hustler

iTrader: (6)

I wonder if this issue will get enough attention for the public to hold a gun to the media's head and make them report it? Ron Paul is really in a pinch because he doesn't pander to NBC or Fox, doesn't pander to GE and Newscorp, the DNC doesn't like him because he doesn't like entitlements, RNC doesn't like him because he supports a strong military and resists the "next Iran-Contra", and wants to shrink every program to a reasonable level.

I like his ideas as much as the next guy and if he continues to shut up about the gold-standard (flawed logic) and legalizing drugs (great logic), he has a chance at the GOP nomination. If Bachman keeps talking she'll effective behead her campaign and the Tea Party can support him as most philosophically parallel candidate.

hustler

iTrader: (6)

BTW, I pray to Satan (Lord and Master, behold his darkness) for a proper Lincoln-Douglas debate.

mgeoffriau

iTrader: (7)

Why don't you like gold-standard currency? It's no panacea, but I'd prefer it to a fiat currency that allows our government to inflate the money supply whenever we need another "stimulus."

sjmarcy

Are there many TV segments detailing, examining, and looking into the Pro-Obama bias shown by the media over time?

viperormiata

iTrader: (24)

You clearly have internet access. Look it up.

hustler

iTrader: (6)

The gold standard is supposed to "hedge" against inflation by requiring that the value of money in circulation be "backed" by an equal value of gold. The problem is that as the economy grows - even Ron Paul would agree that the size of the M1 money supply today SHOULD be larger today than it was 200 years ago based on the value of the economy - the money supply has to keep up with that growth. If the gold exists to continue printing, then whether we are on the gold standard or not doesn't matter b/c we wouldn't have "passed" the "limit" imposed by the standard even if the standard had been in play. If the gold does not exist to permit more money printing, we either go dig it up or re-value the existing gold. Either way you're increasing the M1 supply of currency. If you don't do anything at all, that ***** with economic growth in general.

Beyond all that, why is gold actually worth anything? My boogers are a rare commodity. Nobody thinks they're worth much though. Pandas are hard to come by... they're valuable... why not peg currency to the panda population? The trees in most national parks are protects, their supply is predictable and fixed, why not peg a currency to the trees in Yellowstone? "Gold is different!" Eh, not really. It's a mineral we dig up and seem to like a lot. We *assign* it value just as we do everything else. The value of gold is backed up by faith every bit as much as the value of a dollar. The second people decide to stop taking gold as a form of collateral, or the second people fear a massive gold discovery will cause its value to plummet, gold loses its value. Funny... that's the very quality of paper money that the gold standard aims to solve.

There are plenty of other reasons to think the gold standard obsession is anywhere from silly and pointless to an economic nightmare, and a quick Google search should kick some of that up. There's a reason the economic folks aren't clamouring to rush into the gold standard.

Peace out.

Eat chesse.

Braineack

iTrader: (62)

i love cheese. not the goat variety.

Joe Perez

iTrader: (8)

I've long been bothered by the fact that we place such value in Gold as well. Where does this value come from, apart from the collective hallucination which we all share concerning its supposed worth?

Gold is nearly worthless from a practical standpoint. You can't make gun barrels from it, or use it as a building material, or fashion tools from it, or make bearings or other machine parts out of it. Its value as a dental filling has been superseded by synthetic compounds. It's a good heat-sink, though copper is better. It is one of the denser metals out there, so it would be useful for ballasting ships and making cannonballs, but lead is nearly as dense and far easier to cast.


The reality of the situation is that gold is really no different from any present-day fiat money. Neither has any "real" value except insofar as that we all agree to treat it as though it has value.


I also like cheese. The stinkier the better.

JasonC SBB

Hustler,

Gold historically became the most popular form of money, *not* because of some gov't enforced standard, but because it won out in the marketplace. People voting with their wallets. People liked using gold as money. Nobody will want to use your boogers. Governments later wanted a piece of the action and enforced a "standard" - e.g. coins with emperors faces on them.

Also, the more fundamental position isn't a "gold standard", but to have a free market in currencies. (Which gold has won in popularity, in millenia past). IOW gov't doesn't grant a monopoly on any bank (today it's the Federal Reserve).

The reason for suggesting a gold standard is as a check on central bank money creation / inflation.

