I was going to take a stab at explaining this myself, but why waste time when Lew Rockwell does it so well. Here is a place to start on the Gold standard. Basicly it limits governments. They are forced to raise revenue through taxation not inflation. For instance, if we had been forced to finance the war in Iraq by raising taxes instead of printing money or borrowing, it would not have happened. And with the dollar pegged to gold there would be no inflation.

Ok I will let Mr Rockwell have his say. This is an article by Rockwell that Ron Paul attached to legislation that he introduced to the house of representatives Sept 10, 2002. His aim was to restore financial stability to America's economy by abolishing the Federal Reserve.

WHY GOLD?
By Llewellyn H. Rockwell, Jr.

As with all matters of investment, everything is clear in hindsight. Had you bought gold mutual funds earlier this year, they might have appreciated more than 100 percent. Gold has risen $60 since March 2001 to the latest spot price of $326.

Why wasn't it obvious? The Fed has been inflating the dollar as never before, driving interest rates down to absurdly low levels, even as the federal government has been pushing a mercantile trade policy, and New York City, the hub of the world economy, continues to be threatened by terrorism. The government is failing to prevent more successful attacks by not backing down from foreign policy disasters and by not allowing planes to arm themselves.  These are all conditions that make gold particularly attractive.

Or perhaps it is not so obvious why this is true. It's been three decades since the dollar's tie to gold was completely severed, to the hosannas of mainstream economists. There is no stash of gold held by the Fed or the Treasury that backs our currency system. The government owns gold but not as a monetary asset. It owns it the same way it owns national parks and fighter planes. It's just another asset the government keeps to itself.

The dollar, and all our money, is nothing more and nothing less than what it looks like: a cut piece of linen paper with fancy printing on it. You can exchange it for other currency at a fixed rate and for any good or service at a flexible rate. But there is no established exchange rate between the dollar and gold, either at home or internationally.

The supply of money is not limited by the amount of gold. Gold is just another good for which the dollar can be exchanged, and in that sense is legally no different from a gallon of milk, a tank of gas, or an hour of babysitting services.

Why, then, do people turn to gold in times like these? What is gold used for? Yes, there are industrial uses and there are consumer uses in jewelry and the like. But recessions and inflations don't cause people to want to wear more jewelry or stock up on industrial metal. The investor demand ultimately reflects consumer demand for gold. But that still leaves us with the question of why the consumer demand exists in the first place. Why gold and not sugar or wheat or something else?

There is no getting away from it: investor markets have memories of the days when gold was money. In fact, in the whole history of civilization, gold has served as the basic money of all people wherever it's been available. Other precious metals have been valued and coined, but gold always emerged on top in the great competition for what constitutes the most valuable commodity of all.

There is nothing intrinsic about gold that makes it money. It has certain properties that lend itself to monetary use, like portability, divisibility, scarcity, durability, and uniformity. But these are just descriptors of certain qualities of the metal, not explanations as to why it became money. Gold became money for only one reason: because that's what the markets chose.

Why isn't gold money now? Because governments destroyed the gold standard. Why? Because they regarded it as too inflexible. To be sure, monetary inflexibility is the friend of free markets. Without the ability to create money out of nothing, governments tend to run tight financial ships. Banks are more careful about the lending when they can't rely on a lender of last resort with access to a money-creation machine like the Fed.

A fixed money stock means that overall prices are generally more stable. The problems of inflation and business cycles disappear entirely. Under the gold standard, in fact, increased market productivity causes prices to generally decline over time as the purchasing power of money increases.

In 1967, Alan Greenspan once wrote an article called Gold and Economic Freedom. He wrote that:
"An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other. . . . This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights."

He was right. Gold and freedom go together. Gold money is both the result of freedom and its leading protector. When money is as good as gold, the government cannot manipulate the supply for its own purposes. Just as the rule of law puts limits on the despotic use of police power, a gold standard puts extreme limits on the government's ability to spend, borrow, and otherwise create crazy unworkable programs. It is forced to raise its revenue through taxation, not inflation, and generally keep its house in order.

Without the gold standard, government is free to work with the Fed to inflate the currency without limit. Even in our own times, we've seen governments do that and thereby spread mass misery. 

