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bishop · Jun 13, 2004, 09:49 pm

to return to the gold standard, i.e. fixed exchange rates, simply is not possible. global trade is too abundant now, and a return to fixed standards would bring global investment to its knees.. unless you want to see what a global depression looks like, i'd abandon that argument. after all, we do live in an international economy whether you admit it or not - we've been trading internationally for centuries now. what's more, fixed rates cost an arm and a leg to maintain. and, when you keep fixed rates, you become especially vulnerable to external economic shocks (ex. the oil crisis of the 70's). if we had fixed rates during the oil crisis, our only options would've been to adjust to the higher prices by severaly devaluing our currency, or the establishment of strict capital controls (i.e. anti-growth policies).

how many of you have had an education in economics? specifically in monetary history and policy? i ask because a lot of the posts here seem to have been derived from various anti-establishment/nationalist sources, and, they have completely ignored key historical reasons for why our currency situation is the way it is. not to condescend, but it seems that too many people simply google for what they choose and think that's a substitute for actual education.

PatrickHenry · Jun 13, 2004, 10:10 pm

Quote:

Originally posted by bishop,
how many of you have had an education in economics? specifically in monetary history and policy?

Not me, I admit. Aren't there opposing positions in economics as in other fields? If you are knowledgable why not give us a little insight? Maybe you could set aside your own biases for the moment while you explain...

edit typo

bishop · Jun 13, 2004, 10:18 pm

will do.

Kyran · Jun 14, 2004, 12:43 am

bishop,

Nobody is talking about returning to fixed exchange rates. But I'm gonna tell you something. No matter what flag or what hat or what title the person sitting at the printing press has, he is still creating paper money with nothing tangible backing it. There's no spinning it, no denying it, no getting around it. This is fraud.

If you think your education makes you more knowledged on the subject, then you shouldn't have a problem backing up your assertions within the guidelines of this forum.

I can already tell you, I've heard the argument that we were taken off the gold standard because of depression and what-not. No matter how many times people try to use this position, it is still an invalid argument.

bishop · Jun 14, 2004, 01:13 am

the primary goal of basing our currency against gold was to ensure currency stability, and consequentially price stability. the goal is what's important, not the specific process by which you achieve it. both gold and fiat money only derive their worth from the people using it. neither is worth anything by itself - so, i reject the notion that currency is worthless unless it's backed up by gold.

what we need is a rule-based system governing the foreign-exchange. bretton woods was a logical rule-based system, but the heavy spending of lbj and nixon forced "reform" to abandon the gold standard in favor of a nonstandard. and since that time, we've repeatedly seen huge shifts in currency valuations, which has wreaked havok on economies across the planet.

Kyran · Jun 15, 2004, 09:23 am

Logical fallacy. Every thing is valued by people in the first place. However, you interjected that gold "only" derives it's value from being used. Even though "no thing" is worthless without people to value it, that does not even remotely support your "rejection" of my notion.

Now we will define value and establish that organics do not equate to commodities. I prefer to use the equation Value = Rarity * Quality * Demand. Something in super-abundance (oxygen, ocean water) would have 0 rarity and not be valued. Something with no useable quality (greenhouse gases) would likewise not be valued. And something that nobody wants wouldn't have value in the first place.

Organics are in super-abundance, and capable of growing in quantity and mass. Metals do not have this characteristic. They are irreplaceable, and some metals like gold are very rare. Fiat currencies include very common metals and organics (paper).

Fiat is created by men out of tree. It is not useable as furniture, firewood, or anything except as a medium of exchange. And since our government borrows it and fuels itself with it, infinite fiat begets infinite government. Since fiat is not backed by anything tangible, it is created from nothing; and given value by force. I do not believe the Federal Reserve actually possesses all the Federal Reserve Notes it claims to. I think it's printing them itself; and I'm right.

Uncle Sam could borrow paper from me too, but it doesn't. If it's okay for the FRB to print this money, why is it illegal if others do it? Neither the counterfeiters nor the Feds are willing to redeem the paper for anything. They print it, loan it, profit from it, and spend it. Meanwhile, we the people are stuck facing the pains of inflation.

That's why currency is worthless unless it is cold hard commodity.

The FRB issued every one of our "dollars" sir. How can our government pay them back all of what they borrow with interest? It's not physically possible. Only the FRB may issue those notes, and unless they get taxed to the tune of 100%, there is no way to pay them back what they are owed. This is a scam.

