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

[EdwardBaiamonte]

You are correct - a gold standard does nothing to prevent a government from borrowing. It does practically nothing to prevent them from printing money and inflating their currency.

Of course Sam does not know what a gold standard is. If a bank prints excess money under a gold standard it comes back and
the bank goes bankrupt.

 

[DSGE]

I still don't understand what's with this gold fetishism. You can just freeze the monetary base. You can just say "you're not allowed to change the amount of currency + bank reserves. Ever". That has the advantage over the gold standard that prices also won't rise even if more gold gets discovered. It's also much easier to administer since you don't have to worry about issuing new currency when you get more gold or any of that shit. There is no reason for anybody to ever recommend a gold standard.

 

[EdwardBaiamonte]

I still don't understand what's with this gold fetishism. You can just freeze the monetary base. You can just say "you're not allowed to change the amount of currency + bank reserves. Ever".

you can say anything but a gold standard is actually doing it and represents a commitment to keep on doing it based on an understanding of money. Everybody can and does merely say they are against inflation.

That has the advantage over the gold standard that prices also won't rise even if more gold gets discovered.

trivial but good point

It's also much easier to administer since you don't have to worry about issuing new currency when you get more gold or any of that shit.

you obviously are BSing since you must know more gold does get discovered and so more currency must be issued , and, currency wears out so new currency must be issued, and, as the economy grows new currency must be issued to keep prices stable under a fiat standard.

There is no reason for anybody to ever recommend a gold standard.

exactly, unless you are worried about inflation, deflation, Depressions recessions, bubbles, debts, deficits and trade imbalances. The gold standard ends all those problems with its self correcting mechanisms, while the paper standard causes them all through liberal, socialist mercantilist mismanagement.

 

[DSGE]

I still don't understand what's with this gold fetishism. You can just freeze the monetary base. You can just say "you're not allowed to change the amount of currency + bank reserves. Ever".

you can say anything but a gold standard is actually doing it and represents a commitment to keep on doing it based on an understanding of money. Everybody can and does merely say they are against inflation.

What do you mean "you can say anything"? Do you mean "the Fed will say they're freezing the monetary base but illegally continue to print money?". Because the Fed can also "just say" they're on a gold standard and print lots of money and refuse to redeem dollars for gold. At the end of the day the Fed has to follow the law; and if the law is that the Fed must freeze the monetary base, than that's what the Fed will have to do.

It's also much easier to administer since you don't have to worry about issuing new currency when you get more gold or any of that shit.

you obviously are BSing since you must know more gold does get discovered and so more currency must be issued

What are you talking about? What I said was that the advantage of fixing the quantity of high powered money is that you don't have to do that.

currency wears out so new currency must be issued

Obviously. Old currency can be replaced. But the total quantity of base money will be fixed.

as the economy grows new currency must be issued to keep prices stable

Broader monetary aggregates still grow. So M0 will remain fixed, but M1 and M2 will increase endogenously to maintain stable prices.

There is no reason for anybody to ever recommend a gold standard.

exactly, unless you are worried about inflation, deflation, Depressions recessions, bubbles, debts, deficits and trade imbalances. The gold standard ends all those problems with its self correcting mechanisms, while the paper standard causes them all through liberal, socialist mercantilist mismanagement.

You seem to have missed the entire point of my post. The point is that fixing M0 does all that stuff but without the need to tie money to gold. Fixing M0 does everything good that a gold standard does but with none of the costs. There's no reason to ever talk about a gold standard since it's strictly better to just freeze M0.

 

[expat_panama]

...unless you are worried about inflation, deflation, Depressions recessions, bubbles, debts, deficits and trade imbalances. The gold standard ends all those problems with its self correcting mechanisms...

Huh, all nations have had these problems in one form or another throughout history. Please tell us if you've been imagining some other kind of gold standard that's never been used in the US, or by any other nation for that matter.

 

[EdwardBaiamonte]

Huh, all nations have had these problems in one form or another throughout history. Please tell us if you've been imagining some other kind of gold standard that's never been used in the US, or by any other nation for that matter.

yes, a true gold standard has been very rare in history. The US for example had a quasi gold standard until Nixon, never a real gold standard.

Even today when Ron Paul asks Bernanke why don't we have a gold standard Bernanke says, "we don't need one we operate the Fed as if it is on a gold standard." That is typical of liberal arrogance I'd say.

The liberal always has faith he can regulate capitalism and the money supply to get a better result. This faith is mostly from a low IQ that makes it impossible for them to understand how gold capitalism works

 

[DSGE]

Huh, all nations have had these problems in one form or another throughout history. Please tell us if you've been imagining some other kind of gold standard that's never been used in the US, or by any other nation for that matter.

yes, a true gold standard has been very rare in history. The US for example had a quasi gold standard until Nixon, never a real gold standard.