Now, all governments are stupid but not all are so stupid as to pull stunts like this. Most of the time, governments are pleased to inflate their currencies so long as they don't have to pay the price in the form of mass bankruptcies, falling exchange rates, and inflation.

In the real world, of course, there is a lag time between cause and effect. The Fed has been inflating the currency at very high levels for longer than a year. The consequences of this disastrous policy are showing up only recently in the form of a falling dollar and higher gold prices. And so what does the Fed do? It is pulling back now. For the first time in nearly ten years, some measures of money (M2 and MZM) are showing a falling money stock, which is likely to prompt a second dip in the continuing recession.

Greenspan now finds himself on the horns of a very serious dilemma. If he continues to pull back on money, the economy could tip into a serious recession. This is especially a danger given rising protectionism, which mirrors the events of the early 1930s. On the other hand, a continuation of the loose policy he has pursued for a year endangers the value of the dollar overseas.

How much easier matters were when we didn't have to rely on the wisdom of exalted monetary central planners like Greenspan. Under the gold standard, the supply of money regulated itself. The government kept within limits. Banks were more cautious. Savings were high because credit was tight and saving was rewarded. This approach to economics is the foundation of a sustainable prosperity.

We don't have that system now for the country or the world, but individuals are showing their preferences once again. By driving up the price of gold, prompting gold producers to become profitable again, the people are expressing their lack of confidence in their leaders. They have decided to protect themselves and not trust the state. That is the hidden message behind the new luster of gold.Is a gold standard feasible again? Of course. The dollar could be redefined in terms of gold. Interest rates would reflect the real supply and demand for credit. We could shut down the Fed and we would never need to worry again what the chairman of the Fed wanted. There was a time when Greenspan was nostalgic for such a system. Investors of the world have come to embrace this view even as Greenspan has completely abandoned it. 

What keeps the gold standard from becoming a reality again is the love of big government and war. If we ever fall in love with freedom again, the gold standard will once more become a hot issue in public debate.

I still don't get it.  This article does not convince me that gold is better or that we need to get rid of the federal reserve.

The reason that really makes sense to me is that the value of gold is self-regulating, whereas the value of fiat currencies are controlled by their respective central banks.  The stated purpose of a central bank is to maintain the value of the money (sometimes they say it is to maintain commodity prices, but this is not a useful goal); but gold tends to do this naturally.  It's all a balancing act between the size of the economy, the money supply, technological advances, and commodity prices; so to understand how gold self-regulates we have to understand the relationship between these four factors.

Here are some examples of how these factors interact:

• Given a fixed-size economy, a fixed money supply, and no technological advances, commodity prices will remains static -- they will not change.
• Given a fixed-size economy, a growing money supply, and no technological advances, commodity prices will increase.  Think supply and demand: more money equals less demand, which equals reduced value or purchasing power.  An increase in the money supply is the technical definition of inflation.
• Given a fixed-size economy, a shrinking money supply, and no technological advances, commodity prices will decrease.  In this case the supply of money is reduced so the demand (or perceived value) increases.  A decrease in the money supply is the technical definition of deflation.
• Given a fixed-size economy, a fixed money supply, and new technological advances, prices will decrease for benefiting commodities.  This decrease can manifest itself as an improvement in manufacturing (i.e. same product for less), or as advances in the product itself (i.e. "more bang for your buck").  A loss of technology or manufacturing capability would have the opposite effect.  Such a situation could be the result of war or natural disaster.
• Given a growing economy, a fixed money supply, and no technological advances, commodity prices will decrease.  Note that this is not technically deflation, but it has the same effect.  In this case the demand for money is increased, but the supply doesn't rise to meet it, hence the purchasing power of money increases.
• Given a shrinking economy, a fixed money supply, and no technological advances, commodity prices will increase.  Again, this is not inflation, but it is similar.  There is less demand for money, but the supply does not decrease, so the value decreases.

These examples make clear the impact of economic size, money supply, and technology on prices; but in a real economy, balancing these factors requires a tremendously complex equation.  While we can understand the principles, trying to understand all technological advances, and exactly how large the economy is at any given point is impossible -- we can only begin to understand this data in hind-sight.  The central banks that attempt to manipulate the money supply in response to all these factors, are doomed to fail -- they will never get it right, and will always be reacting to the last mistake.

