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The Socialized American Monetary System (pg. 3)
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| pkcRAISTLIN |
| quote: | Originally posted by zDmn
If Congress controlled monetary policy then monetary decisions wouldnt be made in complete secrecy without the discretion of the people. You obviously have a problem with democracy. |
Firstly, central banks publish minutes for their meetings, its hardly “secret”.
Secondly, why should the people have a say in monetary policy, especially given most of them don’t understand it (and you’re included in this group)?
Thirdly, monetary policy is SUPPOSED to be independent of parliament, because it should never ever be a tool for politics. the fed is an independent government agency, which allows it to make decisions independently of what obama or bush etc might want. That’s the whole point mate. Monetary policy shouldn’t be conducted by politicians.
| quote: | Originally posted by zDmn
This idea was abandoned by the world when one nation after the other started counterfeiting money with aspirations of power. |
Wrong. It was abandoned due to the great depression and the role the gold standard played in it. FYI, like I already mentioned, there’s nothing to stop a government (and they did) devaluing a currency against the price of gold in order to print more money.
| quote: | Originally posted by zDmn
Im not arguing the fact that central banks and and fiat currency provide the illusion of prosperity in the short term. But that system, like a blue giant, expands at such a rapid rate burning through all of its available resources in short order. It always ends with a huge bang and governments are overthrown, rights are confiscated, and people are killed. |
Nonsense.
| quote: | Originally posted by zDmn
The prices of homes, cars, college, etc skyrocketed when banks had an endless amount of credit to loan. And as I already explained, this leads to a system of debt. People forget how to live within their means. Your class warfare argument was also used by government officials and bankers who benefit from this current system, to give home loans to people who could never afford them. Look where that put us today. Nice try. |
Its not an “argument”. Its basic, economic fact. Fractional reserve banking is what allows all of us to access credit. Banks don’t have an “endless” amount of credit to loan. They may lend 90% of what they hold in the US. Other countries may be different.
There is nothing inherently wrong with debt. Debt is one of the few tools ordinary people can use in order to make money. As long as they’re responsible then its not a problem. Obviously having too much debt can and will become an issue, but that doesn’t justify making retarded reforms that would poison the ability of people and business to access credit.
| quote: | Originally posted by zDmn
Keynesian (anything goes) economics have resulted in the current economic status. Your constant attack of character is proof that your education on this subject is lacking. I realize by now that you and your Marxist friend are only going to believe and understand what you want to. Even if its not the truth. So have at it gentlemen. |
Krypton (comrade stalin) certainly isn’t a Marxist. And YOU are the one that wants to believe whatever they want. You didn’t even know that the fed is a government agency, that it returns profits to the treasury etc. you are the one lacking the eduation, and spewing ideology in the place of well established, well understood economic history. Your ideological bias blinds you to simple facts which is why you hold such antiquated and ill-informed viewpoints.
Your understanding of how this all works is just completely skewed and im not sure if there’s anything any of us can do to correct your errors. If occrider were around he’d be able to provide more salient analysis (as TA’s resident economist) than either myself or Stalin, but given your bias im not sure anyone would be able to change your mind. That’s fine, you’re more than welcome to continue making a fool of yourself. Have fun! |
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| pkcRAISTLIN |
| quote: |
Thanks in large part to the hype surrounding Ron Paul's candidacy within the Republican Party, the notion of a US return to the Gold Standard has enjoyed renewed popularity as of late. Mr Paul supports the dissolution of the United States Federal Reserve and a return to the Gold Standard. Others in his ideological camp would take the matter yet further, and some have gone so far as to suggest that the United States do away with paper currency altogether and return to the practice of using coins minted from actual precious metals as currency.
Like many of the solutions seized upon by hobbiest libertarians, these monetary policies are concise, simplistic, and - unfortunately - completely wrong. A return to the Gold Standard is not only profoundly inadvisable for the United States, but also impractical, unnecessary, and unrepresentative of the problems and solutions put forth by the dicitfuls of Dr. Paul. In an effort to inject some sanity into the debate, this article will address the first of three myths and misunderstandings upon which the Gold Standard movement is based.
Myth: Gold Ensures A Stable Currency
Take a dollar bill out of your wallet or purse and look just to the right of George Washington's head. Printed in small black letters should be the phrase "This note is legal tender for all debts public and private." These words, and the guarantee of the United States Government, are the only things that give the US Dollar weight as a currency, either domestically or on the international currency markets.
