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#41
10-19-2007, 05:05 PM
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Re: If the Gold standard came back ...
[ QUOTE ]
My guess is the reason currency has increased in stability in the last thirty years is that the science of economics has improved rapidly and the data the Fed has to work with has improved over the last thirty years. The govt. and private sources spends tens of millions of dollars to generate economic data, which gives the Fed better information to make decisions. [/ QUOTE ] Comparing inflation rates between eras is, how shall we put this, extraordinarily difficult. A flood/weather system/drought in 1845 that wiped out 5% of crops in the US would be a much more severe shock than a similar event in 1945, or 1995. Globilization stabilizes prices by vastly increasing both producers and consumers to flatten out massive shocks, attributing this pattern to the fed, even as a cursory nod, is to ignore (or give them credit for) improvements in transportation, communication, production methods, prediction of weather, ect ect ect. 
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#42
10-19-2007, 05:26 PM
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Re: If the Gold standard came back ...
Does anyone really believe the inflation numbers of the last 10 years? The Europeans are claiming low inflation rates as well, but the USD has lost 40% of its value to the Euro. How can the USD depreciate drastically against the Euro while both currencies claim low inflation? Is there that much speculation in the currency market?
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#43
10-19-2007, 05:45 PM
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Re: If the Gold standard came back ...
[ QUOTE ]
I'm still learning this reading up on the GS subject but if it did come back, what would happen to housing prices and the stock market ? Would there be less $ in the economy ? Would it hurt it at first or no ? Would prices of goods drop to what they were pre 1933? Today's dollar is worth 4 cents in 1933. Would your house basically not go up in value or would it go up just a tad ? [/ QUOTE ] Would it be possible for a couple of people to actually address this question at some point in this thread?
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#44
10-19-2007, 06:38 PM
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Re: If the Gold standard came back ...
[ QUOTE ]
[ QUOTE ] [ QUOTE ] [ QUOTE ] [ QUOTE ] Most of golds value derives from the same reason the dollar bills in your pocket do. [/ QUOTE ] However one has the ability to be created out of thin air, and one does not. Even if they only have value for the same reason, seems like one has a clear edge here. [/ QUOTE ] Yes. paper money has the clear edge because the cost of production to keep up with economic growth is far less expensive. [/ QUOTE ] This is silly. There is no need for the money supply to "keep up with the growth of the economy." The entire 19th century was a sustained period of falling prices and strong economic growth, except during war, when governments drove prices up via monetary inflation to divert productive capacity away from serving consumers to producing war materials. The natural action of a market economy with a stable commodity money is for prices to fall as productivity increases. I.e. the purchasing power of money goes up, making consumers wealthier. There is no problem for businessmen to make profits with steadily falling prices, since the steadily falling prices are due to increases in productivity in the first place, i.e. their costs are going down. Entire industries (consumer electronics and computers, for example) have experienced decades of continuously plunging prices. Oh noes! How do they stay in business? Plunging costs. Furthermore, as the purchasing power of money goes up, there is more profit in producing the commodity money, gold and/or silver. Hence there is a natural market incentive to increase the money supply in a manner that is in harmony with the economy. The converse is true as well. If a huge gold strike were to significantly increase the supply of gold in a short time (which is pretty much impossible given the current world stock, but we'll take it in arguendo), the purchasing power of gold would fall, and there would be an incentive to shift resources out of gold production. Shockingly, gold is a commodity like any other commodity, and the market works to increase its supply when the demand for it increases and decrease its supply when the demand for it falls. Who'd've thunk it. [/ QUOTE ] You are assuming perfect elasticity of gold supply, which doesnt exist, whodve thunk that you would make simplifying assumptions that are wrong, but essential to your argument. stick to physics [/ QUOTE ] No I'm not. I invite you to show that I am. You are invoking meaningless mumbo-jumbo in lieu of an argument. I've already shown that there doesn't need to be any "elasticity of gold supply" at all, because a steadily falling price level is perfectly compatible with a growing economy. Neither your assertions, your mumbo-jumbo, nor your condescention an argument makes.