Fortunately, where central banks fail for lack of divinity, gold succeeds by not requiring it.  From the examples above, it is clear that a growing economy requires a growing money supply in order to provide economic stability.  In other words, a growing economy needs just the right amount of inflation.  (That's right, inflation isn't bad.  It's only bad when it doesn't mirror real growth in the economy.)  And don't forget, we can't simply look at prices to determine the correct rate of inflation because prices may be changing due to other factors -- primarily technological advances.

Gold does not require an outside agency to predict these factors, it lets the market do it.  Since the only way the world's supply of gold increases is by someone finding it, the supply of gold is intrinsically tied to market conditions.  Investors will only allocate resources to finding gold if it is adequately profitable.  As the value of gold increases, the effort to find it becomes more rewarding, thus attracting market participants.  Conversely, if the value of gold decreases, there will be less incentive to mine gold.

If gold is money, and the economy grows, the demand for gold will also grow, which manifests as an increase in value.  This attracts increased mining effort, which results in an increase in the money supply, and a corresponding decreases in the demand for gold and its value.  Thus there is natural error correction.  If too much gold is produced, the impact of its reduced value falls on those that are producing it; they will stop producing gold in favor of something more financially rewarding.  If gold becomes scarce, the value increases, and so does gold production.  No single individual or group has to understand the big market equation, the market handles itself.

The fact that gold is self regulating is only one of its big advantages; its other advantage is that it removes the possibility for corruption -- the intentional misuse of the power to print money.  I'll leave this second advantage for another discussion.

Aunt Judy

Do you believe that it is ok for the government to create money out of thin air with nothing to back it up except consumer confidence?

In other words, a growing economy needs just the right amount of inflation.

Wouldn't prices decrease in a growing economy? Inflation is caused by an increase in the money supply. That is, more dollars chasing fewer products. In a growing economy, under the gold standard, would not the price of gold remain relatively constant? I guess what I am trying to say is without the injection of fiat dollars into the economy how could there be inflation?

Prices will decrease in a growing economy if the money supply stays constant; however, we would expect the money supply to increase as the increased value of money (gold) attracts investors.  The "price" or value of gold remains relatively constant because the rate of inflation closely matches the growth of the economy.  There is inflation on a gold standard, as newly mined gold is "injected" into the economy.

 It seems that most people who advocate returning to gold think that it gets the government out of the business of controlling the money supply.  They fear printing money creates inflation, and retracting money causes recessions.  But I have read that the opposite is true.  Printing money cures recessions and retracting it cures inflation.  Governments in the last 60 years have used these policies with success.  There has not been a single depression or bank panic in any nation anywhere in the world using these monetary policies.   The current system COULD allow an unscrupulous government to create inflation or unemployment, but it also allows the government to fight inflation and unemployment.  It seems that we have eliminated depressions since we eliminated the gold standard.   International trade is based solely on the dollar and other paper currencies.  

Printing money is inflation; retracting it is deflation.  If inflation/deflation does not match changes in the size of the economy, there will be instability.  With a commodity money standard, the market can self-correct, but with a fiat system the market can do nothing -- we can only hope the government gets it right.

As for fiat currencies working so great over the last 60 years: have you paid attention to what has happened in Zimbabwe?  Are you unaware of the various recessions we'e had over the years?  Also, we've only been completely off the gold standard for 30 years or so.  I think the big test for our fiat system is happening now.  I'd say we'll be much clearer on its success or failure in five to ten years.

Yes, we have had several recessions.  But, not one turned into a depression.

What is the difference between a recession and a depression?

Here is one description from economics.about.com:

So how can we tell the difference between a recession and a depression? A good rule of thumb for determining the difference between a recession and a depression is to look at the changes in GNP. A depression is any economic downturn where real GDP declines by more than 10 percent. A recession is an economic downturn that is less severe.

By this yardstick, the last depression in the United States was from May 1937 to June 1938, where real GDP declined by 18.2 percent. If we use this method then the Great Depression of the 1930s can be seen as two separate events: an incredibly severe depression lasting from August 1929 to March 1933 where real GDP declined by almost 33 percent, a period of recovery, then another less severe depression of 1937-38. The United States hasn’t had anything even close to a depression in the post-war period. The worst recession in the last 60 years was from November 1973 to March 1975, where real GDP fell by 4.9 percent. Countries such as Finland and Indonesia have suffered depressions in recent memory using this definition.

