Need for a New Economic System?

[AmaStrat]

Since US economy keeps showing the signs of failure isntead of recovery, should we start looking for another economic system? We can hope that US economy will recover, but there is no concrete solution that can give us this hope? And if US economy fails will the rest of world follow? - most likely, since most economies are based on some sort of variation of a capitalistic system.

So what are the options if capitalism fails? Should we go back socialist type of economy, where government controls most of it? Is there another economic system that could work better? Although I dont believe that another variation of capitalism will work. Or perhaps we have no monetary, or even barter economy at all?

[LongShot]

Um......this is hardly the first time we have been in a recession, no need to dust off the ol' manifesto yet.

[Alpheus]

Bring back the Gold Standard!!

*Sits back and cracks a beer*

[PALADIN]

Since US economy keeps showing the signs of failure isntead of recovery, should we start looking for another economic system? We can hope that US economy will recover, but there is no concrete solution that can give us this hope? And if US economy fails will the rest of world follow? - most likely, since most economies are based on some sort of variation of a capitalistic system.

So what are the options if capitalism fails? Should we go back socialist type of economy, where government controls most of it? Is there another economic system that could work better? Although I dont believe that another variation of capitalism will work. Or perhaps we have no monetary, or even barter economy at all?

Shut your mouth you dirty commie.p-)

[AroundTheCorner]

dude, just wait. It always takes a bit to get moving

[brainplay]

Should we go back socialist type of economy, where government controls most of it?

"Going back" means you had to have done it in the past.

[ZeroZen]

Going back to or initiate socialism will impede innovation and growth.

[CG51]

We should bomb some more brown people.

[Gat0r]

This system of central banks, fractional reserves, fiat paper money and massive debt is coming unraveled, this has by no means been a laissez faire system, just another form of government fascist control but most of the population is still too dense to figure it out. It shall be interesting to see what happens, capitalism is getting the bum rap once again. What we need is free market money and banking, and the belief in the innovation of the market place and its natural regulations. Centralized control always ends in disaster.

[commanding]

Yeah...back in about 1973-75 there was a large recession in the US due to mostly oil prices went sky high and we had inflation out the kazoo. I was working for a company that had about 50 to 60 people working for them, and they had been in business since about 1936. During the 1974 era recession, that company laid off HALF of it's employees at the end of November 1974 (5 weeks before xmas)...and it had NEVER laid off a large number of employees before. It was serious. But, we recovered. Granted we had a long period of inflation during the Carter years,but we all recovered. Time is what it takes, and time is what we have.

PS. yeah I was laid off in that Nov. 74 layoff and that is when it really hits home, especially with a wife and kids to support.

[Macs.]

In periods, the western system always had tough economic times.

And each of these times there were people who were talking about the end of the world, and about how the whole system would be crashing down soon.

[Albatross]

In periods, the western system always had tough economic times.

And each of these times there were people who were talking about the end of the world, and about how the whole system would be crashing down soon.

If we hit a depression, it could be the end of the world. You know, hippies and all.

[AmaStrat]

This system of central banks, fractional reserves, fiat paper money and massive debt is coming unraveled, this has by no means been a laissez faire system, just another form of government fascist control but most of the population is still too dense to figure it out. It shall be interesting to see what happens, capitalism is getting the bum rap once again. What we need is free market money and banking, and the belief in the innovation of the market place and its natural regulations. Centralized control always ends in disaster.


But a true laisse faire syste will not work either, unless your willing to sacrifice your nation to the bankers. Obama's team and democrats are pushing for more control and transparency meaning that government will know every move made by banks and major creditors. If there is no control over the market we will have super rich and no middle class at all.

[AmaStrat]

I dont propose that world should revive socialist economy, but it seems like we are moving in that direction. Is there anything else ? Should we start thinking out of the box and think past government controled and self regulated markets?

[AmaStrat]

Going back to or initiate socialism will impede innovation and growth.

perphaps, but it will also cut back on wastefull consumption. and needless production (unneeded products)

[Gat0r]

But a true laisse faire syste will not work either, unless your willing to sacrifice your nation to the bankers. Obama's team and democrats are pushing for more control and transparency meaning that government will know every move made by banks and major creditors. If there is no control over the market we will have super rich and no middle class at all.

Rediculous, the whole world as been inslaved by central bankers and their paper money and debt. The Federal Reserve has been robbing us of purchasing power from day one to enrich themselves. They do this because of a government granted cartel. We've got into this situation because of government control and regulation you are being suckered by the typical "more transparity" smarter government bullsh*t. Central bank inflation has been destroying the middle class because the well connected get the new money before its devalued who gets taxed by inflation, we the people, so don't sit here and tell me that what we need is more government, more central banking, and more inflation to help the middle class. This system benefits the super rich elite banksters.