Check out this chart



Notice the more rapid inflation after 1971 when Nixon said "nobody can now demand gold in exchange for US dollars". Between 1946 (after WW2) and 1971, there was a pseudo gold standard aka the Bretton Woods agreement. That's why there was still inflation between 1913 and 1971. Before 1913 there was free coinage, (different companies could mint coins), and prices *dropped* while wages *rose*. Think about how cool it would be if everything dropped in prices like PC memory, LCD TV's, and miata BBK's.

You can go into waaaay more detail on the history and the mechanics. If you're interested I can give you links to free books on the topic.

JasonC SBB

Gold like anything else is valued by the marketplace. Supply and demand. Today it is not money (to the avg Joe). It's a commodity. Note that central banks buy it because they know it's a good commodity to keep; and between them, it's money.

When a currency is accepted widely in an economy, it is the economy itself that "stabilizes" said currency, in the short term, within said economy. This is why prices in USD of goods, say Starbucks coffee, don't fluctuate rapidly. However, because the central bank pretty much continuously over time, inflates the money supply, we have the 2-3% price inflation every year, which, over the decades, results in the USD being worth ~$0.18 today of what it was in 1913 (creation of the Federal Reserve).

Central banks and goverments are symbiotic. The former gives the latter a blank check via money created out of nothing, to fund its warfare and its welfare. The latter then pay the former perpetual interest, from taxation. Thus central banking enables big gov't. It's a neat arrangement, but it's parasitic on the middle class, who pay the stealth tax, the inflation tax. Additionally the central bank is the legal enforcement arm with the power to bail out, with future tax earnings, the largest over-leveraged financial institutions when the free market is about to kill them.

And, the system of monopoly debt-fiat money creation and fractional reserve banking is inherently unstable, leading to the boom bust cycle. Debt-fiat money means new money is created out of nothing when it is loaned out, and vice versa.

Here's a physicists' paper, showing that a model of the debt-fiat system is unstable:
http://www.google.com/url?sa=t&sourc...XqzuiXxZVFSEEg

mgeoffriau

iTrader: (7)

I'm not sure how in favor of the gold standard I am -- still reading and working through the issue.

But with regard to the objection that a huge gold strike or increase in supply would have the same effect as government-created money printing, I'm not sure that's true -- the amount of gold that currently exists means that for a given "strike" to noticeably increase the supply, it'd be something several orders of magnitude beyond anything found so far.

Additionally, the entire process of mining gold is a self-checking system -- if more gold is found, then naturally the purchasing power of gold goes down. If the value of gold goes down (but the cost of mining it remains the same), then less gold will be mined. Similarly, in a deflationary period, the relative value of gold will go up, meaning there is greater incentive to mine gold and increase the money supply.

hustler

iTrader: (6)

I think the point has been missed. Until the people on the int3rw3bs learn to read what one poster has said and then respond to what the poster has said, topic threads will continue to be two idiots yelling at the wall between them. I did not say that gold is a bad currency. I said gold's value - just like any other commodity - is only intrinsic insofar as people are willing to accept that commodity as a form of currency. The second they aren't, it's value is just as extrinsic as a greenback's. Just because TODAY people would accept gold as a form of payment does not negate the fact that it's value ONLY stems from that willingness to accept gold as a form of payment.

The inflation argument turns on the INTRINSIC value of gold. A gold standard does **** to curb inflation if the value of gold is EXTRINSIC. My argument about boogers and polar bears might have seemed silly, but it highlights how intrinsic values aren't actually intrinsic. Again, the "intrinsic" value of gold only holds if it is an accepted form of currency. The point about a gold rush had nothing to do with a gold standard breeding inflation. Rather, it had to do with illustrating why the value of gold is every bit as "assigned" as the value of a dollar. (The fact that you all have talked about the market determining the value of gold speaks to the value of gold being extrinsic and not intrinsic. If a market determines value, that value can't be intrinsic because external forces are determining the value.) But guess what, that makes the value EXtrinsic. And because the value is extrinsic, gold standards only hedge inflation if we don't change the value of gold.

The bit about the size of the economy growing was a separate issue. The economy is "too big" for the existing supply of gold. We would have to devalue gold to be able to print enough money for the size of the economy. But if we're devaluing gold just to print more currency, that defeats the purpose of pegging the dollar to gold. This is simple.

That chart is super cool. One super cool thing it shows is that there have been fewer recessions since 1971. Some idiots called PhDs (in economics) think that with a gold standard it's nearly impossible to use monetary policy to get out of a recession, which in general makes it difficult to get out of a recession. They also think that gold standards curb spending which makes it difficult for the economy to grow, and difficult to get out of a recession. Weird.

