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#31
10-19-2007, 03:14 PM
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Re: If the Gold standard came back ...
[ 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. 
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#32
10-19-2007, 03:16 PM
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Re: If the Gold standard came back ...
[ 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 ] You've begged a question there.
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#33
10-19-2007, 03:18 PM
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Re: If the Gold standard came back ...
[ 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 ] You've begged a question there. [/ QUOTE ] No I havent.
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#34
10-19-2007, 03:37 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 ] You've begged a question there. [/ QUOTE ] No I havent. [/ QUOTE ] Of course you have. You're just assuming that there's some vital need to "keep up with economic growth". There isn't.
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#36
10-19-2007, 03:58 PM
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Re: If the Gold standard came back ...
[ QUOTE ]
Look at the upside - it's great for tourism. The lowest paid Scandinavians are making like $20-22 an hour these days. Combined with the fall of US real estate prices, you'll be seeing lots of Scandinavian grocery store cashiers with amazing summer homes in the states. [/ QUOTE ] I actually happen to be Norwegian, going to school in North Dakota where prices are low on almost everything. The strengthening of Kroner (the currency I get my student loan and scholarship in) compared to USD is more than welcomed [img]/images/graemlins/grin.gif[/img] The problem for the Scandinavian grocery store cashiers though is that 75-80% of the 25$ they make an hour is going to the government one way or another.
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#37
10-19-2007, 03:59 PM
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Re: If the Gold standard came back ...
[ 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.
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#38
10-19-2007, 04:25 PM
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Re: If the Gold standard came back ...
[ 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
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#39
10-19-2007, 04:34 PM
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Re: If the Gold standard came back ...
[ 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.
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#40
10-19-2007, 04:46 PM
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Re: If the Gold standard came back ...
So, say Paul is elected President and doesn't abolish the Federal Reserve, but legalizes competition. Would people hop on alternate currencies, gold or otherwise? Is there a way for a fiat currency to be valued without the force of a government?
So with the income tax gone, the individual would be paid however and buy stuff however, does the government start taking these alternate currencies? Further, with a Paul presidency, troops are out of the Middle East quickly. Does OPEC continue to sell oil in dollars? If there are no income taxes to be paid and no oil to be bought, would a Paul presidency cause huge devaluation of the Federal Reserve dollar? Or do countries with large amounts of US dollars like China somehow prevent this when the US turns non-interventionist?
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