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Official Gold Standard Thread


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#1 FCP Bob

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Posted 27 August 2012 - 03:22 AM

So the Republicans are forming a committee to study going back to the Gold Standard. I hope they are only doing this as a superficial cookie to the gold bugs like Ron Paul and don't really mean it.From The AtlanticWhy the Gold Standard Is the World's Worst Economic Idea, in 2 ChartsFrom a former Vice Chariman at Moody's via Project SyndicateGold: The Republican Death Wish

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As I have observed previously, all the world’s problems can be attributed to hard money policies, and gold is the hardest policy of them all. My opinion is no secret: I believe that the libertarian monetary proposals are a prescription for disaster on a scale that we can’t even imagine. I also believe that such policies would do to the GOP what they did to the GOP eighty years ago, and as a God-fearing Republican, I don’t want another twenty years in the wilderness.History shows that Man does learn from his experience, and the American people have paid a heavy price to learn the following:1. Soft money is more conducive to economic stability than hard money.2. The gold standard is inherently unstable and is constantly tested by speculators and foreign central banks.3. Hard money requires periodic depressions to remain “credible”.4. The money supply should be controlled by a wise and independent central bank with the dual mandates of low inflation and maximum employment.5. Wildcat currency printing leads to currency chaos. (Do we really have to relearn that particular chestnut?)6. Hard money requires flexible nominal wages and incomes, which only exist in fantasyland and Hong Kong........My point is that a successful gold standard requires either a dictatorship or Finnish-like national cohesion, both of which we lack. The American people have never taken kindly to a depression, and depression has always caused political and social turmoil.The gold standard is not an experiment we need to try because we’ve already tried it. And it’s always been the Republicans who have tried it, and the Democrats who have fought it (e.g., W.J. Bryan, FDR). Just for the sake of the preservation of capitalism and free enterprise in one country, let’s not drive the bus over that cliff again!

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#2 brvheart

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Posted 27 August 2012 - 06:15 AM

I wonder why his first chart of "proof" covered 12+ years, and included the great depression?and then I wonder why his other chart of "proof" was only 4 years, and starts after the economic collapse of 2008.I'm sure it was just an accident. There is no way he would just be picking periods of time that helped prove his point.

View PostiZuma, on 20 August 2012 - 11:32 AM, said:

napa I was jesus christing suited, you guys just slipped in before me.

View PostEssay21, on 25 February 2013 - 08:32 PM, said:

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#3 FCP Bob

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Posted 27 August 2012 - 06:21 AM

View Postbrvheart, on 27 August 2012 - 06:15 AM, said:

I wonder why his first chart of "proof" covered 12+ years, and included the great depression?and then I wonder why his other chart of "proof" was only 4 years, and starts after the economic collapse of 2008.I'm sure it was just an accident. There is no way he would just be picking periods of time that helped prove his point.
One of the major factors that caused the Great Depression was the Gold Standard and it was a major cause of the Deflation during that time as well.
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#4 CaneBrain

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Posted 27 August 2012 - 06:37 AM

View Postbrvheart, on 27 August 2012 - 06:15 AM, said:

I wonder why his first chart of "proof" covered 12+ years, and included the great depression?and then I wonder why his other chart of "proof" was only 4 years, and starts after the economic collapse of 2008.I'm sure it was just an accident. There is no way he would just be picking periods of time that helped prove his point.
Looking at collapses and what was going on leading up to them and during them seems like a great way to figure out how and why collapses happen. I doubt it was an accident; it makes too much sense.
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#5 brvheart

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Posted 27 August 2012 - 06:46 AM

View PostFCP Bob, on 27 August 2012 - 06:21 AM, said:

One of the major factors that caused the Great Depression was the Gold Standard and it was a major cause of the Deflation during that time as well.
Says you. Economists are not in agreement on that, so why are you correct?

View PostiZuma, on 20 August 2012 - 11:32 AM, said:

napa I was jesus christing suited, you guys just slipped in before me.

View PostEssay21, on 25 February 2013 - 08:32 PM, said:

.

#6 brvheart

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Posted 27 August 2012 - 06:46 AM

View PostCaneBrain, on 27 August 2012 - 06:37 AM, said:

Looking at collapses and what was going on leading up to them and during them seems like a great way to figure out how and why collapses happen. I doubt it was an accident; it makes too much sense.
Agreed. It's a real shame that he didn't use the years leading up to the collapse in 2008. Maybe even the same amount of years he used earlier?? Crazy idea.

View PostiZuma, on 20 August 2012 - 11:32 AM, said:

napa I was jesus christing suited, you guys just slipped in before me.

View PostEssay21, on 25 February 2013 - 08:32 PM, said:

.