Even today when Ron Paul asks Bernanke why don't we have a gold standard Bernanke says, "we don't need one we operate the Fed as if it is on a gold standard." That is typical of liberal arrogance I'd say.

The liberal always has faith he can regulate capitalism and the money supply to get a better result. This faith is mostly from a low IQ that makes it impossible for them to understand how gold capitalism works

I seriously hope this shtick you're doing is a character. Because if any real person was this stupid and ignorant I'd be just shattered.

 

[EdwardBaiamonte]

I still don't understand what's with this gold fetishism. You can just freeze the monetary base. You can just say "you're not allowed to change the amount of currency + bank reserves. Ever".

you can say anything but a gold standard is actually doing it and represents a commitment to keep on doing it based on an understanding of money. Everybody can and does merely say they are against inflation.

What do you mean "you can say anything"? Do you mean "the Fed will say they're freezing the monetary base but illegally continue to print money?". Because the Fed can also "just say" they're on a gold standard and print lots of money and refuse to redeem dollars for gold. At the end of the day the Fed has to follow the law; and if the law is that the Fed must freeze the monetary base, than that's what the Fed will have to do.



What are you talking about? What I said was that the advantage of fixing the quantity of high powered money is that you don't have to do that.



Obviously. Old currency can be replaced. But the total quantity of base money will be fixed.



Broader monetary aggregates still grow. So M0 will remain fixed, but M1 and M2 will increase endogenously to maintain stable prices.

There is no reason for anybody to ever recommend a gold standard.

exactly, unless you are worried about inflation, deflation, Depressions recessions, bubbles, debts, deficits and trade imbalances. The gold standard ends all those problems with its self correcting mechanisms, while the paper standard causes them all through liberal, socialist mercantilist mismanagement.

You seem to have missed the entire point of my post. The point is that fixing M0 does all that stuff but without the need to tie money to gold. Fixing M0 does everything good that a gold standard does but with none of the costs. There's no reason to ever talk about a gold standard since it's strictly better to just freeze M0.

as I said, Bernanke says to Ron Paul he operates the Fed is if we are on a Gold standard. The problem is, its black liberal box that we don't know or trust based on its entire history of mangling our economy. Plus in a crisis the Fed comes under great political pressure to do many many things and to abandon its principles even if they were gold standard principles. Without knowing, it you are proposing the liberal status quo (more/better regulation), and in any case an irrelevant point that is not at issue in America. The issue is gold versus liberal status quo mercantilism.

 

[EdwardBaiamonte]

I seriously hope this shtick you're doing is a character. Because if any real person was this stupid and ignorant I'd be just shattered.

of course if stupid you would not be so afraid to point out your best example for the whole world to see rather than merely allude to its existence. Sorry.

 

[DSGE]

you can say anything but a gold standard is actually doing it and represents a commitment to keep on doing it based on an understanding of money. Everybody can and does merely say they are against inflation.

What do you mean "you can say anything"? Do you mean "the Fed will say they're freezing the monetary base but illegally continue to print money?". Because the Fed can also "just say" they're on a gold standard and print lots of money and refuse to redeem dollars for gold. At the end of the day the Fed has to follow the law; and if the law is that the Fed must freeze the monetary base, than that's what the Fed will have to do.



What are you talking about? What I said was that the advantage of fixing the quantity of high powered money is that you don't have to do that.



Obviously. Old currency can be replaced. But the total quantity of base money will be fixed.



Broader monetary aggregates still grow. So M0 will remain fixed, but M1 and M2 will increase endogenously to maintain stable prices.

exactly, unless you are worried about inflation, deflation, Depressions recessions, bubbles, debts, deficits and trade imbalances. The gold standard ends all those problems with its self correcting mechanisms, while the paper standard causes them all through liberal, socialist mercantilist mismanagement.

You seem to have missed the entire point of my post. The point is that fixing M0 does all that stuff but without the need to tie money to gold. Fixing M0 does everything good that a gold standard does but with none of the costs. There's no reason to ever talk about a gold standard since it's strictly better to just freeze M0.

as I said, Bernanke says to Ron Paul he operates the Fed is if we are on a Gold standard. The problem is, its black liberal box that we don't know or trust based on its entire history of mangling our economy. Plus in a crisis the Fed comes under great political pressure to do many many things and to abandon its principles even if they were gold standard principles. Without knowing, it you are proposing the liberal status quo (more/better regulation), and in any case an irrelevant point that is not at issue in America. The issue is gold versus liberal status quo mercantilism.

