Gingrich: Say, that gold standard looks like a pretty good idea
posted at 1:55 pm on January 18, 2012 by Ed Morrissey
Could Newt Gingrich steal some of Ron Paul’s thunder to generate enough support to beat Mitt Romney in South Carolina? It might be difficult to swing Paul voters to another Republican candidate, even in the general election, but it looks like Gingrich plans to give it a try. Daniel Halper at The Weekly Standard reports on Gingrich’s decision to raise the issue of a return to “hard money” and the gold standard:
“We need to get our house in order. And we need to vaccinate ourselves against foreign contagion. The correct answer to the Euro is not to spend more American money propping up the Germans who prop up Southern Europe. The correct answer is to figure how we seal our banks off; how we make sure we protect ourselves and then say to the Europeans: you have a problem and you need to solve it.
“Part of our approach ought to be to reestablish something Ronald Reagan did in 1981 and that is to have a Commission on Gold to look at the whole concept of how do we get back to hard money.
“We need to repeal the Humphrey-Hawkins Act. We need to say to the Federal Reserve: your only job is to maintain the stability of the dollar because we want a dollar to be worth thirty years from now what it is worth now because that optimizes saving and investment because people know what they are going to back.
“The very purpose of founding the Constitution was landowners and property owners who did not want inflation. And they felt that under the Articles of Confederation they were increasingly getting inflated paper money.
“Hard money is a discipline. It means you can’t just hide from your problems; you’ve got to solve them. And you can’t inflate away your difficulties; you actually have to work them away. But I think it is very important for us to understand in finance that the entire contraption that has been built up over the last thirty or forty years has so much paper in it, so much debt, so much leverage, that we probably have a fifteen or twenty year period of working our way out of it.
“And yet, the alternative is to get sicker and sicker and sicker.”
If that sounds familiar, it’s because Ron Paul has been offering that policy for decades, both on the stump and in his newsletters (the latter of which contained a whole lot of other less-savory notions, too). Gingrich doesn’t quite go as far as to call for a return of the gold standard; a careful reading of this statement reveals a pledge to study the issue, as Reagan did in the 1980s. Unless my recall is faulty, though, that effort in 1981 didn’t produce any action on behalf of Reagan or the Republican Party to push through a move back to gold or any other hard-money system.
Putting aside the historical allusions, though (there were a lot of reasons that the Articles failed, and inflation was hardly the worst of them), this could be dangerous ground for Gingrich. He already has a reputation for offering “bold” ideas that few people actually want. Outside of the Paul contingent, most people would not identify the gold standard as one of the most pressing goals for the US. In theory, it sounds like a great idea, and Gingrich is correct that it would put serious limitations on government — but we would have to implement those limitations prior to a return to the gold standard under current conditions, and the limitations are an end unto themselves without having to add the complication of explaining a return to the gold standard on top of it.
Still, it’s a clever little signal to Paul’s supporters, at relatively low risk, since only Paul would want to extensively debate the gold standard in this cycle. It’s a wink that says, When you realize that your candidate doesn’t stand a chance, remember who agrees with Paul’s fiscal policies, as well as a hint to other Republicans that Gingrich could keep Paul’s voters in the tent in November. We’ll see whether that helps Gingrich in South Carolina.
Blowback
Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.
Trackbacks/Pings
Trackback URL
Comments
Comment pages: « Previous 1 2 3
You don’t know this for sure. If the Fed hadn’t lowered interest rates, then people might not have enough disposable income to neither save NOR consume.
had the Fed not artificially lowered interest rates, interest rates would be higher causing people to save more rather than consume.
Economic growth (and avoiding economic contraction) isn’t a political decision – it’s an economic decision. Would you rather have 1.5% GDP growth, and a 1% savings rate or -2% GDP growth and a 5% savings rate?
I strongly oppose deficit spending and all stimulus spending, but monetary easing during periods of economic contractions can and should be done without either.
blink on January 18, 2012 at 5:54 PM
See, this is exactly where you go wrong.
Our current monetary policies gives us the flexibility of smoothing and maintaining economic growth – which is mostly certainly a good thing. It would be stupid to allow economic contraction simply because of a bad monetary policy.
Now, our monetary policy also provides cover for years of bad fiscal policies (as we’ve been experiencing), however we don’t NEED to take our medicine now. If we simply adopted sound fiscal policies today, then we can avoid having to take our medicine at all. Again, don’t blame the monetary policy for problems being created by bad fiscal policies.
blink on January 18, 2012 at 5:59 PM
It was your context, dimwit.
blink on January 18, 2012 at 6:00 PM
Yea…
The guy who resorted to class warfare is going to get votes from the ultra capitalists…..
Zybalto on January 18, 2012 at 6:02 PM
I’d trust Newt over Romney.
Key West Reader on January 18, 2012 at 6:08 PM
My entire paragraph makes it clear to a rational reader that I meant that it’s not the existence and structure of the fed that is causing the inflation and that it is the strains that our elected officials have put on the fed to avoid economic disaster.
blink on January 18, 2012 at 6:09 PM
Please stop defining Obama’s message.
Key West Reader on January 18, 2012 at 6:11 PM
What’s the difference between a fed that relaxes the dollar peg to gold and a fed that does what it does now???
The fed has dozens of members so how is it a monopoly? In fact, you can own part of a membership in the fed simply buy buying certain bank stocks. If you think that the fed is somehow unfairly profiting from monetary policy, then you should buy some of these stocks so that you can benefit, too.
blink on January 18, 2012 at 6:17 PM
The same thing can easily be said about anyone that has the power to adjust the dollar-to-gold peg in any type of gold standard.
blink on January 18, 2012 at 6:18 PM
It’s going to take more than a message to define this election.
It’s going to take more than rhetoricc to define this election.
This election is about saving the middle class.
This election is about demonstrating how the Obama agenda and its its liberal media ALMOST SUCCEEDED in making the middle class extint.
They will not succeed. We will.
Newt/West
2012
Key West Reader on January 18, 2012 at 6:18 PM
I mis-spelled a word above.
I invite the college educated class, the OWSie’s to correct my spelling.
