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Depression 2008/09

Are we headed for a Great Depression again?

On Sat. I gave a friend even odds on a run on the US $ in the next two years....

That will probably change a bit this week, who knows which direction.

there will be no depression or runs on the dollar because the US is no longer tied to gold. that's right, that was the biggest determining factor of the great depression.

at some stage some of you are bound to figure this out.

quote:

Originally posted by pkcRAISTLIN there will be no depression or runs on the dollar because the US is no longer tied to gold. that's right, that was the biggest determining factor of the great depression. at some stage some of you are bound to figure this out.

And now the dollar is based on faith in the US.

You really think that's better then gold right now???

A friend of mine pointed out that currency is like the stock of a country. It seems to be a good way to think.

The depression had little to do with gold, it had many other factors including a disasterous drop in the stock market that wipped out many people and caused a liquidity crisis where people who actually had money didn't want to lend it to anyone or to invest in anything because they were spooked by the failing of a system they thought was "right".

Lucky that will never happen again..............................

quote:

Originally posted by atbell And now the dollar is based on faith in the US. You really think that's better then gold right now??? A friend of mine pointed out that currency is like the stock of a country. It seems to be a good way to think. The depression had little to do with gold, it had many other factors including a disasterous drop in the stock market that wipped out many people and caused a liquidity crisis where people who actually had money didn't want to lend it to anyone or to invest in anything because they were spooked by the failing of a system they thought was "right". Lucky that will never happen again..............................

Banks buying shit up... then collapsing.

Deja Vu.

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Originally posted by atbell And now the dollar is based on faith in the US.

so?

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Originally posted by atbell You really think that's better then gold right now???

of course.

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Originally posted by atbell The depression had little to do with gold,

wrong.

quote:

Originally posted by atbell it had many other factors including a disasterous drop in the stock market that wipped out many people and caused a liquidity crisis where people who actually had money didn't want to lend it to anyone or to invest in anything because they were spooked by the failing of a system they thought was "right".

...which had everything to do with gold.

They way the economy is comming apart is just so sad, I cant believe the U.S. has let themselves get to this point. It just feels like that every day it isnt getting better.

quote:

Originally posted by pkcRAISTLIN so? of course. wrong. ...which had everything to do with gold.

The exact same thing is happening again. First case = gold standard, Second case = no gold standard.

That's pretty much a direct contradition to your last point.

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Originally posted by Chryz707 They way the economy is comming apart is just so sad, I cant believe the U.S. has let themselves get to this point. It just feels like that every day it isnt getting better.

It's been like this for years. Anyone who pointed it out was black balled, ridiculed, and assured that any job in finance, academics, or corporate organizations would be given to someone "more positive".

quote:

Originally posted by atbell The exact same thing is happening again. First case = gold standard, Second case = no gold standard. That's pretty much a direct contradition to your last point.

its the "same thing" in that there is a crash in the banking sector.

i hate to break it to you, but crashes and corrections and complete collapses are all part of capitalism. you want a free market? this shit will happen from time time. in lots of different ways.

im not saying that economies are great and awesome when they arent tied to a commodity standard like gold. what im saying is that the great depression was made "great" because of gold. gold caused it.

fiat money is not the cause of the so-called credit crunch.

quote:

You really think that's better then gold right now??? The depression had little to do with gold,

if the US was on gold now you'd be super butt-fucked, rather than just regularly butt-fucked.

the principle cause of the great depression was that the countries on gold couldn't stimulate their economies because they were tied to it. im not lying, go look it up. the countries that abandoned gold early, largely escaped the depression.

no one's saying that governments should be able just to print money willy-nilly, but any discussion about gold is like talking about bringing back monarchies. its a step backwards.

Jim Cramer says we should be out of the woods in eight months... woot!

quote:

Originally posted by pkcRAISTLIN fiat money is not the cause of the so-called credit crunch.

yet...

quote:

if the US was on gold now you'd be super butt-fucked, rather than just regularly butt-fucked.

