Kurtosis - I remember that rationalization all the way back to at least Reagan, or even earlier. Like I said, it was supposed to force rollback of many 'great society' programs. Doesn't seem to have worked too well, though... Maybe borrowing constraints enforced by global deflationary recession will come to our rescue.
There used to be a conservative 'justification' for deficit spending, that said it could help entrench 'no new taxes' as an absolute requirement for winning office. Then, when debt payments came due, there would be no way out other than cutting spending, new taxes not being an option. A back door to roll back 'great society', if you will. It requires the electorate to hold the line, though.
[Contd.]...., other countries will be unlikely to back another dollar centric monetary system. Perhaps they will fail to reach any agreement, until they give up and fall back on gold. One can always hope....
Anyway, trying to sell this kind of thing to the voting masses come 2012 will likely require this crisis to be quite the Armageddon. Barring that, we may want to focus more realistically.
[Contd.] If govt remains such a huge player, convenience would likely make the currency they tax in very sticky. Another option is a Hail Mary conversion, which would make those who happen to own gold rich over night. Some see this as a problem. If our benevolent monetary overlords manage to really screw this crisis up and cause a violent swing from deflation to hyper inflation.....[Contd.]
Kurtosis - Actual convertibility would remove the need for interest rate manipulation to maintain a gold peg. The main problem then is the conversion itself. Competing currencies should eventually sort themselves out (likely in favor of gold), but would most likely require govt. (who would still use $) to play a much smaller role than they currently do. [Contd.]
Kurtosis - The rich and super rich to which wealth has shifted are overwhelmingly in the financial industry. It's an inevitable consequence of credit expansion / inflation, since financial institutions is where this new money is created. A dollar convertible to specie (gold) at a fixed rate would make for a generally deflationary environment, and hence prevent and reverse this trend.