If the market chose the money it would be because of the millions of people and their transactions in the economy, not some central banker or government bureaucrat. We'd see a lot more responsiblity by the banks if they knew that government wouldn't be there to save the day because of their wreckless fractional reserve lending. During the depression Hoover and FDR imposed bank holiday's because the banks were insolvent, it really prevented the people from realizing the fraud of the whole system.

[sinophile]

We need a superior system without the inconvenience of economic cycles, political interference and greed. Everyone please kill yourself at the count of 3.. 2... 1...

[longmarch]

Shut your mouth you dirty commie.p-)

Commies are ruling America. Your average joes's tax money are pouring to the bankrupting private banks, the bailed out Wall Street bankers cut a lion share out of it as their 2008 bonus -- that's 13 billion dolars. Get used to it, Joe.

[vryhpyammoadded]

The problem isn’t in the economic system, it’s in the people. In my opinion, the government kleptocracy by way of the Hill/Lobby wink and nudge has overwhelmed true capitalism.

Sorry to use wiki but anyway…http://en.wikipedia.org/wiki/Political_corruption (http://en.wikipedia.org/wiki/Political_corruption)

Our weakness was in so many of our citizens blinded by dollar signs during the gold (credit) rush perpetuated by criminal Senators and Representatives in cahoots with powerful and wealthy looters out to take zillions in profits, gifts and political power from those seduced into falling for the obscene demand price increases of the selected wealth to be mined and resulting overleveraged finances and usurious debt game. The government pushed subprime loan, housing bubble trick is a great example.

Now, via the magic of fiat money, carefully crafted taxes to shake loose savings into the government pot and massive spending away of a generations future, empowered by leveraging the cries of those suffering severally from the lack of fiscal discipline and brains, the criminals in power will now rob the wealth of those fiscally wise, who saved money and invested well.

Note how highly government figures in this scenario. Heading in a more socialist economic direction concentrates MORE power into the hands of power mad, money hungry people to allow them even greater levels of tricking the system to rob people.

Capitalism, when done right by empowered, enlightened individuals who actually punish politicians or businessmen who play these monopolistic (I’m too big to fail) games, spreads the potential damage of corruption over a larger area of population lessening the risk to all rather than concentrating it into a single point failure bureaucrat who could screw everyone. It also allows more of those people more disciplined and mature to succeed while the less capable wither leaving an economically vigorous nation that advances the human condition and technology at a faster pace.

Capitalism had little to do with the shrinking US economy. It was all about the government, and therefore, peoples declining integrity. America needs to diversify and distribute its federal power to the states on down back to individuals and streamline its laws and regulations, not concentrate it in some bloated, corrupt, entitlement crack pushing Socialist death spiral.

Utopia is impossible without mind control on everyone. I’d rather sterilize the planet with cobalt bombs than let the Borg take over. People need to stop worrying and love a little chaos now and then. It’s healthy, promoting human diversity and genetic, cultural and intellectual advancement.

[Marshall_Nord]

perphaps, but it will also cut back on wastefull consumption. and needless production (unneeded products)

Please elaborate; esp. the "unneeded products".

[PALADIN]

Commies are ruling America. Your average joes's tax money are pouring to the bankrupting private banks, the bailed out Wall Street bankers cut a lion share out of it as their 2008 bonus -- that's 13 billion dolars. Get used to it, Joe.

You obviously did not notice my p-), and hence did not see my subtle sarcasm. By the way, weren't you suspended for infractions awhile back? It's too bad it wasn't a ban.

[damagejackal]

We need a superior system without the inconvenience of economic cycles, political interference and greed.

Have you looked up Anarcho Capitalism??


Commies are ruling America. Your average joes's tax money are pouring to the bankrupting private banks, the bailed out Wall Street bankers cut a lion share out of it as their 2008 bonus -- that's 13 billion dolars. Get used to it, Joe.

:) It would be one of those great Ironies in history of China actually came out in defence of the free market an Laissez-faire ideology, so far you proving to be better capitalists than Americans.

[AmaStrat]

Please elaborate; esp. the "unneeded products".

Products that are not made for any useful purpose except for the purpose of consumption.

[longmarch]

Originally Posted by longmarch http://www.militaryphotos.net/forums/images/buttons/viewpost.gif (http://www.militaryphotos.net/forums/showthread.php?p=3906845#post3906845)
Commies are ruling America. Your average joes's tax money are pouring to the bankrupting private banks, the bailed out Wall Street bankers cut a lion share out of it as their 2008 bonus -- that's 13 billion dolars. Get used to it, Joe.