I think I mis-understood you. I don't know enough to say either way if a gold standard makes things better or worse.

someone told me at work it was the hippies that fucked us over..
then i just read this.


about hippies aka: the boomers

quote:

Yeah, this is exactly why I'm against Social Security. They couldn't keep their hands out of the cookie jar, as usual, and then want everyone else to pay for their farkups (like they're a generation of Lehman Bros. executives) and inability to plan for the future. The system might have worked if they hadn't continuously stolen from it merely to feed their own epic sense of entitlement. Hey Boomers: if you don't like the world it's because YOU farkED IT UP. You MADE it this way, so it's a little late to whimper about it, biatches. YOUR FAULT, so if you don't like it why don't you off yourselves you monstrous burdens on society? You poison and wither everything you touch. Do the world a favour and check out. Boomers are like the irresponsible alcoholic older sibling who decides to wreck the house by partying while the parents are away and expects everyone else to clean up after him. You've ruined it for everyone and then complain that nobody can party anymore. And no, the 60's were not better. God, at least we don't have legions of dirty, smelly drug-addled retards running around shiatting and humping in public these days. But who knows, maybe the Boomers will try to bring it back "in vogue" as they try to relive their "glory days".

I can safely say that we are NEVER going to have a depression under the current monetary system. When money can be created at the flip of a switch, depression is impossible. The authorities simply won't allow it. They will simply print like there is no tomorrow and send us into an inflationary spiral, which is just as bad IMO. The intrinsic value of food, clothing, shelter etc will not change, but the PRICING of these things will go up because those little paper rectanges used to purchase them are being devalued.

The government is going to try and inflate it's way out of this mess and people will keep their jobs (for now), but their lifestyles will take a dramatic hit as the cost of living goes through the roof. People may be making more money than ever but they will feel as if they've received a huge pay cut. That is the insidious nature of inflation. It's the only tax that can be passed without a vote in congress.

This is not a depression and one of the reasons is that the Fed has more power than it used to during the 30s. that's just one, and that's all i'm saying in regards to this absurd comparison.

quote:

Originally posted by Capitalizt I can safely say that we are NEVER going to have a depression under the current monetary system. When money can be created at the flip of a switch, depression is impossible. The authorities simply won't allow it. They will simply print like there is no tomorrow and send us into an inflationary spiral, which is just as bad IMO. The intrinsic value of food, clothing, shelter etc will not change, but the PRICING of these things will go up because those little paper rectanges used to purchase them are being devalued. The government is going to try and inflate it's way out of this mess and people will keep their jobs (for now), but their lifestyles will take a dramatic hit as the cost of living goes through the roof. People may be making more money than ever but they will feel as if they've received a huge pay cut. That is the insidious nature of inflation. It's the only tax that can be passed without a vote in congress.

Ah, yes just like the Germans printed thier way out of problems in the 30's right?

Buler?

quote:

Originally posted by diggerz This is not a depression and one of the reasons is that the Fed has more power than it used to during the 30s. that's just one, and that's all i'm saying in regards to this absurd comparison.

you got some splain'n to do.



I'd like references, academic papers in peer reviewed journals are best but major media sources will suffice.

You can start with how a more powerful Fed 'works' to do anything. I'd like you to cover both monetary policy and open market operations in this explanation.

Then you can feel free to go into further reasons about how the stability of todays US economy make things so much better then in the months after the collapse in '29.