Bishop, if the United States Government were to fall, our currency would be worth nothing. Gold retains it's value regardless of the status of nations. I would expect a nation that does not intend to fall to use a currency that does not fail. I would likewise expect a nation that intends to fall to use a currency dependent upon it's rule of law.

"Congress shall coin no thing other than silver or gold"
--a document in ashes.

I trust that you will consider my argument and reply promptly.

bishop · Jun 15, 2004, 11:11 am

Quote:

Since fiat is not backed by anything tangible, it is created from nothing; and given value by force. I do not believe the Federal Reserve actually possesses all the Federal Reserve Notes it claims to. I think it's printing them itself; and I'm right.

paper isn't tangible? and, what is gold backed by? nothing. babe ruth baseball cards are pretty rare too, and worth alot, and they're made out of "tree" too. the value of any mode of exchange is determined by the people using it.

i would continue that debate, but the salient point is that the international financial community has evolved in such a way that a return to gold is not feasible whatsoever - i.e. it is not viewed as a serious solution by any mainstream economist (even those who dissent from prevailing perspectives).

Quote:

Meanwhile, we the people are stuck facing the pains of inflation.

when economists worry about inflation, they generally worry about the stability of prices, not the stability of currencies. currency issues matter more in developing countries - the certainly don't matter as much to the country that has seigniority (you understand what that term means i hope). back in the day of the gold standard, (price) inflation was damn high. and that is the true pains of inflation that people face.

http://qsi.cc/pictures/US%20Inflation.gif

but in the days of fiat, (price) inflation is much lower on average.

http://proft.50megs.com/inflation.gif

Quote:

The FRB issued every one of our "dollars" sir. How can our government pay them back all of what they borrow with interest? It's not physically possible. Only the FRB may issue those notes, and unless they get taxed to the tune of 100%, there is no way to pay them back what they are owed. This is a scam.

Bishop, if the United States Government were to fall, our currency would be worth nothing. Gold retains it's value regardless of the status of nations. I would expect a nation that does not intend to fall to use a currency that does not fail. I would likewise expect a nation that intends to fall to use a currency dependent upon it's rule of law.

your view is quite apocalyptic. also, you do understand that we would still have to do something about our debt before the "option" of returning back to gold was even possible. unless you think that crippling the global economy (by annihiliating global credit) is a good thing to do.

our currency is also worth something by virtue of basic laws of economics - supply and demand. the demand for dollars is always higher than the supply. whenever the fed holds its bond auctions, those things always sell. countries have found value in holding dollars since the end of ww2.

the solution i'm offering is quite sane and rational - stop running deficits and pay down the debt. i'd go so far as to advocate a law requiring the federal government to set aside a certain percentage of tax revenues to debt repayment (more than what is currently allocated) as well as a law requiring a balanced budget. i prefer long-term solutions for long-term problems, not abrupt/radical "reforms".

Kyran · Jun 16, 2004, 07:27 am

Straw man. I said Paper isn't backed by anything tangible, not "paper isn't tangible."

Do you dispute or accept my point about the differences between Organics and Commodities?

Your note concerning the feasibility of returning to the gold standard is irrelevant. I am not advocating any government make such a decision; it wouldn't work that way.

they {currency issues} certainly don't matter as much to the country that has seigniority (you understand what that term means i hope)

Sounds like an appeal to authority or age. Clarify please?

your view is quite apocalyptic.

My expectations are not in question. Please discuss the topic and do not worry about any negativity you perceive. I'm actually quite optimistic about this situation, but until you get on the same page with me I have to show you how serious this is.

also, you do understand that we would still have to do something about our debt before the "option" of returning back to gold was even possible

I understand that you are still clinging to the idea that I am suggesting the United States government force a privately-owned bank (Federal Reserve) to back their paper notes with gold. I'm not.

Bishop, I'm telling you: there is no way to pay the debt off. All the money in the world could not pay our debt to the FRB. Why? Because they loaned us all-the-money-in-the-world and want interest. Since Federal Reserve Notes are not redeemable for anything (by the issuer) I suggest paying the debt off with United States Postage Stamps. No wait...those are worth something. How about Monopoly money? Yes, that would be fair and just.

