Paper money

[Doubletap]

"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

 

[natstew]

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!

 

[Doubletap]

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.

 

[bripat9643]

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!

FDR took us off the gold standard in 1933.

 

[Politico]

Ne he didn't. Nixon did. Pick up a damn book.

 

[Old Rocks]

Ne he didn't. Nixon did. Pick up a damn book.

Now that is asking entirely too much of Pattycake.

 

[Rshermr]

Ne he didn't. Nixon did. Pick up a damn book.

Why? Bripat can't read.

 

[Rshermr]

"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

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.

 

[eflatminor]

Ne he didn't. Nixon did. Pick up a damn book.

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.

 

[jasonnfree]

Ne he didn't. Nixon did. Pick up a damn book.

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.

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.

 

[eflatminor]

Ne he didn't. Nixon did. Pick up a damn book.

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.

Probably wasn't enough gold that could be mined fast enough.

I believe you're missing the concept of how sound money works. The entire world's supply of money could be based on a single ounce of gold...literally. The market would simply adjust the value of the gold based on supply and demand. As long as currency is based on something REAL (and gold is as good a basis as any), it matters not how the supply fluctuates over time.

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.

This sounds like you're lamenting inflation and how it has, over time, so negatively impacted the average working guy.

Couldn't agree with you more.

That problem we can lay at the feet of The Federal Reserve. In 1913, the Federal Reserve was created to stabilize gold and currency values. What they REALLY did was force inflation that should have never existed in the first place. The proof is in the pudding: From 1780 until 1913, the rate of inflation was flat. Some products/services saw inflation, others deflation. Point is, the market determined that, not central planners. From 1913 until today, inflation is up about 2500%. Now that's the most regressive tax of them all.

One might as why would the Fed force inflation? The answer is in the mindset of leaders like Wilson, FDR and those cut from that same bolt, which includes Ds and Rs, no doubt. Basically, the Fed allows Congress to enact entitlements and engage in warfare without having to pay for those expenditures beforehand or even spell out how they will be paid for eventually. Instead, they place the burden on the backs of those yet to be born through the Federal Reserve mechanism. It's quite the scam.

So, I agree with you that it's a shame the average guy has such a hard time these days affording what he used to. I hope you will join us in the calls to end the Fed and return to a sound monetary policy. Baby steps, at least.

 

[Doubletap]

In a free economy, where no man or group of men can use physical coercion against anyone, economic power can be achieved only by voluntary means: by the voluntary choice and agreement of all those who participate in the process of production and trade. In a free market, all prices, wages, and profits are determined—not by the arbitrary whim of the rich or of the poor, not by anyone’s “greed” or by anyone’s need—but by the law of supply and demand. The mechanism of a free market reflects and sums up all the economic choices and decisions made by all the participants. Men trade their goods or services by mutual consent to mutual advantage, according to their own independent, uncoerced judgment. A man can grow rich only if he is able to offer better values—better products or services, at a lower price—than others are able to offer.

Wealth, in a free market, is achieved by a free, general, “democratic” vote—by the sales and the purchases of every individual who takes part in the economic life of the country. Whenever you buy one product rather than another, you are voting for the success of some manufacturer. And, in this type of voting, every man votes only on those matters which he is qualified to judge: on his own preferences, interests, and needs. No one has the power to decide for others or to substitute his judgment for theirs; no one has the power to appoint himself “the voice of the public” and to leave the public voiceless and disfranchised.--Ayn Rand

 

[Rshermr]

In a free economy, where no man or group of men can use physical coercion against anyone, economic power can be achieved only by voluntary means: by the voluntary choice and agreement of all those who participate in the process of production and trade. In a free market, all prices, wages, and profits are determined—not by the arbitrary whim of the rich or of the poor, not by anyone’s “greed” or by anyone’s need—but by the law of supply and demand. The mechanism of a free market reflects and sums up all the economic choices and decisions made by all the participants. Men trade their goods or services by mutual consent to mutual advantage, according to their own independent, uncoerced judgment. A man can grow rich only if he is able to offer better values—better products or services, at a lower price—than others are able to offer.