Key West Reader on January 18, 2012 at 6:20 PM
It seems as if you might be able to see the point. The problem isn’t with the mechanism by which we are allowing the federal government to accumulate debt. The problem is the fact that we keep electing people that keep forcing us to accumulate debt. These people will be capable of forcing us to accumulate debt regardless of the mechanism that they decide to use.
blink on January 18, 2012 at 6:21 PM
Such authority would be better used balancing the budget than trying to return us to a gold standard. A gold standard would be a disaster, and a fractional gold standard wouldn’t change anything that you seem concerned about.
blink on January 18, 2012 at 6:25 PM
Well at least I live in California. There is gold en them there hills.
boogaleesnots on January 18, 2012 at 6:26 PM
Newty promises to get the nation back on the gold standard, huh? Sure, why not. Hey, since he has no problem pandering to the Paultards by making ridiculous promises, maybe he can try to win black voters by promising them 40 acres and a mule? How about a chicken in every pot and everybody gets a new Lexus.
cicerone on January 18, 2012 at 6:31 PM
Perhaps, but the gun has not yet been fired. Gingrich is calling specifically to harden Fed policy, but it seems that the Fed flexibility was needed to cope with the spendthrifts in Congress and the WH. Yes, the Fed could have caused a collapse, but that would not have solved anything except to call attention to something that most reasonable people were already aware. The people that are not reasonable we call Democrats, and there is no telling what story they would have concocted to explain the facts, but they would have eventually found an explanation that called for higher taxes and more regulations.
pedestrian on January 18, 2012 at 6:31 PM
Comrade Newty’s next bogus pander to Paultards will be something like promising to hand over the nuclear launch codes to the Iranians so that there’ll be no hard feelings and stuff. Naturally Israel will have to be sacrificed in order to appease Paultard sensibilities, too.
cicerone on January 18, 2012 at 6:33 PM
Government currencies are an archaic idea that needs to end. If money was printed by private companies, they could use whatever standard they please and people could use it or not use it as they see fit depending on the standard they prefer. It’s hard for people to see how it would work because the established system is so ingrained, but if the Founders could tell us one thing from the grave, it would be to get government out of the currency business. It truly is the root of evil when it is in the hands of the government.
Buddahpundit on January 18, 2012 at 6:44 PM
No, he just wants Perry to drop out before South Carolina. He’s playing for a Perry endorsement.
Gall on January 18, 2012 at 6:48 PM
No, he didn’t.
blink on January 18, 2012 at 6:58 PM
it’s amazing how this morone would say anything to get elected…first he attacks capitalism, then, when he get called on it and his lying manners (which, alas, it came as a surprise to him), he dropped that line of attack, now he’s the biggest fan of the gold standard. seriously? what next? this man is a bad, bad joke, really.
jimver on January 18, 2012 at 7:06 PM
Do you think that FDA should disallow snake oil salesman?
blink on January 18, 2012 at 7:07 PM
I can see that while we both are fiscal conservatives, you seem to embrace Monetarist theory, while I embrace Austrian economics.
I followed Milton Freedman for some years and am familiar with Monetarist theory, but I do not think you are familiar with the Austrian Theory of Business Cycles.
If you should care to enlighten yourself (and take our debate to the next level), please see the following CNBC article.
Here’s Why the Fed Plan is Failing: We’re All Austrians Now
http://tinyurl.com/27zv9p7
classical liberal on January 18, 2012 at 7:08 PM
And you know this will continue… how?
Oh, so I guess that all that election-year rhetoric of returning to a time when gas was $1/gallon was just a load of, ahem, hot gas. Because what’s really bad about $3/gallon gas isn’t the $3/gallon part, it’s that it’s not guaranteed to stay at $3/gallon (i.e. not be subject to inflation), right? Isn’t that the same kind of rhetoric to support price fixing?
Everyone who spends as much money on their food bills as their mortgages, please raise their hands.
You’re taking deflation out from the macroeconomic context where it’s important and into the microeconomic economic context where it isn’t. Wouldn’t it be great if all of a sudden, we could create refined gasoline in a chemical plant for cheap and sell it at the pump for 50 cents a gallon? Costs go down for everyone – personal gas costs! Corporation shipping costs! Industrial energy costs! Hurray!
Deflation’s problem is not when costs deflate, but when earning power deflates. Cost deflation is a good thing for the economy because it just means that the economy is becoming more efficient. Earning power deflation is bad for the economy because it makes items less affordable and thus slows the economy down. Yes, a reversion to a gold standard would cause deflation to both earning power and costs (since it’s a matter of financial policy which should affect all economic sectors that rely on the currency equally); however, it’s well established that deflation of earning power affects the economy much, much more than deflation of costs.
You haven’t explained why fiat is evil.
So just because it’s a special kind of gun with millions of barrels to point at each individual US dollar bearer, means it’s not a gun?
And WMD’s apply the same way. A terrorist can use a WMD to kill millions of people for what we would consider to be very poor reasons. Or, we can use it to end WW2 and prevent even more lives being lost; or, we can use it to ensure that other nations respect our sovereignty. A tool is a tool; you can’t just twist semantics to let it fit your political views.
Oh man, you really want to start down this road? The US Congress is a cartel. Its members are the US House of Representatives and the US Senate. It is protected by the US Constitution, and it has sole monopoly power over legislation. Therefore we should tear down our Federal government, tear down our Constitution, because consolidations of power are eeeeevulll!!! /nonsequitur
Oh yeah, and we should never allow corporations to merge with or acquire other corporations. Ever. Because fewer corporations inherently harms competition, even if it’s in some small, insignificant, and barely measurable factor. /nonsequitur
There’s an old joke – in economics, the real world is a special case.
solatic on January 18, 2012 at 7:14 PM
History has demonstrated that the Fed Chairman is subject to pressure by whomever is in the White House at the time, lest they risk not being renominated (i.e., Arthur Burns in Nixon Admin).
Here’s an article from Forbes that illustrates my point that the Fed’s decision making is not apolitical, but rather, subject to the political pressures of the White House.
Fed Independence is a Myth
Forbes
http://tinyurl.com/racnc9
classical liberal on January 18, 2012 at 7:14 PM
Yes, I can just see it now. In my wallet, instead of carrying US dollars, I’m going to carry StarbucksDollars, BestBuyDollars, AT&TDollars, MacysDollars, and Amazon.comDollars. When I go to my local merchant who isn’t big enough to print his own currency, his price board will have to hold the prices for his wares no longer just in US Dollars, but in StarbucksDollars, BestBuyDollars, AT&TDollars, MacysDollars, and Amazon.comDollars. The merchant will have to devote some manpower every day just to track the exchange rates of all these currencies to make sure that he gets paid the same value for his products, no matter which currency is being offered to him.
I’m a consumer. I only have WalmartDollars in my wallet, and my local gas station doesn’t accept WalmartDollars. I’d drive to the nearest bank to exchange my WallmartDollars for a currency that my gas station does accept, but I’m out of gas. Oh well, at least I have a credit card.
When I log onto my bank’s online site, I see my balances in 20 different private currencies. I also see the exchange rates of those currencies. I’m careful to keep an Excel spreadsheet (God forbid Grandma doesn’t know how to operate Excel) with all the different exchange rates so that I can play the currency market with my savings to ensure that my balances always represent the best value that my currencies can represent. I spend a half-hour a day doing this that I would much rather spend with my family, or watching the football game, or reading a book.
solatic on January 18, 2012 at 7:26 PM
The problem is no Paul supporter will TRUST Newt to do any of it.
I’ve asked my Paul bretheren about what kind of agreement we could get from a Romney or someone to get our vote and their response was unanimous;
“They’ll tear that up as soon as they sign it”.
I thought a pledge of actually very easy things to sign would work. They hated the idea. The pledge just included things like;
Only go to war with a declaration of war from the congress.
Veto any spending or tax increases.
Support a full and complete audit of all federal reserve actions.
Veto any civil liberties destroying legislation.