You obviously did not notice my p-), and hence did not see my subtle sarcasm. By the way, weren't you suspended for infractions awhile back? It's too bad it wasn't a ban.

Obviously you did not get my sarcasm, comrade. Yeah, I was suspended a few times, that is the typical reaction of your Americoms who did that when you guys could not swallow the hard facts that I pointed out.

[longmarch]

Originally Posted by longmarch http://www.militaryphotos.net/forums/images/buttons/viewpost.gif (http://www.militaryphotos.net/forums/showthread.php?p=3906845#post3906845)
Commies are ruling America. Your average joes's tax money are pouring to the bankrupting private banks, the bailed out Wall Street bankers cut a lion share out of it as their 2008 bonus -- that's 13 billion dolars. Get used to it, Joe.





Originally Posted by damagejackal (http://www.militaryphotos.net/forums/member.php?u=50896)
:) It would be one of those great Ironies in history of China actually came out in defence of the free market an Laissez-faire ideology, so far you proving to be better capitalists than Americans.

Obviously you did not get my sarcasm. :)

[Ios]

Rid yourself of the Zionist controlled banking/finance system and ill bet you most of your problems and the worlds will suddenly disappear.

[sinophile]

Rid yourself of the Zionist controlled banking/finance system and ill bet you most of your problems and the worlds will suddenly disappear.

Are you serious?

[perdurabo]

I dont propose that world should revive socialist economy, but it seems like we are moving in that direction. Is there anything else ? Should we start thinking out of the box and think past government controled and self regulated markets?

actually nowadays system is sutch mixture there is no single economy that is purely capitalist or purely socialist. This crisis is self regulation mechanism of economy, every time investors get to greedy there will be depresion witch clenease markets, will it be comunist socialist or free market economy crisis will happen as there is no cure for human greed.


But a true laisse faire syste will not work either, unless your willing to sacrifice your nation to the bankers. Obama's team and democrats are pushing for more control and transparency meaning that government will know every move made by banks and major creditors. If there is no control over the market we will have super rich and no middle class at all.

you know that banks are privately owned entities made in sole prupoose of earing money for their owners? can you imagine trying to maximalize your earinings when there is goverment sticiking its nose in your actions? wll you accept risk of valube information being stolen or sold to your competitors?
I personally know companies that send false or uncomplete reports about their activity to goverment statistic office because paying fines for it (quite high sum of k) is smaller than harm that would be done to comapny ernings when this info would leak out to competition.


Products that are not made for any useful purpose except for the purpose of consumption.

you do know that every thing sold on market has to be done by somone? and if you get rid of some products some peaple will lose their jobs? witch will lead to less ppl having money and being able to buy products witch can lead to even more ppl without job?

[Jobu]

AmaStrat, is this your first recession?

[PALADIN]

Rid yourself of the Zionist controlled banking/finance system and ill bet you most of your problems and the worlds will suddenly disappear.

rofl
If I had a dollar for every time someone cited the zionist as the root cause of the world's problems...

[Eye]

Rediculous, the whole world as been inslaved by central bankers and their paper money and debt. The Federal Reserve has been robbing us of purchasing power from day one to enrich themselves. They do this because of a government granted cartel. We've got into this situation because of government control and regulation you are being suckered by the typical "more transparity" smarter government bullsh*t. Central bank inflation has been destroying the middle class because the well connected get the new money before its devalued who gets taxed by inflation, we the people, so don't sit here and tell me that what we need is more government, more central banking, and more inflation to help the middle class. This system benefits the super rich elite banksters.

If the market chose the money it would be because of the millions of people and their transactions in the economy, not some central banker or government bureaucrat. We'd see a lot more responsiblity by the banks if they knew that government wouldn't be there to save the day because of their wreckless fractional reserve lending. During the depression Hoover and FDR imposed bank holiday's because the banks were insolvent, it really prevented the people from realizing the fraud of the whole system.
Don't You think that gold standard could help to recover that power from bankers hands?

[damagejackal]

Are you serious?

Well he's actually half right, Centralisation of banks an goverments is at the heart of this crisis

listen to this quote from Marx circa 1857

“Talk about centralisation! The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner— and this gang knows nothing about production and has nothing to do with it.”

BTW I dont agree with with his policies Incase your guessing, I just find it strangely ironic that his observations on how easy credit/money can bring an otherwise functioning capitalist economy into socialism...

[Walter Sobchak]

Socialism has failed every where it's been tried.

Just remember what Churchill said: “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.”

[afreu]

.What we need is free market money and banking, and the belief in the innovation of the market place and its natural regulations. Centralized control always ends in disaster.

So what caused the current crisis on the financial markets?

