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Topic:
The Evil Fed Or Why do we want to go back to the Gold Standard?
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Ender_Sai
Title: Manager Emeritus
Registered:
Feb '01
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Date Posted:
1/23 2:13pm
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
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Droid General,
When you say "correct, that's why we have crisis" you realise I doubt you entirely?
First, centrally planned economies don't exist in the West. They existed in "socialist" countries. Again, another term you heard on RonPaulForums.com and misapplied here?
The key facet of a centrally planned economy is that the state, as controller of all "enterprise", is wholly in control of the economy. Inflation exists because competition doesn't. That competition, which is designed to provide the most cost effective product to the consumer, is vital because it also prompts innovation and higher output. Without it, as we saw in Russia and Eastern Europe, there's constantly a struggle for supply to match demand. So you have shortages, and eventually inflation.
That's not the cause of inflation here, but then again, we don't have centrally planned economies.
Given, however, the confidence with which you link central planning to economic crisis and the like, I'd like you to please explain the causes of the current US economic downturn, and how Federal Reserve was involved, and how the gold standard would have prevented it?
Cheers! 
ES
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In this truth he knew himself to be.
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DroidGeneral
Registered:
Jun '05
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Date Posted:
1/23 4:58pm
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
- Date Edited:
1/23 4:58pm (1 edits total)
Edited By:
DroidGeneral
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Ender_Sai posted:
Droid General,
First, centrally planned economies don't exist in the West. They existed in "socialist" countries. Again, another term you heard on RonPaulForums.com and misapplied here?
Social Security, Welfare, Medicare, Medicaid are all expamples of central economic planning. Central economic planning does exist in the West and in the United States.
eventually inflation.
Ender Sai posted:
That's not the cause of inflation here, but then again, we don't have centrally planned economies.
You live in Australia, please stop refering to the US as "here". I don't try and tell you your country's economic situation, don't preach to me about mine.
Ender Sai posted:
Given, however, the confidence with which you link central planning to economic crisis and the like, I'd like you to please explain the causes of the current US economic downturn, and how Federal Reserve was involved, and how the gold standard would have prevented it?
Cheers!
ES
Oh not so fast slick. You still haven't explained to me why my belief about the Fed's out-of-thin-air money creation is incorrect. So please answer that.
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"The Force will be with you, always." "Star Wars isn't dead."-George Lucas  Ron Paul 2008
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Ender_Sai
Title: Manager Emeritus
Registered:
Feb '01
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Date Posted:
1/23 5:17pm
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
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We have repeatedly - you should try reading AND comprehending! Yay!
ES
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J-Rod
Registered:
Jul '04
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Date Posted:
1/23 5:28pm
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
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DroidGeneral posted:
Oh not so fast slick. You still haven't explained to me why my belief about the Fed's out-of-thin-air money creation is incorrect. So please answer that.
Serious? Yes he has...repeatedly. And well enough to clear up my own understanding of it.
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Lowbacca_1977
Title: Senate Moderator
Registered:
Jun '06
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Date Posted:
1/23 6:11pm
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
- Date Edited:
1/23 6:11pm (1 edits total)
Edited By:
Lowbacca_1977
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DroidGeneral posted:
Ender_Sai posted:
Droid General,
First, centrally planned economies don't exist in the West. They existed in "socialist" countries. Again, another term you heard on RonPaulForums.com and misapplied here?
Social Security, Welfare, Medicare, Medicaid are all expamples of central economic planning. Central economic planning does exist in the West and in the United States.
eventually inflation.
I'm no economist, but those aren't at all what Ender talked about by using the term centrally planned economy. It does not mean that an entity is spending money on the federal level and the decisions are from a centralised location or whatever you're interpretting it to mean.
Wikipedia's definition (itself cited to the books Construction Economics and Market Socialism: The Debate Among Socialists) is that "In such economies, the state or government controls all major sectors of the economy and formulates all decisions about their use and about the distribution of income,[4] The planners decide what should be produced and direct enterprises to produce those goods."
Social Security, Welfare, Medicare, Medicaid, and other elements of government spending simply do not fit that definition. At all.
DroidGeneral posted:
Ender Sai posted:
That's not the cause of inflation here, but then again, we don't have centrally planned economies.
You live in Australia, please stop refering to the US as "here". I don't try and tell you your country's economic situation, don't preach to me about mine.
1. Its economics. That's not region dependent.
2. I'm pretty sure he meant the western world, as in its not the cause of inflation in the western world, because he also used a plural economy, which would imply more than one country.