#7 FCP Bob

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Posted 27 August 2012 - 06:57 AM

View Postbrvheart, on 27 August 2012 - 06:46 AM, said:

Says you. Economists are not in agreement on that, so why are you correct?
Credible Economists who have studied it are in agreement.
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#8 brvheart

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Posted 27 August 2012 - 07:12 AM

View PostFCP Bob, on 27 August 2012 - 06:57 AM, said:

Credible Economists who have studied it are in agreement.
I don't know an Economist that hasn't studied it at some point in their education or career.

View PostiZuma, on 20 August 2012 - 11:32 AM, said:

napa I was jesus christing suited, you guys just slipped in before me.

View PostEssay21, on 25 February 2013 - 08:32 PM, said:

.

#9 FCP Bob

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Posted 27 August 2012 - 07:13 AM

From the Wall Street Journal Survey: No Support for Gold Standard Among Top Economists

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Chicago’s Anil Kashyap says, curtly, “Love of the G.S. implies macroeconomic illiteracy.”
And a link to the actual survey.http://www.igmchicag...cw1nNUYOXSAKwrq
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#10 FCP Bob

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Posted 31 August 2012 - 12:09 PM

Pedro da Costa@pdacosta
Former Fed Vice Chair Alan Blinder on gold standard sympathizers: "They're just one step away from the Flat Earth Society." #JacksonHole
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#11 AmScray

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Posted 01 September 2012 - 12:19 AM

What do you think buoys positive global sentiment on Canadian currency? It's because so much of your otherwise worthless economy revolves around resource and mineral exports. Are you saying the world is incorrect? The reason your currency has been owning the world is because of your politeness? Get a ****ing clue.

We all learned that 1:1 pegging creates trouble, circulating gold has its issues (starting at Gresham's Law and going down the drain from there) but a sane degree of relative gold backing is pretty damn sound currency policy. Most of the garbage you cited to refute this addresses suicide-pact gold standard, which nobody is proposing. There's still room for flexible monetary policy within the realm of a gold standard.

For whatever it's worth, I remember a few of those same "top economists" who, circa 2004'ish, insisted that the outcome of the recent drastic rises in values for homes in Nevada, Arizona and Florida wouldn't be a decrease in their sale prices, but an increase in the average state wage, since businesses would have no choice but to pay their employees more, so they could afford to live there.

Theorists gonna theorize.
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#12 BigDMcGee

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Posted 01 September 2012 - 01:23 AM

Perhaps someone pro-standard can answer this for me, because I've been wondering about it.. Doesn't going on the gold standard put your economy at the mercy of foreign interests? what's to stop, say, china or russia from diging up a bunch of gold and inflating our economy into the ground? I'm not saying that backing currency with something is a bad idea, but it seems to me you'd want to back it on a resource, or something, that you have total control of.
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#13 AmScray

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Posted 01 September 2012 - 11:27 AM

View PostBigDMcGee, on 01 September 2012 - 01:23 AM, said:

Perhaps someone pro-standard can answer this for me, because I've been wondering about it.. Doesn't going on the gold standard put your economy at the mercy of foreign interests? what's to stop, say, china or russia from diging up a bunch of gold and inflating our economy into the ground? I'm not saying that backing currency with something is a bad idea, but it seems to me you'd want to back it on a resource, or something, that you have total control of.

Backing it on something you have total control of is the idealogical basis for fiat currency- backing it on 'faith in government'.
Corrupt entities within the system then have total control over their ability to print more and more of it, when it's not accountable to a neutral backing medium. A globally accepted store of value tends to be the best option. Arguing the philosophy of gold as a store of value (WHY NOT SEASHELLS!!!) is utterly pointless. It's like people who try to argue against the potency of .com when they can register a .info instead.

Also, sometimes, inflation is an ordinary byproduct of shitty governance but it can also have a very dark, very deliberate side that not a lot of people talk about. For example, right now, we're taking heavy advantage of an otherwise deflatinary consumer enviroment (albeit inflationary commodity one) to print a metric shitload of money. When things whip back around, there's additional trillions in the system that may be benign now, but will be angrily chasing after those goods and services when sentiments change. Mom and her savings account will get ****ing cornholed, but it lets us pay back the Chinese with play-money, years down the line.
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#14 JustDoIt

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Posted 01 September 2012 - 03:12 PM

View PostAmScray, on 01 September 2012 - 11:27 AM, said:

Backing it on something you have total control of is the idealogical basis for fiat currency- backing it on 'faith in government'.
Corrupt entities within the system then have total control over their ability to print more and more of it, when it's not accountable to a neutral backing medium. A globally accepted store of value tends to be the best option. Arguing the philosophy of gold as a store of value (WHY NOT SEASHELLS!!!) is utterly pointless. It's like people who try to argue against the potency of .com when they can register a .info instead.