[perdurabo]

So what caused the current crisis on the financial markets?
Greed, and large sums pumped into markets by goverment. Sorry but crisis will happen allways, its natural way for economy to clenease itselfe. Everyone should be prepared that sometimes its good and sometimes its bad times.

[click]

Greed, and large sums pumped into markets by goverment. Sorry but crisis will happen allways, its natural way for economy to clenease itselfe. Everyone should be prepared that sometimes its good and sometimes its bad times.

Exactly

123456

[Jobu]

So what caused the current crisis on the financial markets?

The lenders were pressured into lowering their standards by the politicians and amassed enormous amounts of bad debt which was not being, and was not going to be repaid. Their executives were all too willing to go along with this stupid plan because as housing prices were climbing, they could claim that the value of the home covered the debt should the borrower fail to pay.

Then the housing bubble burst, prices started coming down, and the banks had nothing to fall back on to pay off those bad mortgages and loans. No bank had that kind of cash in reserve, not even Citi or Bank of America so they stopped lending altogether and the government had to bail them out with a quick cash infusion.

Notables during the build-up:

CEO of Fannie Mae - Jim Johnson (Former Mondale campaign manager, Kerry campaign official, Obama campaign official)

CEO of Fannie Mae - Frankling Raines (former Carter and Clinton Administration official)

Vice Chairman of Fannie Mae - Jamie Gorelick (former Clinton Admin official)

Citigroup Director - Robert Rubin (former Clinton Admin official)

Goldman Sachs CEO - John Corzine (former Senator and now Governor of NJ)

Goldman Sachs CEO - Henry Paulson (Bush admin official)

etc. etc.


Hopefully now you can see what caused the financial crisis.

[Eye]

http://www.youtube.com/watch?v=_NMu1mFao3w&eurl=http://www.meritum.us/2009/02/18/kulisy-finansowego-911-elektroniczny-atak-na-banki/&feature=player_embedded

Somebody still is out there, and he is waiting for his 5.5 trillion dollars.

[Eye]

We have here some kind of "solution" :)
Who will be the engine of global economy now?

Mr. Obama's $3.6 trillion budget blueprint, by his own admission, redefines the role of government in our economy and society. The budget more than doubles the national debt held by the public, adding more to the debt than all previous presidents -- from George Washington to George W. Bush -- combined. It reduces defense spending to a level not sustained since the dangerous days before World War II, while increasing nondefense spending (relative to GDP) to the highest level in U.S. history. And it would raise taxes to historically high levels (again, relative to GDP). And all of this before addressing the impending explosion in Social Security and Medicare costs.
http://online.wsj.com/article/SB123629969453946717.html

[teoretikern]

This system of central banks, fractional reserves, fiat paper money and massive debt is coming unraveled, this has by no means been a laissez faire system, just another form of government fascist control but most of the population is still too dense to figure it out. It shall be interesting to see what happens, capitalism is getting the bum rap once again. What we need is free market money and banking, and the belief in the innovation of the market place and its natural regulations. Centralized control always ends in disaster.

There exists one good book in swedish that shows bank failures in history. Regulated monetary systems are actually more inclined to failures than unregulated. Long time ago, Canada, Sweden and Scotland had a free banking system with few failures. Tyskland = Germany. A dash (-) means no information. A (C) means intervention by a central bank.


http://s5.tinypic.com/14tmxpj.jpg
The ones that wish to see more regulations should know this: a heavily regulated system like former Bretton Woods does not mean zero financial failures, it simply means that instead of private investors speculating with effects on the monetary system, government officials will do it, like when the French central bank got rid of it's dollars in 1967. A heavily regulated system that does not allow the habitants in a region to choose their money is a wet dream for politicians.

When people mention gold standard, some ojections rise if we won't experience deflation and therefore bank crashes, but that is not what history says.


Reading Alan Greenspans the Age of Turbulence. He mentions regulations, but the regulators in U.S are not financial professionals, they are governmental attorneys with zero insight in financial economics, and therefore have no clue what so ever if regulations will do harm or not.

[Mastermind]

Hell, yeah. Let china do this crap for a while. Unckle Sam could use a rest from feeding the world and protecting freedom. Besides, the Chinese have kick-ass checkers.

[sinophile]

Rediculous, the whole world as been inslaved by central bankers and their paper money and debt. The Federal Reserve has been robbing us of purchasing power from day one to enrich themselves. They do this because of a government granted cartel.

The world has been enslaved by people who can spell. Not those who can't count.

[bigvig]

Since US economy keeps showing the signs of failure isntead of recovery, should we start looking for another economic system? We can hope that US economy will recover, but there is no concrete solution that can give us this hope? And if US economy fails will the rest of world follow? - most likely, since most economies are based on some sort of variation of a capitalistic system.