A day one signing statement which overturns all past signing statements.
SO, NEWT CAN DO THIS ALL HE WANTS but they won’t trust him. Especially him to carry any of it out.
fatlibertarianinokc on January 18, 2012 at 7:49 PM
Aside from the occasional sufferer from senile dementia’s onset, Gold Bugs are idiots.
You still have to manage the currency under a gold standard, Zippy. And it does NOT eliminate inflation – in fact, there was far worse inflation, plus deflation, recessions, panics, bank runs, the Great Depression, and general economic instability under the gold standard.
“End the Fed” and replace it with . . . WHAT? Congress already realizes it cannot act in time or without political interference, which is why they created FRB in the first place. When the Panic of 1907 caused a liquidity crunch which threatened the whole economy, it was a private citizen, John Pierpont Morgan (the world’s biggest banker and one of the richest men) who stepped in to put his own money and his bank’s on the line, and convince other liquid bankers to do the same and end the crisis. The government was utterly clueless what to do – much like Paul and Gingrich today.
From 1907 until his death in 1913, Morgan placed the currency orders with the Mint, although he had no official position. Everyone in DC knew fully well he’d do a better job than they could begin to. Once he died, the responsibility was given to the FRB.
Even if you halfwits managed to pass the gold standard, WHERE would you get the gold? There’s not nearly enough in our reserves (which amount to roughly 25% of the known reserves in the world already). Do you invade Europe and take theirs? Or deflate and collapse the entire economy to satisfy your perverted desires?
Adjoran on January 18, 2012 at 8:18 PM
Well, while I most certainly think that expanding and contracting the money supply can help smooth and maintain economic growth, I don’t think that it is any type of overriding factor for economic growth. I would love to debate the weighted influence of cycles, taxation, regulations, other fiscal policies, and monetary supply on economic growth.
But you certainly can’t deny that money supply has a positive effect on economic growth. While there are drawbacks, limitations, pitfalls, and decaying efficacy involved, it most certainly has a positive effect. Therefore, it is a tool that can be used to help smooth and maintain economic growth. I believe that ignoring this tool is stupid. A gold standard ignores this tool and is stupid.
Additionally, I do NOT believe that the federal government should be in control of this tool – and the federal reserve is currently structured so that neither congress nor the president are capable of controlling the tool.
Oh please, I know all about the quaint little concept of Austrianism. It’s severely underpowered. I’m a huge believer in the effect of cycles, confidence, etc., but monetary supply affect economic growth for much the same reason that those factors impact economic growth.
Overall, it’s foolish to be a purist of either school of thought. Both matter.
Oh please, that article is two levels below the wisdom I’ve imparted within this thread.
No, it hasn’t. Claiming that the White House controls the Fed Chair has no more credibility than claiming that the White House controls Supreme Court judges. Your statement is stupid.
Much of the politics discussed in that article regard the fed chairman’s attempts to influence legislative efforts – NOT vice versa. Additionally, political dealings with any entity that has a relationship with the federal government will always exist. The article quite clearly fell short of indicating ANY federal government control over the fed.
But by all means, feel free to describe the monetary system of your choice.
blink on January 18, 2012 at 8:22 PM
Dude, well done.
blink on January 18, 2012 at 8:27 PM
As a Ron Paul voter, I can’t in good conscience vote for Newt. Lip service is just that. If the republican party really wanted to win Paul voters, they would’ve put up a viable libertarian leaning or tea party candidate. Newt Gingrich is neither, nor for that matter are any of the others.
The 48er on January 18, 2012 at 8:37 PM
Absolutely. Peg the dollar at about that level and you end credit booms and busts, you get back to real interest rates, you end deflation risk and you end inflation erosion. It is the most bullish move, and frankly constitutionally required move.
AshleyTKing on January 18, 2012 at 8:40 PM
Those aren’t currency companies. A currency company would print currency that matches their holdings. McDonalds could theoretically convert their stock to currency, but a standard based on a single fast food company might not be favored. It’s hard to wrap your mind around the concept of a currency company because it has always been a government enterprise.
Even your sarcastic examples would be better than currency based on nothing. I take it your StarbucksDollars would be based on something tangible, unlike the dollar which is based on “trust in Alinsky street activist”, which is less than zero. Basing a currency on trust of anyone is craziness, be it Democrats, Republicans, or the Founding Fathers for that matter.
Buddahpundit on January 18, 2012 at 9:16 PM
I’d be opposed to constitutionally creating an FDA to prevent you from buying snake oil. Needless to say, I’m opposed to the unconstitutional one that currently exists.
Buddahpundit on January 18, 2012 at 9:19 PM
Anyone who actually believes this is much less intelligent and much more insecure than they claim.
I’ll try to logically counter your arguments, but since you are not actually familiar with the fundamentals of monetarist or austrian theory, I doubt I’ll get through to you. But I’ll try. ;)
Ever heard of the concept of “pushing on a string” in your economic scholarship? It refers to the idea that, while contracting the money supply can slow growth, increasing the money supply cannot force banks to lend and fuel growth; hence, it’s like “pushing on a string.”
But you probably already knew that because you’re dropping wisdom like bombs on this thread.
It’s also foolish to advocate for/against either school of thought without an actual appreciation of their guiding principles.
You like building up straw-men just to tear them down, eh? I saw you do it earlier in this wisdom dropping thread of yours. I never said the White House “controls” the Fed Chair. I said “the Fed Chairman is subject to pressure by whomever is in the White House” not “controlled by…” (emphasis added)
A lifetime appointed supreme court judge is not subject to the same kind of pressure that a re-nominated Federal Chair is, so even your straw-man is hollow.
What’s the point? You make arguments oblivious to actual economic theories, claim you’re dropping wisdom, claim I’m stupid, and then continue on your merry way.
Your faith in the Fed is misplaced, at best. Quantitative easing has not helped since implementation and once the velocity of money increases, you won’t be able to put that genie back in the bottle.
But you probably already knew that because, contrary to your name, you never really “blink”
classical liberal on January 18, 2012 at 9:21 PM
…and you diminish a material amount of your economic growth.
The fed can maintain robust economic growth while smoothing credit booms and busts if the federal government stopped constraining them with huge deficits!
blink on January 18, 2012 at 9:25 PM
Why would McDonalds be able to have a currency, but Starbucks, BestBuy, AT&T, etc. can’t?
So, tell us what standard would be favored?
blink on January 18, 2012 at 9:28 PM
Except for those that are much more intelligent, secure, and based these beliefs in reality – like me.
I know all about “pushing on a string”, but holding on tight to a static amount of string doesn’t allow for growth.
This is why I very clearly stated that expanding the money supply wasn’t the only factor for growth. The other factors supply the inventive, but incentive is useless with the money.
The fact that you ignored my very first point makes it obviously that you don’t understand much about real economics outside of these crazy websites that you’re reading.
I completely appreciate their guiding principles, that’s exactly why I’m saying that pure Austrian is a disaster in modern economies.
So what if he is subjected to pressure? Everyone in the world is subjected to pressure. Supreme Court justices are subjected to pressure, too.
