solution, or an even bigger can of worms.
