Dixie Doesn’t Need a Gold Standard

I’m aware that the League of the South core beliefs statement is in favor of the gold standard for our future national monetary currency (referred to as Dixie dollars in this essay). And according to this article by Southern National Congress which calls for the re-coining of gold at Fort Knox, it appears they are of similar opinion. Like many others, I used to like the idea of the gold standard. This post explains why  a national, sovereign, fiat currency is a better strategy.

Here are some points to square away first:

  • The gold standard vs fiat debate is separate from:
    • the debate for/against fractional reserve banking.
    •  whether or not Southern states should accumulate assets in gold as we anticipate secession and/or collapse of the US dollar.
    • whether or not a sovereign nation should maintain a gold reserve.
    • whether or not we should have a federal reserve.
  • The US dollar losing its value since coming off the gold standard in 1971 isn’t because we came off the gold standard, but because too many dollars have been printed (or created by fractional reserve). If they were disciplined enough to not print too many dollars, then the US dollar would have held its value just fine, assuming the minimum fractional reserve stayed the same.
  • Even on a gold standard, the note could still become worthless overnight because it still depends on a promise that the government makes. The gov could always fail to make good on the promise to redeem for gold just like it could fail to keep any other promise, like a promise to not create too much fiat money. Either way, you are relying on the government to keep its word.
  • Gold may be a good way to store value long term, or in preparation of economic collapse, but that’s not what coins and bills are for. Coins and bills are for everyday spending. If anybody wants to invest in gold for long term wealth storage he can freely do so on the open market, with no need for the gold standard.


Problems with gold standard

Here are some reasons not to go with gold standard, especially during any period when we might be fighting a war for, or recently having gained recognized independence:

Startup capital

Capital needed to acquire gold for backing currency is a significant burden for any nation, and may be a make or break concern for a newly independent nation, or a nation seeking its independence. Even if we are in a position to accumulate all that gold during times of peace, it is still a LOT of capital that could be better spent elsewhere.

Expensive to maintain reserve

The gold has to be kept on reserve somewhere which would require significant armed personnel to guard. Those armed guards could probably be put to better use elsewhere during a time of unrest. Also, this would be a significant, indefinite financial drain just to maintain operations, even during times of peace.

Risky to maintain reserve

If gold is kept on reserve somewhere, then an enemy (like the US Empire) could do a raid and take it all, striking a major blow to us by devaluing our currency. From a purely logical perspective the currency would still be worth just as much as fiat that had never been backed by gold, but most people will not see it this way and will immediately lose confidence in our money.

Counterfeit risk

If we have a gold standard, then an enemy or ambitious opportunist might overwhelm us by introducing counterfeit money that would sap our reserves so that we could no longer honor our promise to redeem for gold. But successfully counterfeiting fiat money would be a much more absorbable blow of just lowering the value of the bills by some margin.

Gresham’s Law

If Dixie dollars are backed by gold then Gresham’s Law dictates that people will hoard them and continue to conduct everyday transactions with some other medium of exchange, such as US dollars, Euros, Bitcoin, or whatever. This is basically the opposite of what we would be trying to achieve with our new currency.

Panic risk with fractional reserve

If we do permit fractional reserve banking, then during time of economic crisis or civil unrest, widespread rush to redeem notes for gold could actually facilitate a collapse that could be avoided by using fiat money. With fiat money there is still the risk that people will collapse banks during panic by overwhelming surge in withdrawals, but with gold standard, we would assume that risk PLUS the risk that too many people would try to redeem for gold.

Less public loyalty without fractional reserve

If we do not permit fractional reserve banking, then gold standard means people have less concern for whether our government sinks or swims because they can easily exchange all their notes for gold at predetermined rate and maintain their wealth during collapse. However with fiat money, the people may not so easily redeem notes in gold (except for buying gold on open market at current price), so with fiat money they have more skin in the game regarding whether the minting authority sinks or swims.

Gold isn’t guaranteed

We have little control over how much gold may be discovered someday, or what revolutionary mining technology may come onto the scene. If we are on a gold standard and then the biggest gold rush in world history takes place anywhere in the world, then that is going to crash the price of gold, and consequently the value of a Dixie dollar. If gold is discovered within our territory, it will still disrupt the value of the Dixie dollar, but we will at least have the benefit of it being domestic production rather than foreign production. Still, the gold standard is more volatile in the short term than well managed fiat. The California Gold Rush had a similar effect on the US dollar. In fact, gold has been called the most volatile currency in the world. Even if we print enough fiat money to give us a slow and steady rate of inflation, that is still better for the average person than the short term volatility associated with gold.