Some 30 years ago, in 1972, this was not the case. Under a system called Bretton Woods, the US Dollar was, for some time, pegged at $35/ounce of gold, meaning that one dollar was worth, by decree of the United States Federal Government, 1/35 of an ounce of gold. The Bretton Woods system was brought to an end in 1972 as the unequal market pressures forced a rapid movement of dollars (and thus liabilities for the sale of gold at $35/ounce) out of the United States. Since that time the United States has operated on a fiat currency, meaning that the dollar is no longer pegged to the price of gold nor guaranteed by it. Rather, dollars have value because the government of the United States says that they have value.
Such a notion is troubling to many as the notion of a government controlling anything, much less money, through an exercise in self restraint seems a joke at best and a recipe for financial disaster at worst. Critics of the fiat system question what motive such a government has that would compel it not to simply print money as it sees fit, thus inadvertently destroying overnight the value of its own currency. Gold or silver, by comparison, can not be simply produced, and thus acts as a natural check upon this assumed tendency to expand the money supply without consideration for the hyper-inflationary pressures such a move would have.
The problem with this argument is not one of its accuracy, but rather a matter of degree. A fiat system is more prone to governmental expansion of the money supply, but such expansion is neither unique to it nor a probable course of action for its economic governors. A gold based system is less prone to hyper-inflationary tendencies, but by no means immune from them and, as demonstrated under Bretton Woods, is less able to respond to rapid changes in the market. As such, the opposition between Gold Standard and Fiat is neither a binary one nor nearly so clear cut in its costs and benefits as laid out by critics of the existing system.
Gold's value comes primarily from its high demand and low supply. There are many uses and applications for gold in the modern world and a limited supply of it. Currencies pegged to or backed by gold will remain stable provided these two economic realities remain true. Such monetary systems are, however, at the mercy of the global gold market. History teaches that, should demand for gold drop significantly or if world-wide gold production suddenly increased, gold backed currencies would immediately and irrevocably collapse.
This is exactly the fate suffered by the Spanish (and by extension European) economy during the early era of New World Colonialism. As Spanish galleons hauled tons of silver and gold across the Atlantic, the European precious metals markets went into hyper-inflation. Dutch traders, then profoundly concerned for the long term stability of the European continent, bought and buried gold and silver en masse in a desperate attempt to keep the entire European continent from slipping into a depression, but their economic sacrifice was neither large nor timely enough to save Spain herself, which suffered the brunt of the economic consequences of her wealth. Even Spain's gold standard could not save her economy from the massive influx of gold and silver brought about by her exploitation of the Americas. Indeed, Spain still suffers some of the consequences of that economic collapse today.
The risk of a Spanish style collapse can be mitigated by allowing a government to re-adjust the rate at which gold is pegged to a currency. A US gold standard would, by Constitutional mandate, incorporate such a safeguard as Article I, Section 8 clearly states:[Congress shall have the power] To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.
(Emphasis added) This safeguard and power, however, nullifies the initial advantages listed for a gold-standard system: namely the difficulty of devaluation and political stability.
In short, the constraints and limitations placed upon monetary governance by a gold standard system serve as little more than speed bumps should government seek to actively set about the devaluation of currency. In actuality, a gold standard offers only ineffectual protection for the money supply against incompetence and malice while profoundly limiting the ability of well informed and well meaning governments to enact substantive and beneficial monetary policy.
Far from ensuring a stable currency, a gold standard is a primitive relic serving only to hamper modern monetary regulation. |
http://www.nowpublic.com/debunking_..._myth_stability
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| pkcRAISTLIN |
| quote: |
Friedman and Schwartz's insight was that, if monetary contraction was in fact the source of economic depression, then countries tightly constrained by the gold standard to follow the United States into deflation should have suffered relatively more severe economic downturns. Although not conducting a formal statistical analysis, Friedman and Schwartz gave a number of salient examples to show that the more tightly constrained a country was by the gold standard (and, by default, the more closely bound to follow U.S. monetary policies), the more severe were both its monetary contraction and its declines in prices and output. |
| quote: |
Subsequent research (for example, Choudhri and Kochin, 1980) has identified other countries that, like China, did not adhere to the gold standard and hence escaped the worst of the Depression. Two examples are Spain, where the internal instability that ultimately led to the Spanish Civil War prevented the country from re-adopting the gold standard in the 1920s, and Japan, which was forced from the gold standard after being on it for only a matter of months. The Depression in Spain was quite mild, and Japan experienced a powerful recovery almost immediately after abandoning its short-lived experiment with gold. |
