Paper money

Discussion in 'Economy' started by Doubletap, Feb 21, 2014.

  1. Doubletap
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    Doubletap VIP Member

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    "The government has no source of revenue, except the taxes paid by the producers. To free itself—for a while—from the limits set by reality, the government initiates a credit con game on a scale which the private manipulator could not dream of. It borrows money from you today, which is to be repaid with money it will borrow from you tomorrow, which is to be repaid with money it will borrow from you day after tomorrow, and so on. This is known as “deficit financing.” It is made possible by the fact that the government cuts the connection between goods and money. It issues paper money, which is used as a claim check on actually existing goods—but that money is not backed by any goods, it is not backed by gold, it is backed by nothing. It is a promissory note issued to you in exchange for your goods, to be paid by you (in the form of taxes) out of your future production"
    -John Galt
     
  2. natstew
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    natstew Gold Member

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    Taxes? Taxes have become just another political tool to the Democrats. Borrowing and printing is the game now.
    I remember in the 70's when we went off the gold standard. I remember the strutting and preening in Congress over it, and I remember one Congressman bellowing out, "We have the biggest manufacturing industry in the World, let our manufacturing standard support our dollar".
    Well, now that advantage is gone.

    Members of Congress become multi millionairs in short time after taking office. They invest in things that won't fall with the dollar. They make sure their family is protected. The rest of us are just totally screwed unless we are invested in solid gold, silver, or other things that don't sink with the dollar.

    Being the World's trading currency is all that's floating the dollar now and that's very fragile. The U.S. must be very careful not to upset the wrong Dictators around the World to keep the dollar as the World Currency. We are the World's Bitch and most Americans don't know it. Washington surely isn't going to tell us.

    Maybe not in my lifetime, (70yrs old) but we are soooo screwed!
     
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    Last edited: Feb 21, 2014
  3. Doubletap
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    Doubletap VIP Member

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    Natstew,
    Agreed.
    I too am getting up in years and will probably be gone by the time our financial system collapses.
    Still, a shout out to all: Isn't it worth fighting for a rational monetary system backed by gold?
    So long as there is freedom of the spoken & written word there is always a chance to reverse the suicide course we are on.Spread the word. It's a fight that's noble & right.
     
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  4. bripat9643
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    bripat9643 Diamond Member

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    FDR took us off the gold standard in 1933.
     
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  5. Politico
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    Politico Gold Member

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    Ne he didn't. Nixon did. Pick up a damn book.
     
  6. Old Rocks
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    Old Rocks Diamond Member

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    Now that is asking entirely too much of Pattycake.
     
  7. Rshermr
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    Rshermr VIP Member

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    Why? Bripat can't read.
     
  8. Rshermr
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    Rshermr VIP Member

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    UH??? Ever heard of selling gov bonds?? The gov can produce more money at any point, me poor ignorant con tool. You need to take your head from your ass, go take a class in remedial reading, and check out what has been going on for the last century.
    By the way, you may want to know what actual thinking people know: John Galt is a FICTIONAL character. You are quoting from a movie script, me boy, written by a person with absolutely no understanding of economics. Jesus, you are a waste of space. Fictional character, dipshit. Get a grip.
     
  9. eflatminor
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    eflatminor Classical Liberal

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    Not exactly. It's more complex than that. Nixon dealt the final blow, but getting us off the gold standard absolutely started with FDR.

    A little history:

    In the mid-1800s, most countries wanted to standardize transactions in the booming world trade market. They adopted the gold standard, which guaranteed that any amount of paper money could be redeemed by the government for its value in gold.

    In 1861, U.S. Treasury Secretary Salmon Chase printed the first U.S. paper currency. The Gold Standard Act was passed in 1900. At this time, the value of all American currency was to be based on actual gold.

    In 1933, FDR disallowed the redemption of dollars for gold. This was the first major blow to the gold standard. After all, if paper money is to be based on a gold standard, that means nothing if one could no longer redeem dollars for gold.

    In 1934, the Gold Reserve Act prohibited private ownership of gold. It allowed the government to pay its debts in dollars, not gold. FDR was authorized to devalue the gold dollar by 40%. He increased the price of gold, which had been $20 per ounce for 100 years, to $35 per ounce. The government's gold reserves increased in valued from $4billion to $7.3. This effectively devalued the dollar by 60%.

    It is not unreasonable to say that FDR was the first to take us off the gold standard, because that is effectively, if not formally, exactly what he did.

    Then, in 1946, the Bretton Woods System was enacted. Under this agreement, central banks had to maintain fixed exchange rates between their currencies and the dollar. They did this by buying their own country's currency in foreign exchange markets if their currency became too low relative to the dollar. If it became too high, they'd print more of their currency and sell it.

    The formal end of the gold standard came in 1971. All formal links between major world currencies and actual commodities were broken with this change. On August 15, 1971, he changed the dollar/gold relationship to $38 per ounce. More importantly, the Fed stopped redeeming dollars with gold. The U.S. government repriced gold to $42 per ounce in 1973, and then decoupled the value of the dollar from gold altogether. The price of gold quickly shot up to $120 per ounce in the free market.

    That was the final nail in the coffin of sound money.
     
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  10. jasonnfree
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    jasonnfree Gold Member Supporting Member

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    Probably wasn't enough gold that could be mined fast enough. Things went along pretty well since FDR took office. Fought a war and built the suburbs afterward without a gold standard. The workers could afford to buy houses. Ordinary working class could even afford to go to college.
     
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    Last edited: Feb 22, 2014

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