Here is another quote:

What are the benefits of the current system? The most important has already been mentioned: the elimination of depressions. Being able to expand the money supply in times of unemployment and recession is a critical tool for government. Before World War II, eight U.S. recessions worsened into depressions (as happened in 1807, 1837, 1873, 1882, 1893, 1920, 1933, and 1937). Since World War II, under Keynesian monetary policies, there have been nine recessions (1945-46, 1949, 1954, 1956, 1960-61, 1970, 1973-75, 1980-83, 1990-92 ), and not one has turned into a depression. In fact, no nation in the world has suffered a depression under Keynesian policies.
 

This second quote is from from an article titled:  Myth: The gold standard is a better monetary system.  Fact:  The gold standard causes deflation and depressions.

So basically the difference between a depression and a recession is about how big it is -- but it's the same thing.  I will guess that those "depressions" can be traced to government intervention much like our more recent "recessions."

I'm going to work my way through the following article and book. 

•  The Panic of 1837 and the Contraction of 1839-43
•  A History of Money and Banking in the United States

By the way, saying that inflation "protects" us from a recession is a sham.  If GDP is measured in dollars and the economy is shrinking, inflation can keep the dollar measure of GDP up, making everything look good while in reality they are falling apart.  In otherwords, we can be impoverished but still have lots of dollars.  The government's smoke and mirrors is to focus our attention on the dollar rather than value.

You missed the point.  The articles I have read lead me to believe that government intercession has kept us out of depressions.  So during a recession money is made available when the Fed buys securities.  That money is put back into the economy, more goods are produced and bought.  And then things level out again.  But I am not an economist or a financial wizard.  This is a very complex issue and we are not going to educate ouselves in a few days or weeks.  I just find it hard to believe that we could go back to the gold standard.   Would we be the only ones on the gold standard?  How would that work?

I don't think I missed the point.  The argument is that the government fixes recessions by increasing the money supply, but all this does is inflate GDP numbers to avoid the definition of "depression."

Imagine we had an economy with a GDP of $10T/year.  If that shrunk by 20%, but the dollar held it's value, the new GDP would be $8T/year.  But if the economy shrunk by 20% and the Feds increased the money supply by 20%, then it would appear that GDP was still $10T/year even though there was 20% less value in the market.

I don't think these fundamentals are terribly complicated.  The notion that economics is too difficult for ordinary folks to understand is just another one of the government's smoke-and-mirrors tactics.

For what it's worth, we didn't get completely off the gold standard until 1971 with the collapse of Brenton Woods.

You said:

"Imagine we had an economy with a GDP of $10T/year.  If that shrunk by 20%, but the dollar held it's value, the new GDP would be $8T/year.  But if the economy shrunk by 20% and the Feds increased the money supply by 20%, then it would appear that GDP was still $10T/year even though there was 20% less value in the market."

Not sure about this.  GDP is equal to the amount of money in circulation times the velocity (the number of times it is spent).  GDP is also the price of goods times the quantity of goods sold.  So if GDP drops 20% I am not sure how the idea of 'the dollar held it's value'  comes into play.  I am not sure you tie the amount of increase in money supply to the exact decrease in GDP.  You can probably tell I don't know what I am talking about but I am trying!  LOL

Glad you are aware of Bretton Woods!

It seems that as newly mined gold is "injected" into the economy the gold price would drop because of increased supply therefore correcting any imminent inflation. That is if the Government did not try and artificially fix the gold price and continue to increase the money supply like the treasury did in 1934. This by the way did not work out for the Gov as it created a gold drain as speculators bought gold from the us for $35 and sold it for $36 or more elsewhere... but I digress.. My point is injecting dollars into the economy(which can only be done by the fed) creates inflation not adding to the gold supply.

The link between the value of the dollar and GDP is not direct, but if you recognize that heavy inflation means it cost more money to buy the same goods, then it should be clear that heavy inflation skews GDP, making it look better than it really is.

I agree.  My point about new gold being inflation was in reference to a gold standard system.  On a fiat system such as ours, it is much to easy to print money, hence we have seen far too much inflation in the years since it was introduced.

