Ryan Bailey

At the CNN/ LA Times Debate at the Reagan Presidential Library Ron Paul reported that Renaldvs Magnvs had told him;

"All great nations that go off the Gold Standard are no longer great"

I personally support metallism as currency.

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"If we will not be governed by God then we will be ruled by tyrants" -William Penn

troung

Why not a sheep standard?

There are lots of sheep, one can breed more to keep up with economic growth, and they are popular in New Zealand and Scotland.

Makes more sense then a shiny metal, one can eat a sheep.

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To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway

gunnut

What great nations was he refering to?

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"Only Nixon can go to China." -- Old Vulcan proverb.

dalem

They don't last as long in the safety deposit box.

-dale

troung

But they taste SO good.

Or with the size of the world economy we might as well use the tin foil standard - which BTW is a hot commodity for Ron Paul supporters, the price has been going up due to the rising demand for tin foil helmets since his campaign started.

You can keep it in a safety deposit box and wear it....

Attached Images

	ali2.jpg (46.7 KB, 59 views)
	tinfoil-hat.jpg (24.4 KB, 59 views)

SteaminDemon

Hmmm, I wouldn't mind monopoly money so long as I collected $200 every time I passed go and got the free parking once in a while. What about the chance and community chest? What are we to do about those? Seems the only ones that would get the get out of jail free cards are some of those pesky politicians.

On a serious note, thanks for all the informative posts all. Learn something new every day.

FlyingCaddy

The difference between Iron and gold is the scarcity of gold vis a vis iron.

Oil is an inferior commodity to gold because of the difficult of transport AND the numerous pratical applications for it.

Gold is a good commodity for currency because it is scarce and lacking many practical uses.

FlyingCaddy

You mean like the US used to do. The supply of money is absurd, the loss of value in the Dollar is comical and inflation is running its fastest rate since the early 1990s.

gunnut

What is the loss of value? Compared to what? What time frame?

High inflation? What is the current inflation rate? What is the average inflation rate of western Europe?

FlyingCaddy

Loss of value vis a vis other currencies, especially is an import based, consumer driven, economy. Also the loss of value in comparison to the dollar's value in years past, it take more dollars now to buy the same basket of goods purchased last year.

2007 Inflation Rates by Country, nevertheless, please note that inflation cannot really be compared between nations. When comparing currencies across nations , the appropriate measure is the exchange rate.

Shek

Some inflation is good - it's like a lubrication for the economy, and the key is that it's a stable amount. In the US, 2.0% is considered to be ideal. No inflation or deflation is bad. Just ask those who lived through the great depression or the Japanese and see what they thought of falling real prices. Thus, 0% inflation or less is not what we are after. The key here is to link price stability to growth.

In terms of the gold standard vs. fiat, we can look at past history to consider price stability and its effects. The US went off the gold standard in 1973 for good. Compare price stability and the stability of growth prior to 1972 and after.





For the look at price stability, pull up the attached file. Notice the relationship between price stability in the Voelker/Greenspan/Bernanke era and stable growth: the two longest expansions in post-WWII era combined with very soft recessions.

Attached Files

Annual Inflation Rate in US since 1914.ppt (72.0 KB, 4 views)

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"So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

FlyingCaddy

Yes, Yes, YEs, but I think the current dynamics are changing especially since foreign consumsers of U.S. debt are losing confidence in Bond investments and the Fed is acting very irresponsibily with its constant rate cuts. If it keeps doing this, the Fed will paint itself into a tricky situation like Japan only 5 years ago where the interest rate on bands were negative. Moreover, supply issues are effecting exchange rates of the Dollar compared to the Yuan, Yen, Won, and Euro, which will harm consumption because the US is an import driven economy.

gunnut

Oh really? I spent $450 on a 19" LCD monitor 2.5 years ago. It's selling today at $159. The same computer I can't find on the market today was selling for $1200 2 years ago. My current car that is about the same size as my first car 19 years ago, except with a bigger engine, AWD, antilock brakes, CD player, 6 more airbags, was $5000 more. You couldn't find the same equipment 19 years ago for anything less than $50k. If I were to buy the same equipment, I can get the same car today for the same price, not adjusted for inflation.

Lots of items are coming down in price. We just don't use them to see how much our lives have improved. Instead we focus on things that don't change in value.

OK, let's not compare inflation rates between nations. Let's compare inflation rates between different periods of this nation. What's the inflation over the last 10 years vs. the inflation in 1960s?

Shek

You're conflating issues here and missing out on what fully drives exchange rates. Investors are reacting some to rate changes, but also to the fiscal outlook many years in the horizon and the current macroeconomic outlook. For the most part, it wasn't individual investors sucking up treasuries (created due to fiscal deficits), but most often the so called sovereign wealth funds. Individual investors have been seeking the higher rates of risk-adjusted return that the US offers, and this is evident due to the large capital inflows that you can see in the financial account.

So, the fact that greenbacks aren't anchored to gold is mostly irrelevant, unless you are suggesting that the US go to a fixed exchange rate regime with an uncompromising gold/dollar anchor, in which case, you offer a suggestion that neuters the Fed, prevents any ability to react to world macroeconomic shocks, and is fraught with boom/bust cycles that are exacerbated by the lack of price stability.

Lastly, please define for me the cutoff for an "import-driven" economy. Thanks.

The Chap

Try telling a girlfriend that, say, diamonds are worth xyz because DeBeers restrict the supply. Monetarism with rocks. Tell her again that the difference twixt a "real" diamond" and one grown in a lab is that the latter has no flaws.

Value is a trade item. Much like respect, fear, circumstance and hope. An IOU: let us face it all currency other than its actual physical worth on (for coinage) a metals exchange or scrap (numismatics later) promissory note or metal token. Casino chips are no different. They act as private currency. when a chip is exchanged for a note (bill for Yanks) we exchange our faith in one IOU for that of faith in another. What if one breaks the bank in Monte Carlo? Casino chips only suffer from inflation as the reserves and denomination chosen by the house do. A casino that goes bust is more like an African kleptocracy, than a litteral bank that is broken. The former has material value, and when taken over may return to profit. Reputation, confidence, the "climate" and expectation - well at least a fresh start -are on the table. A bust bank is such 'cos other than office supplies it has nothing. Unless, it seems, you are Northern Rock and cheapy (sub-prime equivalent) mortgages were used in the regions the incumbent Labour administration depends upon to create a bubble. Then it appears possible to skim ~£3,400 per tax payer to prop it up. Yeah $7,000. I digress.

Rothschilds took "Great Britain" as security, even in the most uncertain of times.

Worth and hence the assignation of trade media are defined by whomever one wishes to trade with. A buyers market. The Empires past say it all.

As with chemin de fer, the safest bet is on the house. Peters treasure is Pauls junk. The cost of labour reflects this in the shiny mirror of the rise of the gold price. The destruction of fuedalism in England was largely due to depopulation. Ahh, plague as a force of liberation. Any of the four horsemen drive the collective psyche toward known security. The historical regard for gold means that it has become an eternal redoubt, a financial Camalot, a fiction that does not tarnish.

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Where's the bloody gin? An army marches on its liver, not its ruddy stomach.