So what are the options if capitalism fails? Should we go back socialist type of economy, where government controls most of it? Is there another economic system that could work better? Although I dont believe that another variation of capitalism will work. Or perhaps we have no monetary, or even barter economy at all?
Subsidizing failure isn't capitalism.

[loganinkosovo]

The lenders were pressured into lowering their standards by the politicians and amassed enormous amounts of bad debt which was not being, and was not going to be repaid. Their executives were all too willing to go along with this stupid plan because as housing prices were climbing, they could claim that the value of the home covered the debt should the borrower fail to pay.

Then the housing bubble burst, prices started coming down, and the banks had nothing to fall back on to pay off those bad mortgages and loans. No bank had that kind of cash in reserve, not even Citi or Bank of America so they stopped lending altogether and the government had to bail them out with a quick cash infusion.

Notables during the build-up:

CEO of Fannie Mae - Jim Johnson (Former Mondale campaign manager, Kerry campaign official, Obama campaign official)

CEO of Fannie Mae - Frankling Raines (former Carter and Clinton Administration official)

Vice Chairman of Fannie Mae - Jamie Gorelick (former Clinton Admin official)

Citigroup Director - Robert Rubin (former Clinton Admin official)

Goldman Sachs CEO - John Corzine (former Senator and now Governor of NJ)

Goldman Sachs CEO - Henry Paulson (Bush admin official)

etc. etc.


Hopefully now you can see what caused the financial crisis.


You forgot Barney Franks, Chris Dodd, the rest of the "Countrywide" six, and a host of other crooked congress people.

http://www.youtube.com/watch?v=RAuOEdttjZQ


http://latimesblogs.latimes.com/washington/2008/09/chris-dodd.html

[sinophile]

Don't You think that gold standard could help to recover that power from bankers hands?

No. The US (and the world) would rapidly transition from 80% employment, to 80% unemployment.

[void]

I think that what needs to/will happen is a serious move away from a FIRE economy (finance, insurance, real estate), because an economy such as that a)is very vulnerable to bubbles b)does not produce much of actual substance. Countries such as the UK, US, etc, need to recover their manufacturing base and become less dependant on imports, and stop accumulating huge Current Account Deficits.

The current crisis is a result of a belief in "eternal growth" of assets (a bubble), an over-valuation of the financial sector, and a lack of regulation and oversight in the FIRE sectors.

[Gat0r]

No. The US (and the world) would rapidly transition from 80% employment, to 80% unemployment.

As much as I despise the evilness of central banking, its not feasible to just abolish it, what seems logical would be to get rid of the legal tender laws which would end the Fed's monopoly on issueing currency, allow free market alternatives to compete with their worthless pieces of paper. I'd venture to guess that gold would eventually win. History has proven that government cannot be trusted in controling a nations monetary system.

[Gat0r]

I think that what needs to/will happen is a serious move away from a FIRE economy (finance, insurance, real estate), because an economy such as that a)is very vulnerable to bubbles b)does not produce much of actual substance. Countries such as the UK, US, etc, need to recover their manufacturing base and become less dependant on imports, and stop accumulating huge Current Account Deficits.

The current crisis is a result of a belief in "eternal growth" of assets (a bubble), an over-valuation of the financial sector, and a lack of regulation and oversight in the FIRE sectors.

I completely agree with you up until you mention that we need more regulation, we have one of the most heavily regulated markets in the world. The problem is the central bank, they have the ability to create credit by merely typing some numbers in on a computer, they are the source of the bubbles that occur, such as the stock market bubble in 29 and now the housing bubble, if we didn't have the Federal Reserve there never could have been such a massive distortion in the market in the first place. More regulation can only suffocate the market further.

[bigvig]

No. The US (and the world) would rapidly transition from 80% employment, to 80% unemployment.
Why? ......................

[timetraveller]

Since US economy keeps showing the signs of failure isntead of recovery, should we start looking for another economic system? We can hope that US economy will recover, but there is no concrete solution that can give us this hope? And if US economy fails will the rest of world follow? - most likely, since most economies are based on some sort of variation of a capitalistic system.

So what are the options if capitalism fails? Should we go back socialist type of economy, where government controls most of it? Is there another economic system that could work better? Although I dont believe that another variation of capitalism will work. Or perhaps we have no monetary, or even barter economy at all?


Banks should never have been allowed to float on the stock market or even trade on the market .. No wonder they nearly went down the drain ..

Bank is supposed to make you money .. HBOS offering you a paltry pathetic fiver if you continually put a 1000 a month .. and open up the account with a 1000 .. lol

[sinophile]

Why? ......................