I am reading The Panic of 1907.  It is a little intense on the side of financial jargon....but I am going to plow through it.  The more I read the more it seems to me that we should not/could not go back to the gold standard.  Apparently no one else in the trading world is on the gold standard; plus, I have read that there is not enough gold in the world to back the money in circulation.  So it seems to me that this whole area just takes away from time and effort that could be spent working on making what we have better.  But again I am certainly not even a novice economist or financial expert.  So all my arguments/comments are moot anyway.    But I have increased my knowledge about some things, and raised more questions about others. 

I was recently informed that there was a discussion going on about the "Fed", from my sister. In my high-school years I did a couple presentations on the institution, coupled with a nominal amount of research into its origins, history, and proposed goals. For the sake of being candid, I've always been critical of the Fed, ever since I knew it existed and had a grasp on what it is. That being said, my views and opinions of it have evolved somewhat since the time I became aware of it. I think this is partly do to the fact that, since then, I have had the chance to do more research and, more importantly, a great deal of thinking about economics. The conclusion that I have come to, and I think most should come to, is that modern economics are complex, almost to an irreducible amount under present economic circumstances; there is no way to reduce modern economics into a short epitaph or even a general thesis. We live in a world where information has taken the role of an enemy as well as a friend. The wealth of information available makes you believe that economic truth is possible, but I think such is presumptuous. Modern economics, especially in the area of finance, is a practical application of butterfly theory; every transaction and circumstance has a, theoretically, calculable affect on the whole system, which is more and more a global system. I think all this serves as a disclaimer to the fact that modern economics, in all its mathematical beauty, is about as predictable as whether it will rain tomorrow; sometimes, instead of turning on the tv to see what the weather man says, its better to just ask the simple question, Is it rainy season?

If a critical and open eye is directed at the origin of the Federal Reserve, which I won't delve into here, I believe, it will fast become obvious that it's professed goals have never had much to do with its actual goals. The Fed has always been under indirect influence and often direct control by big business, or more recently, big finance, and the same is only becoming more obvious everyday. It's goals have always centered on the desires of big business and finance because it can benefit both, and, in fact, benefits itself by being so philanthropic. Of course, these are very generalized statements that deserve more history to back them up, but unfortunately I simply don't have the time to do so, but, in our present time, one need only to turn on the tv to see that such is the truth today, and it follows, in my mind, that such has always been true. Of course, this only addresses the Fed in practice and not in theory.

The idea that the Fed can protect economic stability is not totally refuted by the fact that it hasn't, but neither is evolution totally refuted because it hasn't yet found the missing link. The idea that the Fed has kept us from a depression is like saying that a loan has saved you from having to pay your bills. The truth is the Fed has created a depression in both a direct and indirect sense. The one most detestable and deplorable trait of the Federal Reserve is that it gives government the power of deferment. The Fed allows the government to spend the incomes of future citizens, which is what our national debt represents in a large part, and in this destroys any real democracy, not only for the future but also for today. Huge international wars can be fought and have been fought with little, immediate change in taxes to the average citizen, but rather over time in terms of the loss in buying power, due to increased inflation. Leaders can and have made enormously untimely and poor decisions with little to no backlash from the populous because the people have been striped of their one great check on the government, the power of the purse. In essence, the Fed has turned our nation into a global ponzy scheme. In this most dire sense, the Fed has created a depression, or rather has never allowed us to suffer the whole effects of the Great Depression, but has simply compounded and deferred them further into the future. We may be in the that moment now when we no longer can defer our rashness; we may not be able to spend our way out of the inevitable once again.

