There is something about gold that attracts people.  It became the currency of choice for the Eastern and Western hemispheres before either one knew the other existed. Of course, its attractivness sciews judgement and creates hubris.  Governments have always enjoyed hording the stuff.

In the beginning, Roman coinage was worth the amount of gold it had in it.  As the government spent more than it grossed, they began to put less gold into their coins.  Eventually, the people wised up and realized that the coins weren’t worth as much as they once were.  Inflation began and so did decline.

There was a time when an America could take a dollar bill to the treasury and get it’s value in gold.  No more.  In fact, it’s illegal to own a lot of the stuff because the government wants to protect it’s monopoly on the money supply.  But what does that mean?

Despite reading quite a bit about this stuff, I still don’t understand how the Treasury and the Federal Reserve work.  I know the Treasury manufactures money, which is disconcerting in its own right because if someone forgot to turn the machine off at the end of the day, we’d all wake up and our money would be worthless.  I also know the Federal Reserve ‘regulates the money supply’ by determining interest rates and regulating reserve requirements, I don’t fully understand what they’re doing with treasury bonds?  And who makes sure the Fed is doing it’s job properly?  When did we decide the Fed could spend tax payer money (or am I deluding myself and it’s really government money?) to save one businesses but not the other?  Who regulates the Fed and makes sure they’re doing their job properly?

Basically, the point I’m trying to get at is this. Nothing in this world is free.  When government does something, there is always blow back, somewhere, sometime.  Right now, despite our ‘free market’ the government is influencing the financial markets from countless angles and things are spinning out of control.  If we were still on the gold standard, or a modified version of that system, would that allow the government to play a less significant role in the economy?  Would that create less incentives for financial service professionals to influence government policy? Could that pave the road for more honest regulation?