3. Then we will have to discount Ron Paul's economic views as well as, while he American, he adheres to the Austrian or Vienna school of economics, and as we all know, Austria isn't America. Therefore, while the Austrian school's views are fine for Austria, they have no place in America.
DroidGeneral posted:
Ender Sai posted:
Given, however, the confidence with which you link central planning to economic crisis and the like, I'd like you to please explain the causes of the current US economic downturn, and how Federal Reserve was involved, and how the gold standard would have prevented it?
Cheers!
ES
Oh not so fast slick. You still haven't explained to me why my belief about the Fed's out-of-thin-air money creation is incorrect. So please answer that.
Wouldn't explaining why your belief IS correct be better? Or, if we're going to stick in the realm of disproving things only, disprove my assertion that the value of gold is only slightly less arbitrary than the value of currency.
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darthdrago
Registered:
Dec '03
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Date Posted:
1/23 6:23pm
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
- Date Edited:
1/23 6:25pm (1 edits total)
Edited By:
darthdrago
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DroidGeneral posted:
Ender Sai posted:
Given, however, the confidence with which you link central planning to economic crisis and the like, I'd like you to please explain the causes of the current US economic downturn, and how Federal Reserve was involved, and how the gold standard would have prevented it?
Cheers!
ES
Oh not so fast slick. You still haven't explained to me why my belief about the Fed's out-of-thin-air money creation is incorrect. So please answer that.
Well, I've noticed that you haven't responded to my earlier post stating that the Fed/Treasury-prints-money-out-of-thin-air argument is clearly misleading because of the fact that the Fed/Treasury/Mint are constantly replacing worn-out currency notes and the occasional coins with newly printed/minted ones. In order for the inflation to occur as a result of the printing & minting of money by the Gov't, you'd have to know exactly how much of the currency notes & coins are replaced on a one-for-one basis AND you'd therefore have to know the exact "surplus" amount of notes & coins that are allegedly causing the inflation to occur after the currency is exchanged. Any thoughts, DG?
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Ender_Sai
Title: Manager Emeritus
Registered:
Feb '01
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Date Posted:
1/23 7:19pm
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
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As J-Rod said, I have explained.
Droid-General hasn't.
We're waiting.
ES
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DroidGeneral
Registered:
Jun '05
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Date Posted:
1/23 8:49pm
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
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Ender_Sai posted:
As J-Rod said, I have explained.
Droid-General hasn't.
We're waiting.
ES
You haven't clearly explained why I'm incorrect on that particular issue. You've maybe explained why it may be necessary to have endless credit but you haven't dispelled by belief that they print it out of thin air.
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Ender_Sai
Title: Manager Emeritus
Registered:
Feb '01
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Date Posted:
1/23 9:07pm
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
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I damned well have, but do you need me to do the research for you?
Basically, the closest they come to creating money is when the central bank sets reserve ratios for commercial banks which dictates how much those banks must hold in customer deposits and notes. These notes satisfy basic withdrawl demands.
More importantly, the central bank reserve ratio prevents banks from generating excess money.
A central bank then might issue banknotes or account balances by buying financial assets and paying for them with its own banknotes or crediting the seller's account with the central bank. This creates money that the commercial banks can use as reserves to meet the minimum reserve requirement. The commercial banks can therefore expand their issue of banknotes and/or account balances by the amount of additional reserves divided by the reserve ratio.
This completely destroys the "thin air" argument since the money "created" cannot be in excess of any securities or assets the bank holds. Say, for example, the US Fed Reserve buys $1,000,000 in govt bonds (which are basically low risk, lower yield "safe" bonds) from a commercial bank. That bank now has $1mil more in their reserves, and if the reserve ratio is, say, 10% it can now accept an additional $10,000,000 in deposits from customers on current accounts.
To buy that million dollars worth of bonds, however, the Fed would have to either, as I said earlier, trade a security or asset (inc. cash reserves of their own).
In the US, I believe the treasury can issue a security which is basically a note of debt from the Govt relative to the value of that security. If the Govt issues that security, it "creates" money that in intends to repay from generated revenue.
Even then, it's not creating it out of thin air, but rather borrowing against guaranteed national savings (aka GDP).
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DroidGeneral
Registered:
Jun '05
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Date Posted:
1/24 9:06am
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
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Ender_Sai posted:
This completely destroys the "thin air" argument since the money "created" cannot be in excess of any securities or assets the bank holds.
