Learning from Europe while it is , in effect, on a gold standard

[expat_panama]

...I fail to see how a gold price fixed by the government is fundamentally different than fiat... ...I don't see why people think that's a good thing. If you were to have a gold *BASED* currency, i.e. a specific amount of gold alloyed in coin or a specific amount of gold (10 grains) printed on a certificate than that would be a different story...

Yet in spite of all our failings and our inability to see things somehow we still prosper --if that ain't great I don't know what is!

All publicly recognized money is established by fiat (AKA 'fiat money'). Whether our coin of the realm is regulated by congress's Fed, by some arbitrary finite amount of gold, or by the total amount of gold that's ever been mined (which doubles every 40 years), we'll still have most money being created in banks where money deposits are loaned out on collateral.

 

[samjones]

All publicly recognized money is established by fiat (AKA 'fiat money').

Pennies and nickles do pretty good. The base metals contained therein have always resembled the value printed on the front of the coin.

In fact, the penny is a brilliant thing. Those with a gold fetish insist that gold has intrinsic value, but I really fail to see it.

The value for ornamentation really has more to do with the fast that it can be so finely sculpted and the value that goes into those $375 earrings that you bought for your girlfriend who became your wife really has more to do with the labor than with the gold contained therein. Take 'em down to the pawn shop and you'll see what I mean.

The value for industrial uses is negligible. There is a long list of semiconductivity applications for which "only gold will do" until gold is selling at $1800 per ounce then that list gets alot shorter... Drive around Redwood City with a tonne of gold in the bed of your pickup and see if any companies can take it off your hands. They don't need it. Drive around with a ton of copper - you should be able to find someone who will take if off your hands in no time flat.

If the supply of gold increased by a few orders of magnitude and price of gold plunged - I mean really plunged (not going to happen) I would predict that it would take a decade for American industry to figure out what to do about it.

We like copper. It works. We're all using it to read and reply to these posts right now. I think that we would likely yawn at gold cabling. We're all thinking fiber and radiation anyway.

 

[EdwardBaiamonte]

It's not true that Stalin was particularly "liberal" in any sense of the word.

In many of your posts you seem to be either badly misinformed or badly misinforming.

actually it was our liberals who spied for Stalin and gave him the bomb! Rosenberg was code named " liberal" by his Soviet handlers. Oleg Klugian said he " looked among the liberals" when he needed now recruits. Alger hiss was a liberal spy. Bernie Sanders is an open liberal socialist. BO is a liberal beloved by the communists. His mother married 2 communists. BO is beloved by the CPUSA. Are you getting it now?

Norman Thomas quotes:
The American people will never knowingly adopt Socialism. But under the name of 'liberalism' they will adopt every fragment of the Socialist program, until one day America will be a Socialist nation, without knowing how it happened.

 

[EdwardBaiamonte]

I fail to see how a gold price fixed by the government is fundamentally different than fiat.

childs play! When we accept a gold standard we accept a stable currency and stable economic growth because gold is stable. When we accept a fiat standard we accept liberals who will make ignorant guesses about how much money to print and who have a tendency toward liberal meglomania such that they will imagine they can create growth, employment, prosperity and reward their friends merely by printing paper money.

 

[samjones]

BO is a liberal beloved by the communists. His mother married 2 communists. BO is beloved by the CPUSA. Are you getting it now?

BO was primarily raised by European theater WWII vet. I doubt he was a big fan of the Communists. Whatever his mother's political leanings, I don't think it would be fair to say that they represented the political leanings of of the Dunham family as a whole - indeed, it's absurd to think of the Dunham's as a family who had political leanings. They weren't the Kennedys or the Rockefellers or the Bushes. Likely some felt one way, others felt another.

Saying that communists love BO would make about as much sense as saying Nazi Skinheads loved George Bush (either of them). Would it be true? Maybe. Does it matter? No.

Even to criticize BO in the way that you do seems to make no sense. Is he ineffective? Perhaps - criticize him for being so. Has his response to the economic crisis of '08 been fundamentally different than his predecessor? I would argue not really.

 

[samjones]

I fail to see how a gold price fixed by the government is fundamentally different than fiat.

childs play! When we accept a gold standard we accept a stable currency and stable economic growth because gold is stable.

Only if you maintain the delusion that the US Government is capable of maintaining a specific fixed price for gold. They're not.

Bottom line - gold is volatile

 

[EdwardBaiamonte]

I fail to see how a gold price fixed by the government is fundamentally different than fiat.

childs play! When we accept a gold standard we accept a stable currency and stable economic growth because gold is stable.

Only if you maintain the delusion that the US Government is capable of maintaining a specific fixed price for gold. They're not.

Bottom line - gold is volatile

please re read for comprehension. I said it is fundamentally different once you "accept" a gold standard. Getting it now??

 

[EdwardBaiamonte]

BO was primarily raised by European theater WWII vet. I doubt he was a big fan of the Communists.

