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What an unrelenting tissue of lies and misstatements. In the 1920s, we had a "gold exchange standard", not a "gold standard". As John Carney recently wrote about another ignorant and inept attack on gold:The other thing that is very odd here is O’Brien using the 1920s as evidence for what happens under a gold standard. Rothbard’s book on the depression very specifically argued that the 1920s was a time of massive monetary growth unbacked by gold. It was this nearly invisible monetary inflation, Rothbard argued, that eventually led to the boom-bust cycle that resulted in the Great Depression.You can read Rothbard’s book at the Mises Institute’s website here.Joseph T. Salerno, another prominent Austrian, explained the Austrian view of the 1920s in this 1999 article for The Freeman.Indeed, we find that from the inception of the monetary inflation in mid-1921 to its termination at the end of 1928, “uncontrolled reserves” decreased by $1.430 billion while controlled reserves increased by $2.217 billion. Since member bank reserves totaled $1.604 billion at the beginning of this period, this means that controlled reserves shot up by 138 percent or 18.4 percent per year during this seven-and-one-half year period, while uncontrolled reserves fell by 89 percent or 11.9 percent per year. Thus Rothbard correctly concluded that the 1920s were an inflationary decade and that it was indeed the intention of the Federal Reserve System that it be so.http://www.cnbc.com/id/48806186Inflationary funny money loans and money creation redeemable in gold. Sounds like a disaster in the making. BUT IT'S NOT A FREAKIN' GOLD STANDARD, you liars!
A gold exchange standard is setting the value of a currency at a fixed rate of exchange for a specific amount of gold, like $35 at the time the US was on the gold exchange standard in the 1930's. The dollar was later devalued to $42 an oz.A gold standard fixes the currency to specific amount of gold, with the value of currency floating with the market price of gold, revaluing on a moment by moment basis as market prices rise and fall. Just everyone would have to hedge on a regular basis in the gold futures market under such a system, or some alternative to avoid exposure to price fluctuations. This would be tanta mount to bartering in gold since many people would demand gold in payment or convert immediately to gold to avoid exposure through the currency. Extension of credit would also be gold denominated, and with gold scarce and liquidity in gold highly desirable, interest rates would reflect this.Anyone who thinks that the US or the global economy is ever going to a gold standard may be waiting a long time.
The ONLY people talking about "gold" these days are Ron Paul and the Austrians like Tom Woods, Bob Murphy, Edwin Vieira etc….These people have set forth a meticulous and voluminous historical, constitutional and economic explanation for each and every boom/bust recession/depression since the founding this country. Friedrich Hayek won the Nobel Prize for his work on the Austrian Business Cycle Theory. The fact is that the anti-Austrian cohort is congenitally unable to directly engage those very specific arguments. This demonstrates that they know they would lose if they did engage them. Instead, they try to deceive the public about the nature of those arguments. Otherwise, they would simply directly engage the arguments and refute them. They do not because they cannot.
Quote: "Otherwise, they would simply directly engage the arguments and refute them. They do not because they cannot."They have engaged with directly them and the result of firing anyone who disagreed with them. You are failing to response or tolerate debate. See http://www.youtube.com/watch?v=WVlqwJ00LMU&feature=player_embedded
Bob Roddis,You claimed elsewhere that gold standard coincides with peace and precludes war payments. Funny thing: the historical record belies it. The gold coinage arose precisely to pay for wars. For 3000 years of human history people did just fine with credit money, then around 800BC mercenary armies started to be employed, simultaneously and independently in Greece, India and China. And coinage arose there at the same time. Credit relations are based on trust, how do you pay a mercenary you will never see again because he lives far away? You give him a share of the loot. How did gold end up in circulation (previously it was stored in temples and palaces as treasures) - it was STOLEN. So the origin of coinage is theft and the reason for its spread is to enable further plunder.Read about it eg. in David Graeber's book or any book on the history of the Axial Age.
Bob Roddis -- Just curious: Why do you feel compelled to add a gratuitous insult to almost every comment you post? Do you think it adds to the strength of your arguments or is it just a way of distracting people so they won't see how weak your arguments really are?
So how would your "Gold standard" be different from a gold exchange standard Bob?Seems to me if you call it a gold standard but dont actually promise any particular amount of gold to skittish currency users in exchange for their dollars your not really doing anything to relieve their skittishness. Its just a Romney "trust me on this" moment.
Gregg, So how would your "Gold standard" be different from a gold exchange standard Bob?Seems to me if you call it a gold standard but dont actually promise any particular amount of gold to skittish currency users in exchange for their dollars your not really doing anything to relieve their skittishness. Its just a Romney "trust me on this" moment.People could convert their currency to gold in the market, and a lot would since they would rather be holding gold than currency. Central banks would also hold a lot of gold instead of foreign reserves. There's only so much gold in the world and to support both commerce in a world of growing population and emerging economies, central bank gold reserves, and a great deal of saving in gold, the value of gold would be trending up constantly, creating the opposite effect of inflationary currencies, that is, constant deflation. Guess what kind of effect that would have.
Bob's argument is: if you don't let people borrow money, there would never be a problem. Instead you can just force people to work for less and less money over time. That way people like Bob with some gold in a safe in the basement can get richer and richer whilst sitting on their ass as other people get poorer.Of course, the market wouldn't create such a stupid system. Such a stupid system would have to be imposed. As we know, the market creates credit. It creates promises, loans, debts. Bob hates the market and dreams of a time when he can get rich just sitting on his ass jacking off over a lump of gold.
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