Actually it doesn't. Since nothing backs the dollar the Fed is able to create endless credit. If gold (or other types of sound money) does not back the currency and paper is essentially worthless, there is no end to the credit they can dish out. They are not audited by the Congress, their meetings are closed to the public and the only thing we know about the meetings is the few notes they take and those are often lacking in detail.
If there is no backing to the money they are free to print as they will and politicians are free to spend as they will.
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1stAD
Registered:
May '01
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Date Posted:
1/24 9:25am
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
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Gold has no intrinsic value though, so what difference does it make if there is a currency backed by gold, other than being limited by the physical supply of gold available?
I just don't see how a gold-backed currency would have any kind of stabilizing effect on an economy, since it is inflexible by design.
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DarthKarde
Registered:
Jun '02
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Date Posted:
1/24 10:36am
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
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1stAD posted:
Gold has no intrinsic value though, so what difference does it make if there is a currency backed by gold, other than being limited by the physical supply of gold available?
I just don't see how a gold-backed currency would have any kind of stabilizing effect on an economy, since it is inflexible by design.
The fact that gold has no intrinsic value is unimportant. As silly as some people seem to find this it has been considered valuable for thousands of years and it's value is remarkably stable over long periods of time. That isn't a case for having a gold standard but the "no intrinsic value" arguement isn't a good reason not to.
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darthdrago
Registered:
Dec '03
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Date Posted:
1/24 10:44am
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
- Date Edited:
1/24 10:45am (1 edits total)
Edited By:
darthdrago
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DroidGeneral posted:
Since nothing backs the dollar the Fed is able to create endless credit. If gold (or other types of sound money) does not back the currency and paper is essentially worthless, there is no end to the credit they can dish out.
DroidGeneral (or even DarthKarde), platinum is worth more than gold. (Currently worth over $1500 per troy ounce, and edging close to $1600.) Why don't we use platinum to back the dollar instead? Assuming that gold or any other precious metal does have an intrinsic value, why don't we use platinum instead?
PS: I'm still waiting for you to answer how the printing if money is inflationary if they're constantly replacing worn-out currency.
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Lowbacca_1977
Title: Senate Moderator
Registered:
Jun '06
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Date Posted:
1/24 10:54am
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
- Date Edited:
1/24 10:56am (1 edits total)
Edited By:
Lowbacca_1977
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It wasn't neccessarily always valuable though.
Gold is only valuable because other people think its valuable.
I would only give value to gold in the sense that someone else would also consider it valuable and I can get things for it, just like I only value a dollar bill because the next person will and so I can get things for it.
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DroidGeneral
Registered:
Jun '05
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Date Posted:
1/24 11:33am
Subject:
RE: The Evil Fed Or Why do we want to go back to the Gold Standard?
- Date Edited:
1/24 11:43am (3 edits total)
Edited By:
DroidGeneral
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darthdrago posted:
I'm still waiting for you to answer how the printing if money is inflationary if they're constantly replacing worn-out currency.
That's not what they are doing. The replacing of old currency is probably a fraction of a percent of what the printing goes to. Since the US government doesn't have any money it has to borrow it. It an either A) borrow it from foreign bankers or B) borrow it from the Fed. Since the Fed doesn't have any gold reserves, they create credit out of thin air by essentially just telling the treasury how much to print. Then they charge interest on the money they loan. Someone asked earlier why it would be bad if they charged interest on the money they loaned. Because its money they didn't have in the first place! You have to understand that the "Federal Reserve" is no more federal than Federal Express. It is a banking cartel. The Federal Reserve Act was written by bankers, in secret. The meetings are secret. The Fed does not serve the interest of the American people or the American economy, it serves the interests of central and international bankers.
1stAD posted:
Gold has no intrinsic value though, so what difference does it make if there is a currency backed by gold, other than being limited by the physical supply of gold available?
I would argue that gold does have intrinsic value. There is an actual effort in creating gold money. Gold must be mined from the earth. It must be physically pulled from the earth and melted then cast into coin or bars or what not.
Think about this, in ancient Rome, a 1 ounce gold coin would buy you a nice robe, a nice belt and a nice pair of sandals. Today one ounce of gold will buy you a nice suit, a nice belt and a nice pair of shoes.
Dr. Paul made a good argument @ the ABC New Hampshire debate. Around 4:30
http://www.youtube.com/watch?v=CcbApfNV0Co
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