Obama said, in his biography, he gravitated to Marxist professors in college, he had a Marxist preacher best friend for 20 years, said in his auto biography that when he worked on Wall Street he felt as if "he had parachuted behind enemy lines", was more liberal in the Senate the Bernie Sanders( an open socialist) and now, despite 200 years of gov't growth, his deficits will be bigger than all other American presidents combined, and, he also wants perhaps absolute control over health care (already mostly controlled by gov't), banking, and the auto industry.

Through Frank Marshall Davis,( Communist Party number: 47544) Obama had an admitted deep and prolonged relationship with someone who was publicly identified as a member of the Communist Party USA (CPUSA). The record shows that Obama was in Hawaii from 1971-1979, where, at some point in time, he developed a close relationship, almost like a son, with Davis, listening to his "poetry" and getting advice on his career path.
But Obama, in his book, Dreams From My Father, refers to him repeatedly as just "Frank."


Bernie Saunders is a Democrat and an open socialist. Obama is to the left of Saunders based on his voting record in the Senate.

Oleg Klugian (head of KGB in cold war) said that when he wanted to recruit spies he looked among the liberals. When FDR's liberals went to the USSR they came back on a ship named the "Leviathan" to report, "they had seen the future and it worked."

Then of course BO appointed at least 4 communists: Mark Lloyd (supporter of communist revolution in Venezuela) and Van Jones who said "give them the wealth, give them the wealth," and Annita Dunn who said, "Mao is my favorite philosopher" , and Bloom who said, "free markets are nonsense."

Obama: the Constitution is a charter of negative liberties....... it doesn’t say what the federal government [our genius founders forgot?] or the state government must do on your behalf.

I think that there was a tendency to lose track of the political and community organizing and activities on the ground that are able to put together the actual coalitions of power through which you bring about redistributive [Marxist] change.

Obama: "I think we can say that the Constitution reflected an enormous blind spot in this culture that carries on until this day, and that the Framers had that same blind spot."

Obama: the Constitution is a charter of negative liberties....... it doesn't say what the federal government [our genius founders forgot?] or the state government must do on your behalf.

In an article titled "The Impossible is Now Possible: Assessing the Obama Presidency," executive vice chair of the Communist Party United States, Jarvis Tyner hailed the President's "drive to the left." "The health care bill, the stimulus package, the cap-and-trade bill, the elimination of secret elections for union representation-it's a program we dared not dream possible only a year ago," Tyner wrote. "But now it's on the verge of becoming the new blueprint for a truly socialist America."

A quick visit to the CPUSA website yields:

"In some ways last night's State of the Union address by President Obama was a virtuoso performance. There were stirring moments, memorable turns of phrase, humor, a defense of activist government, and proposals that will be welcomed, and surely help, millions of people in need." Obama State of the Union: He got the ball rolling » cpusa


And, if all that is not enough BO wrote a book called " Dreams From my Father". His father was a drunken suicidal Marxist who dreamed to free the world from American imperialism. His mother married 2 communists and urged BO to follow is communist bio dad.


And lets not forget that BO is openly for single payer socialist health care!!

 

[samjones]

childs play! When we accept a gold standard we accept a stable currency and stable economic growth because gold is stable.

Only if you maintain the delusion that the US Government is capable of maintaining a specific fixed price for gold. They're not.

Bottom line - gold is volatile

please re read for comprehension. I said it is fundamentally different once you "accept" a gold standard. Getting it now??

I am getting it. You are not. You think that gold is pixie dust and if we all just believe then it will make everything alright.

"Fiat" (feel free to look up the meaning of the word) currency requires that we trust that the government will maintain the inflation targets that they have either explicitly or implicitly committed to. A gold standard requires that we trust that the government will actually sell us that gold for $45.00 per ounce and won't renege either because they don't have the gold or because the gold is worth more than $45.00. Gold Standards have routinely failed in the United States. We'll see how fiat does - I would agree that it's way too early to tell.

 

[samjones]

And, if all that is not enough BO wrote a book called " Dreams From my Father". His father was a drunken suicidal Marxist who dreamed to free the world from American imperialism. His mother married 2 communists and urged BO to follow is communist bio dad.

None of this is responsive to my point that BO was mainly raised by a WWII European Theater combat vet who was likely not a big fan of the commies.

Besides that, the Dunham family is not an overtly political family. They cannot be seriously regarded as espousing a particular political philosophy.

Besides that, he was educated in his formative years in elite private American schools and so if you're going to blame someone for him being a communist, best to point the finger their way.

Besides that, single-payer health care isn't exactly a new idea here in the good old USA. It's pretty popular among Democrats and you can only imagine that any loyal Democratic President would give it a shot. You're blaming Obama for succeeding. That hardly makes it a gateway drug to Communism. Look on the bright side - gay marriage is still illegal. You can thank Obama for that.

 

[EdwardBaiamonte]

I am getting it. You are not. You think that gold is pixie dust and if we all just believe then it will make everything alright.

no we think gold exists in a very fixed quanitity and so if we accept it as the proportional basis of our currency, our currency will then exist in a very fixed quantity. This is a good thing!!