What the **** are you talking about? The status quo is that the Fed has a mandate of stable prices and maximum employment, and it has discretion over monetary policy to achieve that. You're proposing that the mandate be changed such that the Fed may only issue money if it's backed by gold. I'm saying a better alternative is to simply freeze the quantity of base money. That's not what I want, I want an NGDP target. But nobody need ever consider a gold standard when you can just freeze M0.

 

[DSGE]

I seriously hope this shtick you're doing is a character. Because if any real person was this stupid and ignorant I'd be just shattered.

of course if stupid you would not be so afraid to point out your best example for the whole world to see rather than merely allude to its existence. Sorry.

I like that you've got your own catch phrase too.

 

[OohPooPahDoo]

On a gold standard you cant print money either because only the amount of gold, not politicians, determines the amount of money

Uhh, wrong. I don't think you understand how banking works. Any time a bank makes a loan from its deposits money is created. Under a gold standard the total money supply would indeed exceed the amount of gold.

 

[EdwardBaiamonte]

Under a gold standard the total money supply would indeed exceed the amount of gold.

exactly how is that possible please ???

 

[EdwardBaiamonte]

I seriously hope this shtick you're doing is a character. Because if any real person was this stupid and ignorant I'd be just shattered.

of course if stupid you would not be so afraid to point out your best example for the whole world to see rather than merely allude to its existence. Sorry.

I like that you've got your own catch phrase too.

yes many love to pretend they have won a victory without actually having done so. Its so much easier isn't it?

 

[OohPooPahDoo]

Under a gold standard the total money supply would indeed exceed the amount of gold.

exactly how is that possible please ???

When you go and deposit your gold backed bills with a bank in a checking or savings account and they loan them out M2 money is created. You can have a system where all the CURRENCY is backed by gold, but not all the MONEY, unless you want to make loaning money illegal, which would pretty much cause the economy to come to a halt.

This is basic banking.

 

[EdwardBaiamonte]

Under a gold standard the total money supply would indeed exceed the amount of gold.

exactly how is that possible please ???

When you go and deposit your gold backed bills with a bank in a checking or savings account and they loan them out M2 money is created. You can have a system where all the CURRENCY is backed by gold, but not all the MONEY, unless you want to make loaning money illegal, which would pretty much cause the economy to come to a halt.

This is basic banking.

so then people cant get gold for their money if we're on a gold standard?

 

[samjones]

but there's no way that fiat caused the Great Depression.

so then why be so afraid to tell us exactly what caused it????

Perhaps you can elaborate on why you think fiat currency caused the Great Depression - or any economic crisis in the United States. I haven't seen a single organized thought.

 

[OohPooPahDoo]

exactly how is that possible please ???

When you go and deposit your gold backed bills with a bank in a checking or savings account and they loan them out M2 money is created. You can have a system where all the CURRENCY is backed by gold, but not all the MONEY, unless you want to make loaning money illegal, which would pretty much cause the economy to come to a halt.

This is basic banking.

so then people cant get gold for their money if we're on a gold standard?

If everyone decided to cash in all at once, no. That's called a bank run. It often leads to economic collapse and it doesn't matter whether the monetary base is gold or fiat.

The U.S. abandoned the gold standard in part because it didn't have enough gold to satisfy demand to exchange dollars for it.

 

[OohPooPahDoo]

but there's no way that fiat caused the Great Depression.

so then why be so afraid to tell us exactly what caused it????

??? The U.S. Dollar was still pegged to gold when the 1929 crash occurred. You could exchange $20.67 for one troy ounce of gold.

You are ignorant of the past.

 

[samjones]

exactly how is that possible please ???

When you go and deposit your gold backed bills with a bank in a checking or savings account and they loan them out M2 money is created. You can have a system where all the CURRENCY is backed by gold, but not all the MONEY, unless you want to make loaning money illegal, which would pretty much cause the economy to come to a halt.

This is basic banking.

so then people cant get gold for their money if we're on a gold standard?

You should learn about the history of the gold standard. Printing too many bills to cover the gold in the treasury isn't a problem. There was monetary inflation during the gold standard and after. The gold "standard" necessitates an above-market rate for gold any way. When there isn't enough gold to cover the dollars the government won't consider that a money problem. THey'll consider it a gold problem and here are some of the things they might do about it.

1. They can "borrow" money, bringing the value of outstanding currency in line with gold and simply kicking the can down the road.

2. They can simply appeal to the patriotism of those who might try to redeem their notes.

3. They can raise taxes to fund the treasury - again, reducing the money supply to bring the value of gold in line with outstanding dollars.

4. They increase the number of dollars to receive an ounce of gold.

5. They can simply refuse to honor requests to redeem.

6. They can make private ownership of gold illegal.

7. They can simply move again to fiat.


You seem to think that a gold standard will force the government to be honest. You're wrong.