Claiming that White House pressure on the Fed Chair is evidence of a flawed system has no more credibility than that White House pressure on the Supreme Court judges is evidence of a flawed system.
And again, the White House is subjected to just as much if not MORE pressure by the Fed Chair.
The bottom line is that your statement is stupid.
So, 14 years isn’t enough? What’s enough? Certainly, you agree that Bernanke isn’t threatened by Obama? Obama can’t hold office beyond January 2017. Bernanke doesn’t need to worry about reappointment until February 2020.
Everyone reading this thread knows that this isn’t true.
I don’t have much faith in the Fed’s complete effectiveness given the current level of debt and deficits. I’ve been saying this all along.
That being said, I think QE has efficacy. And again, it’s not the ONLY factor needed for economic growth. Terrible fiscal policies will stifle growth regardless of easing. You love to ignore that I stated this from the beginning.
Again feel free to describe your ideal monetary policy.
blink on January 18, 2012 at 9:48 PM
1. FDA is unconstitutional?
2. So, you think that snakeoil salesman should be allowed to sell their wares and make any claims that they want – buyer beware?
I’d like to know if this is the type of anarchist that I’m dealing with here.
blink on January 18, 2012 at 9:51 PM
But the US dollar isn’t based on “nothing” and it does have value. Case in point: send me all of those worthless US dollars you have. You won’t. Why? Because the value in our currency, just like the value in everything else in the world, is found in the fact that someone else wants it. While it may be “worthless” to you,it isn’t to me and based on that reality you would be unwise to simply give me something I value without something in return.
This is the point that gold bugs miss, I think. The very thing that gives gold “value” is the same darn thing that lets me use US dollars to hire a cab in Moscow…the plain and simple fact that the value of something is, must be, and always will be what someone else is willing to give for it. If you’re trying to argue along the lines of intrinsic value or something similar, well, you’re veering pretty close to theorists like Marx and Engels who tried to suggest the same thing.
Kind of ironic when you think about it.
Oh,and blink…good posts in this thread.
JohnTant on January 18, 2012 at 9:53 PM
Btw, it’s great that people who are in favor of establishing competing currencies are the often the same people that would be opposed to regulating these currencies.
And nobody has explained why a competing currency can’t be created tomorrow? What’s to stop Citigroup from doing a 29 for 1 split and encouraging people to buy it’s shares and use them as currency? Or maybe their debt? Or maybe GE? Or how about using shares of a physical GOLD EFT. Or how about someone that mints gold coins (of course the premium that you need to pay for physical gold kinda kills this concept, right?)? If you don’t like any of these ideas, then please propose your own.
blink on January 18, 2012 at 10:11 PM
Not even if it was a … crumb of gold?!?
The Nerve on January 18, 2012 at 10:16 PM
Dude, the more condescending and confident you project yourself to be on an issue, the more obviously you’re not.
For instance, a few years after the released the Nixon tapes, the Journal of Economic Perspectives (Vol. 20, No.4, Fall 2006) published an article entitled How Richard Nixon Pressured Arthur Burns: Evidence from the Nixon Tapes.
Available from University of Nebraska-Omaha website:
http://tinyurl.com/fedsubjecttopressurefromnixon
In the article, the author details how Nixon explicitly pressured then Fed Chairman, Arthur Burns, to expand the money supply to benefit Nixon’s 1972 election.
Specifically, the author states:
“Evidence from the Nixon tapes, recently made available to researchers, clearly reveals that President Nixon pressured Burns, both directly and indirectly through Office of Management and Budget Director George Shultz, to engage in expansionary monetary policies prior to the 1972 election. The relevant taped conversations used in this study usually involved only two or three persons. While Nixon knew of the tapings, his remarks are remarkably forthright, as though he had forgotten that the tapes were running. The Nixon tapes used here begin in October 1971.” (page 178) (emphasis added)
Again, your faith in the Fed is misplaced and your condescending “know-it-all” attitude reflects a lot more on you and your “theories” than you realize.
classical liberal on January 18, 2012 at 10:17 PM
I recall a guy named Bernard Von Nothaus tried his own private currency called Liberty Dollars. The paper notes were supposedly backed 100% by silver stores, and he sold solid silver coins denominated as one and five dollars (IIRC). As you mention, if you bought a $1 Liberty dollar you actually paid much more than the actual spot price of the silver. Plus, if you didn’t buy early you ended up paying even more as Von Nothaus had a schedule on which he’d increase the price…in other words, veering close to being a pyramid scheme. That, along with the general unwillingness of most places to accept this currency doomed it.
I think the US Treasury eventually went after him because his coin designs looked too similar to US – issued currency.
JohnTant on January 18, 2012 at 10:22 PM
blink on January 18, 2012 at 10:32 PM
Sure they can be currency companies. In the unregulated economy libertarians prefer, any company can enter any industry at any time. In fact, many companies change their industries over time in order to remain competitive. For example, IBM started its business producing the punch card machines that note when workers clock in and clock out. Today, they’re a consulting firm. HP started its business first with scientific instruments, then calculators, and finally computers. If McDonalds or Starbucks or Walmart or any of these other companies decided to start creating and selling currency, what’s to stop them?
Even today we have companies that make other products and make currency too. Take Microsoft. They’re a software company, but did you know they make currency too? Yep, you can even buy it off Amazon:
http://www.amazon.com/Xbox-360-Live-1600-Points/dp/B000B9RI14/ref=sr_1_1?ie=UTF8&qid=1326943814&sr=8-1
By buying the Microsoft Points, you are effectively exchanging your US Dollars for Microsoft Points. You can then spend your Microsoft Points on any of Microsoft’s internal services. The “exchange rate” is 80 Microsoft Points to 1 US Dollar. Sure, Microsoft Points is a non-transferrable, limited-exchange currency, that doesn’t exist in physical form and requires you to keep your Microsoft Points “deposited” in Microsoft’s “bank”, but it’s a currency regardless. You use it to buy (virtual) goods. Nintendo has a similar currency for their Wii system.
Furthermore, you’re not even reproducing the private currencies argument correctly. The private currencies argument doesn’t state that private currencies must be dependable, backed by gold, or what have you. The competing currencies argument states that companies can decide to produce currency by fiat if they so please, and that the free market will decide whether or not a fiat currency or a gold-standard currency is actually better. So if you regard fiat currency to be based on nothing, then you must realize that some of these private currencies (like Microsoft Points) may be based on nothing as well. And you may very well be forced to keep some of those “worthless” currencies in reserve so that you can buy the goods and services you want from retailers that will only accept the “worthless” currencies.
solatic on January 18, 2012 at 10:38 PM
“Bitcoins” are an example of a competing alternate currency. They are a decentralized, anonymous, digital currency with a fluctuating rate used for transactions online.
See Wikipedia’s (cached) article on “Bitcoins”
http://tinyurl.com/alternatecurrency
Thus again, your limited knowledge of actual facts and theories discounts the value of your responses.
classical liberal on January 18, 2012 at 10:53 PM
To play Devil’s advocate, the libertarian argument is that legal tender laws force American retailers to accept dollars.
