Bring Back the 'Gold' Standard

[JW Frogen]

It is somewhat frustrating trying to discuss this issue with people who imagine that there are only two possible ways of doing things.

Not as frustrated as trying to discuss with a wife, who only knows one way of doing things.

Even more frustrating however is Socratic diolouge with a sea sponge. Believe me, I try this at work every day.

 

[editec]

Sophistry seldom effects the unsophisticated

That's like their superpower.

 

[sealybobo]

Part of the what caused the Great Depression and its bank runs was that more currency was printed up than there was specie to redeem it.

Where do you get that from? There was no run on gold that I am aware of. Also, if there was too much currency relative to gold, it is extremely unlikely that there would have been severe deflation as there was during the Depression. How do prices collapse when there is excess money in the system? Usually, that leads to inflation, not deflation.

Good question.

Dude mistakenly believes that the outcome of the crash was inflation.

Of course the outcome of the '29 crash was DEflation.

Gold bugs don't really understand money, what it is why it works or doesn't work, either.

They understand why inflation is a problem, but they cannot understand why DEflation is a problem.

We explain it to them every time this goofy notion comes up but they cannot understand it.

I often ask them how a gold standard economy would work in a growing economy and they pretend I didn't ask the question.

Typically they presume that since I think the gold standard is a bad idea, I must therefore think that the system we have now is good.

It is somewhat frustrating trying to discuss this issue with people who imagine that there are only two possible ways of doing things.

Dude doesn't understand a lot. You know I believe that the private bankers took over this country in 1913 when they bribed congress to let them have the Federal Reserve. I won't go into all the details, but I think this story sort of proves my point.

http://www.alternet.org/blogs/peek/106443/why_won't_the_federal_reserve_say_who_they_gave_$2_trillion_to/

**** the gold standard. Even if we just keep doing it like we do it now, why do we have private bankers managing our $?

If they had to go thru Congress, then fine. But they don't. They gave themselves $2 trillion dollars before ever asking us for $750 billion.

And where the **** are the tea baggers? Where is Dude's outrage? He can't get mad, because he defends private corporations without exception. He is Rush's parrot. He can only repeat what rush has taught him. And that's, "the government is the problem". Oh Rush taught him more sayings, like "socialism, free trade, fascism, liberal, etc", but he can not say private corporations are bad.

 

[Kevin_Kennedy]

Not true, it doesn't matter how much gold you have.

Of course it does. The less there is, the more dear it will be and the cost of using it will be higher, and vice-versa. Think of this in extremes - if there was only one pound of gold in the world, the cost of obtaining it would be astronomical whereas if gold were as abundant as sand, then its use as money would be worthless.

The cost of money is dependent on the supply and demand for money. If demand is too high relative to supply, the cost of money - the rate of interest - rises. In an economy in perfect equilibrium, interest rates should equate to the increase in output of the economy since the marginal cost of capital should equal the marginal return of capital, and the marginal return on capital should equal the growth rate in the economy. If the supply of money is constrained, i.e. the supply curve shifts upward, interest rates will rise above the equilibrium rate of the economy and economic growth will slow.

I don't think anyone would choose to use only a pound of gold to back the entire currency, but it would be possible.

As I've said before, you want the interest rate to be set by the market itself, not a central planner. You're very well read so I assume you're familiar with the Austrian theory of the business cycle.

 

[Oddball]

Good question.

Dude mistakenly believes that the outcome of the crash was inflation.

Of course the outcome of the '29 crash was DEflation.

Gold bugs don't really understand money, what it is why it works or doesn't work, either.

They understand why inflation is a problem, but they cannot understand why DEflation is a problem.

We explain it to them every time this goofy notion comes up but they cannot understand it.

I often ask them how a gold standard economy would work in a growing economy and they pretend I didn't ask the question.

Typically they presume that since I think the gold standard is a bad idea, I must therefore think that the system we have now is good.

It is somewhat frustrating trying to discuss this issue with people who imagine that there are only two possible ways of doing things.

I'm making no mistakes....And I understand the nature of money just fine, your haughty condescending attitude nonwithstanding.

Deflation comes as a product of a currency that was overinflated to begin with.

You can point to the skid marks on the highway all you want, they don't change that the cause of the crash was excessive speed and reckless driving.

 

[Hum Dinger]

First of all, gold and diamonds have been so highly valued, since the time of the caveman, simply because they can be used to make trinkets that girlies love. Those trinkets could be traded for what men truly value...

Secondly, according to the Romans, "A thing is worth what it will get". Which not only explains why diamonds and gold are so highly valued, but it also explains the true value of currency:

All the currency in the world is worth what it will get, which is exactly equal to all the goods that are produced. Nothing will ever change that.

Now, if we could only organize our economy such that all currency was sourced thru the people that do the productive work that makes physical items, we would finally have economic balance and truth.

But the thieves and slavers would never allow that.

 

[Oddball]

Now, if we could only organize our economy such that all currency was sourced thru the people that do the productive work that makes physical items, we would finally have economic balance and truth.

There was....It's called Article 1, Section 8.