Post by: Matthew Carberry on December 14, 2006, 12:29:55 PM
Quote from: wingnutx in "Dollar Coin" thread
Pennies are worth about 1.6 cents in zinc right now.
Via FARK.com (if you don't check there everyday, you should...)
http://money.cnn.com/2006/12/14/news/melting/index.htm?cnn=yes
Mint: Don't melt money
Government threatens prison for violators; at current prices the metal value of the coins may exceed their face values.
December 14 2006: 3:10 PM EST
NEW YORK (CNNMoney.com) -- The U.S. Mint has implemented a rule against melting down pennies and nickels which, at current metal prices, could be worth more as metal than as currency.
The Mint has received numerous questions over the past several months regarding the metal value of the coins and the legality of melting them.
"We are taking this action because the nation needs its coinage for commerce," said Director Ed Moy in a statement.
"We don't want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer. Replacing these coins would be an enormous cost to taxpayers."
The new regulations authorize a fine of up to $10,, or imprisonment of up to five years, or both, against violators.
The rule also bans the exportation of the coins, beyond traveling with $5 worth and shipping up to $100 for legitimate purposes.
Post by: wingnutx on December 14, 2006, 12:42:10 PM
Via FARK.com (if you don't check there everyday, you should...)
Amen.
Post by: Antibubba on December 14, 2006, 07:35:35 PM
Post by: Ron on December 14, 2006, 07:44:51 PM
It will only work as long as people have confidence in it/us.
Post by: LAK on December 14, 2006, 11:59:43 PM
http://www.nowandfutures.com/changing_dollar.html
In 1905, a loaf of bread would have cost less than a nickel. Five cents. In many supermarkets now it is more like $2.50 to $3.00. For a factory item full of junk into the bargain.
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http://ussliberty.org
http://ssunitedstates.com
Post by: K Frame on December 15, 2006, 04:59:57 AM
You're welcome to the bread of 1905.
If you think it was pure, wholesome, and healthy, I've got a dog turd shaped like a bridge to sell you. I'll even give you a certificate that says it's the Brooklyn turd bridge...
Post by: Art Eatman on December 15, 2006, 06:09:06 AM
The number-cruncher boffins are saying that what a dollar bought in 1971 now cost ten dollars. I don't argue, looking at housing and cars/trucks. Or motels/restaurant food. Or a cuppa kawfee, for that matter.
The history of all fiat monies is that of degradation of buying power. I see nothing now that would change that pattern. Right now, the scary part is that even though there is inflation in the EC, the dollar is going down vs. the Euro. Just some three or so years back, the Euro was worth 84 cents. It's bumping at the $1.33 per each level, right now. IOW, we're worse off than the Europeans.
And so it goes...
Priced Confederate money lately?
Art
Post by: richyoung on December 15, 2006, 07:20:16 AM
The dollar has been devalued to such an extent ...
Actually, it hasn't. But those green peices of paper labeled "Federal Reserve Note" aren't dollars - in ANY sense of the word. They aren;t even money. If you look at the Constitution, in the Bill of Rights:
"Amendment VII
In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any court of the United States, than according to the rules of the common law. "
and Article 1, Section 9
"The migration or importation of such persons as any of the states now existing shall think proper to admit, shall not be prohibited by the Congress prior to the year one thousand eight hundred and eight, but a tax or duty may be imposed on such importation, not exceeding ten dollars for each person. "
Bear in mind, this is BEFORE the Constitution is ratified, yet the term "dollars" is used, meaning it had a commonly known definition BEFORE the United States Government, or any of its mints, existed. Yet another clue...Article 1, section 8:
"To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures; "
So what were the colonies using for money BEFORE they were independant? NOT paper money, note the language - "coin money". This is further reinforced in Article 1, Section 10:
"Section 10. No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility. "
So the States themselves are prohibited from "coining money" and "issuing bills of credit" (a form of "paper" money?) - they can only use "gold and silver coin" - & they can't "inflate" the currency by reducing how much gold or silver is in an ounce, because that power is reserved to the Federal Congress. Remeber, only foreign coins are available, right - so WHAT gold or silver coin is in use BEFORE the U.S. government, and is commonly known as a "dollar"?
From Wikipedia:
"Millions of Spanish dollars were minted over the course of several centuries. They were among the most widely circulating coins of the colonial period in the Americas, and were still in use in North America and in South-East Asia in the 19th century. They had a value of one dollar when circulating in the United States.
The coin is roughly equivalent to the silver thaler issued in Bohemia and elsewhere since 1517. The German name "thaler" (pronounced "tah-ler" and "dahler" in Low German) became dollar in French and English.
The peso nominally weighed 550.209 Spanish grains, which is 423.900 troy/avoirdupois grains (0.883125 troy ounce or 27.468 grams), .93055 fine: so contained 0.821791 troy ounce (25.560 grams) fine silver. Its weight and purity varied significantly between mints and over the centuries.
The peso had a nominal value of eight reales ("royals"). The coins were often physically cut into eight "bits", or sometimes four quarters, to make smaller change. This is the origin of the colloquial name "pieces of eight" for the coin, and of "quarter" and "two bits" for twenty-five cents in the United States.
Prior to the American Revolution there was, due to English mercantilist policies, a chronic shortage of English currency in its colonies. Trade was often conducted using Spanish dollars. The pricing of equities on U.S. stock exchanges in 1/8 dollar denominations persisted until the New York Stock Exchange converted to pricing in sixteenths of a dollar on June 24, 1997, to be followed shortly after by decimal pricing."
Post by: K Frame on December 15, 2006, 07:28:03 AM
Of course we wouldn't have much of an economy left after the first 6 months...
Not to mention 2 or 3 crushing panics or full-blown depressions every decade...
Post by: richyoung on December 15, 2006, 07:29:31 AM
Post by: Eleven Mike on December 15, 2006, 09:05:06 AM
Post by: cosine on December 15, 2006, 09:21:26 AM
Of course we wouldn't have much of an economy left after the first 6 months...
Not to mention 2 or 3 crushing panics or full-blown depressions every decade...
Not to mention 2 or 3 crushing panics or full-blown depressions every decade...
This is a serious question... why?
Post by: K Frame on December 15, 2006, 10:11:37 AM
Why?
Because it's inflexible from an economic regulation stand point and it is VERY prone to outside manipulation.
For example, 1869. Jay Gould and James Fiske hatch a scheme to corner the gold market in an attempt to manipulate the United States economy in an effort to drive the value of their railroads by making it more profitable to ship western wheat to the East.
Upon learning of this scheme, President Grant authorized the release of treasury gold to stabilize prices and thwart Gould and Fiske. The result was the Black Friday panic of 1869.
Forward to the modern day.
The United States is the only nation on the gold standard.
China, now the world's largest producer of gold, decides that it's time to take over economically. Action? Release a few hundred million troy ounces of gold onto the market. Result?
Price of gold plummets, in effect devaluing US currency, and economic power, dramatically.
A few months later, Russia decides that its foreign debts to the United States are simply untenable. It releases gold on the market, driving the US currency value down, and repays its debts in the new, devalued currency.
Meanwhile, the prices of imported goods SKYROCKETS.
You think a barrel of oil is expensive now?
Care to imagine what would happen if the effective price of a barrel of oil doubled?
A day?
For 3 or 4 days straight?
A hard specie currency model works ONLY if your economic rivals are also on a specie model.
If they're not, you're *expletive deleted*ed.
The best way of looking at this, though, is the cumulative economic record prior to the Great Depression, and after the Great Depression.
Prior to the Great Depression, when the United States and the rest of the world was on the gold standard, there were 9 major recessions/panics/depressions, each lasting roughly an average of 5 years.
Since the move away from the gold standard, there have been several recessions, lasting on average 1 to 2 years, but no true panics, and no depressions.
Probably the closest we've come to a true depression since the move away from the gold standard is the late 1970s and early 1980s.
But, the ability of the economy to recover from those incidents is also greatly enhanced.
For example... 1987, Black Monday. The Dow Jones loses 25% of its value in a single day of trading. Other markets in other nations suffer similar, or greater drops.
Prior to the Great Depression, such an enormous loss usually signaled the beginning of a lengthy depression.
That wasn't the case.
The .dot bomb explosion of 2000-2001. A similar event, but again, not a widescale panic or depression.
One of the main reasons?
The economic flexibility afforded by a non-specie based currency.
Post by: cosine on December 15, 2006, 10:17:08 AM
Post by: K Frame on December 15, 2006, 10:30:18 AM
If you give up and go back to a specie based currency system, you by definition must give up many of the controls that allow economic stabilization during unsettled financial times.
Post by: cordex on December 15, 2006, 11:06:18 AM
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The .dot bomb explosion of 2000-2001. A similar event, but again, not a widescale panic or depression.
One of the main reasons?
The economic flexibility afforded by a non-specie based currency.
Another of the main reasons is that the implosion of the dot-com bubble wasn't as widespread as it was made out to be. Granted, there were a number of high-profile firms who subscribed to the Get Big Fast business model that lost a huge amount of value. Overall, however, internet startups circa 1995-2000 didn't have a terribly high failure rate compared to other industry startups over the same time period. Just this past Monday I spoke with Dr. William Aspray about a book he just finished editing about the early years of commercial internet and one of the authors in the book did a whole section on the dot-com boom and bust. Very interesting stuff, and the first book of its kind due to the IEEE Annals' 15 year rule. One of the main reasons?
The economic flexibility afforded by a non-specie based currency.
The guy who wrote the dot-com boom section did a comparison of Internet startups with manufacturing startups over the same time period as well as comparing the short-term failure rates of the high tech industries of previous eras (automobiles at the turn of the century, televisions after WWII, etc.) and found that with one or two notable exceptions, internet startups as a whole performed comparatively well following its initial bubble.
Post by: richyoung on December 15, 2006, 11:20:17 AM
If the United States went to a specie model, we'd be the only nation in the world to do so. The world tried the specie model, and it was universally rejected during and after the Great Depression.
Why?
Because it's inflexible from an economic regulation stand point and it is VERY prone to outside manipulation.
Why?
Because it's inflexible from an economic regulation stand point and it is VERY prone to outside manipulation.
With all due repect - a FIAT currrency is just as prone to manipulation - even MORE so! Having to redeem in "hard" precious metals acts a brake. NOW, they don't even need to tax in wealth in the form of gold to print more money - they just crank the presses and feed more paper in. It's called "inflating the currency", and its why a REAL dollar has $11.82 "dollars" worth of silver in it - without hard backing, the currency has been inflated 12 times!!! Not to mention the fact that the agency printing the money (Federal Reserve) isn't even part of the government! How can that be, when the Constituion SPECIFICALLY states that
1. Congress is to "coin" money,
2. Only gold or silver coin is to be money,
3. The Constituion can only be altered by AMMENDMENT - and niether of those provision have been changed by ammenment???
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China, now the world's largest producer of gold, decides that it's time to take over economically. Action? Release a few hundred million troy ounces of gold onto the market. Result?
Not appreciably different than if they dumped US Treasury bonds and stopped buying them now,...or if the Arabs decide to quit holding petro dollars. Yes, you list a real risk, but its one of many, and we face the same, or worse, now.
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Prior to the Great Depression, when the United States and the rest of the world was on the gold standard, there were 9 major recessions/panics/depressions, each lasting roughly an average of 5 years.
And once the traitor FDR illegally took us, (and by "us" I mean the peons, er "citizens" - foreign countries and companies, and well as wealthy Americans, were in fact still on the gold standard...), confiscating privately held gold in the process, we had a Great Depression that lasted from 1929 until after WWII...
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The .dot bomb explosion of 2000-2001. A similar event, but again, not a widescale panic or depression. One of the main reasons?
The economic flexibility afforded by a non-specie based currency.
The economic flexibility afforded by a non-specie based currency.
That "economic flexibility" is what CAUSED the bust. An excess of "money" had been printed proir to Jan 2, because people were hoarding currency in the expectation that ATMs and banks would be hit with the "Y2K" bug. An extra $50 or $100 incurrency per household has a huge impact. That "extra" money largely found its way into the stock market, inflating prices. When the Fed "over-corrected" for the extra liquidity, the flight of assets out of the market caused by the "tight money" policy added to the natural correction for over-priced stocks and caused the bust.
Post by: richyoung on December 15, 2006, 11:22:07 AM
If you give up and go back to a specie based currency system, you by definition must give up many of the controls that allow economic stabilization during unsettled financial times.
Those controls are a two-edged sword,...and whoever said it was the government's job to control the economy?
Post by: cosine on December 15, 2006, 11:24:34 AM
How does any of this stuff ever makes sense, when both sides seem to be able to present reasonable arguments? 
Post by: Perd Hapley on December 15, 2006, 01:09:41 PM
Post by: cosine on December 15, 2006, 01:12:09 PM
Welcome to life. Enjoy the confusion.
Um, thanks, I guess.
Post by: LAK on December 15, 2006, 01:19:51 PM
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If you think it was pure, wholesome, and healthy, I've got a dog turd shaped like a bridge to sell you. I'll even give you a certificate that says it's the Brooklyn turd bridge...
Perhaps some people have a hard time discerning fecal matter from food. The junk-free bread I have had - be it from a bakery, or a family farm in Ireland where they still cut their crops by hand - it was fine.
In 1905, it would have depended on specifically who made the bread. In 1905, good bread could be had for less than a nickel; it is that simple in economic and quality of food terms. You can get good bread today - but look how much it costs. It has old-timey arty packaging and uses trendy marketing terms like "artisan" etc and costs twice as much as the junk for $2.50 a loaf. And most of the stuff turned out in colorful plastic bags today is junk regardless of who makes it. It is made with the junk added consistantly and catalogued on the label.
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The world tried the specie model, and it was universally rejected during and after the Great Depression.
"The world"? That's a good one This was not all some trial and error saga. Leaders and Governments of nations around the world have known what "money" is for centuries, even thousands of years. It only becomes a question of who controls it's value.
We do not have alot of gold in this country, but we have had more than enough silver for a stable currency. What do we "need" to import that we do not have or can produce ourselves? Chinese furniture? Opium? Sardines from Thailand? Shirts made in India?
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http://ussliberty.org
http://ssunitedstaes.org
Post by: Perd Hapley on December 15, 2006, 01:35:05 PM
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Leaders and Governments of nations around the world have known what "money" is for centuries, even thousands of years. It only becomes a question of who controls it's value.
When it comes to money, can you really compare modern Western economies with those thousands of years ago. From what I am told, most people in former ages of history barely saw money, and certainly did not use it on a daily basis. But I will have to do a cosine and say that I'm no economic genius.
Post by: drewtam on December 15, 2006, 05:29:03 PM
Events like the great depression are more complicated than just fiat currency or gold confiscation or inflation by over printing.
Looking back at the interest rates you will see wild fluctations, going from 12% trending up through the twenties to -6% the next decade. So yes everyone is right, something screwy was going on with money supply.
But no has mentioned yet the fact that the stock market crash had little to do with a depression that didn't really set in til 2yrs later. 2yrs is a long time economically. No has mentioned the collapse of farms in the dust bowls. No has mentioned the protectionary tarrifs and trade barrier springing during the 30s, which plummited internation trade 80 - 90%. No mentioned yet how these dramatic economic landscape shifts in policy and money stuck some farms with over abundance so that prices dropped like a rock, yet the same farm mortgage was still due.
No one has mentioned the fact that major economies like Germany was trying to run with both legs tied together from the reparations that were demanded.
No has mentioned the bad loans banks were making.
No has mentioned that we are aghast of those times partly because it was that middling time between the absolute poverty of pre-industrial age and the absolute wealth of our current industrial age. (France, Spain, Germany have right now unemployments WORSE than what we had then.)
Drew
Post by: Headless Thompson Gunner on December 15, 2006, 06:24:56 PM
I've read stories about the British Royal Mint, back in the 1600's and 1700's struggling with this issue. They found that when they set the face value of their gold coins at or very near the value of the bullion content of the coin, that blacksmiths and jewelers in need of additional metal would simply grab a few coins and melt them down instead of going out and buying raw gold on the market. This forced the mint to manufacture new coins at an alarmingly high rate. The expense of minting new coins was prohibitive. The solution was to set the face value of the coins slightly below the bullion value of the gold that comprised the coins, thus making it uneconomical for the smiths to use the nation's currency as a source for currency.
The advent of commodities markets complicated this problem. Suddenly the price of metals was variable and constantly changing. Setting the face value of a coin just above the market value of its metal content became impossible, because the price of the metals were always fluctuating. The only way to solve this problem was to set the face value of the coin quite a bit below the anticipated market value of the metal. People have been bitching about "fiat money" and the fact that their currency is worth less than it says it's worth ever since.
As for the Federal Reserve system...
It's unrealistic to try to hold our currency to a predefined quantity of gold. The economy is constantly growing, wealth is constantly being produced. Every day when you go to work and do something useful, you are producing something economically valuable, something that someone else will trade value for. You are literally creating new wealth. Unless the total quantity of currency in the nation expands at the same rate as the expansion of wealth, the nation will experience wicked bouts of deflation. There won't be any new currency available to supply the ever growing demand for paying for the newly created wealth.
Nations got away with the gold standard for a while because the amount of gold (and thus currency) in the economy was somewhat expandable. New gold could be mined, discovered, stolen from native people, bought from foreign countries, or what have you. Thus the currency base was able to expand with the expanding economy, at least for a while.
But that system is unsustainable. The activity of the economy was directly limited by the ability of the nation to lay hands on additional pounds of gold. A free market economy can create wealth at a rate that far outpaces our ability to come up with new gold. The Federal Reserve system is the solution we've come up with. Like all social systems (or any human invention, for that matter), it has various flaws and weaknesses. But it's still a good system, and better than the alternatives. To paraphrase from Churchill, "The Federal Reserve note is the worst kind of money around, except for all the others."
Post by: Ron on December 15, 2006, 07:23:20 PM
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Like all social systems (or any human invention, for that matter), it has various flaws and weaknesses. But it's still a good system, and better than the alternatives. To paraphrase from Churchill, "The Federal Reserve note is the worst kind of money around, except for all the others."