I know I sound out in left field here Bishop, but bear with me so I can help you make sense out of it. You are referring to the "loans" made by our Federal Government as real loans. A local bank like NBSC makes real loans, even with fiat -- because it does not print them. The Federal Reserve has infinite paper to loan out because it is the source. It is not rational to loan out your own printed fiat and expect to be paid back with interest, and I do not imply the Feds run their bank like a business.

So try to see my point of view. There is no debt. We borrowed paper and owe paper. It's value is only determined by people after all (to exploit your former argument).

There is a very rational explanation as to why mainstream economists do not agree with monetary realists. The information we are here discussing will never be discussed by any politician in office. They understand that they can't change the way things are. Even if the Fed Govt did decide to reinstate the gold standard, the bankers would just leave the country...and Americans do not use commodities as currency -- so it'd all fall apart. The economists you speak of only know the rules of fiat currency markets.

stop running deficits and pay down the debt

Go right ahead and try. I'm not stopping you, I'm just trying to show you how to fix the "debt" long-term. Laws restricting government spending do not traditionally have high lifetimes IMHO. They are temporary solutions to permanent problems. Also, how realistic is the possibility that republicans or democrats would actually pass your suggested Law?

Surrender now and I'll give you the cure.

Jun 13, 2004, 09:49 pm	#41 (permalink) (top)
bishop moderat-e/o-r Location: boston Posts: 11,184	to return to the gold standard, i.e. fixed exchange rates, simply is not possible. global trade is too abundant now, and a return to fixed standards would bring global investment to its knees.. unless you want to see what a global depression looks like, i'd abandon that argument. after all, we do live in an international economy whether you admit it or not - we've been trading internationally for centuries now. what's more, fixed rates cost an arm and a leg to maintain. and, when you keep fixed rates, you become especially vulnerable to external economic shocks (ex. the oil crisis of the 70's). if we had fixed rates during the oil crisis, our only options would've been to adjust to the higher prices by severaly devaluing our currency, or the establishment of strict capital controls (i.e. anti-growth policies). how many of you have had an education in economics? specifically in monetary history and policy? i ask because a lot of the posts here seem to have been derived from various anti-establishment/nationalist sources, and, they have completely ignored key historical reasons for why our currency situation is the way it is. not to condescend, but it seems that too many people simply google for what they choose and think that's a substitute for actual education. hope for america... http://www.ronpaul2008.com/

Jun 13, 2004, 10:18 pm	#43 (permalink) (top)
bishop moderat-e/o-r Location: boston Posts: 11,184	will do. hope for america... http://www.ronpaul2008.com/

Jun 14, 2004, 01:13 am	#45 (permalink) (top)
bishop moderat-e/o-r Location: boston Posts: 11,184	the primary goal of basing our currency against gold was to ensure currency stability, and consequentially price stability. the goal is what's important, not the specific process by which you achieve it. both gold and fiat money only derive their worth from the people using it. neither is worth anything by itself - so, i reject the notion that currency is worthless unless it's backed up by gold. what we need is a rule-based system governing the foreign-exchange. bretton woods was a logical rule-based system, but the heavy spending of lbj and nixon forced "reform" to abandon the gold standard in favor of a nonstandard. and since that time, we've repeatedly seen huge shifts in currency valuations, which has wreaked havok on economies across the planet. hope for america... http://www.ronpaul2008.com/

Jun 14, 2004, 12:43 am	#44 (permalink) (top)
Kyran Igneous Magma Location: East Coast, USA Posts: 451	bishop, Nobody is talking about returning to fixed exchange rates. But I'm gonna tell you something. No matter what flag or what hat or what title the person sitting at the printing press has, he is still creating paper money with nothing tangible backing it. There's no spinning it, no denying it, no getting around it. This is fraud. If you think your education makes you more knowledged on the subject, then you shouldn't have a problem backing up your assertions within the guidelines of this forum. I can already tell you, I've heard the argument that we were taken off the gold standard because of depression and what-not. No matter how many times people try to use this position, it is still an invalid argument.