"Fiat" (feel free to look up the meaning of the word) currency requires that we trust that the government will maintain the inflation targets that they have either explicitly or implicitly committed to. A gold standard requires that we trust that the government will actually sell us that gold for $45.00 per ounce and won't renege either because they don't have the gold or because the gold is worth more than $45.00. Gold Standards have routinely failed in the United States.

thanks for making my point!!! they failed because we did not accept them for long.

We'll see how fiat does - I would agree that it's way too early to tell.

actually we've had the Depression already, Carter's inflation, and now the Great Recession. We know how it goes here and around the world! Its been in all the papers.

 

[expat_panama]

...Gold Standards have routinely failed in the United States. We'll see how fiat does...

Definition (from here):

fiat [ˈfaɪət -æt]
n
-- a legally binding command or decision entered on the court record (as if issued by a court or judge); "a friend in New Mexico said that the order caused no trouble out there"
decree, edict, rescript, order
act, enactment - a legal document codifying the result of deliberations of a committee or society or legislative body​

Gold money, Fed money, all money is so-called "fiat money".

 

[samjones]

actually we've had the Depression already, Carter's inflation, and now the Great Recession. We know how it goes here and around the world! Its been in all the papers.

When Nixon has to go off the gold standard for fear foreign governments would buy up all our gold at the below-market fixed rate we were willing to sell it at.... that's a failure of the currency.

When England sold all its gold to defend itself from Nazi aggression. That's a failure of the currency.

In this financial crisis of 2008 the fiat currency has so far shown to be incredibly robust.


I'm sure that you're going to insist that history will prove you right if only we wait long enough, but that's what every crackpot and doomsayer says.

 

[DSGE]

I am getting it. You are not. You think that gold is pixie dust and if we all just believe then it will make everything alright.

no we think gold exists in a very fixed quanitity and so if we accept it as the proportional basis of our currency, our currency will then exist in a very fixed quantity. This is a good thing!!

You know you can just fix the quantity of high powered money. There's no reason at all to tie it to gold. But still, fixing the monetary base only produces long run price stability, it creates extreme short run volatility.

 

[samjones]

fixing the monetary base only produces long run price stability

Fixing it to gold doesn't. "Price inflation" isn't some new concept that only started when Nixon took us off the gold standard.

 

[expat_panama]

...gold exists in a very fixed quanitity and so if we accept it as the proportional basis of our currency, our currency will then exist in a very fixed quantity. This is a good thing!!

You know you can just fix the quantity of high powered money. There's no reason at all to tie it to gold...

In the first place, the total amount of mined gold doubles every 40 years, but even if dollars were pegged to a limited amount of gold the money supply would still grow with the economy as gold dollars were created out of thin air in banks. We don't have to like it, we don't even have to understand it, but we do need to face the fact that this is how it is.

 

[Toro]

...gold exists in a very fixed quanitity and so if we accept it as the proportional basis of our currency, our currency will then exist in a very fixed quantity. This is a good thing!!

You know you can just fix the quantity of high powered money. There's no reason at all to tie it to gold...

In the first place, the total amount of mined gold doubles every 40 years, but even if dollars were pegged to a limited amount of gold the money supply would still grow with the economy as gold dollars were created out of thin air in banks. We don't have to like it, we don't even have to understand it, but we do need to face the fact that this is how it is.

The problem is that even if you are correct, the supply of gold does not rise with the demand for money in a timely fashion. Even if it is not in the long-term, in the short-term, the supply of gold is fixed, and may be incongruous with the needs of the economy at the moment.

 

[expat_panama]

...the total amount of mined gold doubles every 40 years, but even if dollars were pegged to a limited amount of gold the money supply would still grow with the economy as gold dollars were created out of thin air in banks...

...even if you are correct...

--about which, gold production or money creation?

Gold production stats are public record with say, usgs.gov and gold.org (here's a link to these and other sources). The fact that most money (whether it's gold or PCE pegged) is created in banks and has been for hundreds of years (more info available with these sources). That's nothing new, but what's amazing is how many people don't know it or don't want to know it.

 

[editec]

The gold stardard causes more problems than it solves.

DEFLATION is the boogieman of the GOLD STANDARD.

INFLATION is the boogieman of the FIAT MONEY SYSTEM.

But regardless of what system we use?

If the masters want to overspend and screw over the people, they'll find a way of doing it.

There is NO SYSTEM -- no political system and no economic system, either -- that can overcome the pernicious effect of BAD LEADERSHIP.

America has had some trmendously bad leadership for the last 50 years, folks.

 

[expat_panama]

...America has had some trmendously bad leadership for the last 50 years, folks.

50 years?

In 1962 we were on the brink of lobbing thermonuclear missiles over Cuba while falling into a war in southeast Asia. Intermarriage was illegal and blacks couldn't even vote in several states. Since then the American population has created and amassed an enormous material and intellectual fortune. Say what you want about the leaders Americans have hired, we've done extremely well.