All that makes it work is the nature of our country. People all across the world are betting on the US to remain strong and overcome difficulties as they arise.It will only work as long as people have confidence in it/us.
Post by: K Frame on December 15, 2006, 09:07:21 PM
Lak,
Excellent way to avoid the concept that food TODAY isn't the same as food in 1905.
The content of food in 1905 wasn't regulated. The chances of you getting substantial contaminants in food in 1905 were expodentially higher then than it is today, anywhere from serious levels of heavy metals to fecal contaminants.
As for that family farm in Ireland where the food was cut by hand...
How do you KNOW that what you ate was truly safe?
Travel with a portable laboratory?
Post by: K Frame on December 15, 2006, 09:30:47 PM
Ok, since you think it's such a good one, tell us how many of the world's major economic powers remained pegged to a strict specie monetary system post the Great Depression?
Great Britain, which prior to the Depression was acknowledged to be the world's economic center?
Abandoned the gold standard as untenable in 1931.
France? Also an economic powerhouse? Abandoned the gold standard in 1933, IIRC.
NO other nation of major economic importants maintained the gold standard past 1942, and most smaller nations had totally abandoned it by the late 1940s.
Some vestiges of the gold standard remained under the Bretton-Woods agreement as applied to international trading of gold, but these were terminated in the 1970s.
Post by: K Frame on December 15, 2006, 09:39:38 PM
The people who argue so vociferously for it don't realize something very important...
The only reason gold has "value" is because people agree that it has "value."
In that sense, gold is no different from paper money.
In fact, in economic terms, gold as a medium of exchange is no different than so-called fiat money.
In both cases, goods or services are purchased and paid for using a commonly agreed upon medium of exchange.
In order for gold to have value, the purchaser and vendor both must agree that a lump of metal has value.
In order for paper money to have value, the purchaser and vendor both must agree that a slip of paper with printing on it has value.
Conceptually they are no different, but those who advocate a strict gold standard seldom stop to recognize that inconvenient little truth.
Post by: richyoung on December 15, 2006, 11:49:41 PM
You know what really amuses me about all of the arguments for the gold standard?
The people who argue so vociferously for it don't realize something very important...
The only reason gold has "value" is because people agree that it has "value."
The people who argue so vociferously for it don't realize something very important...
The only reason gold has "value" is because people agree that it has "value."
...unless I'm very far off the mark, that's pretty much the way ANYTHING that "has value" has value. You've argued the definition. Now, if you want to talk about INTRINSIC value, gold is used for industrial and medical purposes as well as money, jewelry, and luxury items - many of these uses have no substitue. Plus the higher the value of it rises the more of it is poduced, as it becomes profitable to dig deeper, recycle , etc. While not perfect, its still a better money basis than "trust", especially when said trust is placed in foreign bankers (Federal Reserve) and politicians...
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In that sense, gold is no different from paper money.
But a GOLD BACKED paper currency is a much different beastie than a PAPER backed currency, and much harder to inflate due to political pressure - remember the "free silver" populist movement? What happens when enough of America votes for politicians who get everone out of their morttgage and credit card paymeents by inflating the currency to near-worthlessness?
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In fact, in economic terms, gold as a medium of exchange is no different than so-called fiat money.
Heck of a lot harder to counterfeit gold - even if its the treasury printing press doing the counterfeiting.....
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In both cases, goods or services are purchased and paid for using a commonly agreed upon medium of exchange.
Aye, but the rub is what happens when people STOP agreeing...to my knowledge, that has NEVER happened with gold OR a solid currency. In fact,gold goes UP in times of uncertainty. For counter exaples involving fiat money, please see: Germany after WWI, Italy whenever, or the fact that the US defacto has inflated itself off of the "zinc" standard, after previously inflating itself off of the copper standard - (tell me again how fiat money is so proof against manipulation?
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In order for gold to have value, the purchaser and vendor both must agree that a lump of metal has value.
Scarcity and desirability will do that. Under what circu,stances do you see gold ever loosing its value? In fact, YOUR argument was that a gold standard would lead to serious deflation, which is a round about way of saying that gold would gain TOO MUCH value. Which is it?
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In order for paper money to have value, the purchaser and vendor both must agree that a slip of paper with printing on it has value.
And originally, paper money was... receipts for gold on deposit. Its a lot easier to agree on the slip of paper's value when its BACKED by something of intrinsic value and convertible, isn't it?
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Conceptually they are no different, but those who advocate a strict gold standard seldom stop to recognize that inconvenient little truth.
A one ounce "silver dollar" is either worth the face denomination - one dollar, OR, in a worst case scenario, (actually, next to worst - I have seen people drill a hole in a coin to make a washer...) worth the price of an ounce of silver on the international market for jewelry, photography, etc. It has a floor. The floor for paper money is the same floor that toilet wipe has - which a lot of fiat money was used for in WWII Europe. Which "floor" is better? IN fact, there's only two kinds of fiat currency - those that have collapsed - and those that are going to.
Post by: Perd Hapley on December 16, 2006, 04:20:27 AM
Post by: Art Eatman on December 16, 2006, 04:25:53 AM
This creates a helluva problem for folks on a fixed income--or a retirement iincome which has a COLA built in. The COLA is based on official government numbers for inflation; right now these are at best a half of the true rate of inflation in terms of buying power of the dollar.
I remember $35/oz. gold. Nixon devalued the dollar to $42 before giving up. Now, gold is around $625. One of the very few things for which there is world-wide agreement: Gold is a better measure of value than paper money.
Art
Post by: LAK on December 16, 2006, 06:45:45 AM
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Excellent way to avoid the concept that food TODAY isn't the same as food in 1905.
The content of food in 1905 wasn't regulated. The chances of you getting substantial contaminants in food in 1905 were expodentially higher then than it is today, anywhere from serious levels of heavy metals to fecal contaminants.
Avoid? I highlighted the fact.The content of food in 1905 wasn't regulated. The chances of you getting substantial contaminants in food in 1905 were expodentially higher then than it is today, anywhere from serious levels of heavy metals to fecal contaminants.
Contaminants from what and where? Certainly if you camped downstream of a mining operation you might have ingested one of a number of toxic subtsances.
All "regulation" has done is legalized the addition of many more. In the 1960s no one I knew, no one my parents or other others spoke of had "diabetes". I had never even heard of it until the late 1970s. Now, every other person I meet "has diabetes" - or their father, or other person they know.
The number of people with innumerable "syndromes" these days is staggering. There is no pathology, they are just called "syndromes" - and the medical profession peddles a variety of pills, creams and other "helpful" (sometimes) items to these people who get to pay for them and suffer with the "syndrome" for the rest of their lives. Where were all these people 40 years ago? 100 years ago?
I'd never met or heard of anyone who had food poisoning via a self-produced, self-prepared or commercially marketed food item in the 1960s or 70s - and having read a good number of works written in the 19th and early 20th century I do not recall a single instance written of it. Not to say it did not happen, but apparently more people knew about food preparation and storage as a matter of family knowledge 101. Today it is more and more common, and many people in general seem to know little about the subject except the blurbs everytime a string of ecoli cases.
People seem generally unaware that one of the greatest single factors in their general health is what they drink and eat. And what do the majority of people eat? Processed food with liberal does of junk added to it; the regulated variety of course.
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As for that family farm in Ireland where the food was cut by hand...
How do you KNOW that what you ate was truly safe?
As they say, the proof is in the pudding. Count the number of people preparing and eating that way in rural Ireland with diabetes, one of a thousand or more "syndromes", cancers in the 1970s with those eating the regulated processed junk in any urban section of the United States today.How do you KNOW that what you ate was truly safe?
If you study the diet and history of cultures in the far east and central asia and other areas where people routinely have lived to a ripe old age it is not because they had a huge bureaucracy testing their food, adding a pile of legalized junk and sticking labels on it. In the same cultures you will see elderly people who are still fighting fit - often doing the kind of work that would have many a western 20-30 year old on their knees. Their children look bright, alert, calm and healthy - as opposed to the number of sickly children I see on a daily basis, many others extremely hyperactive, and those with a number of other maladies.
All regulation seems to have accomplished is createb a huge bureaucracy, disproportinately higher food prices, the addition of alot of junk and a correspondingly high number of sickly people who have been fleeced while they are slowly poisoned.
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http://ussliberty.org
http://ssunitedstates.org
Post by: LAK on December 16, 2006, 07:26:20 AM
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Ok, since you think it's such a good one, tell us how many of the world's major economic powers remained pegged to a strict specie monetary system post the Great Depression?
This apparent popularity? Well, that's easy. Economic slavery may be popular, but hardly beneficial - at least to those paying the bills.What percentage would a nickel have amounted to of the average household income in 1905? How about $2.50 or $3.00 to todays? How about if this household wants to buy bread sans the regulated slow poison - at say $5.00 or $6.00 a loaf?
How about milk? How much was a gallon of milk in 1905 - and how much is it now out of the average household income?
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Great Britain, which prior to the Depression was acknowledged to be the world's economic center?
Abandoned the gold standard as untenable in 1931.
France? Also an economic powerhouse? Abandoned the gold standard in 1933, IIRC.
NO other nation of major economic importants maintained the gold standard past 1942, and most smaller nations had totally abandoned it by the late 1940s.
And which european country had one of the highest per capita standard of living in the 1980s?Abandoned the gold standard as untenable in 1931.
France? Also an economic powerhouse? Abandoned the gold standard in 1933, IIRC.
NO other nation of major economic importants maintained the gold standard past 1942, and most smaller nations had totally abandoned it by the late 1940s.
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You know what really amuses me about all of the arguments for the gold standard?
The people who argue so vociferously for it don't realize something very important...
The only reason gold has "value" is because people agree that it has "value."
In that sense, gold is no different from paper money.
Not quite. Gold, like silver and number of other precious metals, has unique properties - and a level of intrinsic value.The people who argue so vociferously for it don't realize something very important...
The only reason gold has "value" is because people agree that it has "value."
In that sense, gold is no different from paper money.
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In fact, in economic terms, gold as a medium of exchange is no different than so-called fiat money.
In both cases, goods or services are purchased and paid for using a commonly agreed upon medium of exchange.
In order for gold to have value, the purchaser and vendor both must agree that a lump of metal has value.
In order for paper money to have value, the purchaser and vendor both must agree that a slip of paper with printing on it has value.
Conceptually they are no different, but those who advocate a strict gold standard seldom stop to recognize that inconvenient little truth.
Gold, and silver and a number of other precious metals have intrinsic value. A current Federal Reserve Note is merely a "promise to pay".In both cases, goods or services are purchased and paid for using a commonly agreed upon medium of exchange.
In order for gold to have value, the purchaser and vendor both must agree that a lump of metal has value.
In order for paper money to have value, the purchaser and vendor both must agree that a slip of paper with printing on it has value.
Conceptually they are no different, but those who advocate a strict gold standard seldom stop to recognize that inconvenient little truth.
So we have millions of people running around obtaining goods and services - and "promising to pay". What happens when the sellers and service providers one day say; ok, I want my money - the payment you promised?
A joke? Not really; if the bottom falls out of the notes, what have all the people holding actually earned, accumilated all those years? Nothing, unless they have invested a substantial portion in some kind or kinds of tangible assets. Gold, silver etc are tangible assets - they have unique properties which assign them a minumum value.
When you read a headline that says "Gold has risen by $46.50 an ounce in the last three months" it is misleading. Gold does not rise or fall against the dollar, it is the other way around. Fiat money can rise against gold or silver, but only by manipulation of the metals market where a government or several, and perhaps some of the largest private holdings "sell" - dump large quantities on the market. If the fiat money crashes - and they all do eventually - the metal remains.
It would be a mistake to have a gold-based currency in this country, because most of the world's gold production is overseas and subject to manipulation. We do however produce and hold an enormous amount of silver. This is why Lincoln backed his greens with silver, and so did John F Kennedy.
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http://ussliberty.org
http://ssunitedstates.org
Post by: Headless Thompson Gunner on December 16, 2006, 09:59:22 AM
Two facts remain. First, ANY item universally agreed upon as a medium for barter will work as well as any other. Second, for a modern economy the money base must be easily expandable, which the gold standard would not allow.
I understand that people are uncomfortable with fiat money. But the Federal Reserve system isn't going anywhere, and your life would suffer if it did. So don't lose any sleep over it.
* Gold or silver as jewelry has no intrinsic value. You can't buy a loaf of bread with a silver earing or make a house payment with a gold bracelet. You could sell jewelry to someone else who wants it and then use the proceeds to buy food or housing or whatever. But in that regard it's no better than FRNs - it still depends upon someone else believing it has value in and of itself, even though it lacks any practical utility.
Post by: thebaldguy on December 16, 2006, 10:07:34 AM
OK, back to the dollar. The dollar has lost almost 40% of it's value in the last 20 years. The cost of living has gone up and the dollar has gone down. Gold holds its value. In 1933, an ounce of gold bought you a nice suit; today, an ounce of gold gets you a nice suit. It is valuable because it's rare. Paper money can be printed with reckless abandon; check out Zimbabwe and their financial problems. Even the US government is no longer publishing the M3 numbers http://www.financialsense.com/editorials/conrad/2005/1122.html(http://www.econbrowser.com/archives/2006/05/m3_or_not_m3.html). Why is the total amount of money floating around no longer published? When I saw inflation figures on the news, they omitted energy costs from the inflation calculations. Why? To make things look better than they really are. No elected offical wants to be perceived as a failure.
Post by: drewtam on December 16, 2006, 10:56:38 AM
If the anit-fiats really wanted a note with intrinsic value the note would point to pounds of nuclear fuel (uranium, plutonium, or maybe thorium), or oil, or coal. Nuclear fuel and coal are abudant in the US and China. These notes would have real intrinsic value, particularly nuclear fuel. Its worth about $65/lb. Of the utilitarian metals and commodities (iron, aluminum, copper, coal, oil), uranium and plutonium have the largest price per pound. Also consider the wonderful energy density of nuclear fuels (1lb = 3 million lbs of coal), and ultitarianism of any fuel is obvious: transportation, heating, metalurgy, light, manufacturing, water, concrete. Every aspect of our modern life is built on these fuels. Gold certainly does lose value in a major depression, why would I buy gold as an investment or money shelter if I can't afford to eat or heat my home. But I certainly would buy in fuels that can power my car, heat my home, pump my water, and run my business. Although price would still go down, nothing beats real intrinsic value (like being an engineer!).
Its all about estabilishing a currency and controlling it by people and systems that drive incentives to operate in the best interest of the people (like federalism and separation of powers). Keep an extremely low interest rate but also prevent deflation; keep inflation relatively less than economic growth or wealth creation as some call it. It will become the background tool while the rest of us get to work ( spending too) which makes the real growth and wealth.
Of the economic policies this nation has, this one seems like a low priority to change.
Lets focus on the priority issues: Social Security (1/5 of debt), Medicare&Medicaid (1/5 of debt), Interest on debt (<~1/5 of debt).
http://www.federalbudget.com/
And the priority social issues, like the growing underclass.
Then we can debate on how big we want our standing army, and our future plans for war with the middle east (1/5 of debt). Then start working our way to the small stuff, farmer subsidies, federal education expenses, fed reserve, etc (all other programs in the whole budget combined is 1/5 of debt).
Drew
Post by: Art Eatman on December 16, 2006, 01:19:39 PM
One thing about gold: In a sense it's purely democratic as to its value: Worldwide, folks don't care what a few US folks think about gold; the Chinese, Indians, the oil folks, etc., all believe gold is a Good Thing. And, it's a free-market measure of the relative strength of fiat currencies...
Art
Post by: LAK on December 16, 2006, 10:16:41 PM
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Gold and silver have no intrinsic value to the vast majority of Americans. You can't eat it, you can't sleep in it, or drive to work with it, it won't keep you warm, it won't make you healthy.
You wouldn't live long eating dead Federal Reserve Notes. You might feather a quilt with them - or disinfect and sew them together to make toilet paper. Other than that, to most people with few resources during a crisis, dead Federal Reserve Notes have no value whatsoever. To a thousand and one domestic and foreign private and commercial scientific, high technology, technological research and developement institutions etc metals like gold and silver will always be needed.
So to people with resources to spare; tangible assets like food, fuel, medicine etc - gold and silver are a sound currency. Dead paper is not going to impress them.
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The most common use for gold and silver is in jewelry, yet even as jewelry these metals have no intrinsic value.* Even to those few industrial concerns that use gold and silver, you still couldn't get much of an intrinsic value out of your gold currency. Good luck finding a factory that will buy your gold currency for it's raw materials.
There are far more than a few industrial concerns that use precious metals - you are mistaken there. Certainly during a crisis not many such institutions and organizations are going to have on hand and divvy out bread and butter for handfuls of silver. To the individual though, a handful of precious metal is a better longterm bet than a dead paper currency with a folded gov treasury. Quote
Two facts remain. First, ANY item universally agreed upon as a medium for barter will work as well as any other.
Barter is fine; ideal in fact. If you have the space and correct conditions to store enough items to barter your way through a period of economic sea bottom that may take years to surface from. And if you need to move any more than a superficial distance you have the physical means and security to cart them all around.Quote
Second, for a modern economy the money base must be easily expandable, which the gold standard would not allow
The term "modern economy" is an invented term tailored for globalism. The terms "global economy" and "modern economy" are mutually supportive and applied to justify each other's existance. There is no imperative for any nation to play this game on these terms - unless there are physical resources in the form of raw materials, food or other that can not be produced domestically and must be imported. We need no such thing.There is nothing we actually need that can not be produced at home.
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I understand that people are uncomfortable with fiat money. But the Federal Reserve system isn't going anywhere, and your life would suffer if it did. So don't lose any sleep over it.
We are already inside the bounds of a very thinly veiled depression. Something worse than the 1930s is just over the horizon; not because "I say so", but because the spiralling trillion-dollar debt and an artificially propped currency can not be sustained indefinately.People should be "uneasy" about the FRS - it is theft on a mass scale. The crime of the century. It is a private institution charging us for the use of our own "money", and charging us a huge amount of interest on the "money" borrowed by their partners in crime in Washington DC, and being devalued as the game progresses. These people need to be in prison for racketeering on a mass scale along with those running a few other Federal agencies and their elected support in Washington.
