The Flip Side of Industrial Repatriation

[Cassandro]

President Trump's goal of bringing factories and jobs back to the US may have some problematic consequences. Unlike tariffs, whose costs may be borne by foreign manufacturers in order to maintain market presence in the US, repatriating factories will almost certainly increase costs and prices of those same goods produced in the US. Thus, any resulting increase in domestic employment will be countered by a rise in inflation.

I don't know what effect AI will have on this equation, but it seems that substantial inflation will again return to the US economy. While this may make it easier to pay our debts in the short run, it must make borrowing more difficult and expensive in the longer term.

One possible remedy to this conundrum would be to create a new gold-backed currency for which old currency and debts could be converted at a specified exchange rate. This could be done by the US Treasury revaluing its gold reserves to market rates or even well above those. If gold was revalued at 10x the current market rate, old currency could be exchanged for the new currency at a 1:10 ratio. This would essentially wipe out our old debt, but provide a more secure alternative for debt holders and investors alike.

This may seem like a far-out scenario, but it has been done before. The US may have to consider this option before the window of opportunity is closed.

 

[initforme]

I would gladly pay a bunch more for the same exact product made here.

 

[Toddsterpatriot]

President Trump's goal of bringing factories and jobs back to the US may have some problematic consequences. Unlike tariffs, whose costs may be borne by foreign manufacturers in order to maintain market presence in the US, repatriating factories will almost certainly increase costs and prices of those same goods produced in the US. Thus, any resulting increase in domestic employment will be countered by a rise in inflation.

I don't know what effect AI will have on this equation, but it seems that substantial inflation will again return to the US economy. While this may make it easier to pay our debts in the short run, it must make borrowing more difficult and expensive in the longer term.

One possible remedy to this conundrum would be to create a new gold-backed currency for which old currency and debts could be converted at a specified exchange rate. This could be done by the US Treasury revaluing its gold reserves to market rates or even well above those. If gold was revalued at 10x the current market rate, old currency could be exchanged for the new currency at a 1:10 ratio. This would essentially wipe out our old debt, but provide a more secure alternative for debt holders and investors alike.

This may seem like a far-out scenario, but it has been done before. The US may have to consider this option before the window of opportunity is closed.

If gold was revalued at 10x the current market rate, old currency could be exchanged for the new currency at a 1:10 ratio.

What does this maneuvering accomplish?
Why would I want to participate?

 

[initforme]

We cannot expect american factory workers here to work for even close to the same wages overseas. That is not logical nor posdible.

 

[The Sage of Main Street]

President Trump's goal of bringing factories and jobs back to the US may have some problematic consequences. Unlike tariffs, whose costs may be borne by foreign manufacturers in order to maintain market presence in the US, repatriating factories will almost certainly increase costs and prices of those same goods produced in the US. Thus, any resulting increase in domestic employment will be countered by a rise in inflation.

I don't know what effect AI will have on this equation, but it seems that substantial inflation will again return to the US economy. While this may make it easier to pay our debts in the short run, it must make borrowing more difficult and expensive in the longer term.

One possible remedy to this conundrum would be to create a new gold-backed currency for which old currency and debts could be converted at a specified exchange rate. This could be done by the US Treasury revaluing its gold reserves to market rates or even well above those. If gold was revalued at 10x the current market rate, old currency could be exchanged for the new currency at a 1:10 ratio. This would essentially wipe out our old debt, but provide a more secure alternative for debt holders and investors alike.

This may seem like a far-out scenario, but it has been done before. The US may have to consider this option before the window of opportunity is closed.

Self-Serving Serf-Slaving Oinkonomics

 

[Cassandro]

If gold was revalued at 10x the current market rate, old currency could be exchanged for the new currency at a 1:10 ratio.

What does this maneuvering accomplish?
Why would I want to participate?

I was using a theoretical example. The numbers being talked about are up to 5x. This would effectively cut our debt by 80%, and the Treasury would have an extra $trillion to reduce the deficit.

You might wish to participate because the dollars you hold have no intrinsic value. How would $20K gold hurt you?

 

[Toddsterpatriot]

I was using a theoretical example. The numbers being talked about are up to 5x. This would effectively cut our debt by 80%, and the Treasury would have an extra $trillion to reduce the deficit.

You might wish to participate because the dollars you hold have no intrinsic value. How would $20K gold hurt you?

You want to default on 80% of our debt?
How would the Treasury have an extra trillion?
How would $20K gold help me?

 

[Cassandro]

You want to default on 80% of our debt?

I would like to erase all of our debt by replacing it with gold backed securities.

How would the Treasury have an extra trillion?

By revaluing its gold reserves. This would allow for putting extra money into the economy without borrowing it.

How would $20K gold help me?

