Our banking system is based of Fractional banking. Fractional banking is just a fancy term for leveraged banking. Leverage banking means too much money in the system on the way up causing inflation and speculation and in turn, deflation and bankruptcy on the way down. Our current system is leveraged 10 to 1 , meaning wide swings due to the amount of leverage.

The Greenback system would have the government , not the privately owned and operated Federal Reserve create our currency. Debt based currrency creation currently is great for banks who can lend $10 for every dollar deposited and get leveraged interest but we can see how this has ravaged our economy at certain points in time.

The privately owned and operated Federal Reserve created 2 "busts" and the Great Depression in only 25 years of operation. In the last 30 years there have been several busts and booms that can be laid at the doorstep of the Fed either for inaction or contribution. We are now in the worst of those , the subprime crisis , which isn't just a subprime crisis, but a credit meltdown as the Fed protects its member banks while jeopardizing the entire economy.

A Publicly Owned and Opperated Central Bank along with government creation of money would slow this cycle of boom and bust to a much milder business cycle. We would have credit money instead of debt money ...

"...or is the critical issue how well the government manages the economy?"

The critical issue is THAT the government manages (or attempts to manage) the economy (through the mechanism of the Fed). The gold-standard does not imply that we must walk around with gold coins in our pockets. It just means that money has intrinsic value (which real money always does). The market would decide what it uses as money and what its price is (i.e. other commodities' relative trading ratios with respect to money). Gold just happens to be the one commodity (along with silver) that thousands of years of global trading has determined to be the best money. There is nothing sacred about it. It came about through millenia of trial and error.

The international money of choice MUST be a market decision. Nothing else works in the long run. And the market alone must determine interest rates - which is merely an expression of our unwillingness to save and invest. The more willing we are to save and invest, the lower the interest rate. In other words, if there is an oversupply of savers and investors (i.e. too much capital), the price that entrepreneurs are willing to pay for that capital (interest) goes down. Simple supply and demand. Natural market balance. Interest rates rigged low by the Fed creates the illusion of excess capital. Entrepreneurs suck up the new fake money, embark on new production and hiring, and so the "boom/bubble" begins. At some point the lack of real demand for all this new production causes the bubble to burst. This so-called business cycle is soley the result of Fed meddling. Then, to fix the problem, the Fed pumps in more money (oh.. now they're calling it "liquidity") and the cycle starts again. The secondary problem is that this inflation of the money supply erodes the value of savings, and makes it nearly impossible for the common man to plan for the future or create wealth for himself or his descendants. It also shortens the planning horizon for businesses, so that true growth and innovation are stifled.

Gold "pegs" the world's pricing structure (for everything) to gold (however indirectly) in a pyramid with gold at the top. This has a natural stabilizing effect that eliminates "business cycles" and inflation. It allows for very long business and personal planning time horizons - which in turn - allows for tremendous creativity and wealth creation at every level and in every nook and cranny of society.

Governments have no business meddling with money. Of course, without control of money, they have no real power. And that's the point. When governments control money, the elites get rich. When the people control their own money, the people get rich. Read Rothbard's "What Has Government Done To Our Money"

It's simply not debatable. To oppose the "gold standard" is to side with the elites and oppose the common people.

... but this sure is a fun learning experience, thinking through these issues. I got to wondering about the question of whether a gold standard favors "the elite" or "the people." It seems to me, a regular joe without much in the way of capital, that I've got two things I can use to better myself: labor, and credit. Let's say that "the elite" are folks who have option 3: enough capital to matter.

Now, under our present system, with the Fed mostly trying to control the economy by regulating credit, lots of the time I can get relatively easy credit. That can be a bad thing, as the recent housing bubble proves, but if I'm smart, I can use that credit to improve my situation without costing me or my creditors too much. I've also got my labor, which my employer values relative to several factors, including his need to preserve capital and his ability to get credit (not to mention the liquidity available to his customers.)

Under a gold standard, there's a fixed amount of currency in the world, which would seem to put the brakes on inflation. Can't devalue money if there ain't no more money, right? But it occurs to me that a lack of inflation wouldn't allow the value of my labor to increase, and in fact, my employer would be encouraged to devalue my labor as much as I'll stand in order to get more for himself - economics is all about self-interest, no?

That leaves credit as a means of advancement, and while it's not always available under a fiat system, and not always well-managed, I don't see how, with labor's valuation being flat, I'd be able to get any significant credit.

So, speaking as a regular joe, I fail to see how a gold standard helps anything except the stabilization of socio-economic status. Fine if you've got a little capital, but not so great if all you have is some money.