Wealth, in a free market, is achieved by a free, general, “democratic” vote—by the sales and the purchases of every individual who takes part in the economic life of the country. Whenever you buy one product rather than another, you are voting for the success of some manufacturer. And, in this type of voting, every man votes only on those matters which he is qualified to judge: on his own preferences, interests, and needs. No one has the power to decide for others or to substitute his judgment for theirs; no one has the power to appoint himself “the voice of the public” and to leave the public voiceless and disfranchised.--Ayn Rand

So, what economics background did you think that ayn rand had?? She is simply another opinion maven, with no concept of economics at all. Proposing an economic system that never has nor never will work.
If you love her so much, perhaps you can name an actual Libertarian economy that exists in the world. Or do you simply love fantasy. I mean, really, most boys quit believing in Libertarianism by the time they reach puberty. Sorry about you.

 

[Norman]

Dual mandate of the FED: Stable prices and high employment.

Not exactly what happened.

 

[eflatminor]

In a free economy, where no man or group of men can use physical coercion against anyone, economic power can be achieved only by voluntary means: by the voluntary choice and agreement of all those who participate in the process of production and trade. In a free market, all prices, wages, and profits are determined—not by the arbitrary whim of the rich or of the poor, not by anyone’s “greed” or by anyone’s need—but by the law of supply and demand. The mechanism of a free market reflects and sums up all the economic choices and decisions made by all the participants. Men trade their goods or services by mutual consent to mutual advantage, according to their own independent, uncoerced judgment. A man can grow rich only if he is able to offer better values—better products or services, at a lower price—than others are able to offer.

Wealth, in a free market, is achieved by a free, general, “democratic” vote—by the sales and the purchases of every individual who takes part in the economic life of the country. Whenever you buy one product rather than another, you are voting for the success of some manufacturer. And, in this type of voting, every man votes only on those matters which he is qualified to judge: on his own preferences, interests, and needs. No one has the power to decide for others or to substitute his judgment for theirs; no one has the power to appoint himself “the voice of the public” and to leave the public voiceless and disfranchised.--Ayn Rand

So, what economics background did you think that ayn rand had?? She is simply another opinion maven, with no concept of economics at all. Proposing an economic system that never has nor never will work.

There are more than a few actual economists that would disagree with you, whose opinions mirror those of Rand. Friedman, Mises, Williams and plenty of others:

Category:Libertarian economists - Wikipedia, the free encyclopedia

So what economics background do you have?

If you love her so much, perhaps you can name an actual Libertarian economy that exists in the world.

As has been discussed here so many times before, everyone knows that there has never been a 100% pure libertarian economy anymore than there has been a perfect example of a socialist economy. We look at trends and examine results from economic and social experiments over time. There, we see that the American experience, especially prior to the Progressive era, most closely resembled that of free markets and free minds. It also happened to be a time during which more poor become middle class and more middle class become rich than at any time in human history, while the country came to dominate the world economically and socially, despite representing a tiny portion of the population. Even in today's economic malaise, countries that embrace economic freedom are thriving as the US heads down the path of central planning. It would appear we have not learn from past lessons. Ironically, you look to those central planners to fix the problems they've caused in the first place. Amazing.

Or do you simply love fantasy. I mean, really, most boys quit believing in Libertarianism by the time they reach puberty. Sorry about you.

An ad hominem attack does not help you case.

 

[william the wie]

Another way of looking at the same data is that high risk/high return vs. low risk/low return in the short run is vice versa in the long run in regards to risk but not return.

A low risk environment encourages excessive amounts of both structural and financial leverage as in the dotcom bubble and housing bubble. Minsky's take on the downside of stabilization policies such as the Fed has a lot of supporting data and no refutations worthy of the name.

 

[Moonglow]

The US govt also makes money in it's investments.

 

[Doubletap]

Ne he didn't. Nixon did. Pick up a damn book.

Now that is asking entirely too much of Pattycake.

It makes no difference to me WHO took us off the gold standard. Nixon or FDR.
That we should be on it is the important issue.
Bripat believes, correctly, that our money should be backed by something on concrete value.
And you?

 

[Bombur]

Do we have to take gold standard folks here seriously or can we just laugh and ignore them?

 

[Doubletap]

The US govt also makes money in it's investments.

How much did the gov. make on its subsidies (please don't call them "investments") to the auto, solar, farming, and financial companies?