Because international trade has far surpassed the availability of gold as an exchange of value. Its the equivalent of what would happen to marine life in the Atlantic Ocean if you removed 80% of the oxygen content in the water.

What's required is not a return to the gold standard, but responsible political leadership.

[Eye]

Because international trade has far surpassed the availability of gold as an exchange of value. Its the equivalent of what would happen to marine life in the Atlantic Ocean if you removed 80% of the oxygen content in the water.

What's required is not a return to the gold standard, but responsible political leadership.
We had golden money in XIXc. and as far as I know it was period of the fastest progress in human history.

[Bia]

Since US economy keeps showing the signs of failure isntead of recovery, DUHHHH.... it takes time.

[Gat0r]

Because international trade has far surpassed the availability of gold as an exchange of value. Its the equivalent of what would happen to marine life in the Atlantic Ocean if you removed 80% of the oxygen content in the water.

What's required is not a return to the gold standard, but responsible political leadership.

I'm sorry but I had to laugh at your assesment of "resonsible poltical leadership." That seems like an oxymoron to me, this is what government does when it has control of the monetary system, there is a long history of governments debasing their currency, asking for more responsibilty in politics is asking for the impossible.

This sounds like the argument brought forward by the elite bankers in their push for a central bank in the U.S., that we needed a more elastic money supply in order to expand the economy, of course thats total bs, this was really a guise for the banks to inflate without restraint, the gold standard prevented them from attaining this policy, and ever since the true gold standard was abolished and the bankers and their allies in government got their wish to inflate to their hearts content we've seen increasingly devastating economic collapses.

The gold standard didn't become obsolete, increasing the money supply doesn't make society as a whole richer it debases to purchasing power of each monetary unit, only those who create the money and those who get the money first temporarily gain before the market adjusts. Productivity is the measure in increasing wealth. Money is just the unit of exchange so the money supply really doesn't matter, all of this business of an elastic money supply is just an excuse to commit fraud.

I'm not necessarily advocating that we have to go back to the 100% gold standard per se, the market should choose the best monetary system.

[sinophile]

...The gold standard didn't become obsolete, increasing the money supply doesn't make society as a whole richer it debases to purchasing power of each monetary unit, only those who create the money and those who get the money first temporarily gain before the market adjusts. Productivity is the measure in increasing wealth. Money is just the unit of exchange so the money supply really doesn't matter, all of this business of an elastic money supply is just an excuse to commit fraud.

I'm not necessarily advocating that we have to go back to the 100% gold standard per se, the market should choose the best monetary system.

You're 22 years old. -10.

First, productivity is a measure of output, not wealth. -1.

Money is not just a unit of exchange, it is the lowest friction means of exchange of output. -1.

The "market" chooses the "best" monetary system every day as FOREX prices move in relation to each other declaring losses and gains in confidence among various units of exchange. -5.

A gold standard is mostly meaningless if countries are unwilling to fully convert currency to gold - and that has happened several times. -1.

I've deducted credibility for every silly thing you wrote in your reply and I see that you are out of credibility. So, in conclusion I'll throw you a bone and say that in a small sense the gold standard still exists in that gold trades somewhat freely, and trades with some correlation to confidence in the largest currencies. But, for international and domestic trade the sum of all tradable units of exchange has to equal or exceed the gross output of the entire market, or the market contracts to limits of the tradable exchange units. This also hopefully answers EYE's earlier reply.

[346L3]

I dont consider the Federal Reserve to be part of the government. They put the word Federal in there just to seem more credible.

[sinophile]

I dont consider the Federal Reserve to be part of the government. They put the word Federal in there just to seem more credible.

Thanks. Please navigate to www.overthrowthegovernment.org to socialize with your ignorant kind.

[Gat0r]

You're 22 years old. -10.

First, productivity is a measure of output, not wealth. -1.

Money is not just a unit of exchange, it is the lowest friction means of exchange of output. -1.

The "market" chooses the "best" monetary system every day as FOREX prices move in relation to each other declaring losses and gains in confidence among various units of exchange. -5.

A gold standard is mostly meaningless if countries are unwilling to fully convert currency to gold - and that has happened several times. -1.

I've deducted credibility for every silly thing you wrote in your reply and I see that you are out of credibility. So, in conclusion I'll throw you a bone and say that in a small sense the gold standard still exists in that gold trades somewhat freely, and trades with some correlation to confidence in the largest currencies. But, for international and domestic trade the sum of all tradable units of exchange has to equal or exceed the gross output of the entire market, or the market contracts to limits of the tradable exchange units. This also hopefully answers EYE's earlier reply.

