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 Replies: 17 / Views: 2,404 |
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Valued Member
175 Posts |
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Pillar of the Community
United States
667 Posts |
Interesting but clearly a one sided political view of the issue. Personally I find these one sided views about as useful as ones coming from companies selling gold or companies selling stocks. They just are no open minded enough and more content on selling their views as related to their party or market beliefs.
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Bedrock of the Community
United States
10045 Posts |
 Something also to consider is the history of currencies pegged to PMs; look back a few hundred years. Their value can also be set arbitrarily, or debased just as easily by adjusting the silver or gold content...back to Roman times. There are also numerous "wild rides" of currencies on metal standards, when the market price of au/ag shot up or fell precipitously. I regard economic stability as dependent on much wider range of conditions/policy than merely the position of metals. Obviously, excessive liquidity leads to market abuses (bubbles), but some level of credit is required for stable growth. I don't consider abuses of liquidity, ie bubbles, a strong argument to return to an inflexible gold standard--just my personal opinion. |
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Valued Member
 175 Posts |
If we were to go back to a gold standard it would keep government in check. We wouldnt be able to police the world and the government itself would have to shrink in size which imo is needed. They wouldnt be able to print money out of thin air to finance their thousands of government programs. Since we are going off facts here it is a fact that every fiat currency in history has come to an end at some point or another.
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Pillar of the Community
United States
667 Posts |
The gold standard sounds nice but there are disadvantages.
There is evidence that the gold standard contributed to the severity and length of the Great Depression as the gold standard forced the central banks to keep monetary policy too tight, creating deflation.
The gold standard broke down during World War I, as major belligerents resorted to inflationary finance which the gold standard will not prevent. The other issue was that economies under the gold standard were so vulnerable to monetary shocks, prices were highly unstable in the short run.
It takes a lot of ready, thinking and thoughts but gold is in no way a cure for what you want to avoid.
I really don't have a strong opinion one way or the other but sometimes I know you have to be cautious for what you wish.
Here is some interesting history. Not coincidentally, since the government could not have discretion over monetary policy, unemployment was higher during the gold standard years. It averaged 6.8 percent in the United States between 1879 and 1913, and 5.9 percent between 1946 and 2003. Of course the great depression rate is not included.
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Valued Member
175 Posts |
It can be debated that the federal reserve was the reason the great depression lasted so long. You can compare their policies then to their policies now for example Qe1 and Qe2 which has done nothing but extend the recession we are in now.
Edited by Ron2012Paul
09/01/2011 6:55 pm
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Pillar of the Community
United States
667 Posts |
Just some information to consider.
Recessionary bias. Under a gold standard, the burden of adjustment is always placed on the "weak currency" country.
Countries seeing downward market pressure on the values of their currencies are forced to contract their economies and raise unemployment.
The gold standard imposes no equivalent adjustment burden on countries seeing upward market pressure on currency values.
Hence a deflationary bias which makes it likely that a gold standard regime will see a higher average unemployment rate than an alternative managed regime.
The gold standard and the Great Depression.
The current judgment of economic historians (see, for example, Barry J. Eichengreen, Golden Fetters) is that attachment to the gold standard played a major part in keeping governments from fighting the Great Depression, and was a major factor turning the recession of 1929-1931 into the Great Depression of 1931-1941.
Countries that were not on the gold standard in 1929--or that quickly abandoned the gold standard--by and large escaped the Great Depression
Countries that abandoned the gold standard in 1930 and 1931 suffered from the Great Depression, but escaped its worst ravages.
Countries that held to the gold standard through 1933 (like the United States) or 1936 (like France) suffered the worst from the Great Depression
Commitment to the gold standard prevented Federal Reserve action to expand the money supply in 1930 and 1931--and forced President Hoover into destructive attempts at budget-balancing in order to avoid a gold standard-generated run on the dollar.
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Valued Member
175 Posts |
Something to remember, Article 1 Section 10 of the United States constitution says that states shall only use gold and silver coins as legal tender.
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Pillar of the Community
Canada
3692 Posts |
The states don't issue the money, though. That's done at a federal level now. But if a state did issue something to be used as legal tender it shall only be gold and/or silver. It does not state that "Only states shall use..." What's the exact wording here?
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Pillar of the Community
United States
1064 Posts |
Good article, but a little scary. I guess I need to educate myself a bit on this stuff...
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Valued Member
175 Posts |
The whole purpose of the constitution was to limit powers at the federal level.
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Valued Member
175 Posts |
the federal government doesn't issue our money the federal reserve does and technically the federal reserve isn't even a part of our government they are a privately owned central bank.
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Pillar of the Community
United States
667 Posts |
Article I, Section 10 of the Constitution explicitly forbids the states from issuing "bills of credit" (paper or "fiat" money) or making anything but gold and silver coin "legal tender", whereas there are no corresponding explicit prohibitions against the federal government, nor any explicit authorization.
Article I, Section 8 of the Constitution specifically gives Congress power to "borrow money" and also power to "coin money" and "regulate the value" of both U.S. and foreign coins, and regulate interstate commerce, but does not explicitly and unambiguously grant Congress the power to print paper money or make it legal tender.
Article I, Section 8 of the Constitution gives Congress the additional power to "regulate the value" of both U.S. and foreign coins. According to Justice Stephen Field, dissenting in the Legal Tender Cases, Congress had no power to make paper money a legal tender, but he believed "the Constitution says that Congress shall have the power to make metallic coins a legal tender.
The Legal Tender Cases were a series of United States Supreme Court cases in the latter part of the nineteenth century that affirmed the constitutionality of paper money.
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Bedrock of the Community
United States
10038 Posts |
I personally think that linking this topic in with the plight of the Liberty Dollar gives a glimpse into what the feds are thinking about this situation. The Liberty Dollar was an attempt to make an alternate, silver, barter currency. There are still many of these out there today, but the Liberty Dollar just became too big and the government did not want this. As it sits, they control the value of what we call money. The verdict against the producer of these Liberty Dollars, that he is a counterfeiter, is totally a political ploy. There is no way these coins can be mistaken as US issued currency. When the trial was on, the people on the prosecution put pictures of US coins - all resized to be the same size - side by side with pics of the Liberty Dollars. This was nothing but manipulation of "evidence." The sad thing about all of this is that if this verdict sticks, then the government will have the power, on the books, to regulate any and all bartering of any sort. For the government to say I cannot trade someone an ounce of silver for goods or a service is insane - especially for people who are supposed to be living in the "Land of the Free." And, BTW, although I agree with what Nothaus was trying to do, I do not like the way in which he was conducting his business. When I initially saw these Liberty Dollars in 1998, I thought they were a great looking silver round and wanted some, but his prices were way too inflated. Of course hindsight is always best and now I am kicking myself I did not get some of the 98's anyway b/c, besides silver being worth so much more now, the 1998 Liberty's are very high priced on ebay. Since history has shown every fiat currency ever made has gone under, to me it is obvious we need something else. |
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Pillar of the Community
United States
2120 Posts |
Now this is what I like to see. A discussion with references. Keep it up guys!  |
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Rest in Peace
United States
9104 Posts |
Quote:
Their value can also be set arbitrarily, or debased just as easily by adjusting the silver or gold content If the US mint lowered the metal value 5% at 9 ayem, how long would it be broadcast all over the world on the Interwebs? Lunch? |
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Replies: 17 / Views: 2,404 |
Posted 09/01/2011 5:48 pm