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http://ussliberty.org
http://ssunitedstates.org
Post by: richyoung on December 17, 2006, 05:30:39 PM
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People should be "uneasy" about the FRS - it is theft on a mass scale. The crime of the century. It is a private institution charging us for the use of our own "money", and charging us a huge amount of interest on the "money" borrowed by their partners in crime in Washington DC, and being devalued as the game progresses. These people need to be in prison for racketeering on a mass scale along with those running a few other Federal agencies and their elected support in Washington.
+1. I'll bring my own pitchfork and torch...
Post by: LAK on December 19, 2006, 02:39:16 AM
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http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=53311
Tuesday, December 19, 2006 Morning Edition
U.S. dollar facing imminent collapse?
Fed in bind as Paulsen, Bernanke head to China
Posted: December 10, 2006
5:38 p.m. Eastern
By Jerome R. Corsi
© 2006 WorldNetDaily.com
Even as the stock market is hitting new record highs almost every day, the Federal Reserve and Treasury Department are quietly coordinating a devaluation of the dollar that the Bush administration hopes will be a slow decline rather than a dollar collapse.
This week, in an unusual move, the Bush administration is sending virtually the entire economic "A-team" to visit China for a "strategic economic dialogue" in Beijing Dec. 14 and 15.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are leading the delegation, along with five other cabinet-level officials, including Secretary of Commerce Carlos Gutierrez. Also in the delegation will be Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman, and U.S. Trade Representative Susan Schwab.
The Bush administration wants to get China's cooperation in preventing a dollar collapse. That's the conclusion of John Williams, an experienced professional econometrician, who writes the "Shadow Government Statistics" blog.
Williams has re-created M3, a money-supply measure whose data the Federal Reserve simply stopped publishing after issuing a technically worded March 2006 announcement.
Williams reports M3 is currently growing at close to a 9.6 percent rate and trending higher, compared with an 8 percent rate early this year, when the Fed quit reporting the measure.
"The Fed is pumping liquidity into the U.S. economy," Williams told WND, "and the Fed evidently did not want the markets to follow too closely what the Fed was doing with the money supply."
China today now is holding a historically unprecedented $1 trillion in foreign exchange reserves. During the Thanksgiving holiday, an announcement by China that their central bank planned to diversify foreign-exchange holding away from the dollar caused the dollar to drop in value on international currency markets. Since then, the dollar has hit a 20-month low against the euro.
"This was almost an orchestrated announcement," Williams claimed. "Around Thanksgiving the markets were thinly traded. I'm not sure who was playing games there, but the signal was clearly heard."
"You're dealing with mass psychology here," Williams argued. "The central bankers around the world know they are going to take a hit on their dollar holdings. None of the central bankers want to start a dollar panic, but none of the central bankers want to be the last out of the dollar, either."
Williams explained that the Federal Reserve is in a bind.
"Raising rates would kill any chance of avoiding a recession, but in terms of the dollar, we can't raise the rates fast enough when the dollar starts to slip quickly."
Are we experiencing a dollar collapse?
"Not yet," Williams answered. "I believe we're going to have a dollar collapse, but the Fed is going to do its best to slow play the dollar's decline in value, so that it takes a year or two for the dollar value to reach its low point."
Williams explained the risk of collapse the dollar faces:
"There will be a central bank, most probably in Asia, who will start the move away from the dollar and when it happens, you're going to see other central bankers covertly trying to follow. The move will magnify very quickly and it could become a full-fledged panic and a dollar collapse."
The Fed is struggling right now to contain inflation and stimulate economic growth. All the Fed is doing right now with all their grand policy shifts is using a lot of propaganda and market massaging to try to prevent a financial panic."
Recent reports have shown that U.S. gross domestic product growth slowed to 1.6% in the third quarter, the lowest in more than 3 years.
Will a declining dollar help narrow the U.S. trade deficit with China?
"You could take a 30 percent decline in the value of the dollar," Williams argued, "and it wouldn't make much of a dent in our trade deficit with China, not as long as Bush administration trade policy continues to be one-sided in favor of China."
"The Fed is faced with an impossible circumstance with the trade and budget deficits being run by the Bush administration," Williams told WND, "and they are just playing games with the markets and the public by not publishing M3, the broadest measure of money supply and the best indicator we have of long-term activity."
M3 is the broadest measure of the total money in the economy, including checking and savings accounts, cash, time deposits, and money-market funds. Economist Milton Friedman, one of the key economists contributing to the conservative theories that led to the development of "Reaganomics," argued that money supply is a key measure correlated both with economic growth and inflation.
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Post by: Art Eatman on December 19, 2006, 04:53:56 AM
"...trade policy..."? Huh? Somebody explain to me what change could be made, besides a tariff? A tariff would knock hell out of the buying power of the lower strata of our economic pyramid.
Art
Post by: richyoung on December 19, 2006, 05:00:41 AM
Quote
Quote
China, now the world's largest producer of gold, decides that it's time to take over economically. Action? Release a few hundred million troy ounces of gold onto the market. Result?
Not appreciably different than if they dumped US Treasury bonds and stopped buying them now,...or if the Arabs decide to quit holding petro dollars.
Boy I am SO GLAD that our being on a fiat currency PREVENTED (not) the crisis LAK is posting. Hate to say I told you so...
Post by: Ron on December 19, 2006, 08:06:46 AM
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Boy I am SO GLAD that our being on a fiat currency PREVENTED (not) the crisis LAK is posting. Hate to say I told you so...
Back in the eighties I was really really exercised over the whole issue and even bought gold and silver to be prepared.
Looking back I feel a little silly.
The US economy crashing is really not in Chinas best interest. Actually a US economic collapse isn't really in any ones interest save for the Islamic extremists.
Our currency is valued by the worlds confidence in us. A stable relatively free US is an attractive place to make money and keep your money safe.
Post by: Guest on December 20, 2006, 09:25:54 AM
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Boy I am SO GLAD that our being on a fiat currency PREVENTED (not) the crisis LAK is posting. Hate to say I told you so...
Back in the eighties I was really really exercised over the whole issue and even bought gold and silver to be prepared.
Looking back I feel a little silly...
Only if you no longer have it.
Notice that the fiat proponents are usually the diehard statists that can't live without massive state regulation of all types.
Post by: Perd Hapley on December 20, 2006, 10:11:48 AM
And please tell us that is not your picture.
Post by: Guest on December 20, 2006, 10:31:46 AM
mercedes, by your definition, everyone in this conversation are diehard statists who can't live without massive state regulation of all types.
I was under the impression that many here could live with considerably less regulation. IOW, less than "massive".
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And please tell us that is not your picture.
Why wouldn't it be?
Post by: richyoung on December 20, 2006, 10:35:59 AM
Post by: Guest on December 20, 2006, 10:54:00 AM
Sweet - what kind of music do you play, & where?
Nowadays,in our metal-building/studio, Rich. I had a 13+- year professional career in the mid-60's - late 70's. I play rock/blues/R+B styles. My influences go from the earliest days of rock to approximately '80...but I learn new things still.
Post by: richyoung on December 20, 2006, 11:22:33 AM
Post by: Perd Hapley on December 20, 2006, 11:25:34 AM
In its smaller form, the picture appears to be that of a woman.
Post by: Guest on December 20, 2006, 02:24:57 PM
http://www.armedpolitesociety.com/index.php?topic=5329.0
In its smaller form, the picture appears to be that of a woman.
In its smaller form, the picture appears to be that of a woman.
Haha!
I used to be a "glam-rocker". Now, I guess I look like an old woman. I get mistaken several times a year still.
Post by: Ron on December 20, 2006, 04:17:03 PM
In the smaller form I thought you looked younger and skinnier. Not meant as knock on you, You look kinda Frampton like in your avatar.
Back on topic...
How in the world could we ever get back to a hard currency anyhow? The whole economic system of the planet is based on fiat money and central banks.
Is there even enough gold and silver to cover all the paper and credit?
Post by: Guest on December 20, 2006, 05:58:13 PM
Cool guitar.
In the smaller form I thought you looked younger and skinnier. Not meant as knock on you, You look kinda Frampton like in your avatar.
In the smaller form I thought you looked younger and skinnier. Not meant as knock on you, You look kinda Frampton like in your avatar.
I think the forum software squishes the pic.
Quote
Back on topic...
How in the world could we ever get back to a hard currency anyhow? The whole economic system of the planet is based on fiat money and central banks.
How in the world could we ever get back to a hard currency anyhow? The whole economic system of the planet is based on fiat money and central banks.
When it collapses under the weight of the trillion$ in derivatives, a new system will be needed.
Quote
Is there even enough gold and silver to cover all the paper and credit?
Not at the present US$ price of gold. That is the point of using gold as a store of value.
Trivia: the actual US deficit for 2006, figured the way businesses are forced to perform accounting, is almost twice the size of all the gold ever mined at present gold prices. (At present, the gold price is surreptitiously manipulated downwards by governments but will eventually break free)
Also, though it seems like going back to coins would be a nuisance, I like to ask (since a one-ounce gold coin is worth $625) how many of those would it take to equal the number of dollars you usually carry? Of course, there would be half, quarter and tenth-oz. coins plus silver.
Post by: doczinn on December 20, 2006, 06:13:56 PM
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I think the forum software squishes the pic.
Crop the sides off with a photo editor, then repost. It should come out OK.
Post by: richyoung on December 21, 2006, 07:46:25 AM
How in the world could we ever get back to a hard currency anyhow? The whole economic system of the planet is based on fiat money and central banks.
Is there even enough gold and silver to cover all the paper and credit?
I'll try to make this simple: bear with me -
In the 30's, the worst traitor to ever be president since Lincoln, FDR, not only took us off the gold standard, but confiscated all privately held gold except jewelry - and then turned around and sold it on the international markets for more than he paid for it in paper "dollars". However, the COINS were still silver. Without out gold backing, the money could be inflated...but only up to the point that weight of $1.00 in coins didn't contain more than $1.00 in silver. If the weight of the coins in silver was more, (say, $1.50...), you could get change for a paper dollar, melt it down, get $1.50, etc, and soon there would be no coins. This is part of why the very wise Founding Fathers mandated that ONLY gold or silver coin would be money, and that ONLY Congress would coin money and set the exchange rates between metals. This is also an example of "Gresham's law", which says that any circulating currency consisting of both "good" and "bad" money (both forms required to be accepted at equal value under legal tender law) quickly becomes dominated by the "bad" money. This is because people spending money will hand over the "bad" coins rather than the "good" ones, keeping the "good" ones for themselves. (Seen any silver coins in your pocket change? REAL silver, that is? Now you know why... This is also why, in the old East Germany, where by law East German marks had the same "value" as west german ones, when they actually traded at 8 to 1, almost no one ever spent western currency.).
So because coins were silver, the "dollar", which before had been pegged as being 1/20.67 ounce (1.5048 g) of gold, now oculd be inflated (more "money" cranked off of the printing presses chasing the same pool of goods and services) until a silver dollar contained more than $1.00 worth of silver...which happened in 1964.
So the governement stopped using silver in coins. They basically made their new coins out of worthless sandwich slugs of a nickle-copper-nickle sandwich. This put us, de-facto, on the "copper standard", until...
The weight of 100 pennies held more than $1.00 worth of copper. Remember the era of copper thefts in the late '70s - early '80s, when people would steal wiring and plumbing, and burger joints would give you a free hamburger if you changed in a roll of pennies, or 3 burgers would sell for two rolls of pennies? This was proof that the US had inflated its currency to the point where we could no longer even stay on the COPPER standard! The penny was switched to a zinc slug with a thin coat od copper - (cut a new penny in half & see for yourself!) in 1982.
Now, our worthless, illegal fiat money has been inflated to the point that we will have to go off of the "zinc standard" - and coincidentaly, China and Opec are about to stop doing business in dollars. Gee I wonder why? Fact is, when you inflate a currency by cranking the presses, you basically steal worth from EVERYONE that is holding the inflated currency - all without pass and collect taxes, etc. You can pick the pockets of the whole world from the comfort and privacy of your office.
Now, if the currency WAS pegged to a precious metal, I'm sure there would be more than enough gold, silver, brass, copper, zinc, platinum, etc to go around...you just set the par value low enough.
Post by: Art Eatman on December 21, 2006, 08:59:35 AM
"Old" pennies were worth a penny, intrinsic, when copper hit $1.22/pound. While copper futures are dropping due to an anticipated reduction in home building, it's still around $2.90/lb.
Post by: Perd Hapley on December 21, 2006, 09:36:21 AM
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I think the forum software squishes the pic.
Crop the sides off with a photo editor, then repost. It should come out OK.Photo editor? He needs a barber to crop off the top and sides, and everything else.
Post by: richyoung on December 21, 2006, 10:23:59 AM
" George Mason of Virginia: "I have a mortal hatred of paper money."
" John Langdon of New Hampshire: "I would rather reject the whole [Constitution] than grant the new government the right to issue fiat money."
" George Reed of Delaware: "The right to issue fiat money would be as alarming as the mark of the beast in Revelation."
" Thomas Paine: "The punishment of a member of Congress who should move for such a law ought to be death."
Post by: Joe Demko on December 21, 2006, 01:09:29 PM
Post by: Guest on December 22, 2006, 07:06:18 AM
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I think the forum software squishes the pic.
Crop the sides off with a photo editor, then repost. It should come out OK.Photo editor? He needs a barber to crop off the top and sides, and everything else.
Hey, when one is 63 with hair, one flaunts.
Post by: Guest on December 22, 2006, 07:14:03 AM
"They [i.e., US Mint officials] claim that they are imposing these rules because they don't want certain individuals who melt down coins taking advantage of the American tax payer. It isn't the people who are melting down the pennies and nickels that are taking advantage of the American taxpayer. Those people are just trying to protect themselves from the stupidity of the Federal Reserve that continues to destroy our currency."
Post by: richyoung on December 22, 2006, 07:45:25 PM
Post by: Matthew Carberry on December 30, 2006, 12:52:30 PM
scroll down for text...
The book concerns the construction of a data haven in a small Pacific Nation and the creation of a completely internet-based currency backed by gold.
Post by: richyoung on January 03, 2007, 08:05:00 AM
rich, you might be right on some of that stuff, I don't know. But there is more than one kind of dollar out there. It may be a fed reserve note or anything else, but that doesn't mean it's not a dollar. The Canadian dollar is not a US dollar, and the US dollar is not a Bohemian thaler, or any historical predecesor. There's also more than one currency called the real, I believe, and certainly there are a few pesos.
The POINT would be, what "dollar" is the Consitution refereing to, and therefor the legal "dollar" under our Constitution?
Post by: Headless Thompson Gunner on January 03, 2007, 08:44:04 AM
Post by: Art Eatman on January 03, 2007, 08:44:55 AM
That is, we had the mix of LBJ's Great Society social programs and the guns'n'butter federal government policies of the Vietnam War era. This led to hyperactivity for the printing presses. That gave us the ensuing inflation of the general period of 1968 through 1981. During that time, when Nixon fully removed us from any tie to gold as a monetary security for our currency, the U.S. dollar bought less and less and less. We had a respite to some extent during the Reagan tenure, but the decay re-accelerated with Clinton and has sped up even more in these last half-dozen years with the rise in global competition for commodities.
"Full faith and credit" can carry you just so far when you get toward the end of your credit and there's little faith left.
Art
Post by: Mannlicher on January 03, 2007, 09:02:51 AM
Post by: BrokenPaw on January 03, 2007, 09:35:43 AM
for those folks that have seen the light, and realize that their money is worthless, I am offering a free service. Just package, and mail me all the worthless junk. I will pay shipping.
I have an old, worthless, ratty dollar that I'd like to send you. Shipping and handling will be $2.39, thanks. -BP
Post by: richyoung on January 03, 2007, 09:39:07 AM
http://www.libertydollar.org/
Post by: The Rabbi on January 03, 2007, 01:30:35 PM
I will gladly take those nasty illegal Federal Reserve notes off your hands. Especially the ones with Franklin's picture.
You have made these claims before. It is nonsense. Paper money was well known in colonial times.
http://eh.net/encyclopedia/article/michener.american.colonies.money
Post by: Mannlicher on January 03, 2007, 04:05:48 PM
for those folks that have seen the light, and realize that their money is worthless, I am offering a free service. Just package, and mail me all the worthless junk. I will pay shipping.
I have an old, worthless, ratty dollar that I'd like to send you. Shipping and handling will be $2.39, thanks. -BP
funny. Just send it first class for .39 ok?
Post by: richyoung on January 03, 2007, 05:58:32 PM
Rich Young,
I will gladly take those nasty illegal Federal Reserve notes off your hands. Especially the ones with Franklin's picture.
You have made these claims before. It is nonsense. Paper money was well known in colonial times.
http://eh.net/encyclopedia/article/michener.american.colonies.money
I will gladly take those nasty illegal Federal Reserve notes off your hands. Especially the ones with Franklin's picture.
You have made these claims before. It is nonsense. Paper money was well known in colonial times.
http://eh.net/encyclopedia/article/michener.american.colonies.money
..and it was despised - in colonial times, the Civil War era, etc. "Not worth a Continental" - ever heard that phrase before? It pretty much says it all. +There was a REASON that the Founding Fathers MANDATED "gold and silver coin" to be lawful money.
Post by: Headless Thompson Gunner on January 03, 2007, 07:58:25 PM
By the time the civil war came around, the Northerners had come to favor a centralized Federal currency because it made interstate (and even intra-state) trade and commerce easier. The Southerners still favored localized currencies, because it decentralized the system and made the various regions more economically autonomous and independent. The Southerners felt that a central, government-backed currency would give the government power to control the economy, which was something they feared.
This gave a huge advantage to the North in the Civil War. Northerners could raise money in Ohio, pay it to soldiers from New Hampshire, and spend it on rifles from Pennsylvania or uniforms from New York. By contrast, if the South raised money in Texas it would only be good in Texas. That money wouldn't buy food in Virginia or pay soldiers from South Carolina, at least not without a great big mess of currency conversion every time the money crossed a regional border.
