Policy on Currency
When you think about it, having a stable currency is a basic human right. If you have $10,000 in banknotes, they should be worth just as much in ten years’ time as they are now, and not half as much. We will link the value of the Australian currency to the price of gold. We will introduce a right to sue the government for damages if the value of the currency falls.
Having a gold standard will not mean that the government will need to keep vaults full of gold bullion. It will not mean that you can go to the Reserve Bank, hand over some currency, and receive gold in exchange. Here is what it will mean. Suppose you have had $10,000 in your bank account for the last ten years. And suppose the price of gold in Australian currency is twice what it was ten years ago. Then you will have lost half your money, that is, $5,000 in currency ten years ago, or $10,000 in currency today. So you will be able to sue the Government for $10,000.
This will mean that the Australian Government will need to keep inflation under much tighter control. They will need to stop spending all the taxes they collect, and to throw away some of the money they collect in taxes, so that what money is left in the hands of the public will buy more than before.
At one time, one Australian cent was worth something. Due to inflation, one Australian cent is worth so little that the coins are worth more for scrap metal than for money. We need to make it so that one cent corresponds to about 20 cents in today’s terms. If we revalued our currency by twenty times, then one cent would be a useful amount of money, and $1 would correspond to $20 today. We could withdraw the existing money from circulation, and replace it with new coins and banknotes worth twenty times as much.
At the time of writing, gold is worth $1641.64 (Australian currency) for every troy ounce, or $52.78 for every gram. This suggests that we could make one Australian dollar worth a ½ gram of gold. This would mean every dollar of revalued currency would be worth about $26 of existing currency. Five cents Australian would be equivalent to one dollar American.
Exporters complain that, if the Australian currency is always increasing in value, this makes Australian exports less competitive. To get around this, we will fix the exchange rate between the Australian currency and the American currency most of the time, and it will be changed only every three months. This means the Australian Government will need to spend money to maintain the exchange rate. The Chinese Government does this, and are criticized by the Americans for it as giving the Chinese an unfair advantage, so it must be a good idea.