That is for you to decide. The overriding problem with out current financial structure is that we have amassed a crushing debt burden that will continue to grow until we are overwhelmed and forced to abandon the dollar or face ruinous inflation.

 

[Toddsterpatriot]

I would like to erase all of our debt by replacing it with gold backed securities.

By revaluing its gold reserves. This would allow for putting extra money into the economy without borrowing it.

That is for you to decide. The overriding problem with out current financial structure is that we have amassed a crushing debt burden that will continue to grow until we are overwhelmed and forced to abandon the dollar or face ruinous inflation.

I would like to erase all of our debt by replacing it with gold backed securities.

How do "gold backed securities" erase our debt?

By revaluing its gold reserves. This would allow for putting extra money into the economy without borrowing it.

How does revaluing reserves put extra money into the economy?

That is for you to decide.

It doesn't automatically help me? How does it help you?

 

[Cassandro]

I would like to erase all of our debt by replacing it with gold backed securities.

How do "gold backed securities" erase our debt?

By replacing our high interest fiat currency debt with low interest gold backed debt.

By revaluing its gold reserves. This would allow for putting extra money into the economy without borrowing it.

How does revaluing reserves put extra money into the economy?

This would add assets to the federal balance sheet which could be spent by the Treasury and/or used by the Fed to recapitalize banks and increase lending.

That is for you to decide.

It doesn't automatically help me? How does it help you?

It would accelerate economic growth in the US. Where do you live?

 

[Toddsterpatriot]

By replacing our high interest fiat currency debt with low interest gold backed debt.

This would add assets to the federal balance sheet which could be spent by the Treasury and/or used by the Fed to recapitalize banks and increase lending.

It would accelerate economic growth in the US. Where do you live?

By replacing our high interest fiat currency debt with low interest gold backed debt.

How do you replace it? Buy it back in the open market?
Or wait for it to mature?
Why do you feel replacing it will lower the rate?

This would add assets to the federal balance sheet which could be spent by the Treasury

Are you selling the gold?

It would accelerate economic growth in the US.

Why do you feel it would accelerate growth?

Where do you live?

Chicago.

If gold was revalued at 10x the current market rate, old currency could be exchanged for the new currency at a 1:10 ratio.

I have $1000 in old currency.

I'm going to get $10000 in gold backed currency?

You owe me $1000 in old currency, now you owe me $10000 in gold backed currency?

Why do I benefit from that exchange? Why do you benefit?

 

[citygator]

I would gladly pay a bunch more for the same exact product made here.

No you wont. I know that because every single product can be made in the US if you want it. You just don’t want it.

 

[Cassandro]

By replacing our high interest fiat currency debt with low interest gold backed debt.

How do you replace it? Buy it back in the open market?
Or wait for it to mature?
Why do you feel replacing it will lower the rate?

As old debt matures, new gold backed debt will replace it.

This would add assets to the federal balance sheet which could be spent by the Treasury

Are you selling the gold?

No, the revaluation of assets would increase the collateral backing US securities.

It would accelerate economic growth in the US.

Why do you feel it would accelerate growth?

Money supply and credit would increase with direct inflationary impact.

Where do you live?

Chicago.

The "Golden" State

If gold was revalued at 10x the current market rate, old currency could be exchanged for the new currency at a 1:10 ratio.

I meant that that $1 in new currency would be worth $10 in old currency.

I have $1000 in old currency.

I'm going to get $10000 in gold backed currency?

You owe me $1000 in old currency, now you owe me $10000 in gold backed currency?

Why do I benefit from that exchange? Why do you benefit?

See above. The new gold backed currency would not continue to devalue like the old (existing) currency.

 

[Woodznutz]

President Trump's goal of bringing factories and jobs back to the US may have some problematic consequences. Unlike tariffs, whose costs may be borne by foreign manufacturers in order to maintain market presence in the US, repatriating factories will almost certainly increase costs and prices of those same goods produced in the US. Thus, any resulting increase in domestic employment will be countered by a rise in inflation.

I don't know what effect AI will have on this equation, but it seems that substantial inflation will again return to the US economy. While this may make it easier to pay our debts in the short run, it must make borrowing more difficult and expensive in the longer term.

One possible remedy to this conundrum would be to create a new gold-backed currency for which old currency and debts could be converted at a specified exchange rate. This could be done by the US Treasury revaluing its gold reserves to market rates or even well above those. If gold was revalued at 10x the current market rate, old currency could be exchanged for the new currency at a 1:10 ratio. This would essentially wipe out our old debt, but provide a more secure alternative for debt holders and investors alike.

This may seem like a far-out scenario, but it has been done before. The US may have to consider this option before the window of opportunity is closed.

Revive Lincoln's "greenbacks". Oh wait, that's what got him killed.

 

[Toddsterpatriot]

As old debt matures, new gold backed debt will replace it.