| quote: |
The second category consisted of countries that had restored the gold standard in the 1920s but abandoned it early in the Depression, typically in the fall of 1931. As Friedman and Schwartz observed (p. 362), the first major country to leave the gold standard was Great Britain, which was forced off gold in September 1931. Several trading partners, among them the Scandinavian countries, followed Britain's lead almost immediately. The effect of leaving gold was to free domestic monetary policy and to stop the monetary contraction. What was the consequence of this relaxed pressure on the money stock? Friedman and Schwartz noted (p. 362) that "[t]he trough of the depression in Britain and the other countries that accompanied Britain in leaving gold was reached in the third quarter of 1932. [In contrast, i]n the countries that remained on the gold standard or, like Canada, that went only part way with Britain, the Depression dragged on." |
| quote: |
Third were countries that remained on gold but had ample reserves or were attracting gold inflows. The key example was France (see p. 362), the leader of the Gold Bloc. After its stabilization in 1928, France attracted gold reserves well out of proportion to the size of its economy. France's gold inflows allowed it to maintain its money supply and avoid a serious downturn until 1932. However, at that point, France's liquidation of non-gold foreign exchange reserves and its banking problems began to offset the continuing gold inflows, reducing the French money stock. A serious deflation and declines in output began in France, which, as Friedman and Schwartz pointed out, did not reach its trough until April 1935, much later than Great Britain and other countries that left gold early. |
| quote: |
They found that the countries that remained on gold suffered much more severe contractions in output and prices than the countries leaving gold. In a highly influential paper, Eichengreen and Sachs (1985) examined a number of key macro variables for ten major countries over 1929-35, finding that countries that left gold earlier also recovered earlier. Bernanke and James (1991) confirmed the findings of Eichengreen and Sachs for a broader sample of twenty-four (mostly industrialized) countries (see also Bernanke and Carey, 1996), and Campa (1990) did the same for a sample of Latin American countries. Bernanke (1995) showed that not only did adherence to the gold standard predict deeper and more extended depression, as had been noted by earlier authors, but also that the behavior of various key macro variables, such as real wages and real interest rates, differed across gold-standard and non-gold-standard countries in just the way one would expect if the driving shocks were monetary in nature. The most detailed narrative discussion of how the gold standard propagated the Depression around the world is, of course, the influential book by Eichengreen (1992). Eichengreen (2002) reviews the conclusions of his book and concludes largely that they are quite compatible with the Friedman and Schwartz approach. |
money, gold and the great depression
http://www.federalreserve.gov/board...022/default.htm |
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| culorut |
| quote: | Originally posted by zDmn
You know, for every link you post, there is another link that lays out the exact opposite. I guarantee you didnt even read them. Ive been challenging you for input and all you've been able to do is attack my character. And suddenly youre such a knowledgeable guy because you googled up 20 articles. Thats not how it works, noob. I've read convincing articles that describe all kinds of different opinions. I dont go along with the conspiratorial aspect of the Fed because there is a lot of phony information coming from all kinds of different opinions. All I have to do is look back at history and see how obvious it is that the Fed has too much power. |
zdmn just became my favorite tranceaddict member. |
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| culorut |
| quote: | Originally posted by pkcRAISTLIN
10 characteristics of conspiracy theorists
A useful guide by Donna Ferentes
6. Inability to tell good evidence from bad.
Conspiracy theorists have no place for peer-review, for scientific knowledge, for the respectability of sources. The fact that a claim has been made by anybody, anywhere, is enough for them to reproduce it and demand that the questions it raises be answered, as if intellectual enquiry were a matter of responding to every rumour. While they do this, of course, they will claim to have "open minds" and abuse the sceptics for apparently lacking same.
you dont know how the fed works or what it does. yes, i HAVE read numerous pieces of garbage that you're alluding to here. many of us in the PDD have been unfortunate to be presented with these arguments repeatedly over the last few years. every so often another idiot conspiracy theorist like yourself comes along to "open our eyes". ultimately all they do is illustrate their sincere lack of knowledge and understanding of a fairly straightforward and transparent institution. i pity you. |
lol, he just used his famous cut and paste list on you zdmn. |
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| pkcRAISTLIN |
Oh look, if it isn’t TA’s dumbest of the dumb!
How’s the second investigation into 911 coming along mate? I bet you’ve made some massive strides since last we spoke!