So let’s say I take a trip to Europe and have some Euros left over. I come back, and I know a small business owner who takes frequent trips to Europe (for business, family, doesn’t matter). Knowing this, I can reason with the small business owner and offer some amount of Euros for his product, instead of dollars. He may accept the Euros, and he may not. If he does, then I trade my Euros for his product, everyone is happy, and I used a non-USD currency. This is legal, and when the business owner reports his income for taxes, he can simply refer to the dollar equivalent of the number of Euros accepted.
The point is that, while the store owner may refuse to take Euros, under Federal legal tender laws he cannot refuse to accept US Dollars. So the argument goes, if all retailers must accept US currency, therefore no one will bother carrying any other currency because they know US Dollars will be accepted everywhere. However, if businesses could decide to decline to take US Dollars, then people will naturally buy the currencies that the businesses will take, putting multiple currencies in people’s wallets, and thus starting the revolution.
The problem, of course, as I tried to explain above, is that competing currencies creates too many economic inefficiencies to be worth the trouble. Just like how ordinary people and companies have a burden of compliance when they deal with the tax system, so too will exchange markets create another burden of compliance for ordinary people and companies. Only people who can see taxation as a means of increasing economic efficiency can see the burdens of competing currencies as a means of increasing economic efficiency.
solatic on January 18, 2012 at 10:53 PM
Bitcoins are an extremely poor example because the nature of computation-generated currency places no limits on the generation of supply. Indeed, the Bitcoin currency crashed: http://arstechnica.com/tech-policy/news/2011/10/bitcoin-implodes-down-more-than-90-percent-from-june-peak.ars
Ordinary Americans are not mad at Wall Street because Wall Street deals in stocks and fiat currencies, or because of executive pay, or because of poor ethical decisions, etc. Ordinary Americans are mad at Wall Street because the stock market crashed, pure and simple. It’s the real reason socialism is such an endearing concept to so many people – they know they’re not going to get wealthy off the welfare state, but they don’t care. All they care about is that socialism promises them (and, of course, ultimately fails to deliver) risk-free financial security. Ironically, this is the same reason why people like the gold standard.
If you think ordinary Americans, who will not pay attention to daily economic fluctuations, should put their money into currencies that will then crash, hooo boy you got another thing coming to you when your hypothetical competing-currencies-supporting president’s approval ratings crash alongside currency crashes.
solatic on January 18, 2012 at 11:02 PM
Simply providing an answer to blink’s question:
Just demonstrating that a competing currency already exists. Nothing more.
classical liberal on January 18, 2012 at 11:09 PM
You didn’t quote the part of his comment that asked why a competing currency couldn’t be created; you quoted the part of his comment asking for the proposal of a new currency. Ergo, you appeared to be supporting Bitcoins instead of simply noting their existence.
So did you make a mistake or are you simply unfamiliar with how commenting works on the Internet?
solatic on January 18, 2012 at 11:22 PM
No. I am condescending to you because you aren’t very smart and lack a basic understanding of this issue. I’m confident because I am very smart and possess a very advanced understanding of this issue. But I do agree that I’m not very nice about it.
The author completely overstates his case. Even the author admits that the taped conversations reveal Nixon arguing the raise on the merits – not using political pressure.
What’s GOLDEN is that a conversation between Nixon and Shultz (NOT between Nixon and the Fed Chair) reveals Nixon making a comparison to the SUPREME COURT – just like that genius, blink, did.
Chief Justice Warren] Burger . . . I’m not going to let him name his people.”
Gee, Nixon wanted Shultz to let the Fed Chair know that it’s the President that names the board just like a Chief Justice doesn’t have control over who the President assigns to SCOTUS. Are you going to tell me that a Chief Justice would let himself be bribed by a President by a promised justice appointment? There’s no evidence that this tactic was even used with the Fed Chair or that the Fed Chair even cared.
Overall, this paper demonstrates how LITTLE influence a president has over a fed chair – even one as aggressive as Nixon.
No, it’s not. It’s a good system if the government doesn’t overspend like they do.
But, again, feel free to specifically describe a better system.
blink on January 18, 2012 at 11:44 PM
It’s called context.
Again, someone who has no understanding, whatsoever, about digital currency opining like they actually knew what they were talking about.
Bitcoins exist through the creation of “blocks” which are so difficult to create that an entire industry called “bitcoin miners” exist simply to harness the computing power necessary to create these “blocks.”
Currently 8 million bitcoins exist and, due to difficulty in creating “blocks,” over the next 100 years a total of 21 million bitcoins will be created, so your statement that “the nature of computation-generated currency places no limits on the generation of supply” is completely made up on your part. A fiction.
See https://en.bitcoin.it/wiki/How_bitcoin_works.
If you do not see the relationship between fiat money, monetary policy, boom & bust cycles and stock market crashes, then I cannot convince you otherwise.
Agreed
And what if it’s the U.S. Dollar that crashes? How does that change your analysis?
classical liberal on January 18, 2012 at 11:48 PM
There you go! You have a currency alternative to the dollar. So what’s the problem? Why not simply add a few more?
Oh, maybe this is the problem.
I would think that you would like this part. The Bitcoin software hardcodes expansion. Gee, can the creator modify the software???
OK, so why doesn’t this make you people happy?
blink on January 18, 2012 at 11:57 PM
That’s not an argument. Retailers can accept other currencies as well. Why do the libertarian’s need retailers be be able to refuse dollars. If the dollar is as worthless as they claim, then I would think that the superior, competing technologies would simply take over and demand for dollars would diminish.
blink on January 19, 2012 at 12:01 AM
I never denied that they already exist. In fact, I even claimed that plenty of things are already used as a sort of currency.
My point was that nothing is stopping someone from creating an alternative currency. You actually helped prove my point.
blink on January 19, 2012 at 12:04 AM
I’m quite sure he sees that the federal reserve system is actually capable of preventing more boom & bust cycles and preventing more stock market crashes if it was unfettered by our federal deficits/debt.
Sadly, you’ve already been too brainwashed to ever understand this.
blink on January 19, 2012 at 12:10 AM
You obviously did not read the entire paper and instead cherry-picked quotes to serve your purpose. Do a little search the internet and see how many scholarly articles support your theory versus mine.
You have it backwards. Fiat money, as opposed to hard money, makes it easier for governments to overspend.
classical liberal on January 19, 2012 at 12:16 AM
Why will you care? You’ll have your entire net worth in gold, silver, or bitcoins, right?
blink on January 19, 2012 at 12:17 AM
Nope Microsoft points. I’ll spend my time preparing for the upcoming Armageddon by playing COD:Modern Warfare.
Gird your loins my brothers.
classical liberal on January 19, 2012 at 12:22 AM
I read that entire paper. I dare you to find one instance of Nixon, post appointment, saying anything to the Fed Chair which represents anything other than economic argument.
Wow, I’d be shocked, shocked if people wanted to write papers to try to make Nixon look bad. Shocked I tell you.