No, the revaluation of assets would increase the collateral backing US securities.

Money supply and credit would increase with direct inflationary impact.

The "Golden" State

I meant that that $1 in new currency would be worth $10 in old currency.


See above. The new gold backed currency would not continue to devalue like the old (existing) currency.

As old debt matures, new gold backed debt will replace it.

Why do you feel the "gold backed debt", whatever that means, will have a lower rate?

No, the revaluation of assets would increase the collateral backing US securities.

US securities are not currently backed by collateral.

Money supply and credit would increase with direct inflationary impact.

Why do you feel that would happen? Why do you feel it would accelerate growth?

I meant that that $1 in new currency would be worth $10 in old currency.

You want me to trade $10 in currency for $1 of gold currency?
What if I don't want to do that?

See above. The new gold backed currency would not continue to devalue like the old (existing) currency.

And in exchange, I lose 90% upfront.

If gold was revalued at 10x the current market rate, old currency could be exchanged for the new currency at a 1:10 ratio.

Gold is worth about $4200. You want to make it worth $42,000?
And in exchange, my current $4200 will be turned into $420? Or $42,000?

 

[Woodznutz]

As old debt matures, new gold backed debt will replace it.

Why do you feel the "gold backed debt", whatever that means, will have a lower rate?

No, the revaluation of assets would increase the collateral backing US securities.

US securities are not currently backed by collateral.

Money supply and credit would increase with direct inflationary impact.

Why do you feel that would happen? Why do you feel it would accelerate growth?

I meant that that $1 in new currency would be worth $10 in old currency.

You want me to trade $10 in currency for $1 of gold currency?
What if I don't want to do that?

See above. The new gold backed currency would not continue to devalue like the old (existing) currency.

And in exchange, I lose 90% upfront.

If gold was revalued at 10x the current market rate, old currency could be exchanged for the new currency at a 1:10 ratio.

Gold is worth about $4200. You want to make it worth $42,000?
And in exchange, my current $4200 will be turned into $420? Or $42,000?

True. In order for gold to back the amount of currency, and the amount of debt, in the economy either more gold must be acquired by the government, or the value of gold must increase exponentially.

The best way to 'cure' the economy is to reduce unproductive debt. This can only be done by issuing equity instead of more debt into the economy. Consumer debt can be reduced by strict borrowing laws.

Before there was such a thing as unsecured consumer credit there was "layaway". The store laid your item away in the back room until it was fully paid for in installments. As little as "a dollar down, a dollar per week" secured your purchase. If you defaulted the store kept your money and the item.

 

[Cassandro]

True. In order for gold to back the amount of currency, and the amount of debt, in the economy either more gold must be acquired by the government, or the value of gold must increase exponentially.

You are describing a mercantile economic theory theory where growth can only be attained by mining more gold. Modern economics understand that the same amount of money can used over and over by many people (i.e., money velocity).

The best way to 'cure' the economy is to reduce unproductive debt. This can only be done by issuing equity instead of more debt into the economy. Consumer debt can be reduced by strict borrowing laws.

Restricting credit causes recessions (if not worse). Do you want to repeat 2008?

Before there was such a thing as unsecured consumer credit there was "layaway". The store laid your item away in the back room until it was fully paid for in installments. As little as "a dollar down, a dollar per week" secured your purchase. If you defaulted the store kept your money and the item.

You are describing Sharia law which prohibits charging interest on loans. Instead, sellers increase prices to cover this loss and then let customers pay it off over time. If they pay cash up front, they get a discount. (i.e., no interest charge).

 

[Woodznutz]

Restricting credit causes recessions (if not worse). Do you want to repeat 2008?

If you have a 'gold backed' monetary system all consumer money must be 'demand notes' that can be redeemed for the same value in actual gold. We abandoned the gold standard because of that. Now we have 'Federal Reserve Notes' that are guaranteed by the 'full faith and credit' of the government to redeem them for yet more paper money.

Unrestricted credit to unqualified borrows and the resulting housing bubble led to the Great Recession.

Layaway purchases weren't 'interest free loans' as the goods technically remained in the store's inventory until fully paid for.

 

[Cassandro]

Unrestricted credit to unqualified borrows and the resulting housing bubble led to the Great Recession.

Subprime loans were deceptively packaged and sold as performing loans. When their huge default rates were finally exposed, the collateral underpinning of the credit industry became indeterminate. As a result, banks and related institutions didn't know if they had sufficient reserves to support new lending. This led to the crash of the housing market and other economic activity.

Layaway purchases weren't 'interest free loans' as the goods technically remained in the store's inventory until fully paid for.

Who pays for the the purchase and maintenance of the store's inventory?

 

[Woodznutz]

Who pays for the purchase and maintenance of the store's inventory?

Relevance?