Since most of the gold in the world is probably under the oceans or in very cold and remote regions and yet to be discovered, and since technology in general continues to march forward, “the biggest gold rush in world history” probably hasn’t happened yet.

Prone to international manipulation

Having a gold standard introduces the risk that another country(s) could manipulate the value of our currency by manipulating the price of gold. This could be done by suddenly dumping (or merely threatening to dump) large quantities of gold into the global market. Thus, committing to a gold standard literally gives other countries the ability to manipulate OUR currency, especially if they form an OPEC-like alliance of countries holding significant gold deposits or holding significant reserves in vaults.

Fighting over Fort Knox

If we go with a gold standard early on, or if we announce to people that we will have a gold standard in the future, then our secession/startup success will likely depend heavily on whether or not we manage to get the gold in Fort Knox whereas with fiat money, we can have a “whatever” attitude toward Fort Knox. If we have to fight a war for independence, then going with fiat money could prevent us from having a future battle on that hill. If we go with fiat, we still might deal a blow to the enemy if we take Fort Knox, but we will not be desperate to take Fort Knox.

Fiat is easy (but limited) revenue during hard times

Printing fiat money at controlled inflation levels is a very efficient alternative to any other form of taxation as it doesn’t have to be enforced, wages don’t have to be garnished, penalties and interest don’t have to be billed by a bureaucratic organization, and there are no litigation costs. Is this actually extracting wealth from the people to the government like any other tax? Yes, but much, much more efficiently than other alternatives. While it is not the most desirable option, inflationary printing of fiat money has been a common practice to finance war.

Printing fiat Dixie dollars at high volume during a time of “negotiating” independence has the unique advantage that the people of the South will not be the sole contributors, since this will be displacing US dollars from the South to elsewhere. The burden will be shared by the rest of the US and any other country that uses the US dollar. Obviously, there is a limit to how much money you can print before inflation becomes prohibitive. This is not a sustainable strategy for the long run unless it is done very slowly (like the US is doing to us today) but it is a strategy that can be employed to a limited degree over the short run and would enable us to extract wealth from the US to meet our own immediate needs. If we end up in a war, this would also be a good way to “punch back” at the US by destabilizing their currency. Again, the disadvantages include:

  • Southerners will share in the inflation burden, even though the US (and other countries on the US dollar) will bear most of it.
  • At some point there will be an upper limit before runaway inflation becomes a problem. If we make Dixie dollars legal tender and encourage the dumping of US dollars back into the US economy*, then the optimum time to stop printing would be when most of the US dollars have been driven from circulation in the South. If we continue to rapidly increase the Dixie dollar supply beyond that point then we will obviously end up with Zimbabwe style inflation in a very short time.

* We don’t even have to dump US dollars directly back into the US, we can dump them into any country that uses US dollars, or we could dump them into international currency exchanges. Anywhere. For instance, we could print Dixie dollars, exchange them for US dollars locally , then use those US dollars to buy things from other countries, all while destabilizing US currency.

Politically motivated counterfeiting  is one of the nonviolent tactics suggested on page 94 (tactic 185) in Gene Sharp’s From Dictatorship to Democracy. But I think printing a sovereign currency to displace the old currency accomplishes the same purpose except with a new currency there is the added benefit of expressing sovereignty.


Reasons for a gold standard

  • As a new currency being introduced, being backed by gold will likely increase confidence for those accepting Dixie dollars as payment (but Gresham’s Law would still apply to the spender).
  • A gold standard might provide national pride for having “outdone” the US dollar.
  • Many people simply believe that since gold standard was a past practice that it must be better than fiat.

I think these reasons are pretty weak compared to the advantages of fiat.


Closing remarks

It is interesting to note that out of 195 (196 if you count Taiwan) countries in the world today, not even one uses a gold standard, not even Israel. I suspect some of the best economics and finance industry experts in the world either live in Israel or have a patriotic interest in Israel. This isn’t exactly proof that fiat is the best strategy, but it should at least give us reason to second guess a return to the gold standard. I think it should at least put to rest any suspicion that the US departure from the gold standard was a Jewish conspiracy against whites.

I have not discussed the option of simply adopting Bitcoin during our para-independence period, then switching to our own national currency when we’re good and ready. Bitcoin has the advantage of being already established and hard for an enemy to thwart, but it doesn’t permit us to finance operations by printing our own currency. It’s an option that warrants considering, but clearly both Bitcoin and the fiat Dixie dollar strategies would beat the gold standard in the short term, and a fiat Dixie dollar beats gold standard once independence is established.