How many instances are there of the Fed Chair using political pressure against the White House?
Regardless, please describe your desired currency system.
1. I didn’t state the opposite of that so why would you claim that I have it backwards???
2. If the government wants to overspend then it will overspend. How will you stop them? A government that wants to overspend using a fractional gold standard will merely vote to adjust the fraction. A government that’s using physical currency will merely borrow physical currency to overspend.
Again, stop blaming the mechanism and start blaming the overspenders.
blink on January 19, 2012 at 12:23 AM
Btw, I agree that we are nearing a very critical point because of worldwide sovereign debts. We disagree that switch currencies should be the focus. They focus needs to be to control spending.
blink on January 19, 2012 at 12:25 AM
First of all, spending is the problem. But the Fed is not the solution and will only make the problem worst. Had there been no deficit spending, we probably would not be having this discussion.
That said, when the Fed is not constrained by hard currency and can print fiat money at will, the government is able to borrow at a much lower cost than otherwise because the Fed increases overall demand by purchasing most of the treasury bills issued.
As such, hard currency constrains a governments ability to borrow, which, consequently, impacts their ability to spend.
classical liberal on January 19, 2012 at 12:35 AM
I wrote a whole long post and then I saw that this will pretty much suffice:
https://en.bitcoin.it/wiki/Weaknesses
You can break through the 21 million Bitcoin hard limit either by introducing massive amounts of computing power to the system (so that the amount of computing power makes generation easy, despite reaching maximum difficulty) or if you break SHA256. Interestingly, the link on that page that promises more information about transitioning Bitcoin to a different encryption algorithm, without crating a Bitcoin fork in the process, is a broken link. (whoops!)
By the way, SHA256 can be broken. Already 41 of the 64 rounds of SHA256 are broken, and the algorithm can be broken entirely when quantum computing matures, assuming it doesn’t happen earlier with a discovery of mathematical weakness (and yes, there are a lot of very smart people employed whose full-time jobs are to try and find a weakness). The first rule of security is that all security can be broken.
solatic on January 19, 2012 at 12:44 AM
No, the Fed does not make the problem worse.
When is the last time ANYONE allowed the cost of borrowing to effect the deficit in any given year???
That said, constraining the Fed via hard currency introduces a worse problem.
blink on January 19, 2012 at 12:51 AM
Yeah so that’s actually how it used to work. Every bank would issue it’s own notes, and the banks would accept each other’s notes.
With today’s technology, it would be easy to implement digital currency weighed in grams of gold.
A few companies would probably end up competing on this, but it wouldn’t many.
Kind of how theres VISA, MasterCard, AmericanExpress, and… a few others worldwide.
No store goes oh chucks we take MasterCard, never heard of this VISA thing… Take your VISABUX elsewhere!
In fact stores now brand VISA cards. So sure you could have Walmart [VISAGOLD] cards denominated in grams of gold… But just like all CCs work on a basic standard so would this.
All PCs use the same HTML specs for their browser. It’s not like OH NO THE GOVERNMENT DOESN”T CONTROL WEB BROWSERS, THERE WILL BE 5 MILLION OF THEM!
Nah, you have FF, Chrome, Safari, IE, and a few smaller ones… and they all use the same HTML specs but have slightly diff features. Big Deal.
ebrawer on January 19, 2012 at 12:56 AM
The interest rate (i.e. cost of borrowing) does determine how much deficit spending is possible.
The more congress deficit spends, the more bonds it must issue. The higher the supply of bonds, the lower the demand. The fed makes up for the decreased demand by crediting itself money and bidding on/buying bonds. But it’s a careful dance. If they have to buy too many, it would trigger an inflationary spiral. So have to threaten not to be willing to buy more, and the congress doesn’t want to have a bond auction fail because since it NEEDS to sell bonds to pay the interest on the deficit, they would have to offer a higher rate of interest, which would increase the interest (i.e. cost of borrowing), and would lead to a deficit/interest-rate spiral à la Greece.
So yes, the cost of borrowing is central to how much is borrowed. When it costs next to nothing, they see it as an opportunity. What they don’t understand is that they are 2-3 interest rate points away from total bankruptcy, which would be linked to massive monetization by the Fed, and a hyper inflationary spiral.
The tight rope being walked is far more dangerous than you think.
ebrawer on January 19, 2012 at 1:15 AM
There’s no real risk allowing anyone to try pushing their browsers on to the public. The public will adopt the browser if it’s good and will simply stop using the browser if turns bad.
However, there is most certainly a risk of allowing just anyone to try pushing their currency on the public. This is basically why we’ve had our securities laws since the 1930s. Are Paulbots opposed to securities laws? Do Paulbots claim that SEC is unconstitutional?
So, let me get this straight. Your currency would simply be grams of gold and transactions would be executed via a credit card type device depending on whose device or service you wanted to use? Would all gold be back by actual, warehoused gold? Or would this simply be a system that equates their currency to gold prices?
You need to clear this up.
blink on January 19, 2012 at 1:18 AM
*facepalm*
Believe it or not, some retailers don’t take all credit cards. When was the last time you saw a place take Diner’s Club? Oh, and Discover and American Express are definitely not accepted everywhere. We also haven’t even begun to talk about foreign credit card brands. But this distinction is an apples-to-oranges comparison when you’re trying to compare multiple credit card bills to multiple currency balances. If anything, multiple currencies makes financial management worse because not only would consumers have to worry about different credit card bills, they’d have to worry about different credit card balances in each currency for each credit card that they own. Financial management becomes an absolute nightmare, and the corporations that have to deal with this (by being multinational corporations that deal with different national currencies) employ people full-time to run the numbers for them.
And you OBVIOUSLY have never, ever, ever created a website in your life. Cross-browser compatibility is the biggest headache that web developers have today, just to get their website to look the same in all these competing browsers. They do NOT use the same HTML specs. They can all read the same HTML document but, many times, they make the HTML document look differently unless the programmer spends half his time agonizing over why the stupid page looks one way in one browser and a different way in a different browser. Believe you me, if I could force everyone to use one browser, I would. IE6 is the devil.
solatic on January 19, 2012 at 1:28 AM
Nonsense. The federal government simply issues the amount of debt that it wants at whatever rates it can get. The federal government never cuts the deficit because it claims that the rates to borrow were too high.
This is gibberish.
No, the LAW which was passed by Congress and signed by the President determines the amount which will be spent and therefore the amount which will be borrowed.
Treasury might attempt to time their debt issuances, but Treasury is obligated to supply the federal government with approved amounts whether or not it comes from revenues or issued debt.
No, I completely understand the tight rope being walked. That’s why I stated this:
The critical point has been caused by excessive borrowing. Blaming the elected officials for the excessive borrowing – stop blaming the monetary system that we have. It’s much easier to have our elected officials curb borrowing than to transform the monetary system (and both require actions to be taken by elected officials). Additionally, the monetary system that many are calling for would immediately trigger catastrophe, and other monetary systems that many are calling for wouldn’t change a single thing.
blink on January 19, 2012 at 1:29 AM
In a free-market it’s the same thing. People will adopt the currency if it’s good, and stop using it if it’s bad. I don’t se the difference. You can’t push your currency on anyone. In the 1700-800s during the free-banking era in Scotland if a bank was known to issue too many notes, other banks would stop accepting their notes at face value or at all in the after-market clearing-houses. That kept banks in check from over-issuing. Market forces work if we let them.