Of course, the second great fallacy of the Fed is the power that it gives to banks and finance, in general, to become "too big to fail". The game is bailout, and it's not an invention of the the last 6 months. Huge risks are taken, huge profits are often made by a very select group, the risks are over-extended, the institution fails, but it "can't fail", the Fed guarantees the money, prints a few more bills or billions, and the game keeps going. A bank, at this moment has to have almost nothing in real assets to lend money because it always has the Fed to fall back on. In this sense, the Fed is one of the most successful socialistic institutions in practice, the only difference being it's a socialistic institution for the rich and not the poor. But the banks need to lend right? If they didn't lend the economy would collapse? Yes and no. The present system certainly would collapse and is collapsing. But the question we need to ask here is why will it collapse? For the rich or large corporation, not having access to loans means "tucking in the belt" and taking a little less risk for profits, for the average person not getting refinanced means ruin. The reason for this is that the rich always have real assets to fall back on, the average citizens not only don't own much of anything but sometimes have more in debt then in what they actually own. This is not some magical phenomenon but rather a very simple statistic. The fact of the matter is that since 1970 real wages for American workers have stagnated and sometimes dropped below what real wages were in the 70s, while corporate profits have gone through the roof in many cases. I believe this is the cause of the various bubbles that we've seen in the recent history since 1970 and provided the ground work for the consequent collapse of finance. In the 70s executives found that Americans would work for less and less, and such was necessary to keep up with the rest of the Western world, so while corporate and executive profits continued to sore, the average worker was finding it harder and harder to buy that brand new car or house, which he used to make, but now only designs. The obvious solution is lend those huge profits back to the worker, and that's exactly what was done. We now live in the most inegalitarian society in the world and likely fast becoming one of the most unpropertied as well, at least if you take property to mean things you actually own. The grand question is, how can you have a populous that continues to buy the newest things at ever higher prices while he doesn't own the last one yet because his wages are too low to pay for it? Eventually everyone has a house and a car, one they don't own and aren't about to leverage against for another. Can you expect those people to continue to buy more!? for "the sake of the economy". At some point you realize that doing things "for the economy" is the opposite of doing something for yourself (like paying off a loan), but rather continuing to profit those who actually own stuff at the top. 

The deeper question though, and my final point is, why do you think the Fed is sold to the people as a "stabilizer" to the economy unless people saw that the economy needed stabilizing. The grim fact to any investor remains in our system, that the higher your potential profits, the higher your risks. We have lived in a country and a society where enormous profits are possible, but certainly only because enormous risks are possible, and the more risk the more instability. The Fed has been a stabilizer, it has given a few large firms, corporations, and individuals, power to make huge profits without risks to themselves, only risk to the average man. The Fed tried to stabilize a system that is inherently unstable and inegalitarian, namely, monopolistic capitalism, which is to say, capitalism in its necessary last stages before a new system is formed. Switching to a gold standard would obviously be deflationary. Even if we had 90 billion in gold somewhere, think about what 90 billion can buy if we have a 3 trillion dollar budget this year. The gold standard would mean the destruction of our present way of life, namely, a step closer to reality than we've lived in a long time. But that said, I cannot stomach the assertion of a laisse faire capitalist, that it would fix all our problems. "In conditions of perfect liberty markets will create perfect equality", a rough quotation from The Wealth of Nations. To have perfect liberty you must have perfectly informed and intelligent people, in essence perfect competition is the only thing that will make capitalism perfectly egalitarian, but without it, capitalism, be it quickly or slowly, degenerates into the enemy of liberty and democracy (and quite literally itself as well, if you think that capitalism is egalitarian). When looked at from an objective point of view, our present economic melt down really just comes down to a few people doing what was in their best interest at the time. To say, if we only got rid of the regulator that the market would do its thing, is simply crazy. All capitalists are simply regulators trying to get the system to lean in their favor; in a system such as this, monopoly and thus a servile state will certainly follow. The only way to create a truly egalitarian socioeconomic situation is to reverse the assertion of capitalism, not, "what's best for me is best for everyone", but rather, what's best for everyone is best for me. This is the first step towards sanity.

Note:

I think it should be said here that the immediately above statement may be interpreted to mean that I think everyone should be the same, thus that some kind of socialistic theory is the natural way to equality. While I can see how this could be presumed I hope I can make it clear that, while I have been a socialist (for about a week I think) I have since given up socialism, first, for its denial of private property which, to me, seems an obvious fact of life, and secondly, because of its similarity to capitalism, at least in the state socialism area of thought. The most extreme application of my assertion above would be that everyone should be the same, but I hope it can be seen that the most extreme application of the basic assertion of capitalism is narcissism, which we have come far closer to in the present society than most would like to admit. Capitalism is powerless without individualism. Rather what I mean is that the focus of society and economic dynamics should be put on community, community banking, cooperatives, localism, and most importantly a system whose basic structure promotes a wider distribution of private property, the principles of solidarity and subsidiarity, and worker's ownership of the means of production (the one great truism of socialist thought).