My age is irrelevant , and your smug little point deduction is well lame, whatever makes you feel good, productivity is a measure of output, the creation of products is the ability to sale and export for income, as you can see America is not creating wealth because our productive capacity has mostly left and gone to Asia, hence our reliance on borrowing in order to consume. The market does not choose the best money to be used (Legal Tender Laws) we are forced by the government to accept the Fed's unbacked paper, if the people in the market place get to decide what to use as money I almost guarantee it wouldn't be a piece of paper but something with intrinsic value. True the gold exchange standard and then Bretton Woods were half measures that prevented full redemption in gold, only foreign countries were allowed not the populations, these systems were destroyed by infating the money supply.

The gold standard prevented governments from inflating their money supply, if they did other countries would redeem for gold, it kept a government from creating massive inflationary bubbles, so there were contractions and necessarily so. 1814-1914 the years of the Classic Gold standard was and incredibly properous time and the most honest monetary system. Had we been on a gold standard today the housing bubble never could have became this big because other countries would have started redeeming dollars for gold, this check has been taken away. Your assumption that we just need competent government management of the monetary system kills your credibility, history has proven this disasterous -20.

[sinophile]

My age is irrelevant , and your smug little point deduction is well lame, whatever makes you feel good, productivity is a measure of output, the creation of products is the ability to sale and export for income, as you can see America is not creating wealth because our productive capacity has mostly left and gone to Asia, hence our reliance on borrowing in order to consume. The market does not choose the best money to be used (Legal Tender Laws) we are forced by the government to accept the Fed's unbacked paper, if the people in the market place get to decide what to use as money I almost guarantee it wouldn't be a piece of paper but something with intrinsic value. True the gold exchange standard and then Bretton Woods were half measures that prevented full redemption in gold, only foreign countries were allowed not the populations, these systems were destroyed by infating the money supply.

The gold standard prevented governments from inflating their money supply, if they did other countries would redeem for gold, it kept a government from creating massive inflationary bubbles, so there were contractions and necessarily so. 1814-1914 the years of the Classic Gold standard was and incredibly properous time and the most honest monetary system. Had we been on a gold standard today the housing bubble never could have became this big because other countries would have started redeeming dollars for gold, this check has been taken away. Your assumption that we just need competent government management of the monetary system kills your credibility, history has proven this disasterous -20.

Too young, didn't read.

[Sufficient]

Too young, didn't read.

I thought it was a good read :) You not being able to read two paragraphs says more about you than him.

[sinophile]

I thought it was a good read :) You not being able to read two paragraphs says more about you than him.

It was too fiat, no currency. Seriously, he's quoting revisionist economics 101 and the world has moved on to a global network economy, that still works. All the gold ever mined isn't enough to support international trade (est. 4.887 Trillion in Gold to est. 60 Trillion in fiat money) because:

a. Its not truly fungible because of the logistical challenges in acquisition, transport and storage.
b. Its easily manipulated by leasing holdings, changing content and denying conversion.
c. Holdings are out of synch with output in most countries.
d. Its redundant when the foreign currency markets perform the same function by allowing the market to hammer another currency if that country's economy is on the ropes.

Go back and read my initial reply. His 22 yr pre-fontal cortex is still developing. He needs a few more years before his cognition can match his ideology.

[Gat0r]

Looks like the fiat paper standard you defend is melting down, I wouldn't bet on it lasting very much longer, the history of paper money is an ugly one. John Maynard Keynes's economics of inflating and spending to prosperity is rubbish, we're seeing just how successful it is now. Sure i've only taken two college econ classes, but I don't buy into the "mainstream" crap, and i've only studied Austrian Economics for a year but I think i'll let my pre-frontal cortex soak up the works of Mises, Rothbard, Hayek, and Hazlitt, its too easy to label them as old fashion but economic law doesn't change, the Keynsian's can develope all the complex models they want but central planning fails in the end.

The gold standard didn't fail, the governments of the world wanted to abolish it so that they could inflate without restraint in order to expand government and pay for war, the transport and storage didn't seem to be much of a problem during the gold standard years, gold can be debased but that pales in comparison to the counterfeiting going on with paper money under govnerments permission, the size of the money supply doesn't really matter in that prices will adjust to it, the dollar has lost 95% of its value since the Fed was created making more money doesn't increase our wealth, producing things does, prices haven't gone down over the last 100 years they have gone up drastically. Not to mention the moral problems with inflation and its redistribution of wealth to government and the well connected.

I've mentioned before that I don't want government to re-establish the gold standard, why not let the market place compete with the Feds paper money and see what comes of it.

[Eye]

why not let the market place compete with the Feds paper money and see what comes of it.
They will fight hard for every piece of paper money - to the last drop of our blood p-)

[sinophile]

...the dollar has lost 95% of its value since the Fed was created...