Post by: LAK on January 04, 2007, 12:42:20 AM
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http://ussliberty.org
http://ssunitedstates.org
Post by: richyoung on January 04, 2007, 06:05:56 AM
Post by: The Rabbi on January 04, 2007, 06:11:30 AM
Post by: Guest on January 04, 2007, 07:17:17 AM
For those of you who think precious metals have no intrinsic value, I will gladly trade you 8 Federal Reserve "dollars" for any single Liberty Dollar that comes into your possession...
http://www.libertydollar.org/
http://www.libertydollar.org/
Has rabbi sent you any silver yet? He made a firm offer to do so.
"Rich Young, I will gladly take those nasty illegal Federal Reserve notes off your hands. Especially the ones with Franklin's picture."
Post by: richyoung on January 04, 2007, 08:00:10 AM
First Source(s):
www.digitalhistory.uh.edu/historyonline/us26.cfm
www.statcan.ca/english/freepub/11-516-XIE/sectione/sectione.htm
(See section E248-267)
Both sources confirm that the average wage of an American in 1900 was around $.22/hour, or in other words, about $2/day. That equals 47.8 grams of silver at the time. That also means that a nickle loaf of bread represented 1/200th of his weekly wages - IF he worked only 5 days a week, and no overtime.
Average annual wage - 2006 $36,219 = $17.41/hour = $139.28/day = 339.7 grams of silver, with a loaf oif bread being roughly 1/1000 of a week's wage. Bare in mind, bread * SHOULD * be much cheaper now....
Post by: richyoung on January 04, 2007, 08:07:11 AM
For those of you who think precious metals have no intrinsic value, I will gladly trade you 8 Federal Reserve "dollars" for any single Liberty Dollar that comes into your possession...
http://www.libertydollar.org/
http://www.libertydollar.org/
Has rabbi sent you any silver yet? He made a firm offer to do so.
"Rich Young, I will gladly take those nasty illegal Federal Reserve notes off your hands. Especially the ones with Franklin's picture."
For just 8 Liberrty dollars (coin or paper, either one - the fastest growing and most popular alternate LEGAL currency in the US...) I'd be happy to send him a FedRes Franklin
Post by: The Rabbi on January 04, 2007, 08:24:45 AM
We've also had double-digit inflation and unemployment at the SAME TIME, a supposed "impossibility" under the Keynsian theories that the fiat money is based on. Plus, are you forgetting a little thing called the Great Depression? It was DURING the onset of that the gold standard was revoked for peasants like us - (not for foriegners and the rich,tho...).
First Source(s):
www.digitalhistory.uh.edu/historyonline/us26.cfm
www.statcan.ca/english/freepub/11-516-XIE/sectione/sectione.htm
(See section E248-267)
Both sources confirm that the average wage of an American in 1900 was around $.22/hour, or in other words, about $2/day. That equals 47.8 grams of silver at the time. That also means that a nickle loaf of bread represented 1/200th of his weekly wages - IF he worked only 5 days a week, and no overtime.
Average annual wage - 2006 $36,219 = $17.41/hour = $139.28/day = 339.7 grams of silver, with a loaf oif bread being roughly 1/1000 of a week's wage. Bare in mind, bread * SHOULD * be much cheaper now....
First Source(s):
www.digitalhistory.uh.edu/historyonline/us26.cfm
www.statcan.ca/english/freepub/11-516-XIE/sectione/sectione.htm
(See section E248-267)
Both sources confirm that the average wage of an American in 1900 was around $.22/hour, or in other words, about $2/day. That equals 47.8 grams of silver at the time. That also means that a nickle loaf of bread represented 1/200th of his weekly wages - IF he worked only 5 days a week, and no overtime.
Average annual wage - 2006 $36,219 = $17.41/hour = $139.28/day = 339.7 grams of silver, with a loaf oif bread being roughly 1/1000 of a week's wage. Bare in mind, bread * SHOULD * be much cheaper now....
Your sources are not responsive at all to your argument.
You agree that food prices as a percentage of income have declined. This was my argument and thanks for proving it.
Roosevelt outlawed private ownership of gold in 1934, well into the Depression. There is additionally a large body of opinion holding that the gold standard caused the Depression, or at least contributed to it. In fairness there is another view that holds the opposite view.
Post by: richyoung on January 04, 2007, 08:31:13 AM
Ignoring for the moment that "store bought bread" was essentially a LUXURY ITEM in 1900...
Post by: richyoung on January 05, 2007, 07:55:36 AM
Post by: richyoung on January 05, 2007, 08:05:56 AM
Your sources are not responsive at all to your argument.
You agree that food prices as a percentage of income have declined. This was my argument and thanks for proving it.
Your argument is flawed - mechanization of agriculture, the use of chemicals, improved hybrid seeds, and the development of a national, then international food distribution system, along with refrigeration, canning, freeze-drying, and other techniques are responsible for the radical decline in food prices - NOT sound monetary policy. In 1929, the average American household spent 23.9% of its income on food - now its around 9.3%, It should be (and could be, in hte absence of government subsidies & other meddling), much less. Not to mention the fact that WHOLE NEW CATEGORIES exist to spend money in: How much did people spend in 1900 on:
electricity
telephone
consumer electronics
automobile
income tax
movies
photography
recorded music and video
computers
batteries
For the average joe, that total would be close to: ZERO.
As other things are added to the family budget, the percentage that existing expenses occupy DROPS - its called "math".
Post by: Headless Thompson Gunner on January 05, 2007, 12:13:43 PM
(See section E248-267)
Both sources confirm that the average wage of an American in 1900 was around $.22/hour, or in other words, about $2/day. That equals 47.8 grams of silver at the time. That also means that a nickle loaf of bread represented 1/200th of his weekly wages - IF he worked only 5 days a week, and no overtime.
Average annual wage - 2006 $36,219 = $17.41/hour = $139.28/day = 339.7 grams of silver, with a loaf oif bread being roughly 1/1000 of a week's wage. Bare in mind, bread * SHOULD * be much cheaper now....
I'm not exactly sure what it is you're driving at here, but I want to point out that it is right and proper for today's worker to earn many times more money than a worker from 1900 - today's worker is many times more productive than the 1900's worker. The fact that the daily wage in dollars has gone up does NOT indicate that the dollars are worth less today than they were in 1900. It means that today's worker is being paid many times more value because he is producing many times more value.Both sources confirm that the average wage of an American in 1900 was around $.22/hour, or in other words, about $2/day. That equals 47.8 grams of silver at the time. That also means that a nickle loaf of bread represented 1/200th of his weekly wages - IF he worked only 5 days a week, and no overtime.
Average annual wage - 2006 $36,219 = $17.41/hour = $139.28/day = 339.7 grams of silver, with a loaf oif bread being roughly 1/1000 of a week's wage. Bare in mind, bread * SHOULD * be much cheaper now....
A critical aspect of this discussion is being ignored in this thread, which is the fact that the economy (and thus the raw quantity of currency needed) is continually growing.
Back in 1900 the US population was about 75 million. Each worker made on average $2/day. Total payment is owed to the workers of the nation add up to something like $150M/day.*
Today's workers earn on average $140/day, and the population is about 300 million. Total payment owed to the workers of the nation each day amounts to some $42B/day.*
Unless the money supply had expanded over the last century there wouldn't be enough currency to go around! There has to be some sort of mechanism for intelligently and deliberately increasing the money base as the economy grows. That can't happen if you are tied to the gold standard!!
Sure, additional gold can be mined to increase the money base. But then the growth of your economy would be limited by the rate at which you can dig up gold. The country would suffer crippling bouts of inflation every time mining production increased, and wicked bouts of deflation every time worker productivity increased. That makes the gold standard a Bad Idea.
Using the Fed Reserve to manage the size of the money base is a necessary aspect of modern life. The gold standard simply wouldn't work today. You can debate the rate at which the Fed increases the money base, but you can't dispute the need for the Fed to increase the money base.
The bottom line is that the gold standard was abandoned because it was obsolete.
* These numbers are intended to be illustrative, not absolutely correct. Do the research yourself if you really want to know the accurate numbers.
Post by: Perd Hapley on January 05, 2007, 12:20:37 PM
Quote
Sure, additional gold can be mined to increase the money base. But then the growth of your economy would be limited by the rate at which you can dig up gold. The country would suffer crippling bouts of inflation every time mining production increased, and wicked bouts of deflation every time worker productivity increased. That makes the gold standard a Bad Idea.
Economical newbie here: Would part of the problem be that money would get more expensive? In other words, that it would be harder to get a loan to start or expand a business, or to buy products, because there is not as much money availabe to lend?
Post by: Headless Thompson Gunner on January 05, 2007, 02:02:59 PM
Quote
Sure, additional gold can be mined to increase the money base. But then the growth of your economy would be limited by the rate at which you can dig up gold. The country would suffer crippling bouts of inflation every time mining production increased, and wicked bouts of deflation every time worker productivity increased. That makes the gold standard a Bad Idea.
Economical newbie here: Would part of the problem be that money would get more expensive? In other words, that it would be harder to get a loan to start or expand a business, or to buy products, because there is not as much money availabe to lend?
It's a basic supply and demand thing. As the population grows, and the sum total of business activity grows, and the value of peoples' productivity grows, then so does their need for currency. Demand goes up, supply goes down, and suddenly money (in the form of currency/dollars/FRNs) becomes too valuable to spend. You get deflation.
Yes, there would be too little money available for lending. You'd end up in a goofy situation where creditors would lend money at negative interests rates. The lender offers the debtor a loan of $10, and only asks to be repaid $8. But the debtor loses out on this deal, because in a deflationary period the value of $1 is always increasing. The $8 of future currency he must repay is worth more than the $10 of old currency he borrowed.
Yes, there would be too little money for buying goods. Consumers would be reluctant to spend money, because in a deflationary period the value of the currency exceeds the value of the goods. People would horde their money, knowing that it would be more valuable tomorrow than it is today
There would be too little money for paying employees. Employers would be reluctant to hire workers, because the future liability of those wages would be too expensive. Pay rates would be forever decreasing, not increasing.
There would be too little money for investing into new business ventures. Investors with spare cash would be better off just holding the cash. Deflation would make that cash more valuable over time. It would be foolish to give that growth up on the hopes that the business venture would pay off better in the long run.
The overall result is that deflation would deter investment. This is the real danger of deflation! Economic activity would halt, because investment is the backbone of any economy.
Our current conditions, a small but ever-present level of inflation, is probably the best possible condition. Inflation is low enough that nobody is seriously hurt by it, yet still high enough to encourage people to invest spare cash rather than horde it.
Post by: Headless Thompson Gunner on January 05, 2007, 02:49:56 PM
A period of steady, predictably deflation wouldn't be too terribly damaging. The people and the economy would adapt, and life would go on.
Take lending as an example. Current inflation is something on the order of 3% to 5%.
Under current conditions, if a bank loaned money at the exact rate of inflation (3% or 5% or whatever) then they would just break even. If the loaned at a rate less than inflation (say 0% or 1% or so) they would lose money, and if they loaned at a rate higher than inflation (say 10%) they would make a profit.
Banking would work the same way in a deflationary period, it's just the numbers that would be different. Let's say deflation is something like 10% (or in other words inflation is -10%; currency become 10% more valuable each year). For the bank to break even on a loan, it still has to lend money at the exact rate of inflation (-10%; that means that on a one year loan, they would only expect you to pay back to 90% of what you borrowed). To make a profit, the bank has to loan at a rate higher than inflation (-5%, or 0%, or something like that). If they goof up and loan at a rate lower than inflation (say -15%), then the bank would lose its shirt.
The system of lending works the same regardless of the actual rate of inflation/deflation (lend at a rate higher than inflation to turn a profit; lend at a rate lower than inflation and you take a loss), but the numbers are different. It would take some getting used to. A 5% mortgage rate looks pretty darned good right now, but in a deflationary period (inflation=-10%) it would be a terrible deal: you would be paying back 15% more value than you borrowed each and every year.
Anyway, we could live with a system of constant, predictable deflation. We'd just have to get used to the new ways the numbers worked out.
What we couldn't adapt to is a system where the rate of inflation or deflation is constantly changing. A banker can make a reasonable estimate of what interest rate to loan money at if he knows what inflation/deflation is going to be in the future. He simply sets the rate of the loan a few percentage points over the rate of inflation regardless of what inflation happens to be. But if he doesn't know what the inflation rate will be going forward, then he can't make any loan without taking on a significant risk. If he sets his interest rates too low, then he might end up losing money and being ruined by the loans he made. If he sets sets his interest rates too high, then nobody will borrow from him and he'll still be ruined. The best course for all concerned is to avoid lending or borrowing money.
Economic stagnation is the eventual result of unpredictable inflation and deflation.
I guess my point in all of this is that it's predictability that matters most of all. This is where the gold standard fails and the Fed Reserve system shines.
Under the gold standard, the only way to increase the money base is to dig more gold out of the ground. If some miner strikes a mother lode, then suddenly the money base has increased tremendously. Supply and demand: the supply of gold/currency increased, therefore the demand decreased. This means inflation.
If the population grows suddenly, then so will the demand for currency. Demand goes up, supply goes down, and you get deflation.
If an entrepreneur or an inventor suddelny manages to increased the productivity of the nation's workforce (the invention of the assembly line would be a good example - suddenly laborers were able to produce tenfold more than they were before). Again, the demand for currency goes up, supply goes down, and you get deflation.
Under the gold standard, what you find is that a never ending sequence of unpredictable events (gold production, population changes, productivity changes, economic growth, etc) is constantly causing sharp spikes of inflation and deflation. The rate of inflation becomes upredictable, and it becomes very difficult and very risky for people to make sound investments. So people simply stop investing.
But thankfully we have the Federal Reserve system. Under our existing system, a smart guru in Washington is able to wave his magic wand and make the money base bigger or smaller whenever it's necessary.
Population boom? Bad news if you're on the gold standard, you get deflation. No problem if you're on the Fed Reserve standard. The fed can simply create more currency. Supply rises to meet rising demand, thus no change in inflation/deflation. Predictability is maintained.
Alaskan gold rush? Bad news if you're on the gold standard, you get inflation. No problem if you're on the Fed Reserve standard, because the supply/demand ratio for money isn't based upon gold. Predictability is maintained.
Henry Ford or Ma Bell or Bill Gates making your workforce dramatically more productive? Bad news if your on the gold standard, you won't have enough additional currency to cover the increase in productivity and worker output, you get deflation. No problem if you're on the Fed Reserve system, the Fed Chairman will simp;y increase the nation's money supply to match the increase in economic output. There'll be no change inthe rate of inflation/deflation, predictability is maintained.
You get the idea.
Obviously the Fed Reserve system can be abused or mismanaged. If the Fed Chairman increases the money supply at the wrong rate or at the wrong time, he'll actually end up causing inflation or deflation instead of controlling it. So the increased flexibility of the Fed Reserve system doesn't come free of risk. But it's a cost that's worth paying, the advantages outweigh the risks. I's like any other government power. Beneficial to the people if it's wielded properly, dangerous if it's not. Ultimately it is the responsibility of the electorate to make sure that our government does the right thing with our money supply.
Sorry for being extremely long-winded.
Post by: The Rabbi on January 06, 2007, 02:35:27 PM
I'd like to expand upon my previous post, which is already too long.
A period of steady, predictably deflation wouldn't be too terribly damaging. The people and the economy would adapt, and life would go on.
Take lending as an example. Current inflation is something on the order of 3% to 5%.
Under current conditions, if a bank loaned money at the exact rate of inflation (3% or 5% or whatever) then they would just break even. If the loaned at a rate less than inflation (say 0% or 1% or so) they would lose money, and if they loaned at a rate higher than inflation (say 10%) they would make a profit.
Banking would work the same way in a deflationary period, it's just the numbers that would be different. Let's say deflation is something like 10% (or in other words inflation is -10%; currency become 10% more valuable each year). For the bank to break even on a loan, it still has to lend money at the exact rate of inflation (-10%; that means that on a one year loan, they would only expect you to pay back to 90% of what you borrowed). To make a profit, the bank has to loan at a rate higher than inflation (-5%, or 0%, or something like that). If they goof up and loan at a rate lower than inflation (say -15%), then the bank would lose its shirt.
A period of steady, predictably deflation wouldn't be too terribly damaging. The people and the economy would adapt, and life would go on.
Take lending as an example. Current inflation is something on the order of 3% to 5%.
Under current conditions, if a bank loaned money at the exact rate of inflation (3% or 5% or whatever) then they would just break even. If the loaned at a rate less than inflation (say 0% or 1% or so) they would lose money, and if they loaned at a rate higher than inflation (say 10%) they would make a profit.
Banking would work the same way in a deflationary period, it's just the numbers that would be different. Let's say deflation is something like 10% (or in other words inflation is -10%; currency become 10% more valuable each year). For the bank to break even on a loan, it still has to lend money at the exact rate of inflation (-10%; that means that on a one year loan, they would only expect you to pay back to 90% of what you borrowed). To make a profit, the bank has to loan at a rate higher than inflation (-5%, or 0%, or something like that). If they goof up and loan at a rate lower than inflation (say -15%), then the bank would lose its shirt.
You make excellent points in your posts so I am reluctant to disagree. OK, I am gung ho to do so.
Anyway, Japan had a steady deflation for a few years. It was disaster. There was no investment at all. Banks kept their money in cash rather than make loans. There seems to be some preference for mild inflation (2%/year) over mild deflation. Our problem seems to come directly from the high inflation of the late 1970s. Prior to that everything was working out fine.
Post by: Art Eatman on January 06, 2007, 03:42:32 PM
Now, the "offical" inflation numbers make certain assumptions and omit and occasionally drop certain items from the list.
Assumption, e.g.: If the price of a brand-name canned veggie jumps up, Mrs. Housewife will then buy Generic, lowering her grocery bill. Anybody believe that?
Omitted: Medical costs. What's interesting is to read an article, "Medical Cost Increases Exceed Inflation by a Factor of Five!" Hmmm. Aren't we glad that we don't buy "Medical"? So it's unnecessary to include that in our cost of living?