Also, sometimes, inflation is an ordinary byproduct of shitty governance but it can also have a very dark, very deliberate side that not a lot of people talk about. For example, right now, we're taking heavy advantage of an otherwise deflatinary consumer enviroment (albeit inflationary commodity one) to print a metric shitload of money. When things whip back around, there's additional trillions in the system that may be benign now, but will be angrily chasing after those goods and services when sentiments change. Mom and her savings account will get ****ing cornholed, but it lets us pay back the Chinese with play-money, years down the line.

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#15 BigDMcGee

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Posted 01 September 2012 - 03:31 PM

View PostAmScray, on 01 September 2012 - 11:27 AM, said:

Backing it on something you have total control of is the idealogical basis for fiat currency- backing it on 'faith in government'.
Corrupt entities within the system then have total control over their ability to print more and more of it, when it's not accountable to a neutral backing medium. A globally accepted store of value tends to be the best option. Arguing the philosophy of gold as a store of value (WHY NOT SEASHELLS!!!) is utterly pointless. It's like people who try to argue against the potency of .com when they can register a .info instead.

Also, sometimes, inflation is an ordinary byproduct of shitty governance but it can also have a very dark, very deliberate side that not a lot of people talk about. For example, right now, we're taking heavy advantage of an otherwise deflatinary consumer enviroment (albeit inflationary commodity one) to print a metric shitload of money. When things whip back around, there's additional trillions in the system that may be benign now, but will be angrily chasing after those goods and services when sentiments change. Mom and her savings account will get ****ing cornholed, but it lets us pay back the Chinese with play-money, years down the line.

Okay, but that still didn't answer my question. If we get a gold backed ( or partially gold backed) currency, couldn't a foreign power destablize our economy by flooding the market with gold? It seems to me that if we really want to go to a gold back currency, then that currency should be an international one, so at least foreign powers would have no incentive in destabilizing it. of course, an international currency has it's own series of issues, but I just think that a Gold standard would become a National Security risk, isn't that part of the reason we went away from it?
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#16 AmScray

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Posted 01 September 2012 - 07:49 PM

View PostBigDMcGee, on 01 September 2012 - 03:31 PM, said:

Okay, but that still didn't answer my question. If we get a gold backed ( or partially gold backed) currency, couldn't a foreign power destablize our economy by flooding the market with gold?

The short answer is no.
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#17 BigDMcGee

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Posted 01 September 2012 - 09:48 PM

View PostAmScray, on 01 September 2012 - 07:49 PM, said:

The short answer is no.

Was kinda looking for a long answer, tho. Thanks anyway.
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#18 colonel Feathers

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Posted 17 September 2012 - 08:13 PM

View PostAmScray, on 01 September 2012 - 07:49 PM, said:

The short answer is no.
Since gold is a finite commodity, I would think flooding the market in the long run would have the opposite efect.Since we could just buy it up and hoard it.
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#19 AmScray

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Posted 21 September 2012 - 12:51 PM

View Postcolonel Feathers, on 17 September 2012 - 08:13 PM, said:

Since gold is a finite commodity, I would think flooding the market in the long run would have the opposite efect.Since we could just buy it up and hoard it.

The idea of "flooding the market with gold' is an almost child-like estimation of the amount of gold planet eath has at its disposal, relative to politicians ability to fabricate mind-boggling cash out of thin air.

To wit: Our deficit spending during the Obama administration has been, what? 4 or 5 trillion?
That's 4,000,000,000,000 in four years.

The entirety of all gold remaining on planet earth is 5,890,591,000 ounces. Lets say mankind really pulled our shit together, dropped everything we were doing and extracted ALL the remaining gold left on earth. Every country, we just started a campaign to turn the earths crust upside down and extract it all. We can safely assume that would seriously impact the supply and price in hugely neative way but lets be super-mega optimistic and say that it still remained at $1K an ounce, even after the market were flooded with the entirety of the earths available gold stock.

That would result in $5,900,000,000,000 net asset increase.

So, in four years, with a few strokes of a pen, one single country defecit spent about 70% of that.
"That" is all the gold left on planet earth, if we were to extract it at once and value it at $1000 per ounce.

So, that's the "long answer" he was looking for, I guess.
The point is, no. If we use gold as a valuation basis, it limits overnments from engaging in irresponsible monetary policy. It doesn't mean 1:1 pegging, but there are several nuanced ways where it can be used as a brake to reckless politicians which, apparently, is something our generation needs very badly.
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