Jun 15, 2004, 09:23 am	#46 (permalink) (top)
Kyran Igneous Magma Location: East Coast, USA Posts: 451	Logical fallacy. Every thing is valued by people in the first place. However, you interjected that gold "only" derives it's value from being used. Even though "no thing" is worthless without people to value it, that does not even remotely support your "rejection" of my notion. Now we will define value and establish that organics do not equate to commodities. I prefer to use the equation Value = Rarity * Quality * Demand. Something in super-abundance (oxygen, ocean water) would have 0 rarity and not be valued. Something with no useable quality (greenhouse gases) would likewise not be valued. And something that nobody wants wouldn't have value in the first place. Organics are in super-abundance, and capable of growing in quantity and mass. Metals do not have this characteristic. They are irreplaceable, and some metals like gold are very rare. Fiat currencies include very common metals and organics (paper). Fiat is created by men out of tree. It is not useable as furniture, firewood, or anything except as a medium of exchange. And since our government borrows it and fuels itself with it, infinite fiat begets infinite government. Since fiat is not backed by anything tangible, it is created from nothing; and given value by force. I do not believe the Federal Reserve actually possesses all the Federal Reserve Notes it claims to. I think it's printing them itself; and I'm right. Uncle Sam could borrow paper from me too, but it doesn't. If it's okay for the FRB to print this money, why is it illegal if others do it? Neither the counterfeiters nor the Feds are willing to redeem the paper for anything. They print it, loan it, profit from it, and spend it. Meanwhile, we the people are stuck facing the pains of inflation. That's why currency is worthless unless it is cold hard commodity. The FRB issued every one of our "dollars" sir. How can our government pay them back all of what they borrow with interest? It's not physically possible. Only the FRB may issue those notes, and unless they get taxed to the tune of 100%, there is no way to pay them back what they are owed. This is a scam. Bishop, if the United States Government were to fall, our currency would be worth nothing. Gold retains it's value regardless of the status of nations. I would expect a nation that does not intend to fall to use a currency that does not fail. I would likewise expect a nation that intends to fall to use a currency dependent upon it's rule of law. "Congress shall coin no thing other than silver or gold" --a document in ashes. I trust that you will consider my argument and reply promptly.

Jun 16, 2004, 07:27 am	#48 (permalink) (top)
Kyran Igneous Magma Location: East Coast, USA Posts: 451	Straw man. I said Paper isn't backed by anything tangible, not "paper isn't tangible." Do you dispute or accept my point about the differences between Organics and Commodities? Your note concerning the feasibility of returning to the gold standard is irrelevant. I am not advocating any government make such a decision; it wouldn't work that way. they {currency issues} certainly don't matter as much to the country that has seigniority (you understand what that term means i hope) Sounds like an appeal to authority or age. Clarify please? your view is quite apocalyptic. My expectations are not in question. Please discuss the topic and do not worry about any negativity you perceive. I'm actually quite optimistic about this situation, but until you get on the same page with me I have to show you how serious this is. also, you do understand that we would still have to do something about our debt before the "option" of returning back to gold was even possible I understand that you are still clinging to the idea that I am suggesting the United States government force a privately-owned bank (Federal Reserve) to back their paper notes with gold. I'm not. Bishop, I'm telling you: there is no way to pay the debt off. All the money in the world could not pay our debt to the FRB. Why? Because they loaned us all-the-money-in-the-world and want interest. Since Federal Reserve Notes are not redeemable for anything (by the issuer) I suggest paying the debt off with United States Postage Stamps. No wait...those are worth something. How about Monopoly money? Yes, that would be fair and just. I know I sound out in left field here Bishop, but bear with me so I can help you make sense out of it. You are referring to the "loans" made by our Federal Government as real loans. A local bank like NBSC makes real loans, even with fiat -- because it does not print them. The Federal Reserve has infinite paper to loan out because it is the source. It is not rational to loan out your own printed fiat and expect to be paid back with interest, and I do not imply the Feds run their bank like a business. So try to see my point of view. There is no debt. We borrowed paper and owe paper. It's value is only determined by people after all (to exploit your former argument). There is a very rational explanation as to why mainstream economists do not agree with monetary realists. The information we are here discussing will never be discussed by any politician in office. They understand that they can't change the way things are. Even if the Fed Govt did decide to reinstate the gold standard, the bankers would just leave the country...and Americans do not use commodities as currency -- so it'd all fall apart. The economists you speak of only know the rules of fiat currency markets. stop running deficits and pay down the debt Go right ahead and try. I'm not stopping you, I'm just trying to show you how to fix the "debt" long-term. Laws restricting government spending do not traditionally have high lifetimes IMHO. They are temporary solutions to permanent problems. Also, how realistic is the possibility that republicans or democrats would actually pass your suggested Law? Surrender now and I'll give you the cure.