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#45
10-19-2007, 06:44 PM
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Re: If the Gold standard came back ...
[ QUOTE ]
[ QUOTE ] I'm still learning this reading up on the GS subject but if it did come back, what would happen to housing prices and the stock market ? Would there be less $ in the economy ? Would it hurt it at first or no ? Would prices of goods drop to what they were pre 1933? Today's dollar is worth 4 cents in 1933. Would your house basically not go up in value or would it go up just a tad ? [/ QUOTE ] Would it be possible for a couple of people to actually address this question at some point in this thread? [/ QUOTE ] Its an impossible set of questions to give definitive answers to, because there are innumerable possible paths back to a gold standard. None are likely to be pretty, but some are much uglier than others.
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#46
10-19-2007, 07:09 PM
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Re: If the Gold standard came back ...
[ QUOTE ]
[ QUOTE ] The entire 19th century was a sustained period of falling prices and strong economic growth, except during war [/ QUOTE ]  As you can see, the value of a dollar was much less stable when the currency was backed by gold. There were several periods of high inflation (1830, 1845, 1875) that do not correspond with wars or periods of government expansion. You'll also note that the currency during the last 30 years is much more stable than currency during the 1800's. I don't know enough about economics to say for sure, I would prefer a consistent but predictable rate of inflation over the wild swings of the early 1800's. My guess is the reason currency has increased in stability in the last thirty years is that the science of economics has improved rapidly and the data the Fed has to work with has improved over the last thirty years. The govt. and private sources spends tens of millions of dollars to generate economic data, which gives the Fed better information to make decisions. [/ QUOTE ] This post has more wrong with it than I can correct while driving.
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#48
10-19-2007, 09:22 PM
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Re: If the Gold standard came back ...
Here are some videos with Ron Paul debating a member of the Federal Reserve Board of Governors on the gold standard in 1983:
Part 1 Part 2 Part 3 Part 4 Part 5 Part 6 Part 7 The video quality is poor, but all you really need is to be able to hear the audio. I’m fairly sure Ron Paul hasn’t changed his views since then. If you're still not convinced that the gold standard is the way to go, how about reading this essay titled “Gold and Economic Freedom” by Alan Greenspan. He also supports the gold standard. -Caeddyn
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#49
10-19-2007, 09:27 PM
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Re: If the Gold standard came back ...
[ QUOTE ]
Here are some videos with Ron Paul debating a member of the Federal Reserve Board of Governors on the gold standard in 1983: Part 1 Part 2 Part 3 Part 4 Part 5 Part 6 Part 7 The video quality is poor, but all you really need is to be able to hear the audio. I’m fairly sure Ron Paul hasn’t changed his views since then. If you're still not convinced that the gold standard is the way to go, how about reading this essay titled “Gold and Economic Freedom” by Alan Greenspan. He also supports the gold standard. -Caeddyn [/ QUOTE ] Youre only 40 years too late. Greenspan does not support the gold standard any longer.
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#50
10-19-2007, 09:49 PM
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Re: If the Gold standard came back ...
[ QUOTE ]
[ QUOTE ] Here are some videos with Ron Paul debating a member of the Federal Reserve Board of Governors on the gold standard in 1983: Part 1 Part 2 Part 3 Part 4 Part 5 Part 6 Part 7 The video quality is poor, but all you really need is to be able to hear the audio. I’m fairly sure Ron Paul hasn’t changed his views since then. If you're still not convinced that the gold standard is the way to go, how about reading this essay titled “Gold and Economic Freedom” by Alan Greenspan. He also supports the gold standard. -Caeddyn [/ QUOTE ] Youre only 40 years too late. Greenspan does not support the gold standard any longer. [/ QUOTE ] Oh yeah? “There are numbers of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard.” -Alan Greenspan October 2007
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