Thirty-some years ago, housing and automobiles were included in the "Inflation Basket". Guess what? When prices began to climb like crazy during the Carter era, these were dropped from the list.
If you think inflation is 3% to 5%, you don't buy hydraulic oil, engine oil, pvc pipe, steel or copper tubing. You don't stay in motels. Or eat at restaurants.
Oh: What do you call it when the ad valorem tax--with the sudden high increase in the alleged "value" of your land or house--is tripled or more?
Post by: Headless Thompson Gunner on January 06, 2007, 10:19:54 PM
If you think the actual inflation rate exceeds, or even approaches, the prime lending rate, then you don't understand banking and finance. The prime rate (~8%) less the bank's overhead and profit is an excellent indicator of the true level of inflation. You'll have to guesstimate what the overhead and profit margin is on a sound bank loan, but I wouldn't think they sum to less than 2% or 3%. Thus real inflation isn't likely to be more than 5% or 6%, else banks would be losing money and going under.
Taking that idea one step further, the Fed funds rate is probably a rock solid reliable indicator of true inflation. This is the rate at which bank loan among themselves, usually on an extremely short term basis and at zero risk. Thus the overhead on a fed funds loan approaches zero. The current fed funds rate is 5.25%, and is up about a point over the past year. This indicates that real inflation is on the order of 5% and rising slightly.
If all you're buying is petroleum products and metals, then of course you'll think we're in a period of dramatic inflation. Hotel rooms and restaurant meals are another matter; I haven't noticed either increasing much around here, maybe things are different where you live. Any time you try to compute some sort of price index based on a small set of goods, you'll invariably have some error due to the disproportionate way that different goods change in price. Thus I prefer to look at the money itself, rather than a short list of what that money can be spent on, when trying to judge true inflation.
Post by: Headless Thompson Gunner on January 06, 2007, 10:33:00 PM
I'd like to expand upon my previous post, which is already too long.
A period of steady, predictably deflation wouldn't be too terribly damaging. The people and the economy would adapt, and life would go on.
Take lending as an example. Current inflation is something on the order of 3% to 5%.
Under current conditions, if a bank loaned money at the exact rate of inflation (3% or 5% or whatever) then they would just break even. If the loaned at a rate less than inflation (say 0% or 1% or so) they would lose money, and if they loaned at a rate higher than inflation (say 10%) they would make a profit.
Banking would work the same way in a deflationary period, it's just the numbers that would be different. Let's say deflation is something like 10% (or in other words inflation is -10%; currency become 10% more valuable each year). For the bank to break even on a loan, it still has to lend money at the exact rate of inflation (-10%; that means that on a one year loan, they would only expect you to pay back to 90% of what you borrowed). To make a profit, the bank has to loan at a rate higher than inflation (-5%, or 0%, or something like that). If they goof up and loan at a rate lower than inflation (say -15%), then the bank would lose its shirt.
A period of steady, predictably deflation wouldn't be too terribly damaging. The people and the economy would adapt, and life would go on.
Take lending as an example. Current inflation is something on the order of 3% to 5%.
Under current conditions, if a bank loaned money at the exact rate of inflation (3% or 5% or whatever) then they would just break even. If the loaned at a rate less than inflation (say 0% or 1% or so) they would lose money, and if they loaned at a rate higher than inflation (say 10%) they would make a profit.
Banking would work the same way in a deflationary period, it's just the numbers that would be different. Let's say deflation is something like 10% (or in other words inflation is -10%; currency become 10% more valuable each year). For the bank to break even on a loan, it still has to lend money at the exact rate of inflation (-10%; that means that on a one year loan, they would only expect you to pay back to 90% of what you borrowed). To make a profit, the bank has to loan at a rate higher than inflation (-5%, or 0%, or something like that). If they goof up and loan at a rate lower than inflation (say -15%), then the bank would lose its shirt.
You make excellent points in your posts so I am reluctant to disagree. OK, I am gung ho to do so.
Anyway, Japan had a steady deflation for a few years. It was disaster. There was no investment at all. Banks kept their money in cash rather than make loans. There seems to be some preference for mild inflation (2%/year) over mild deflation. Our problem seems to come directly from the high inflation of the late 1970s. Prior to that everything was working out fine.
Over the long term, if an economy and its constituent people are accustomed to deflation, then deflation wouldn't be all that bad. If everyone knows what the conditions are and how to operate properly under them, then the economy will function. But it would take a very long time indeed for any existing inflation-adapted economy to make the transition to a functioning deflation-adapted economy. We're talking a generation or more in which the economic populace agrees that deflation is the existing norm and will continue to be the norm indefinitely.
My point was that sudden variability in the rate of inflation/deflation is the real killer.
Post by: Art Eatman on January 07, 2007, 05:29:57 AM
The added costs of such as hydraulic oil and repair parts drives up the cost of construction, for instance. That drives up the private-sector costs for houses and commercial buildings as well as the taxpayer cost for highways and dams. Anytime the cost of electricity goes up, so goes the cost of cement--which is also affected by the cost of natural gas, and natural gas prices in the last few years are some four times more than in the late 1990s.
When the US Government sources claim the buying power is down over a lengthy period, that tells me that the published rate of inflation (from a different US Government source
) MUST be higher than what's claimed.Oh, well. What's oddball in all this, today, is that we don't have a case of "too many dollars chasing too few products". Yeah, the world is awash in dollars, but it's also awash in over-production. It's more a case of the printing presses and Gresham's law. That 84-cent Euro is now $1.31, just in the last four or five years.
True rate of inflation? Damfino, but it's darned sure more than any 2.6 or 3 percent.
Art
Post by: The Rabbi on January 07, 2007, 05:44:50 AM
You were replying to Headless, not me.
Be that as it may, the gov't probably does not count the cost of rail transportation for goods in the index either. But those numbers do come out anyway in the cost for items shipped by rail. As for hydraulic fluid, most consumers do not buy it in any quantity or on any regular basis (I never have). The primary consumers are repair shops etc. That is why it is called the Consumer Price Index. There is a Producer Price Index as well of course.
Except for the huge inflation of the 1970s prices have not risen all that much. When someone looks back to costs etc in 1960 and compares them to toda, invariably the biggest change happened from 1973 to 1980. If you took those years out of the picture things would look very different indeed.
Post by: JohnBT on January 07, 2007, 08:58:43 AM
No wonder everything always looks rosy to me.
Finished high school in '68, finished college in '72, endured the OPEC embargo of '73, finished grad school in '74, went to work, and finally bought a house in 1980 with a 30-year 12.75% mortgage that looked cheap at the time. The payment was 75 cents less than half my monthly take home.
Heck, things ARE good.
John
Post by: Kyle on January 07, 2007, 11:12:39 AM
Post by: Matthew Carberry on January 07, 2007, 11:36:18 AM
The guy with the reindeer farm in the Matanuska Valley sure won't care what some certificate printed by a private outfit in Dubuque says, he'll want physical quid for his fresh slaughtered side of pro quo.
Even USD backed by gold wouldn't do me any good if there's no realistic way to get to Ft. Knox to redeem it. Assuming Ft. Knox remained in .gov hands and wasn't seized by someone. The deflation rate due to time and distance to redeem gold-backed paper dollars for specie in AK, much less HI, would be crippling.
Thus the only gold worth "owning" is gold on hand, which means I then have to store and protect it. If it becomes necessary to move in or out of a disaster, I'll have to transport it and protect it enroute. That's quickly going to become unwieldy.
Post by: Headless Thompson Gunner on January 07, 2007, 11:42:58 AM
So.... lets say I wanted to buy an ounce of gold to horde away... where/how/when do I do this?
"Where" and "how" is easy. Go to your local coin collecting shop and ask about gold bullion coins. These are one ounce gold coins that aren't used as currency and are so common that they have no collector value. Their only value is their weight in gold. Krugerrands are probably the most common type, followed by Canadian Maple Leafs and American Eagles. Buy as many as you want. Just don't lose any. "When" is another matter. My own opinion is never, as there are far more profitable long-term investments out there. I suppose they'd make sense as a dense, portable, off-book store of wealth. But I'm not that paranoid (yet), and even if I were, golds coins as currency would be cumbersome. Try paying for a burger or a gallon of gas with a non-divisible $600 coin.
Post by: Creeping Incrementalism on January 07, 2007, 12:46:06 PM
Post by: Headless Thompson Gunner on January 07, 2007, 01:33:43 PM
Thompson gunner, thanks for your posts in this thread, I found them educating, and they helped cut through the paranoia. Their length was worth the effort.
Thanks for saying so. I'm glad all that finger exercise wasn't wasted.
Post by: richyoung on January 07, 2007, 06:16:01 PM
Try paying for a burger or a gallon of gas with a non-divisible $600 coin.
Why would it be "non-divisible"? A sharp knife or hatchet will do so easily - discounting fo r the moment the idea of "change", of carrying some smaller denomination coins - say in silver? Ever wonder why they were called "pieces of eight"? Just cut along the lines...like a pizza...
Post by: Guest on January 07, 2007, 06:31:02 PM
So.... lets say I wanted to buy an ounce of gold to horde away... where/how/when do I do this?
...there are far more profitable long-term investments out there. What, for instance?
Quote
I suppose they'd make sense as a dense, portable, off-book store of wealth. But I'm not that paranoid (yet), and even if I were, golds coins as currency would be cumbersome. Try paying for a burger or a gallon of gas with a non-divisible $600 coin.
Don't forget about gold half-ounces (approximately $300+-), quarters ($150), tenths ($60), and also silver coins: dimes ($1), quarters ($3), halves ($6), dollars ($12). How do you think the early americans did it? They didn't even drive cars and somehow they could buy everything with the coins they carried. This is a specious argument.
Post by: Perd Hapley on January 07, 2007, 06:40:04 PM
I'm sorry, I just couldn't resist.
Post by: Guest on January 07, 2007, 06:43:20 PM
...My point was that sudden variability in the rate of inflation/deflation is the real killer.
Well, which do you think is more likely: a sudden change in the amount of gold mined yearly or a sudden change in the amount of paper/digital money created by the central banks? That's a rhetorical question; of course it is the latter. Any negative thing that "could" happen with precious metals as money could happen even faster and worse with paper money.
Post by: Guest on January 07, 2007, 06:43:51 PM
I thought it was a specie argument. I'm sorry, I just couldn't resist.
I'm sorry, I just couldn't resist.
Post by: Headless Thompson Gunner on January 07, 2007, 07:07:37 PM
Try paying for a burger or a gallon of gas with a non-divisible $600 coin.
Why would it be "non-divisible"? A sharp knife or hatchet will do so easily - discounting fo r the moment the idea of "change", of carrying some smaller denomination coins - say in silver? Ever wonder why they were called "pieces of eight"? Just cut along the lines...like a pizza...
The discussion was on how to purchase an ounce of gold. I suppose I assumed that he wanted a single one ounce coin, not several coins of smaller denominations. Maybe that assumption was wrong. Even so, the smallest readily available and widely recognized gold coins are 1/20th of an ounce, or about $30 at current prices. Chopping the coin is a bad idea (see above), so change would have to be given in something other than gold. Thus you've spent at least $30 worth of gold to buy that burger. Now you have some other commodity (probably silver) that trades at another rate entirely, and is still non-divisible. It could be made to work, but it would be cumbersome and tedious.
So.... lets say I wanted to buy an ounce of gold to horde away... where/how/when do I do this?
...there are far more profitable long-term investments out there. What, for instance?
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I suppose they'd make sense as a dense, portable, off-book store of wealth. But I'm not that paranoid (yet), and even if I were, golds coins as currency would be cumbersome. Try paying for a burger or a gallon of gas with a non-divisible $600 coin.
Don't forget about gold half-ounces (approximately $300+-), quarters ($150), tenths ($60), and also silver coins: dimes ($1), quarters ($3), halves ($6), dollars ($12). How do you think the early americans did it? They didn't even drive cars and somehow they could buy everything with the coins they carried. This is a specious argument.
Post by: Headless Thompson Gunner on January 07, 2007, 07:12:56 PM
...My point was that sudden variability in the rate of inflation/deflation is the real killer.
Well, which do you think is more likely: a sudden change in the amount of gold mined yearly or a sudden change in the amount of paper/digital money created by the central banks? That's a rhetorical question; of course it is the latter. Any negative thing that "could" happen with precious metals as money could happen even faster and worse with paper money.
The amount of money created by the Fed is infinitely controllable. It can be set to exactly zero change from one year to the next, if that's what the economy needs. It can also be adjusted up or down if that is what the economy needs. This is why we dropped the gold standard.
Gold mining production is very difficult to predict, and impossible control (unless perhaps you favor nationalizing the mining industry and running it from Washington?). There is no assurance that gold production will remain fixed. Worse, there is no mechanism for it to be intelligently increased or decreased if the economic conditions make such desirable.
Post by: LAK on January 08, 2007, 01:26:52 AM
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The amount of money created by the Fed is infinitely controllable. It can be set to exactly zero change from one year to the next, if that's what the economy needs. It can also be adjusted up or down if that is what the economy needs. This is why we dropped the gold standard.
Controllable by whom and in whose ultimate interests if there is a conflict of interest that transcends our border? Our own nation - or the private interests that own the banking institutions who have no borders or allegiances?
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Gold mining production is very difficult to predict, and impossible control (unless perhaps you favor nationalizing the mining industry and running it from Washington?). There is no assurance that gold production will remain fixed. Worse, there is no mechanism for it to be intelligently increased or decreased if the economic conditions make such desirable.
Right. Gold production is largely owned and controlled by europeans. But we have plenty of silver here in the United States. This is why Lincoln chose silver to back his greenbacks and J F Kennedy his silver certifcates.
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http://ussliberty.org
http://ssunitedstates.org
Post by: The Rabbi on January 08, 2007, 03:39:57 AM
Right. Gold production is largely owned and controlled by europeans. But we have plenty of silver here in the United States. This is why Lincoln chose silver to back his greenbacks and J F Kennedy his silver certifcates.
This might be the factual error of the week. Maybe the month.
Gold mining companies are typically either American or Canadian or South African. The properties are either in Canada, the US, South Africa, Russia, or Australia.
Lincoln chose silver because he needed to expand the currency and didnt have any more gold supplies. This was a constant battle with populists demanding silver backing as well.
Kennedy had nothing to do with silver certificates, which started long before he came to office.
But other than that you're right.
Post by: richyoung on January 08, 2007, 04:54:32 AM
Right. Gold production is largely owned and controlled by europeans. But we have plenty of silver here in the United States. This is why Lincoln chose silver to back his greenbacks and J F Kennedy his silver certifcates.
Kennedy had nothing to do with silver certificates, which started long before he came to office.
He's talking about:
Executive Order 11110 was issued by president John Kennedy on June 4, 1963.
This executive order allowed the US Secretary of the Treasury[1], as per delegated authority given to the President by the Thomas Amendment to the Agricultural Adjustment Act, to issue silver certificates against silver bullion. The major change affected by this order was that the printing of paper money could again be carried out without any reliance on the Federal Reserve System, which by this time had become the sole entity responsible for currency production and valuation in the United States. Very little of this silver-backed money was ever issued, with the project largely being abandoned after Kennedy's assassination only a few months later. While no President since JFK has ever availed himself of what this order allows, it has never been rescinded.
You are in error, Rabbi.
Post by: Guest on January 08, 2007, 05:45:25 AM
...My point was that sudden variability in the rate of inflation/deflation is the real killer.
Well, which do you think is more likely: a sudden change in the amount of gold mined yearly or a sudden change in the amount of paper/digital money created by the central banks? That's a rhetorical question; of course it is the latter. Any negative thing that "could" happen with precious metals as money could happen even faster and worse with paper money.
Because it's obvious.
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The amount of money created by the Fed is infinitely controllable. It can be set to exactly zero change from one year to the next, if that's what the economy needs. It can also be adjusted up or down if that is what the economy needs.
Also known as economic fascism because it is set by an entity over which ordinary persons have no control and for reasons not always in the interests of ordinary americans. It is changed arbitrarily and somewhat secretly, making it hard for americans to plan for the future.
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This is why we dropped the gold standard.
No, it isn't. It was dropped because the US printed up so much paper money that when Europeans tried to redeem it for gold in the 1960's, the US went effectively bankrupt and reneged on its debt by refusing to redeem the paper for gold. The US had already gone effectively bankrupt once already when FDR confiscated US citizens' gold and gave them paper and then revalued gold.
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Gold mining production is very difficult to predict, and impossible control (unless perhaps you favor nationalizing the mining industry and running it from Washington?). There is no assurance that gold production will remain fixed. Worse, there is no mechanism for it to be intelligently increased or decreased if the economic conditions make such desirable.
I guess you trust politicians, who have gotten into trillion$ of debt, to decide what is needed by or desirable for "the economy". A side benefit to hard money would be that it's unlikely that the US gov't would be involved in a horrific, unjust war in Iraq if it had to pay for it in gold.
I never said that gold mining is "fixed'. I meant that it is easier to ramp up some paper-printing presses and computers than it is to scratch gold out of the ground. Jeez!
Post by: Ron on January 08, 2007, 06:04:25 AM
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I guess you trust politicians, who have gotten into trillion$ of debt, to decide what is needed by or desirable for "the economy".
Wonder what the net worth of the US government is?
I realize we have a huge national debt but the government has a huge amount of assets in property not to mention military hardware.
All the land, buildings, vehicles that has to really add up.
Post by: Art Eatman on January 08, 2007, 06:11:01 AM
Gold: Most any coin store; most any coin show: You can buy gold coins from as small as the Mexican two-peso (about 0.05 ounces) on up to the 1.23-ounce Mexican 50-peso. There are many fractional-ounce gold coins, including the English sovereign as well as fractional-ounce US coins. Note that gold does not become "worth" more; as the dollar declines in buying power, the cost of buying gold via dollars increases. Gold in Euro terms hasn't risen nearly as much, these last few years.
Silver: IMO, the best way to buy silver is U.S. "junk" silver. That's coinage from 1964 and earlier; 90% silver. 0.712 ounces of silver per dollar of face value. U.S. silver dollars have 0.82 ounces of silver. Well-circulated common-date dollars sell for intrinsic value, or should; anything higher is sort of a ripoff.