... um, go.

quote:

Originally posted by Capitalizt I can safely say that we are NEVER going to have a depression under the current monetary system. When money can be created at the flip of a switch, depression is impossible. The authorities simply won't allow it. They will simply print like there is no tomorrow and send us into an inflationary spiral, which is just as bad IMO. The intrinsic value of food, clothing, shelter etc will not change, but the PRICING of these things will go up because those little paper rectanges used to purchase them are being devalued.

funny, because what is the rate of this "inflationary spiral"? recently, zimbabwe had an inflation rate of around 70,000% surely the US must be approaching this rate for it to be termed a "spiral"?

no? really? huh, funny that.

quote:

Originally posted by Capitalizt The government is going to try and inflate it's way out of this mess and people will keep their jobs (for now), but their lifestyles will take a dramatic hit as the cost of living goes through the roof. People may be making more money than ever but they will feel as if they've received a huge pay cut. That is the insidious nature of inflation. It's the only tax that can be passed without a vote in congress.

oh yeah, sorry i forgot. its the GOVERNMENT'S fault that the capitalist system is collapsing. silly me. wouldn't be all the self-interested merchant bankers or lenders or banks would it? your bias in this topic is pathetic, and you call yourself an economist. what a joke.

quote:

Originally posted by atbell you got some splain'n to do. I'd like references, academic papers in peer reviewed journals are best but major media sources will suffice. You can start with how a more powerful Fed 'works' to do anything. I'd like you to cover both monetary policy and open market operations in this explanation. Then you can feel free to go into further reasons about how the stability of todays US economy make things so much better then in the months after the collapse in '29. ... um, go.

this has been provided time and time again on this forum. sometimes by me, sometimes by others. it is an accepted and well-known fact and if you wish to play "doubter" then i suggest you find your own "peer reviews" to say otherwise. im sick and tired of a bunch of undergrads thinking they know better than the world's economic institutions regarding economic policy.

here's a brief start. you can do the rest yourself.

quote:

Loss of control over economic policy. If the U.S. and a substantial number of other industrial economies adopted a gold standard, the U.S. would lose the ability to tune its economic policies to fit domestic conditions. For example, in the spring of 1995 the dollar weakened against the yen. Under a gold standard, such a decline in the dollar would not have been allowed: instead the Federal Reserve would have raised interest rates considerably in order to keep the value of the dollar fixed at its gold parity, and a recession would probably have followed. Recessionary bias. Under a gold standard, the burden of adjustment is always placed on the "weak currency" country. Countries seeing downward market pressure on the values of their currencies are forced to contract their economies and raise unemployment. The gold standard imposes no equivalent adjustment burden on countries seeing upward market pressure on currency values. Hence a deflationary bias which makes it likely that a gold standard regime will see a higher average unemployment rate than an alternative managed regime. The gold standard and the Great Depression. The current judgment of economic historians (see, for example, Barry J. Eichengreen, Golden Fetters) is that attachment to the gold standard played a major part in keeping governments from fighting the Great Depression, and was a major factor turning the recession of 1929-1931 into the Great Depression of 1931-1941. Countries that were not on the gold standard in 1929--or that quickly abandoned the gold standard--by and large escaped the Great Depression Countries that abandoned the gold standard in 1930 and 1931 suffered from the Great Depression, but escaped its worst ravages. Countries that held to the gold standard through 1933 (like the United States) or 1936 (like France) suffered the worst from the Great Depression Commitment to the gold standard prevented Federal Reserve action to expand the money supply in 1930 and 1931--and forced President Hoover into destructive attempts at budget-balancing in order to avoid a gold standard-generated run on the dollar. Commitment to the gold standard left countries vulnerable to "runs" on their currencies--Mexico in January of 1995 writ very, very large. Such a run, and even the fear that there might be a future run, boosted unemployment and amplified business cycles during the gold standard era. The standard interpretation of the Depression, dating back to Milton Friedman and Anna Schwartz's Monetary History of the United States, is that the Federal Reserve could have but for some mysterious reason did not boost the money supply to cure the Depression; but Friedman and Schwartz do not stress the role played by the gold standard in tieing the Federal Reserve's hands--the "golden fetters" of Eichengreen. Friedman was and is aware of the role played by the gold standard--hence his long time advocacy of floating exchange rates, the antithesis of the gold standard. Consequences for the Long-Run Average Rate of Inflation: Average inflation determined by gold mining. Under a gold standard, the long-run trajectory of the price level is determined by the pace at which gold is mined in South Africa and Russia. For example, the discovery and exploitation of large gold reserves near present-day Johannesburg at the end of the nineteenth century was responsible for a four percentage point per year shift in the worldwide rate of inflation--from a deflation of roughly two percent per year before 1896 to an inflation of roughly two percent per year after 1896. In the election of 1896, William Jennings Bryan's Democrats called for free coinage of silver as a way to end the then-current deflation and stop the transfer of wealth away from indebted farmers. The concurrent gold discoveries in South Africa changed the rate of drift of the price level, and accomplished more than the writers of the Democratic platform could have dreamed, without any change in the U.S. coinage. Thus any political factors that interrupted the pace of gold mining would have major effects on the long-run trend of the price level--send us into an era of slow deflation, with high unemployment. Conversely, significant advances in gold mining technology could provide a significant boost to the average rate of inflation over decades. Under the gold standard, the average rate of inflation or deflation over decades ceases to be under the control of the government or the central bank, and becomes the result of the balance between growing world production and the pace of gold mining. Why Do Some Still Advocate a Gold Standard? A belief that governments and central banks should not control the average rate of inflation over decades, and that the world will be better off if the long-run drift of the price level is determined "automatically." A belief that bondholders and investors will be reassured by a government committed to a gold standard, will be confident that inflation rates will be low, and so will bid down nominal interest rates. Of course, if you do not trust a central bank to keep inflation low, why should you trust it to remain on the gold standard for generations? This large hole in the supposed case for a gold standard is not addressed. Failure to recognize the role played by the gold standard in amplifying and propagating the Great Depression. Failure to recognize that the international monetary system functions best when the burden-of-adjustment is spread between balance-of-payments "surplus" and "deficit" countries, rather than being loaded exclusively onto "deficit" countries. Failure to recognize how gold convertibility increases the likelihood of a run on the currency, and thus amplifies recessions