This is EXACTLY why you're not ready grasshopper.

When the Fed was created an Abacus might be able to perform 1 arithmetic operation per two seconds if you had fast fingers. Today, a billion per second are possible.

Now, consider how much fractional reserve lending and money multiplication (a.k.a. leverage) went into the development of that computational power? Think about the unit labor (and arthritis) savings in having that computational capability available for the tasks of weather modeling or drug development. Then consider where that unit labor savings has been applied and magnified by same increase in productivity. Finally, consider the demand for new money created by opportunities that emerged from the development of these tools.

Absolute purchasing power in the vacuum of a time series means nothing unless you overlay some measure of absolute productivity.

To your point about the market competing with the Fed. I've made the point several times that the US Fed has to compete with other major world currencies, commodities and competing sovereign debt offerings every day. By way of example, China is rumored to have bought commodities as both a hedge against USD risk, but also - formerly - as a speculative play on its own currency appreciation.

I seriously doubt you'll see a USD collapse, but you'll have some measure of fiat money accountability without the GLD standard.

[sinophile]

http://3.bp.blogspot.com/_8rpY5fQK-UQ/SbXaesaxpPI/AAAAAAAAGHM/lZOkLoiAUn8/s400/goldsp.png (http://econompicdata.blogspot.com/2009/03/gold-has-it-really-stored-value.html)


... asset inflation (whether via gold, housing, or commodities) serves no long-term productive purposes... only increased productivity creates actual economic value. Thus, the movement of capital towards productive resources (i.e. what equities, fixed income, and bank loans are intended to do) is the only type of long-term investment that really creates broad economic value.

Using an extreme example: Imagine if all the wealth in the world simply went to buy assets (to be more extreme, lets pretend it all went to gold and was in turn stored in a vault). There literally would be no global economy.

[Gat0r]

Yes I should have mentioned that inflation is negated with an equal or exceeding amount of productivity, but the Fed can only inflate for so long before the economy becomes unstable, their interest rate manipulation and credit expansion and fractional reserve banking creates business mal-investment and of course bubble's I'm sure you've read up on the Austrian Business Cycle, thats why Ludwig von Mises predicted a crash in the late twenties, Productivity was increasing, prices should have been falling but were propped up do to inflationary credit expansion, and Peter Schiff warned about our current sitiation while Paul Krugman sits there scratching his head saying, well I didnt expect this to happen.

The 95% dollar devaluation since 1913 just desribes the inflationary measures that have been used I should've gone on to explain why we still have USD in spite of that. It seems that whenever a Fed created bubble blows up they paper it over only to create an even more damaging bubble down the road such as the .com crash which they turned into the housing bubble. The most important issue with inflation in my opinion is the redistribution of wealth that occurs would you not agree? I remember Ron Paul getting Bernanke to agree that inflation was a hidden tax on the people. Countries past and present have resorted to inflation to expand the welfare/warfare state I hardly see how thats beneficial to an economy or a population.

When I was talking about competition I meant domestically, the market did not choose the dollar it was picked via fiat through legal tender laws. There is value competition in the currencies but ours has the title as the world reserve currency so we have gottan away with quite a lot and we're still seen has the all powerful USA. The USD is in grave danger because we're $12 or so trillion in debt to foreign countries and it seems that Obama is going to continue the borrowing and spending that got us into this fiasco in the first place, there is no way we can pay this debt back if we do not start producing again, as Peter Schiff has been saying people all around the world are running towards the dollar for safety when the opposite should be happening, basically because of our image, but sooner or later our debtors will realize we are broke and cannot repay our debts, that will kill the dollar.

P.S. what are you a Keynesian? Monetarist?

[sinophile]

It seems that whenever a Fed created bubble blows up they paper it over only to create an even more damaging bubble down the road such as the .com crash which they turned into the housing bubble. The most important issue with inflation in my opinion is the redistribution of wealth that occurs would you not agree?

I was going to give a sarcastic answer, but here's a suggestion instead... consider reading a little about Malthusian theory and the subsistence theory of wages. Also, try to think in terms of applying Moore's law (which I view as sorta law of productivity) as a constraint on Malthus' thinking. Add a little network theory. That's how I view the economy. So far I'm right about outcomes, but too early in timing.

** note: I believe we're seeing falling wages in the US vindicating Malthus and Lassalles.

[budgie]

No economic system is fail-safe. There will always be recessions and booms. But remember that the rest of the world - particularly the EU and East Asia - share in these ups and downs. Eventually the economies help one another up and out. There has always been a kind of globalisation in this respect, since trade began thousands of years ago. Thos societies that tried to opt out, the USSR for example, saw their economies collapse when they failed to adapt.