Equities: Some commodity companies have been going great guns. You have to do homework, just as with any stock. You can't just buy and forget or buy and hold in the expectation that the stock price will always rise. It's not unwise to sell if a stock goes up notably, pay your capital gains tax and go back to doing homework. I note from observation over the last three or four years that around 90% of the investment recommendations from "Strategic Investment" have been quite nicely profitable.
Right now, the slowdown in US homebuilding has eased the demand for copper, steel and cement, so those commodities are holding, not climbing. If you own, hold; but probably, don't buy those equities right now. And with the Democrats ready to target "Big Oil", avoid the US majors. It could be that the foreigners (Shell, e.g.) could benefit. However, my crystal ball isn't crystal clear...
Art
Post by: richyoung on January 08, 2007, 06:22:39 AM
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I guess you trust politicians, who have gotten into trillion$ of debt, to decide what is needed by or desirable for "the economy".
Wonder what the net worth of the US government is?
I realize we have a huge national debt but the government has a huge amount of assets in property not to mention military hardware.
All the land, buildings, vehicles that has to really add up.
Actually, the government isn't "supposed" to own property - outside of forts, naval bases, and the capitol. Thats why things like homesteading, and the Oklahoma land rush happened. The .gov had to get rid of the land. Then the government just started ignoring that part of the Constitution to create "parks" etc. Suspiciously, few of those were created in "old" states with politcal clout. Now states like Nevada and Arizona have to provide services to hige parts of the state that can't be developed as part of the tax base. As to the net worth, with 60 TRILLION of debt hanging over us, I'm quite sure its negative.... maybe we could get Greta Brittain to pay back their WWI debt?
Post by: richyoung on January 08, 2007, 06:24:32 AM
Those early Americans managed with their gold and silver coins because they knew by definition that 20 $1 silver coins were exactly equal in value to a single $20 gold coin. No such assurance exists today. We'd all have to carry around conversion tables containing commodity prices, and be sure our tables aren't out of date.
Uh, you might want to look at who's JOB it is to set the ratio between metals: COngress. That's how they "knew" the ratio in the old days: Congress set it - and could do so again.
Post by: Matthew Carberry on January 08, 2007, 07:31:16 AM
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As to the net worth, with 60 TRILLION of debt hanging over us, I'm quite sure its negative.... maybe we could get Greta Brittain to pay back their WWI debt?
Don't know about WWI but they made the last payment on WWII a week ago.
http://marketplace.publicradio.org/shows/2006/12/28/AM200612289.html
Post by: richyoung on January 08, 2007, 08:32:16 AM
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As to the net worth, with 60 TRILLION of debt hanging over us, I'm quite sure its negative.... maybe we could get Greta Brittain to pay back their WWI debt?
Don't know about WWI but they made the last payment on WWII a week ago.
http://marketplace.publicradio.org/shows/2006/12/28/AM200612289.html
...they haven't made a payment on WWI since the '30s...
Post by: cosine on January 08, 2007, 08:37:25 AM
Thompson gunner, thanks for your posts in this thread, I found them educating, and they helped cut through the paranoia. Their length was worth the effort.
Same here. I just read the rest of the thread, thanks for your excellent posts.
Post by: Headless Thompson Gunner on January 08, 2007, 08:49:49 AM
Those early Americans managed with their gold and silver coins because they knew by definition that 20 $1 silver coins were exactly equal in value to a single $20 gold coin. No such assurance exists today. We'd all have to carry around conversion tables containing commodity prices, and be sure our tables aren't out of date.
Uh, you might want to look at who's JOB it is to set the ratio between metals: COngress. That's how they "knew" the ratio in the old days: Congress set it - and could do so again.
Well, which do you think is more likely: a sudden change in the amount of gold mined yearly or a sudden change in the amount of paper/digital money created by the central banks? That's a rhetorical question; of course it is the latter. Any negative thing that "could" happen with precious metals as money could happen even faster and worse with paper money.
It's hardly a rhetorical question, so why are you dismissing it without thought?Because it's obvious.
...
Also known as economic fascism because it is set by an entity over which ordinary persons have no control and for reasons not always in the interests of ordinary americans. It is changed arbitrarily and somewhat secretly, making it hard for americans to plan for the future.
Also known as economic fascism because it is set by an entity over which ordinary persons have no control and for reasons not always in the interests of ordinary americans. It is changed arbitrarily and somewhat secretly, making it hard for americans to plan for the future.
...
Controllable by whom and in whose ultimate interests if there is a conflict of interest that transcends our border? Our own nation - or the private interests that own the banking institutions who have no borders or allegiances?
Controllable by whom and in whose ultimate interests if there is a conflict of interest that transcends our border? Our own nation - or the private interests that own the banking institutions who have no borders or allegiances?
This discussion is rapidly becoming pointless. A lot of you need a big smack upside the head with a Clue Bat, and I'm tired of swinging.
I shouldn't have to explain that we live in a Representative Republic, where the people select the leaders and control the national policy, either directly or indirectly. This applies to the Fed Reserve Chairman and the Fed's monetary policy as readily as to any other aspect of government.
Who selects the Fed Reserve Chairman? We do, though our elected officials.
Who selects our nations' monetary policy? We do, through our elected officials.
Who is responsible for ensuring that our government implements sound monetary policy? We are, through our elected officials.
Whose ultimate interest does the Fed serve? Ours.
If y'all wanna believe in some sort of shadow conspiracy government that circumvents the electorate and serves the interests of a secret cabal of powerbrokers, then who am I to debate you? Enjoy your fantasy, and don't let me or any other source of reality intrude.
Aside from one final remark to Art, I'm done with this thread. I'll leave y'all in peace to whimper about whichever grand financial conspiracy scares you most.
Inflation comment: I turned the key on my 1985 Toyota 4WD PU in January of 1985, and drove off the lot: Buy-price, tax, tags & title registration for $9,500. I looked at the plainest-vanilla 2005 equivalent Toyota at the dealer's in Austintatious. I could have driven away for about $30, , total cost. Play with the "Rule of 72" to figure the percentage increase per year.
Art, a plain vanilla Toyata 4WD pickup truck retails for less than $20,000. Check it for yourself:http://www.toyota.com/byt/pub/setStartOptions.do
I'm not sure what your dealer is quoting you, but it sounds like he's selling you a bridge in Brooklyn. (What do tax, title, and registration amount to on a $18k truck down in Texas? Surely not 50%...?
)Anyways, playing with the Rule of 72, that amounts to an annual inflation rate of about 3.5%, which is strikingly similar to the official figures.
Back '85, the CPI was 105, today it's 205. This matches up almost exactly with the reality you describe. Over the past 22 years, prices have roughly doubled. If you were trying to back up your assertion that the official CPI and inflation numbers are wrong, then you've accomplished just the opposite.
Post by: The Rabbi on January 08, 2007, 10:10:17 AM
Post by: richyoung on January 08, 2007, 10:14:04 AM
We are talking MONEY, not "commodities". Get it?
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not by Congressional fiat. Unless perhaps you are suggesting that we should nationalize the commodities markets???
No more htan it was in the late 1700's. See, Congress is to set the exchange ratio between the two when used as money, and to adjust it for market forces when needed. its in: U.S. Constitution - Article 1 Section 8 "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"
Thats the part that MANDATES that CONGRESS adjust the metals ratio. Naturally, one would expect that to reflect free market conditions, and also to be a political football - nonetheless, thats what the Constitution mandates.
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If it's obvious, then how were you able to come up with the wrong answer? The Fed Reserve system has a far greater capacity to hold the money base constant, ...
"Capacity" does not equal "intent", "will", "desire", etc. Nor has the money base been held constant.
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I shouldn't have to explain that we live in a Representative Republic, where the people select the leaders and control the national policy, either directly or indirectly. This applies to the Fed Reserve Chairman and the Fed's monetary policy as readily as to any other aspect of government.
Clue Bat me in. When were the provisions mandating gold and silver coin be money revised by ammendment. What part of the Constitution gives either the Treasury Dept or the Federal Reserve the right and authority to make U.S. money? I * SHOULDN'T * have to remind you that the consitutio ncan only be altered by ammendment, NOT by inferior law, or even judicial fiat.
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Who selects the Fed Reserve Chairman? We do, though our elected officials.
Who selects the rest of the Fed?
Post by: Matthew Carberry on January 08, 2007, 05:51:54 PM
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Who selects the Fed Reserve Chairman? We do, though our elected officials.
Who selects the rest of the Fed?
Who actively selects the 2nd-tier officials of any bureaucracy? The officers under general rank? The members of the President's staff for that matter?
That power is delegated in one way or another.
Post by: richyoung on January 10, 2007, 04:49:20 AM
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Who selects the Fed Reserve Chairman? We do, though our elected officials.
Who selects the rest of the Fed?
Who actively selects the 2nd-tier officials of any bureaucracy? The officers under general rank? The members of the President's staff for that matter?
That power is delegated in one way or another.
Why do we need a quasi-government, quasi-private secretive organization to perform functions that are delegated to Congress in the first place?
Post by: cordex on January 10, 2007, 06:27:31 AM
We are talking MONEY, not "commodities". Get it?
Rich,Your entire point is that you believe that the value of money should be based on the value of one or more commodities - specifically precious metals - rather than legislative fiat. However, you also stated:
Quote from: richyoung
Uh, you might want to look at who's JOB it is to set the ratio between metals: COngress. That's how they "knew" the ratio in the old days: Congress set it - and could do so again.
In other words, you want Congress to specify the exchange rate for silver and gold. So if Congress is setting the exchange rate between silver and gold, they are setting the value of at least one of these precious metals as a commodity. For example, if one dollar is fixed at 1/20th of an ounce of gold and Congress has passed a law stating that silver exchanges at a rate of 13:1 with gold, you know that one ounce of gold is worth 13 ounces of silver or that each ounce of silver is worth $1.54, right? Now let's say that there is a glut of silver in world markets and that outside of the US silver trades with gold at 15:1 or where silver is worth $1.33 relative to the $20.00 gold standard. Suddenly American currency is out-of-whack. If you brought gold into the US, its relative value in silver would be debased because one ounce of gold would buy two ounces less of silver, or put another way, an ounce of US gold would cost $17.33 if paid for in foreign silver. So, for every ounce of gold you brought into the country to trade for silver, you'd lose money. However, if you brought silver into the US, you could use it to buy gold cheaper than in any free market. Unless you are proposing that international commodities trades be abolished or nationalized, people would flock here to buy gold at the government enforced rate. Suddenly the US would have a huge amount of silver (paid for at an inflated price in gold) and little to no gold. The reverse could also be true. If the silver supply outside the US was deflated relative to the gold supply, people would come to the US, buy silver with gold at the government's rate and ship the bullion back out to be sold on the world markets. This is not a new problem.One way to balance this out would be for Congress to restructure the ratio every time there was a shift in the market, but then you're just tied to the market and we're back to square one where any time you made change you'd have to check what the current relative values were. Any other way would involve prohibiting the destruction of coins (which, when enforced, would cause coins to lose whatever value they hold as metal and become mere tokens) or prohibiting any import or export of gold except by the government.
Someone earlier mentioned Neal Stephenson's Baroque Cycle ... you really should read it. It is a fantastic series of novels that deals with (among many other things) this exact issue of currency and what it should be based on.
Post by: richyoung on January 10, 2007, 07:27:26 AM
We are talking MONEY, not "commodities". Get it?
Rich,Your entire point is that you believe that the value of money should be based on the value of one or more commodities - specifically precious metals - rather than legislative fiat.
Almost,... but not quite. I want the money used in the US to be what the Constitution DEMANDS - "gold or silver coin". Its essentially a bimetallic standard. Its what the highest law inthe land mandates. Some will argue that it has been "modified" by such and such Coinage Act - the Constitution CANNOT by modified by a law - it is SUPERIOR to any such act of Congress, and requires an AMMENDMANT to be changed. Like when Prohibition was instituted.
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However, you also stated:
Quote from: richyoung
Uh, you might want to look at who's JOB it is to set the ratio between metals: COngress. That's how they "knew" the ratio in the old days: Congress set it - and could do so again.
In other words, you want Congress to specify the exchange rate for silver and gold. Correct. Its their JOB to coin the money and specify the exchange rate between gold and silver.
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So if Congress is setting the exchange rate between silver and gold, they are setting the value of at least one of these precious metals as a commodity.
No. They are setting the EXCHANGE RATIO for the metals as MONEY. Just like arbitrarily setting 100 copper pennies = 20 nickel nickels = 10 silver dimes = 4 silver quarters = 1 paper "silver certificate" dollar. Even metal-backed currencies aren't set at the par weights of the metals; otherwise the coins would be converted into their base metals when needed. What the metal backing provides is a FLOOR of value below which the currency can't sink - this in turn puts a brake on the creation of currency and prevents government inflation and spending.
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For example, if one dollar is fixed at 1/20th of an ounce of gold and Congress has passed a law stating that silver exchanges at a rate of 13:1 with gold, you know that one ounce of gold is worth 13 ounces of silver or that each ounce of silver is worth $1.54, right?
As MONEY, yes. See above. As a commodity, no. Its worth whatever its trading for that day as a commodity - which, barring catastrophic inflation, will almost ALWAYS be less than its face value in money. A $20 gold coin is NOT normally going to contain $20 woth of commodity gold - it will have, say $15 worth. The fact that it has a certain mass of gold means that the value of the MONEY can't fall below that value as a COMMODITY. What causes the value of money to fall? Too much money chasing goods and services - supply and demand. This is WHY backing currency with precious metals prevents inflation. It also virtually eliminates counterfeiting. It also acts as a brake to government spending and manipulation of the money - which is why governments hate it.
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Now let's say that there is a glut of silver in world markets and that outside of the US silver trades with gold at 15:1 or where silver is worth $1.33 relative to the $20.00 gold standard. Suddenly American currency is out-of-whack. If you brought gold into the US, its relative value in silver would be debased because one ounce of gold would buy two ounces less of silver, or put another way, an ounce of US gold would cost $17.33 if paid for in foreign silver. So, for every ounce of gold you brought into the country to trade for silver, you'd lose money.
ONLY if the commodity value of the metal in the money exceeded its face value. As I've pointed out, that will almost never be the case, due to Gresham's Law. I know of no mechanism short of outright fraud whereby a currency backed by precious metal can be inflated to the point where its coinage exceeds in commodity value its face value. To do so would require the government to print up some sort of paper money that is SUPPOSED to be backed by the metal without actually taking in as tax sufficient metal to back it, and COMPELLING use of the paper money. Thats what happened in 1934, thanks to FDR and the FED.
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However, if you brought silver into the US, you could use it to buy gold cheaper than in any free market.
Only if the gold coinage was at or very close to the commodity value already, AND Congress failed to either revalue the ratio, or pin it to some commodity index.
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Unless you are proposing that international commodities trades be abolished or nationalized, people would flock here to buy gold at the government enforced rate.
Again, this could only happen if the COMMODITY value was at or close to the FACE value - in an honest government - can't happen.
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Suddenly the US would have a huge amount of silver (paid for at an inflated price in gold) and little to no gold.
Actually, something similar to this was happening to Great Britain in the late 20's. Since much of the Federal Reserve system stock is owned by "offshore interests" (read British bakers....), the Federal Reserve persued a monetary policy with the dollar to try to "prop up" the English currency, which largely lead to the Great Depression and the previously referenced inflation of the US dollar off of gold, formalized in 1934.
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The reverse could also be true. If the silver supply outside the US was deflated relative to the gold supply, people would come to the US, buy silver with gold at the government's rate and ship the bullion back out to be sold on the world markets. This is not a new problem.
..and this is why the branch of government MOST RESPONSIVE tot he people, the Congress, was charged with setting the ratio. Now we don;t have any metal at all, and the money supply is controlled by the Fed - how responsive, pray tell, are they to the people?
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One way to balance this out would be for Congress to restructure the ratio every time there was a shift in the market, but then you're just tied to the market and we're back to square one where any time you made change you'd have to check what the current relative values were.
When you make change now, do you worry about the commodity values of copper, zinc, nickel and paper? Of course not. Neither would you with a metal backed currency - BECAUSE if you DID want to convert, you could at any time.
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Any other way would involve prohibiting the destruction of coins (which, when enforced, would cause coins to lose whatever value they hold as metal and become mere tokens)
Again NOT necessary unless the currency has been illegitimately inflated. Can't happen. Deflation is much more likely a problem with backed currency than inflation.
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or prohibiting any import or export of gold except by the government.
Which most governments do, including ours (for ordinary serfs such as you and I) between 1934 and just recently.
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Someone earlier mentioned Neal Stephenson's Baroque Cycle ... you really should read it. It is a fantastic series of novels that deals with (among many other things) this exact issue of currency and what it should be based on.
Thanks, I'll read when I get the chance. Until then, I'll stick with the Constitution, the Founding Fathers, the Chicago School, the Austrian School, Milton Freidman, Paul Volker BEFORE he became Fed Chairman, etc.
Post by: richyoung on January 10, 2007, 07:48:14 AM
Question - if this casino is paying out LESS than a dollar for a "dollar" chip, how much longer will:
...that casino's chips be accepted for payment in lieu of dollars?
...will patrons use that casino, instead of the competition?
Whats the point of all this?
The "Casino" is the government, the "bank" is the Fed, the patrons are you, me, and the world. The "chips" are Federal Reserve Notes, and the "actual dollars" you can think of as either gold, or the pool of goods and services available in the Gross National Product. The diminished value of the chips is inflation - most of the "sheeple" don't recognize it as such, because they don't have their nose rubbed in a dollar-for-dollar comparison between the "casino chips" and the "actual dollars" in this case. While a gross over-simplification of the situation, it is worth noting that Iraq before the war, Iran, Venusuala and increasingly China and Japan are doing business in "Euros" rather than "dollars" - they have chosen to do "business" in another "casino". The flight has already started, & it will escalate.
Post by: richyoung on January 10, 2007, 08:00:06 AM
1. Owes money. (Our's does).
2. Taxes based on dollar amount for income, business activity, and property. (Our's does).
3. Has a graduated system of taxation, where the higher the dollar figure involved, the higher the tax RATE goes. (Our's does - its called "progressive income tax").