Care to educate us with your wealth of economics knowledge? We’d love to hear from you. |
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| Comrade Stalin |
| quote: | Originally posted by zDmn
I made the mistake of trying to reason with fools. The laws of nature, common sense, and the physics of money are totally irrelevant to a Marxist. They artificially change the rules and proclaim themselves intellectuals and its lead to the same end time and time again - a system of counterfeit money that cannot be sustained. The average man's 401K is drowning in debt while investment banks and government continue to grow despite the fact that they are the ones who overreached and caused this mess in the first place. Before Bretton Woods, the USA (despite the FED) was the worlds largest lender. Now we are the worlds largest debtor. Yet these Marxists still refuse to acknowledge the fact that wealth has been redistributed. Your solutions to the economic downturn are simply more of the same - counterfeit, confiscate, and redistribute. I shouldnt expect anything more from a guy named "Comrade Stalin" though. |
Marxist!? LOL! Is that what it is? Sorry, read up on Marxism before you misuse the term. None of us are arguing for the state to control the means of production. And instead of providing any counter argument to my rebuttals of all your points, you simply revert back to restating for the nth time all the talking points which we just addressed for you. Talk about in one ear, out the other.
Are we supposed to just accept your propositions outright? Hell no. This isn't a church you're preaching to the choir to, it's a political discussion/debate. You got to put (evidence) or shut up.
| quote: | My solutions?
- Return monetary powers to the Congress per the Constitution. Democracy is key when dealing with honest money. |
Congress has money powers. They have just delegated it to the Federal Reserve. And this just goes to show you have no problem letting our interest lobby infested Congress run monetary policy. For all intents and purposes, you're proposing the economic suicide of America.
| quote: | | - The currency must be backed by a commodity. A common man should be able to exchange his paper money for its worth in gold/silver/etc. at any bank of his choosing. This type of system would make the effects of counterfeiting much more apparent to the common man, in turn, encouraging government saving rather than debt. Interest rates will be influenced by commodity reserves and free markets instead of artificial means, and thus be more stable over a longer period of time. |
You can already buy all the gold and silver you want without commodity money. Occrider has already made clear that many of the attributes of fiat money apply to commodity money as well. Interests rates are not set "artificially", the Fed moves them up or down according what the market is doing. Free ranging interests rate are utterly detrimental to the economy. No they won't be stable, they will become enormously more volatile.
| quote: | | - End "fractional reserve lending". When the average bank isnt able to loan money that doesnt exist, people are far more likely to buy with savings than debt. Prices of houses, cars, college, etc. will accommodate. |
Prices of houses, cars, etc. will accomodate alright, into a deflationary spiral by the very radical change of our entire economic framework that you advocate. Credit is the reason businesses expand, hire new workers, entreprenuers open up shop. Our spectacular growth would not have been possible without the current system we have in place.
| quote: | | These key solutions, among others, would end an era of constant boom and bust cycles and massive market fluctuations, and replace it with a market that is not only more predictable and sustainable, but even more prosperous in the long run. |
Your key solutions would only massively disrupt the economy. The business cycle is a natural effect of capital markets. To say these "principles" are going to end it all is ludicris. I don't know what planet you're on, but a unregulated highly volatile market, is far from predictible or properous. |
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| Comrade Stalin |
| Funny how they come and go so quickly. |
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| Dupz |
I'm am sick to the bone of these lunchbox economists...
I studied economics for 4 years at uni, got my Honours degree, and have subsequently been successful in the field for 5 years. I STILL feel that I'm not qualified enough to have a decent opinion on fixing the worlds financial ills.
And here come along some halfwit wannabe intellects that've watched some papermaché youtube videos, and have read some bull hyperbolic internet article claiming comparisons of the US economy with Zimbabwe. Not only do these pricks think they have the understanding of the topics at hand, they think that their regurgitated opinions actually hold weight.
If you feel so passionately about the ill state of the economy, get out there and make a fukn difference yourself. Educate yourself and get a job where you can create change. If that's too hard, or you like your ty menial job, then shut the fuk up. Stop posting bull on the internet that makes absolutely NO difference.
Intelligent people like Occrider no longer post in these forums simply because of these fukwits that hijack threads into discussions of homeschool grade economics. There's little wonder why the PDD is dead |
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| Capitalizt |
| quote: | Originally posted by Dupz
And here come along some halfwit wannabe intellects that've watched some papermaché youtube videos, and have read some bull hyperbolic internet article claiming comparisons of the US economy with Zimbabwe. |
The comparisons are not entirely invalid. |
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| pkcRAISTLIN |
| quote: | Originally posted by Capitalizt
The comparisons are not entirely invalid. |
So where’s the graph that shows that such increases have caused hyperinflation in the US? |
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| Capitalizt |
| Patience young grasshopper..It will take a few years to see the results. We haven't felt the effects of all the money printing yet due to the economy being utter crap. Banks are hoarding cash to make their balance sheets look good and keep stockholders confident. Things will turn around eventually though. Unemployment will drop..lending will pick up, and the bubbles will begin to reinflate.. Once the economy gets moving and that money starts circulating and multiplying (via the fractional reserve process), look out below. |
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