Many securities laws are either bad or bad solutions meant to solve other bad laws. The government has the obligation to investigate and stop fraud/theft though. To the extent that SEC or laws purely do that, they are legitimate. A lot of securities laws only serve to protect market players from competition though by creating massive barriers to entry that only serve to fortify current players. In fact a common misconception is that businesses don’t like government interference. It’s not true – they LOVE it, just only when it helps them and cripples their competitors (i.e. it contributes to giving them a de facto pseudo monopoly.)
That said I’m not a Paulbot. I’m anti-libertarian (it’s a very broad grouping made of people with very different philosophical reasons for being there). I agree with some bits of his FP to the extent that the US is too altruistic/self-sacrifical in it’s FP, but I don’t accept his entire view as a package deal. He’s stupid to think Iran getting a nuclear bomb is no big deal. I say stop Iran right now. He would consider me a “war-monger”. The other place I agree with him on is monetary policy (i.e. Austrian economics).
Gladly! Yes, all denominated in weights. No fancy currency name that lets you play with the weight-currency peg in the background without the general public noticing.
All the gold would be warehoused, and any gold for which a receipt exist (i.e. in someone’s account) could not be leased-out or otherwise missing. The government would very much be allowed to investigate accusations of fraud (i.e. someone claims the gold isn’t backed). It would also be appropriate for the companies to be subject to regular audits to ensure nothing is missing.
That would be a legitimate role for government oversight (i.e. protect us from fraud).
It would be a great system.
ebrawer on January 19, 2012 at 1:39 AM
Uh, I’m actually and App/Web designer:) Browsers base themselves on the same ISO specs and their compatibility is graded using standardized methods like acid tests. They started off very different (i.e. MS inventing it’s own JavaScript in IE3, way different CCS interpretations), but they are getting closer and closer to following specs (though theres still plenty of quirks). I agree I hate IE6 and it makes me want to kill myself, but it just became 1% of the installed IE base recently (and IE now <50% of total browsers). Forcing everyone to use the same browser would suck. It would be like saying everybody should use the same car. Sure it would be better for spare parts, but in the long run it would harm innovation. Besides with both Chrome and Safari using WebKit, we are consolidating a lot.
But that's an aside. Dude, you're getting way too caught up in the meat of the analogy and missing the point. Sure I could have used a better one but I'm SURE you understood my point.
If the Fed stopped bidding on treasuries tomorrow, the government would have to pay say 10% interest, and it would cause a hyper inflationary spiral in a very short time.
It’s convoluted, but that’s because the system I am describing is convoluted. I’m sure you could understand it if you tried. And if you understood it, you would be shocked.
OK. Let’s use an extreme example to illustrate a point. If the congress passes a LAW that the congress will issue 500 trillion dollars worth of bonds, and the Fed refuses to buy the bonds, and the auction fails – did the treasury borrow 500 trillion? Nope.
There are TWO limits to what the congress can borrow:
1) The internal limit – i.e. what congress allows itself to borrow.
2) The external limit – i.e. what everybody else agrees to lend.
This is a general principle. You can’t say “I am going to pull a 1 million dollar mortgage on my house”! and make it magically so. If no bank plays ball, you have nothing.
Again there are two sides to a loan. The borrower and the lender. So long as the lender will lend for near nothing interest, the profligate spender will continue! Even Reagan couldn’t stop it! Who is going to cut social security? Nobody will, until the country is backed in a corner (i.e. higher borrowing costs).
The only way congress historically stops spending voluntarily is if they have just ended a World War and demobilized millions of soldiers (I.E. WW1, WW2). And even then the Keynesians tried to argue against demobilizing the WW2-era Army in 45.
ebrawer on January 19, 2012 at 2:00 AM
Wrong (that in the long term it would harm innovation). That would be true if the entities that develop the web standards were profit-driven, but they’re not. HTML and CSS are developed through W3C, which is essentially a non-profit. JavaScript is developed through the Mozilla Foundation, which is a non-profit.
The browsers themselves usually follow the same convention. WebKit is open-source. Firefox is open-source. Chrome is a compiled binary released by Google of the open-source browser Chromium. Camino, Konqueror, and Epiphany are open-source. Shiira and links/elinks are open-source, but Shiira is dead and no one uses elinks anymore hehe.
Open-source development doesn’t follow conventional economic development theory. People do this stuff as a hobby. Saying that innovation will stop is like saying people will stop taking photographs for fun, because they aren’t being paid for those photographs.
Bringing this back to the financial discussion… let me know when people are able to produce currency as a hobby. And Bitcoins don’t count.
solatic on January 19, 2012 at 2:56 AM
Ah, I meant the browser software itself, not the standards. That said different browser engine devs push different stuff. Apple had a hand in pushing m4vs for HTML5 video I think for example. And nothing pisses me off more than browser specific implementations of CSS rules. That’s currently the case for a lot of relatively new CCS2/3 shadow stuff.
Well it basically follows the same theory (just profit is strictly measure in personal satisfaction of developers since there are no monetary rewards). If there’s only one open source browser, then there can be only one vision to implement. Many open source browsers means individual browsers can implement different conventions.
I can coin a piece of gold. And I’m against bit coin, it’s intrinsically worthless.
For something to be money it must be 1) fungible 2) valuable 3) rare. Bitcoin doesn’t meet all three. Gold however, is the ultimate money.
ebrawer on January 19, 2012 at 3:37 AM
And yet with all your self-proclaimed wisdom, you fail to see that we have not experienced much if any REAL economic growth. The majority of the increases are artificial bubbles.
The fed does not “maintain robust economic growth”. The fed does not produce a product or service, and thus does not contribute anything meaningful to economic growth. The fed artificially inflates economic growth provided by businesses seeking to sell a product or service to seem like robust economic growth.
My dad talks about he used to be able to buy a cheap, new car for $3,000. What car can you get for that money now?
I rest my case.
dominigan on January 19, 2012 at 10:14 AM
Then you aren’t looking. Currencies can be scams. Web browers can’t be scams.
You do realize that there is a reason why companies that want to sell stock to the general public are forced to comply with regulations, right?
Are you opposed to SEC regulations?
OK, so this is the type of kook that I’m dealing with. You think that we should remove requirements which reduce the number of stock scams being perpetrated on the public.
You probably also think that FDA should allow snake oil salesmen to market their wares, right? After all, you think FDA is simply protecting pharmaceuticals from competition, right?
OK, so you want gold currencies all denominated by gold weight.
OK, so currency would be 100% backed by gold – no leverage at all, right?
Why don’t you start one of these currencies? If it’s such a great idea than surely the market will recognize this, and it will be successful.