4. Has signifigant quantities of money used off-shore. (Our's does: see "petro-dollars", China, Japan,...)
THEN, the temptation to inflate the currency, especially one NOT backed by precious metals, is irresistable, because:
1. The government gets to pay back its debt with devalued and debasedinflated currency, making it possible to cheat those who hold the debt instruments.
2. The government gets to rob the off-shore holders of dollars without having to go to the trouble of attacking them over-seas - they just steal some of the value of the dollars they hold by printing more unbacked dollars to chase the same pool of goods and services.
3. They get to increase tax revenue WITHOUT the political cost of passing tax increases by "inflating" everyone into higher rate tax brackets when their pay is adjusted for the inflation. Its called "bracket creep".
4. Without having to actually redeem the money in a fixed commodity, there is no "floor" for the currency. It can just keep on dropping....
The people who get hurt are:
1. People on fixed incomes, like retirees.
2. Holders of instruments of government debt, especially low-interest ones such as so-called "Savings Bonds".
3. Anyone who holds dollars, either in actuallity or on account.
Post by: richyoung on January 10, 2007, 11:56:39 AM
Post by: richyoung on January 11, 2007, 05:17:17 AM
Post by: cordex on January 11, 2007, 09:41:41 AM
You mention that concerns about direct exchange rates and about the destruction of currency are immaterial because no gold coin would have a face value equivalent to its actual value. So what you are actually saying is that $20 face value = $15 worth of gold, right? Are you aware of a historical system where such a configuration of pre-inflated currency worked without market forces equalizing the face value and gold value?
Post by: richyoung on January 11, 2007, 12:10:57 PM
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Are you aware of a historical system where such a configuration of pre-inflated currency worked without market forces equalizing the face value and gold value?
To my knowledge, all governments have eventually yielded to the temptation to debase 9devalue) their currency. In the days of metal-based currency, this was done by putting less and less precious metal into a "dollar" coin, and mandating that the new coin be traded at its face value the same as the old. By Gresham's Law, this soon drove all the old coinage out of circulation. With paper money, this is done by cranking the presses without either a precious metal bakcing or a corresponding increase in the goods and services. This, in hte US, has had the effect of taking us off of, in sequence, the gold standard, the de fact silver standard of coinage, the defacto copper standard of coinage, and now, the de facto zinc standard.
Post by: Caimlas on January 11, 2007, 03:30:53 PM
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Of course we wouldn't have much of an economy left after the first 6 months...
No argument. We've devalued our economy and sold so much of our gold and silver overseas to help balance our trade deficit, the country has almost no concrete wealth left.Quote
Not to mention 2 or 3 crushing panics or full-blown depressions every decade...
You mean like the Great Depression that was directly caused by the Federal Reserve Act - the Great Depression which was an order of 10 times as severe as any of the cyclical 20-year recessions which were experienced, and are still experienced today? (Nevermind that the dips in the economy prior to fiat currency were caused by wars.)
The only thing which got us out of the Great Depression was the creation of the Military/Industrial Complex (as it's called); the resurgent wars every time the economy is down (interesting parallel, I think) have coincided with the improvement of the economy.
In other words, war is necessary to maintain an inflationary fiat currency so as to stimulate the economy. In a specie economy, war will negatively impact the economy to the exception of plunder and conquest attempts. (Look throughout history - you'll find it's an undeniable fact prior to fiat currency.)
So, in other words, fiat currency is responsible, indirectly, for causing war, decreasing the penalty for loss, and encouraging us to lose.
Post by: Perd Hapley on January 11, 2007, 03:36:27 PM
Post by: The Rabbi on January 11, 2007, 03:56:45 PM
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Of course we wouldn't have much of an economy left after the first 6 months...
No argument. We've devalued our economy and sold so much of our gold and silver overseas to help balance our trade deficit, the country has almost no concrete wealth left.Which explains why our economy is the strongest, most dynamic in the world, right? Um, oops, ahh.
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Not to mention 2 or 3 crushing panics or full-blown depressions every decade...
You mean like the Great Depression that was directly caused by the Federal Reserve Act - the Great Depression which was an order of 10 times as severe as any of the cyclical 20-year recessions which were experienced, and are still experienced today? (Nevermind that the dips in the economy prior to fiat currency were caused by wars.)
That would be the Federal Reserve Act of 1913, right? I've heard of lag time in an economy but I think 16 years is stretching it a tad.
And the dips caused by wars, you would be speaking about the Panic of 1893, which was caused by the....um...Franco-Prussian War, right?
The only thing which got us out of the Great Depression was the creation of the Military/Industrial Complex (as it's called); the resurgent wars every time the economy is down (interesting parallel, I think) have coincided with the improvement of the economy.
In other words, war is necessary to maintain an inflationary fiat currency so as to stimulate the economy. In a specie economy, war will negatively impact the economy to the exception of plunder and conquest attempts. (Look throughout history - you'll find it's an undeniable fact prior to fiat currency.)
So, in other words, fiat currency is responsible, indirectly, for causing war, decreasing the penalty for loss, and encouraging us to lose.
In other words, war is necessary to maintain an inflationary fiat currency so as to stimulate the economy. In a specie economy, war will negatively impact the economy to the exception of plunder and conquest attempts. (Look throughout history - you'll find it's an undeniable fact prior to fiat currency.)
So, in other words, fiat currency is responsible, indirectly, for causing war, decreasing the penalty for loss, and encouraging us to lose.
So the only thing that helped was WW2, right? Not the fact that business cycles only last so long. Not any of Roosevelt's programs. Nothing else contributed. Aha.
And those resurgent wars every time the economy is down. You mean like after the recession of 1974-75 when we went to war against...um..uh....gimme a minute here. And fiat currency causes wars because we know there were no wars prior to its adoption, right?
This is your fourth post on this forum and you haven't impressed me any.
Post by: richyoung on January 11, 2007, 05:36:43 PM
Which explains why our economy is the strongest, most dynamic in the world, right? Um, oops, ahh.
Like the NASCAR boys always say, the motor runs its strongest right before it blows, How was the economy in the Roaring Twenties...right before hte Great Depression? Before the Dot COm bubble bust? More to the point, whats going tohappen when OPEC stops holding petrodollars, and China and Japan stop subsidizing out trade and governemnt spending deficits, and simply stop buying treasury bills... much less start redeeming them? Plus there's that unfunded 59 trillion combo of SOcial Security benefits and deficit comming up.
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That would be the Federal Reserve Act of 1913, right? I've heard of lag time in an economy but I think 16 years is stretching it a tad.
There was little thing now known as World War One that happened in between. Hard to have a crash during a war - when everyone is working extra shifts to build arms for the country and belligerents.
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And the dips caused by wars, you would be speaking about the Panic of 1893, which was caused by the....um...Franco-Prussian War, right?
It was caused by a partial failure to stay on the gold standard - the Sherman Silver Purchase Act of 1890, aggrevated by the tariff acts and a few other factors. Interesingly, the Panic of 1893 was ended by.... (wait for it...) a return to "sound money" the Gold Standard - which we stayed on until 1934.
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So the only thing that helped was WW2, right? Not the fact that business cycles only last so long. Not any of Roosevelt's programs. Nothing else contributed. Aha.
It sertainly WASN'T FDR's programs - they actually prolonged the Depression - when they weren't just punishing FDR's political opponents. The wrong-headed idea that higher commodity prices were needed really made things worse for everybody.
Post by: LAK on January 11, 2007, 10:55:04 PM
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This might be the factual error of the week. Maybe the month.
Gold mining companies are typically either American or Canadian or South African. The properties are either in Canada, the US, South Africa, Russia, or Australia.
Lincoln chose silver because he needed to expand the currency and didnt have any more gold supplies. This was a constant battle with populists demanding silver backing as well.
Kennedy had nothing to do with silver certificates, which started long before he came to office.
But other than that you're right.
Gold mining companies are typically either American or Canadian or South African. The properties are either in Canada, the US, South Africa, Russia, or Australia.
Lincoln chose silver because he needed to expand the currency and didnt have any more gold supplies. This was a constant battle with populists demanding silver backing as well.
Kennedy had nothing to do with silver certificates, which started long before he came to office.
But other than that you're right.
Where the properties are located is superfluous. But there is more private gold in european hands than american.
You may have silver certificates confused with federal notes. There is a difference.
Many people do not seem to be aware of it, but J F Kennedy signed an executive order in the month of June 1963 with threatened to cut out a certain private bank's interest in loaning money to the United States government. One of L B Johnson's first acts was to strike this one off. See: EO 11110.
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http://ussliberty.org
http://ssunitedstates.org
Post by: The Rabbi on January 12, 2007, 03:47:30 AM
Which explains why our economy is the strongest, most dynamic in the world, right? Um, oops, ahh.
Like the NASCAR boys always say, the motor runs its strongest right before it blows, How was the economy in the Roaring Twenties...right before hte Great Depression? Before the Dot COm bubble bust? More to the point, whats going tohappen when OPEC stops holding petrodollars, and China and Japan stop subsidizing out trade and governemnt spending deficits, and simply stop buying treasury bills... much less start redeeming them? Plus there's that unfunded 59 trillion combo of SOcial Security benefits and deficit comming up.
I love it. The proof that things are terrible is that they are so good right now. How can anyone argue with that logic?
There is something called a business cycle. That means you get periods of growth followed by periods of stagnation or regression. There is no way to eliminate that short of a command economy. The best that gov't can do is manage it so things dont get out of hand. One tool is monetary policy. Putting that policy in a straightjacket to gold removes its effectiveness. It is without argument that the periods of depression/recession were far more frequent and far more severe prior to ditching the gold standard than they have been since.
Are there potentially hazardous issues out there? Of course. But there always are. And they tend never to be as bad as imagined.
Post by: richyoung on January 12, 2007, 04:17:08 AM
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I love it. The proof that things are terrible is that they are so good right now. How can anyone argue with that logic?
I love it. The proof that things are terrible is that they are so good right now. How can anyone argue with that logic?
AGAIN: things were REAL good in the Roaring Twenties... but it was a house of cards. The Federal Reserve was trying to stop the flight of gold OUT of Great Britain - the extra liquidity they created in the US to do that ended up buying stocks on the margin - very similar to what happened with Y2K and the dot.com boom/bust. The extra money, in both cases, ended up in the stock market, as there were insufficient goods and services to absorb it. This inflated stock prices - when the Fed crammed on the brakes, at the same time the market was trying to correct itself - CRASH!
Today's "prosperity" is bought at the cost of 60 trillion in unfunded obligations soon to come due. What happens when the government can no longer roll over the debt?
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There is something called a business cycle. That means you get periods of growth followed by periods of stagnation or regression. There is no way to eliminate that short of a command economy. The best that gov't can do is manage it so things dont get out of hand.
Where, pray tell, is the part of the Constitution that says the Government is to "manage" the economy? Its NOT IN THERE. The part about gold or silver being the only legal money, however, IS.
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One tool is monetary policy. Putting that policy in a straightjacket to gold removes its effectiveness. It is without argument that the periods of depression/recession were far more frequent and far more severe prior to ditching the gold standard than they have been since.
If this premise where true, the Great Depression should have quickly ended when FDR took us off of the gold standard. Why did it drag on?
Post by: The Rabbi on January 12, 2007, 04:27:29 AM
It is laughable that people try to paint pictures of doom and gloom in what is arguably the best economy in history. We have historically low unemployment levels, historically low inflation levels, and historically low interest rates all at the same time. Keynsianism said this couldnt happen.
Post by: richyoung on January 12, 2007, 04:43:55 AM
People made exactly the same point about the 1980s: the prosperity occurred only because Reagan borrowed so much money. It wasnt true then and it isnt now.
Perhaps because only CONGRESS, then controlled by the Dems, can borrow money against the credit of the US?
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It is laughable that people try to paint pictures of doom and gloom in what is arguably the best economy in history. We have historically low unemployment levels, historically low inflation levels, and historically low interest rates all at the same time. Keynsianism said this couldnt happen.
What you say is true - I'll grant you that. I have long considered Keynsian theory thouroughly disproven. However, the current plan is that, if foreign holders of US governemnt debt instruments fail to "roll over" the principle anda ccumlated interest by refusing to continue to buy them, much less try to cash in theones they already have, the Federal Reserve is to be the "buyer of last resort", paying for the securities with money they just crank off of hte presses. That is a recipe for hyper-inflation in the near future. Add in the fact that the government is trying to devalue the dollar by 30 percent over the next 2 years to give it a "soft landing" - that may NOT in fact be so soft.
Post by: The Rabbi on January 12, 2007, 05:50:28 AM
People made exactly the same point about the 1980s: the prosperity occurred only because Reagan borrowed so much money. It wasnt true then and it isnt now.
Perhaps because only CONGRESS, then controlled by the Dems, can borrow money against the credit of the US?
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It is laughable that people try to paint pictures of doom and gloom in what is arguably the best economy in history. We have historically low unemployment levels, historically low inflation levels, and historically low interest rates all at the same time. Keynsianism said this couldnt happen.
What you say is true - I'll grant you that. I have long considered Keynsian theory thouroughly disproven. However, the current plan is that, if foreign holders of US governemnt debt instruments fail to "roll over" the principle anda ccumlated interest by refusing to continue to buy them, much less try to cash in theones they already have, the Federal Reserve is to be the "buyer of last resort", paying for the securities with money they just crank off of hte presses. That is a recipe for hyper-inflation in the near future. Add in the fact that the government is trying to devalue the dollar by 30 percent over the next 2 years to give it a "soft landing" - that may NOT in fact be so soft.
The President proposes the budget. Reagan got the budgets he asked for. Putting it off on Congress is just a cop out.
As for other countries, they will do no such thing. First, there is no country more powerful or stable than the US. Our current accounts "deficit" reflects not jobs going overseas but foreigners investing here. Second, the largest holder of US securities is US citizens or corporations. Third, countries that are large holders of US instruments, incl dollars, will not want to shoot themselves in the foot by destabilizing the currency they hold. All the "what if" is just wind and noise.
Post by: richyoung on January 12, 2007, 06:24:39 AM
The President proposes the budget.
EVERY Reagan budget was dead-on-arrival at a hostile, Democratic controlled Congress.
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Reagan got the budgets he asked for. Putting it off on Congress is just a cop out.
Felling revisionist today, huh? The fact is, Tip O'Neill promised spending cuts as part of a budget DEAl, that he then never delivered on, as a deliberate attempt to put the government in a huge deficit.
Fact: Interest rates eased after Reagan slashed tax rates.
The long-bond yield was 13.45 percent in 1981. By the time Reagan left office in 1989, it had dropped to 8.45 percent. Mortgage rates fell from 14.70 percent to 10.13 percent over the same period.
Fact: Inflation cooled.
In the year before Reagan's tax cuts took effect, the annual rate of consumer inflation was 13.5 percent. In the first year of his tax cut, 1981, inflation was 10.3 percent. In the second year, it was 6.2 percent. By the third and final year, 1983, inflation had dropped to 3.2 percent. When Reagan left office, inflation stood at a tame 4.8 percent.
Fact: The economy reached full employment.
Before Reagan's full tax-relief package took effect, the jobless rate hit 9.6 percent. But as tax cuts worked their magic in the economy, unemployment dropped every year after 1983, reaching a low of 5.3 percent in 1989.
Tax cuts benefited minorities, too. The jobless rate among blacks plunged from 19.5 percent in 1983 to 11.4 percent in 1989.
Fact: Government revenues nearly doubled after Reagan's sweeping tax cuts.
Before his 25 percent across-the-board cut in individual income-tax rates went into effect, government receipts from individual income taxes trickled in at $244.1 billion. The year Reagan left office, they totaled $445.7 billion -- an 82 percent jump.
In the tax-hiking, supposedly "fiscally responsible" '90s, by comparison, individual tax receipts rose a comparable 86 percent.
More key, individual tax receipts grew at a compound annual rate of 6.9 percent from 1980 to 1989 (compared with a 7.1 percent rate from 1990 to 1999).
Meanwhile, however, federal outlays grew at a faster 7.6 percent compound annual clip from 1980 to 1989, causing the yawning budget gaps.
Yes, Reagan ballooned defense spending. But Democrats, who controlled appropriations back then, refused to give him the corresponding cuts in other domestic programs -- and instead increased spending.
In fact, the Democrat Congress outspent every one of the nine budgets Reagan proposed, but one.
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As for other countries, they will do no such thing. First, there is no country more powerful or stable than the US. Our current accounts "deficit" reflects not jobs going overseas but foreigners investing here.
If there's any investing to be done, it will have to be foreigners. We don't save any money to invest here.
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Second, the largest holder of US securities is US citizens or corporations.
Nice way to obscure the fact that almost HALF of the debt is owed to foreigners. According to Federal Reserve data, $2.2 trillion of this 'public' debt, rising to a new record over 46%, is owed to foreign investors and foreign central banks - - not to U.S. citizens. The share of foreign holdings zoomed upward since 1992.
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Third, countries that are large holders of US instruments, incl dollars, will not want to shoot themselves in the foot by destabilizing the currency they hold. All the "what if" is just wind and noise.
...or, they could start a "run on the bank" to avoid being left holding the bag. Please note the Euro, which started trading at around 84 cents, is now worth over $1.30, as more and more nations do business in it rather than thte dollar. Perhaps the run has started...
Post by: The Rabbi on January 12, 2007, 10:36:45 AM
The Euro started trading in the $1.40 range and sank to .89, an all-time low. It has recovered some since then. I wouldnt call any of that the start of a "run". That is just wishful thinking.
Post by: richyoung on January 12, 2007, 05:59:34 PM
I'm not sure what point you were trying to make, but you failed.
Well, I'll try harder this time....
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The Euro started trading in the $1.40 range and sank to .89, an all-time low.