http://www.j-bradford-delong.net/Po...ldstandard.html

there is a reason we have central banks. they're far from perfect, but are a necessary evil. anyone that thinks otherwise is a moron.

Pk, you seem to think that a LACK of government caused this mess.

I always expect people to take this view and it really is rather sad. The government screws everything up but capitalism takes the blame. That is essentially what the article below explains. I HIGHLY suggest you read it if you want to know how we got where we are today:

http://www.telegraph.co.uk/money/ma.../ccrisis108.xml

quote:

Originally posted by Capitalizt Pk, you seem to think that a LACK of government caused this mess. I always expect people to take this view and it really is rather sad. The government screws everything up but capitalism takes the blame. That is essentially what the article below explains. I HIGHLY suggest you read it if you want to know how we got where we are today: http://www.telegraph.co.uk/money/ma.../ccrisis108.xml

i will endeavour to finish the article, but here's the first line:

quote:

Three years ago, the world's top watchdog warned that the global economy was veering out of control. Defending orthodoxy against the easy debt policies of the Greenspan era, the Bank for International Settlements said interest rates were being held too low for safety in most of the mature economies.

last time i checked, banks set their own interest rates.

quote:

Originally posted by pkcRAISTLIN this has been provided time and time again on this forum. sometimes by me, sometimes by others. it is an accepted and well-known fact and if you wish to play "doubter" then i suggest you find your own "peer reviews" to say otherwise. im sick and tired of a bunch of undergrads thinking they know better than the world's economic institutions regarding economic policy.

Who's an undergrade?

quote:

Originally posted by pkcRAISTLIN last time i checked, banks set their own interest rates.

i'm convinced most people on this board who discuss the federal reserve are absolutely clueless about how it actually works.

It's called monetary policy for a reason. The fed exerts influence (albeit extremely powerful inflence) over market rates, it doesn't dictate the rate banks charge.

http://www.federalreserve.gov/monetarypolicy/fomc.htm

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