Btw, your currency idea is a gold standard. If the country had no other currency, then economic growth would be artificially stifled.
blink on January 19, 2012 at 10:15 AM
Your claim was that rates determine amounts borrowed. That’s wrong, and you’ve made no attempt to defend your statement.
No, it’s not convoluted. It’s gibberish. That paragraph strings together one erroneous statement after another.
First, pretend that you live in the real world.
Second, try to understand how things work. Congress/President pass a budget into law and authorize Treasury to provide the capital that the budget requires. Whatever capital isn’t generated via revenue is borrowed – that’s how the borrowing amounts are decided.
You keep trying to make the argument that the Fed bids for bonds keeps the rates lower than they otherwise would be. I’m fine with discussing this, but first you need to admit that rates don’t determine the amount borrowed.
The lender authority is controlled by the federal government. The mechanism required to change the lender can more easily be used to change borrower actions. If the mechanism isn’t currently being used to change borrower actions, then what makes you think that the federal government is going to use the mechanism to change the lender???
And just because the borrow is misusing a lending system which would otherwise be good, that’s not a reason to change to something which would be worse.
blink on January 19, 2012 at 10:26 AM
Where will you get all the gold? Or do you want to immediately contract the GPD by 66% in order to use gold as money?
blink on January 19, 2012 at 10:30 AM
The Fed contributes by selling a service. This service is the guarantee that the level of currency in the system is keeping prices constant. It obviously doesn’t do that job very well, but the fact that it’s offering a poor service does not mean that a service is not being offered. This service is paid for through your taxes – not some silly semantics twisting like “inflation tax”, but your normal Federal income taxes.
As we’ve discussed before, a gold standard leads to long-term deflation. That $3,000 car was hard to afford for your father, and under a gold standard it’ll be harder to afford for you.
solatic on January 19, 2012 at 10:47 AM
Lol, told you so.
Gall on January 19, 2012 at 10:58 AM
Why wouldn’t he have wanted Perry to drop out and endorse him? Why wouldn’t he want all the candidates to drop out as early as possible and endorse him?
blink on January 19, 2012 at 11:30 AM
Reread the op. He’s playing the federal reserve card to get Perry support. I doubt he’s trying to get the Paul supporters after trashing him so hard.
Gall on January 19, 2012 at 2:05 PM
Sure currencies can be scams. Like the Zimbabwe dollar that it’s central bank printed to oblivion. There have been plenty of currency scams… Reichmarks in the early 20s, the Hungarian Pengo post ww2… The difference between those and the Dollar is that the Dollar scam is being better managed (i.e. it is slower and so the scammers get bore bang for their fake buck).
I am not opposed to all SEC regulations. Again, the government should be out there stopping fraud. But if you think every SEC regulation is a pristine well-meant reasonable requirement and none of them act to entrench large market players by creating barriers to entry, you’re wrong. Of course I’m sure you don’t believe anything that simple. Unfortunately you didn’t assume the same for me. Because I am skeptical of SEC regulations, you assume I’m against all government efforts to protect the general population from fraud. Thanks.
They make trials cost incredible amounts of time and money. The result is more people die from lack of treatment than would die from adverse treatments. Just we don’t see who dies because they didn’t get an experimental drug. We only see who dies from a bad side-effect and scream bloody murder. And of course established pharma companies are the only ones who can compete when there are multi-million dollar barriers to entry like these super trials. This is economics 101.
Yup.
Someone already has. Goldmoney.com for example by James Turk.
You wouldn’t claim that the US and UK saw no growth under 1700-1850 right? I mean, we only had an industrial revolution.
You’re thinking in fiat. The meme-like critique that without inflation of the money supply we get no growth is utterly hollow. There would be growth, but instead of being measured in GDP, it would be measured in PP (purchasing power).
If I propose a $1000 loan at 1% interest to you, you will take it (presumably). If I propose a $1,000,000 at 20% you won’t (presumably). But I know you won’t take 1M$ at 20%, so I don’t even propose it, and you don’t even ask what my rate is at 1M$.
So if we described what happened today, we would say “blink decided to borrow $1000 for 1%”. What we don’t say is “If blink could have gotten 1M$ at 1%, he would have, but that wasn’t even on the table”.
Treasury will try to raise whatever congress tells it to. But both congress and treasury know that if the more more they try to raise (i.e. demand for investment dollars) the higher the price (rate). It’s pure supply and demand. Econ 101. If they ask for too much at too low a rate, nobody bids and they have a failed auction on their hand. Failed auctions are bad because it’s a signal to everybody that interest rates are being forced up by the market.
You obviously don’t understand the idea of trying the demonstrate an abstract concept using a concrete, or using an exaggerated example on purpose to isolate important variables from noise.
Yes. And treasury does this via auctions. Google “failed bond auction” or something to learn more about how this works.
Discuss it? It’s a BASIC supply-demand situation. I don’t negotiate with n00bs. Admit rates don’t determine the amount borrowed?
YOU’RE RIGHT – SO LONG AS THE OTHER SIDE PLAYS BALL!
If congress were to tell treasury – borrow 10 trillion tomorrow, and treasury offers it at 2%, and nobody bids, YES BY LAW TREASURY will try again tomorrow – JUST NOW AT 3%…. and they will raise the rate everyday until they get takers.
Now imagine they end up with bids at 7% – which would be catastrophic, as it would trigger a budgetary death spiral.
YOU THINK CONGRESS WONT PASS A LAW SAYING HAY TREASURY ON SECOND THOUGHT PLEASE HOLD OFF ON THAT?
Sigh.
1) on a gold standard GDP is irrelevant in terms of measuring growth IN a country – PP is how you measure.
2) on a gold standard you can use GDP to compare growth BETWEEN countries, but you might as swell stick to PP.
You’re mixing elements of one system with another.
ebrawer on January 19, 2012 at 4:01 PM
Apparently, you don’t know the difference between a scam and a poorly managed currency.
You need to define fraud in order to stop it.
Yes, I think that every SEC regulation is perfect. /sarc
Idiot.
One of your gold-bug buddies claimed that FDA was unconstitutional so I thought that you might think SEC was unconstitutional. It’s hard to know how crazy some of you are.
No, it’s not Economics 101. It’s statistics 202. You make it obvious that you know nothing about drug efficacy and safety. You make it obvious that you don’t know the difference between an effective drug and snake oil.
I would love to educate you about this if you’re willing to learn.
But, the federal government would. That’s the point your clearly missing, dimwit.
You obviously don’t understand the basics of investment banking (which is exactly what Treasury uses). Demand is gauged for bonds, stocks, and other securities all the time. But again, the federal government wants to borrow so it will borrow.
No, it’s not. It’s a DEMAND issue. The federal budget is law and it DEMANDS capital.
YES!!!
And your numbers are highly overblown.
No, I’m not. Economic growth is economic growth regardless of the metrics used to measure it.
An actual gold standard would most certainly destroy growth.
blink on January 20, 2012 at 1:05 PM
Comment pages: « Previous 1 2 3