The Euro started trading on January 2, 2002 at 1 Euro = $0.90 USD, ( or, to put it another way, 1 dollar bought 1.11 Euros. On DEcember 4th, 2006, 1 Euro = $1.33 USD, ( or the same dollar that used to buy 1.11 Euros on 1/2/2002 now only buys 0.75 Euro. The point I'm trying to make is the DOLLAR now buys LESS STUFF, like Euros - and its NOT like the Euro a screaming exampole of sound fiduciary policy and fiscal restraint. Even against that competition, the dollar lost 11% of its value over just the last year - in part because places that USED to hold dollars, and thereby subsidize our debt, as Fed Reserve notes are debt instruments, are moving AWAY from the dollar to other things, a trend that will accellerate.
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It has recovered some since then. I wouldnt call any of that the start of a "run". That is just wishful thinking.
I would submit that anyone who looks at the future of the "dollar" amd isn't very worried is indulging in "wishful thinking".
Post by: Art Eatman on January 13, 2007, 04:57:11 AM
I sold a house in 1981, carrying the paper on an 11% note.The Euro was introduced at $1.15-ish. It sank to $0.84 before beginning the current rise. It has hit $1.34; last I looked (last Monday) it was $1.31. However, when you look at the relationship between the US $ and other currencies, it's less that the Euro has risen than it is that the US $ has fallen. Less buying power. The US $ decline has run approximately 10% per year, these last two or three years.
Me, I see no difference between "decline in buying power" and "inflation". It's a big hickey in the billfold, whichever words are used.
Art
Post by: LAK on January 13, 2007, 05:48:18 AM
That's more than a decade away you say. Well figure this; if the picture looked alittle sharper than that, and the decline of the dollar much sooner - would they come out and say it? Not likely. These are the folks that are going to make sure they are ahead of the curve, and do not intend themselves nor their banking cronies to be caught holding the bags when the music stops.
Iraq .. well ... before it was invaded that is, switched to the euro as it's reserve currency. Iran has switched to the euro. There are a significant number of countries that have switched or are going that way. China is or is on the verge of dumping some huge amounts of dollars and buying euros - China holds twenty percent of the world's currency reserves. It is interesting to note that only about twenty central banks actually publish details of their reserve currency composition.
We can rest assured that regardless of which nations are left holding the bags of worthless paper after a run on the dollar, their citizens will have no recourse on the day, nor for a long time thereafter.
The winners of course get to go into those respective countries and buy property and real estate - tangible assets - for a fraction of their worth.
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http://ssunitedstates.org
Post by: Matthew Carberry on January 13, 2007, 01:46:06 PM
No agenda (I'm out of my depth), just thought it interesting
http://en.wikiquote.org/wiki/Benjamin_Franklin
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That is simple. In the Colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay no one.
Explaining to Bank of England directors his ideas on why the colonies were so prosperous (1763); as quoted in The Money Masters
Explaining to Bank of England directors his ideas on why the colonies were so prosperous (1763); as quoted in The Money Masters
Post by: The Rabbi on January 13, 2007, 02:19:56 PM
Or the Swiss franc:
Guess what? Currencies fluctuate against each other. Using the fluctuations of the Euro as proof that the dollar is losing value is just plain stupid and betrays a gross ignorance of economics and currency exchange.
Post by: richyoung on January 13, 2007, 02:47:33 PM
Just found this while looking at that Franklin quote...
No agenda (I'm out of my depth), just thought it interesting
http://en.wikiquote.org/wiki/Benjamin_Franklin
No agenda (I'm out of my depth), just thought it interesting
http://en.wikiquote.org/wiki/Benjamin_Franklin
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That is simple. In the Colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay no one.
Explaining to Bank of England directors his ideas on why the colonies were so prosperous (1763); as quoted in The Money Masters
Explaining to Bank of England directors his ideas on why the colonies were so prosperous (1763); as quoted in The Money Masters
..and part of what spawned the phrase "not worth a Continental", and further spawned provisions in the Constitution to require gold and silver coin as "legal money".
Post by: The Rabbi on January 13, 2007, 02:52:20 PM
Post by: richyoung on January 13, 2007, 02:52:35 PM
Or the Swiss franc:
Guess what? Currencies fluctuate against each other. Using the fluctuations of the Euro as proof that the dollar is losing value is just plain stupid and betrays a gross ignorance of economics and currency exchange.
Post by: richyoung on January 13, 2007, 02:55:58 PM
There is no requirement in the USC that legal tender be gold or silver.
Factually challenged today? How about this:
U.S. Constitution - Article 1 Section 10
Article 1 - The Legislative Branch
Section 10 - Powers Prohibited of States
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Post by: Matthew Carberry on January 13, 2007, 03:17:13 PM
Post by: The Rabbi on January 13, 2007, 03:30:12 PM
Not to play devil's advocate or be contrary but that reads as if it only restricts the several states, not the federal government.
Of course that what it means. Sheesh. Factually challenged, indeed.
Post by: richyoung on January 13, 2007, 03:37:41 PM
Not to play devil's advocate or be contrary but that reads as if it only restricts the several states, not the federal government.
Here's some more for you:
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U.S. Constitution - Article 1 Section 8
Article 1 - The Legislative Branch
Section 8 - Powers of Congress
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
Article 1 - The Legislative Branch
Section 8 - Powers of Congress
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
Get it? "Coin" money. Not "print" money. Not to mention that if the STATES are restricted to gold and silver coin, then what kind of MONEY, pray tell, is COngress going to have to supply?
Post by: richyoung on January 13, 2007, 03:38:47 PM
Not to play devil's advocate or be contrary but that reads as if it only restricts the several states, not the federal government.
Of course that what it means. Sheesh. Factually challenged, indeed.
...and if the STATES are restricted to "gold and silver coin", what type of money is the Congress going to have to supply for the system to function?
Post by: The Rabbi on January 13, 2007, 03:59:38 PM
Not to play devil's advocate or be contrary but that reads as if it only restricts the several states, not the federal government.
Of course that what it means. Sheesh. Factually challenged, indeed.
...and if the STATES are restricted to "gold and silver coin", what type of money is the Congress going to have to supply for the system to function?
Doesnt specify. WHich is why the Federal Govt issues paper money.
But again, if you have issues with paper money, please send all of yours to me.
Post by: richyoung on January 14, 2007, 06:16:26 PM
...and if the STATES are restricted to "gold and silver coin", what type of money is the Congress going to have to supply for the system to function?
Doesnt specify. WHich is why the Federal Govt issues paper money.
But again, if you have issues with paper money, please send all of yours to me.
IF:
1. The states are prohibited from using anything other than silver and gold coins, and...
2. The states are prohibited from coining their own money, and...
3. Only COngress can coin money, then by simple deduction =
Congress has to coin gold and silver as money - otherwise, from where are the states to obtain the gold and silver coins whose use is mandated, and Congress is charged to supply?
Post by: The Rabbi on January 15, 2007, 08:54:06 AM
Post by: richyoung on January 16, 2007, 04:32:26 AM
1+1=5. No dice. You'd have to provide something more substantive. A Supreme Court opinion striking down the various currency acts would be a good start.
Why would the Supremem pay any more attention to breaking this part of the Constitution than any other? Treason on the part of 5 out of 9 judges does NOT change what the Constitution calls for.
In this case, 1+1 = 2, Rabbi. Lets go over it again:
1. The states may only make gold and silver coin legal tender for debts.
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U.S. Constitution - Article 1 Section 10
Article 1 - The Legislative Branch
Section 10 - Powers Prohibited of States
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Article 1 - The Legislative Branch
Section 10 - Powers Prohibited of States
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Agreed thats what it means?
2. Only the United States Congress can "coin" money -
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U.S. Constitution - Article 1 Section 8
....To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;
....To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;
Only Congress can make the money, and it has to be "coined" - gold and silver, because THATS what the States under the Constitution are rrequired to use - kapisch?
3. Now lets look at Section 10 again:
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Section 10. No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal;
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coin money;
[/b]The States CANNONT, MUST NOT coin money - only the Federal Congress can.
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emit bills of credit;
[/b]"bills of credit" are debt instruments - paper money bajced by a promise to pay. Federal Reserve Notes are "bills of credit", so were the Continentals issued by the previous American government, as well as Lincoln's (illegal) Greenbacks. This provision PROHIBITS the states from issuing paper money - the Federal Government is already prohibited from issuing paper money, because it has the SOLE authority to issue money to thte States, which MUST, by the COnstitution, use gold and silver coin. There would be no point to issuing anything else, as no one in the States cpould use it - it could only be used in territories unincorprated into a state.
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make anything but gold and silver coin a tender in payment of debts;
Game, set, and match. The states MUST use gold and silver coin - only the Federal government can supply it - in fact the states are prohibited from using paper money, or even establishing the relative value of gold and silver, or foriegn coins - that is reserved to Congress in Section 8.
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pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.
Post by: richyoung on January 16, 2007, 04:44:01 AM
1. Where do the States get the gold and sivler coin they have to use?
2. Where is this "other" money going to be used, since it can;t be used in the States?
Post by: The Rabbi on January 16, 2007, 05:04:37 AM
So answer me a question Rabbi - if Congress can make anyhting it wants "money", and the States CAN'T use anything other than gold and silver coin, and CAN'T coin their own money, and CONGRESS has to not only coin money, but also set the relative values of gold and silver and of foreign coins,...
1. Where do the States get the gold and sivler coin they have to use?
2. Where is this "other" money going to be used, since it can;t be used in the States?
1. Where do the States get the gold and sivler coin they have to use?
2. Where is this "other" money going to be used, since it can;t be used in the States?
1) Same place they get it from now.
2) What "other money" are you talking about? There is no other money.
And as a reminder, the opinion of the USSC on what the Constitution means is binding and definitive. Much more so than some guy on a chatboard.
Post by: richyoung on January 16, 2007, 05:13:34 AM
So answer me a question Rabbi - if Congress can make anyhting it wants "money", and the States CAN'T use anything other than gold and silver coin, and CAN'T coin their own money, and CONGRESS has to not only coin money, but also set the relative values of gold and silver and of foreign coins,...
1. Where do the States get the gold and sivler coin they have to use?
2. Where is this "other" money going to be used, since it can;t be used in the States?
1. Where do the States get the gold and sivler coin they have to use?
2. Where is this "other" money going to be used, since it can;t be used in the States?
1) Same place they get it from now.
They AREN'T getting it now - that's rather the point. They are SUPPOSED to get it from the same place they were gettting it after the Coinage act of 1792. Might ought to peruse that pupy, and seehow many times the words "gold and silver coin" are used....
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2) What "other money" are you talking about? There is no other money.
The "other money would be the NON-gold and NON0-silver money you insist the government had the right to create. Where is it to be used, sinc ehte states can't?
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And as a reminder, the opinion of the USSC on what the Constitution means is binding and definitive.
Why? Because the Constitution SAYS SO? If THEY don't follow it, they have lost the moral imperative to compel ME to follow it - they have broken the compact.
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Much more so than some guy on a chatboard.
None are so blind as those who refuse to see.... or to put it another way, how legal are all those "gun control" laws, in the light of the 2nd Ammendmant? Freedom isn't always lost at one fell swoop, with conquering armies marching through rubbled streets. Sometimes its lost one thin sliver of a slice at a time, gradually, slowly....
Post by: Matthew Carberry on January 16, 2007, 09:19:49 AM
Maybe I'm missing something.
I'll grant as written the .gov should be only making gold and silver coins, and Congress can set their value. That doesn't solve the problem of "fiat money".
If I understand correctly, there isn't enough gold or silver in existence for the actual amount of wealth around on a ounce-dollar basis to make a dollar coin worth "a dollar", not with a coin at an ounce and an ounce at $600 for gold and even at whatever silver's trading at. You'd have to have some kind of debased alloy to get usably sized coins out of (small enough denominations to make change and to be rational to carry around as cash on hand). A debased coin is hardly better than paper.
Even if there were enough metal around for everyone's use, if we have a new innovation in science and all of a sudden our productivity triples or something, there won't necessarily be enough specie found to match the demand. So you'll have a "dollar" coin that suddenly has a set value in no relation to anything resembling it's scarcity as Congress will set it's value to the abstract "wealth" amount.
Whether it's made out of paper or gold, if its value is just assigned to match economic reality, what does it matter?
Post by: Perd Hapley on January 16, 2007, 09:51:00 AM
Post by: richyoung on January 16, 2007, 12:20:41 PM
rich,
Maybe I'm missing something.
I'll grant as written the .gov should be only making gold and silver coins, and Congress can set their value. That doesn't solve the problem of "fiat money".
If I understand correctly, there isn't enough gold or silver in existence for the actual amount of wealth around on a ounce-dollar basis to make a dollar coin worth "a dollar", not with a coin at an ounce and an ounce at $600 for gold and even at whatever silver's trading at. You'd have to have some kind of debased alloy to get usably sized coins out of (small enough denominations to make change and to be rational to carry around as cash on hand). A debased coin is hardly better than paper.
Maybe I'm missing something.
I'll grant as written the .gov should be only making gold and silver coins, and Congress can set their value. That doesn't solve the problem of "fiat money".
If I understand correctly, there isn't enough gold or silver in existence for the actual amount of wealth around on a ounce-dollar basis to make a dollar coin worth "a dollar", not with a coin at an ounce and an ounce at $600 for gold and even at whatever silver's trading at. You'd have to have some kind of debased alloy to get usably sized coins out of (small enough denominations to make change and to be rational to carry around as cash on hand). A debased coin is hardly better than paper.
Even under the old system, coins of copper, brass, and nickle were used for smaller denominations. Also, remember, the par value is usually maintained such that the metal in the coin is worth SLIGHTLY less than the face value, to avoid coinage from being scrapped for its material content. Add in the fact that so much of our wealth exists in the form of digitally kept records, and you will rapidly see that it isn't necessary for every single dollar to be instantly redeemable in precious metal. No less than Alan Greenspan himself had repeatedly called for a return to the discipline ncumbant upon a gold-backed currency. FYi, over 80% of the gold is currently used for jewelry and decoration. If you add in platinum, copper, etc....
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Even if there were enough metal around for everyone's use, if we have a new innovation in science and all of a sudden our productivity triples or something, there won't necessarily be enough specie found to match the demand. So you'll have a "dollar" coin that suddenly has a set value in no relation to anything resembling it's scarcity as Congress will set it's value to the abstract "wealth" amount.
Whether it's made out of paper or gold, if its value is just assigned to match economic reality, what does it matter?
Its when its value is inchained to any reality that problems creep in.
Post by: CAnnoneer on January 17, 2007, 09:08:51 PM
So, the issue is not metal or paper, but to what extent the gov can be stopped from bankrupting itself. To me, that is much more scary than how the euro does. Moreover, the strength of the gov is the only guarantee of the currency, and that is why making America look impotent on the international scene is so damaging to the dollar as well. As an aside, is it really a coincidence that the Dems fighting to lose the Iraq war are financed by people (Soros, anyone?) that bet against the dollar?
Finally, we do not want the dollar to be too expensive either, because then foreigners will be less likely to invest in the US. Observe that South Korea car manufacturers are hurt by the strengthening of the won, because the cost of their own money decreases their effective profit from exports.
Post by: Waitone on January 18, 2007, 04:44:43 AM
The Coming Battle was written in 1899 and details the history of banking in the US. A fascinating book because
a. the US has always been in a fight over control of the currency
b. argumentation in this thread can be found in the book
Google hard and you'll find a freebee pdf file somewhere.
Post by: Art Eatman on January 18, 2007, 05:24:05 AM
Yup. Perzackly. Even when gold and silver were used in coins, government debased currency. That goes back to Roman times. They minted coins with ever decreasing amounts of intrinsic value, although the face value remained the same. Prices of commodities rose.
In more modern times, we were able to make the Louisiana Purchase because France had gone to fiat currency and had debased it to the point of bankruptcy.
Basically, the history of fiat currencies is one of degradation of buying power over time. As long as wages keep up with this inflation, it doesn't really matter for purchases of domestic goods and services. A problem for the U.S. is that wages haven't kept up since the early 1970s, for the middle economic class, the majority of our population. And, we're importing more and more from outside the country, with other countries' currencies gaining in strength against the dollar: A double-hickey.
Rome didn't crater in any short time; I doubt the U.S. will, either. Great empires of whatever sort don't. I note, however, that the rate of decline has accelerated. Consder the comparative lengths of time for the decay of Rome, Great Britain and the USSR...
Art
Post by: Guest on January 18, 2007, 05:39:26 AM
"So, the issue is not metal or paper, but to what extent the gov can be stopped from bankrupting itself."
Yup. Perzackly.
Yup. Perzackly.
So, in essence, the issue is the "gov" and its perverse incentives.
Private gold/silver coin manufacturers would have an incentive to make their coins honest, unlike the state. If found to be light, sales would decrease.
BTW, why is the forum software repeating phrases in everyone's posts?
Post by: Eleven Mike on January 18, 2007, 08:03:24 AM
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BTW, why is the forum software repeating phrases in everyone's posts?
What do you mean?
Post by: Guest on January 18, 2007, 08:33:15 AM
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BTW, why is the forum software repeating phrases in everyone's posts?
What do you mean? Hmmmm, must have been my cloudy, intermittent satellite connection.
Never mind.
Post by: Matthew Carberry on January 18, 2007, 09:02:26 AM
I'd recommend donning your tinfoil, I know I am.
Post by: richyoung on January 18, 2007, 09:45:37 AM
Post by: Matthew Carberry on January 18, 2007, 09:54:39 AM
Your average "challenge coin" sized coin, made of 99.9% silver. What kind of weight are we talking per?
I made up a bunch when I thought I had the resources to do a new one each year and sell them to support my non-profit. I must have 70 or 80 still floating around. They cost me about $10 each to have made in '01 and '02.
Post by: Art Eatman on January 18, 2007, 01:15:34 PM
Art
Post by: Matthew Carberry on January 18, 2007, 02:08:40 PM
"Challenge coin" is a term that's new to me.
Art
Art
google it
It refers to the commemorative coins military and other folks tote around that have a unit emblem or such-like on them. In theory, if you are out and someone tosses one on the table you have to produce your own, the guy without has to buy the round.
A 1/8" thick coin of 1-1/2" diameter, most commonly bronze but available in precious metals as well.
Post by: Art Eatman on January 18, 2007, 06:42:05 PM