That chart is also descriptive. It shows what happened. It doesn't say that some inflation is a sign of a healthy economy... bananas. A certain Asian country that targeted NO inflation seriously fucked up their economy. I'm sure you know which country I'm talking about since you seem to know all about how the economy works sugar lips.

That chart also doesn't say that we went off "the gold standard" in 1971. It doesn't say that, because we didn't. But it's super cool that you think we did. We went off Bretton Woods in 1971... but the BW "gold standard" isn't the same "gold standard" as what is commonly referred to as "the gold standard". But you knew that, right?

Okay, so let's all play a fun little game. I like to call it, "Read something a politician, pundit, editorial columnist, activist, or blogger did NOT write about the gold standard." It's a fun game, and it's amazing what you can learn if you read about the economy as writted by... ******* **** A GODDAMN ECONOMIST!

My ***** are sweaty from all this insanity.
bye bye darlings
xoxo

Braineack

iTrader: (62)

I like reading ecomonists that say a fake alien invasion that causes a massive arms build up, would save the economy.

sjmarcy

It would also require different countries to cooperate very closely…which would make a power grab easier.

mgeoffriau

iTrader: (7)

Cool argument, bro. Should we bother comparing the historical stability of gold vs. fiat currencies, or can we just agree that while neither gold nor fiat currency offers absolute security and stability, one of them has vastly outperformed the other?

This whole section is fail. All of your arguments presuppose the idea that government ought to be doing things like setting interest rates, controlling monetary supply, targeting inflation rates, and so on.

Let's play a different game, in which you stop pretending that:

1. You are the only one who has ever read an economist,
2. All economists are in agreement with you.

Normally when one forgoes valid argumentation and offers an appeal-to-authority, one also supplies the name and credentials of the supposed authority.

Joe Perez

iTrader: (8)

How about a more pragmatic question:

Given that 100% of the world's major economies are now, and have been for some time, based upon a fiat-currency standard, discuss the practical issues which would surround any single nation's dissolution of the fiat-currency policy and the re-implementation of a commodity-based monetary standard, such as the "gold standard."

Consider the ways in which the relative instability of the value of gold (as compared to fiat currency) would affect trade balances, foreign debts and credits, etc. between a gold-based nation and fiat-based nations.

Give special attention to the consequences to both consumers and retail businesses (eg: car dealers and car buyers) in the gold-based nation of rapid fluctuations in the value of gold relative to the retail price of imported consumer goods. Compare and contrast this to the effects on export-based businesses (eg: technology companies, US-based carmakers, etc) as their ability to do business abroad fluctuates inversely to that of import-based businesses.

Scrappy Jack

iTrader: (2)

If you guys want to do some more heavy lifting on monetary theory:
A "concise" guide to MMT.

This is a link; not an endorsement.

JasonC SBB

hustler,

as mgeoffriau alluded to, you need to take a step back and question some common assumptions:

- why should gov't have, or grant a, legal monopoly on, or otherwise "control", currency?
- why should there be a monopoly central bank?
- what would currencies or the economy look like in the absence of said currency or central banking monopolies?

I will type more later.

JasonC SBB

Joe,

Read what I wrote above about economies "stabilizing" short-term fluctuations in currency.
The recent (decade) rapid rise in the price of gold is not a reason to not use gold for backing currency. Gold is not money (except between central banks) that's why it has fluctuated. But that doesn't mean it's not good for backing currency if a "standard" is enacted. More later. Off to seam welding!

Joe Perez

iTrader: (8)

1: Stability.
2: Standardization. (All bills / coins work in all vending machines, parking meters, etc.)
3: Efficiency and low overhead. (No need to memorize and constantly update twenty different exchange rates, have twenty different sets of drawers in point-of-sale registers, etc.)
4: Guaranteed exchangeability. (Without a central bank, businesses in Area A might choose not to accept a currency which is popular in Area B, etc.)

See above answers.

The currency would resemble the state of affairs in early America, where various territories all used different currencies, the collapse of specific currencies relative to others was not uncommon, and interstate commerce didn't really exist.

The economy would resemble that of pre-Eurozone Europe, in which commerce between the various states was much more cumbersome and restrictive than it is today, and a de-facto tax on all interstate commerce (which benefited only the banks) existed in the form of currency-conversion fees.