At the time of the Great Depression, America had a 100% gold standard

[OceanBlue]

A friend of mine disagrees with Ron Paul on the gold standard issue. I sent him the below with a link to a film called Money, Banking and Federal Reserve and his response was:
At the time of the Great Depression, America had a 100% gold standard
for its money...
How should I respond. Please Help?


Despite the established view Greenspan, the Fed and big commercial bankers are not the inflation fighters they pretend to be.
The Fed and it's allied banks are not part of the solution to the inflation in the business cyle, they are the problem itself. To limit chronic inflation and boom bust business cycles the currency must be backed 100% by gold, that would remove the Fed's ability to print money, which amounts to no more then legalized counterfeiting. Instead there would be a monetary system were gold serves to anchor the dollar rather then the fiat reserves created by the Fed.
If we were to establish a real gold standard the average American family would benefit tremendously. First of all there would be more jobs, better jobs, more secure jobs more business opportunities, no more business cycles, no more recessions, and depressions. People's savings would be secure you wouldn't have to worry if you put money away for old age that it's value would be stolen by the central bank and by the central government as they are today.
It's as simple as this. Sound money means economic prosperity and limited government. Unsound money means inflations, recessions and depressions and big government. What sort of system do we want for our families. The transition to a gold standard will not be easy but as Murray put it, the alternative is much worse.
Since 1980 the Fed has enjoyed the power to do absolutely anything it wants. To buy not only US government securities but any assets, whatever. To buy as many assets and to inflate credit as much as it pleases. There are no restraints on the federal reserve, the fed is master of all it controls.


Watch film below:

Money, Banking and the Federal Reserve

http://video.google.com/videoplay?docid=-466210540567002553

Thomas Jefferson and Andrew Jackson understood "The Monster". But to most Americans today, Federal Reserve is just a ...

 

[foofighter20x]

Tell him that Dr Paul doesn't want to put the US back on a gold standard. He's said repeatedly that all he would work with Congress to do is allow the market to make gold and silver a competeing currency against the Federal Reserve Note and then let the people and the market decide which is a better currency.

 

[maxmerkel]

i really hope (and believe) dr. paul does not want to implement a 100% gold/silver standard.
i hope (and believe) he just wants to legalize competing currencies. that was nobel prize winner hayek's proposal and this is what is dictated by reason and logic.

 

[rodent]

The Federal Reserve was still playing games with the amount of liquidity, though. Decoupling the currency from gold allows them to play even more games with the amount of liquidity in the market. The concept of fractional reserve lending and loan recalls had more to do with the Great Depression than the gold standard. It was still a Federal Reserve problem. If you take out the Fed AND put us on gold, these massive fluctuations in liquidity wouldn't happen. The two aren't separate.

A friend of mine disagrees with Ron Paul on the gold standard issue. I sent him the below with a link to a film called Money, Banking and Federal Reserve and his response was:
At the time of the Great Depression, America had a 100% gold standard
for its money...
How should I respond. Please Help?


Despite the established view Greenspan, the Fed and big commercial bankers are not the inflation fighters they pretend to be.
The Fed and it's allied banks are not part of the solution to the inflation in the business cyle, they are the problem itself. To limit chronic inflation and boom bust business cycles the currency must be backed 100% by gold, that would remove the Fed's ability to print money, which amounts to no more then legalized counterfeiting. Instead there would be a monetary system were gold serves to anchor the dollar rather then the fiat reserves created by the Fed.
If we were to establish a real gold standard the average American family would benefit tremendously. First of all there would be more jobs, better jobs, more secure jobs more business opportunities, no more business cycles, no more recessions, and depressions. People's savings would be secure you wouldn't have to worry if you put money away for old age that it's value would be stolen by the central bank and by the central government as they are today.
It's as simple as this. Sound money means economic prosperity and limited government. Unsound money means inflations, recessions and depressions and big government. What sort of system do we want for our families. The transition to a gold standard will not be easy but as Murray put it, the alternative is much worse.
Since 1980 the Fed has enjoyed the power to do absolutely anything it wants. To buy not only US government securities but any assets, whatever. To buy as many assets and to inflate credit as much as it pleases. There are no restraints on the federal reserve, the fed is master of all it controls.


Watch film below:

Money, Banking and the Federal Reserve

http://video.google.com/videoplay?docid=-466210540567002553

Thomas Jefferson and Andrew Jackson understood "The Monster". But to most Americans today, Federal Reserve is just a ...

 

[aravoth]

We had a 100% regulated gold standard. With the Fed able to increase or decrease the money supply at will, which is exactly what they did, and because of that, the Fed caused the great depression. Fed chair Helicopter Ben Bernanke even admitted this a while back. So if our money back then was 100% backed by gold, why did the governent implement a "gold sezuire" in an attempt to allieviate the depression? Thats what they did.

They increased the money supply and caused the roaring 20's, then they decreased it, causing the depression in the 30's, then they stole the people's gold.

 

[Adamsa]

The Great Depression happened because the economy was before doing so well and people got over confident and started taking loans and taking stock risks without thinking about the consequences.

So have a gold standard, but make sure it's flexible too.

 

[akovacs]

Even though it was backed by gold, the central bank made several bad decisions in how it handled it that caused a recession to go into a depression. Having a gold standard doesn't prevent bad economic policy, it just prevents runaway and deficit spending. Ideally, you wouldn't have a central bank either.

The depression would not have happened if the federal reserve did not exist.

No paper currency has ever survived long periods of time. We've only had a floating currency for ~35 years, and look where it's gotten us. The thing is, most people don't notice until it's way too late.

 

[Qiu]

I don't think the Great Depression's blame is on the gold standard. Tell him that correlation doesn't mean causality. Tariffs and isolationism caused the Great Depression. The Austrian school of which Paul is a member of, even blames the federal reserve for it.

 

[me3]

http://video.google.com/videoplay?docid=-466210540567002553&hl=en

 

[Visual]

There were tons of miscellaneous reasons that wouldn't have been a killer alone, but together caused the depression.

 

[MyKillK]

The market crash of 1929 had nothing to do with the gold standard and had everything to do with the Federal Reserve, questionable investment practices such as margin calls, and public delusion that the roaring twenties (also a byproduct of irresponsible Federal Reserve policy) would last forever. A gold standard is a policy, a tool that is not living and one that cannot make decisions that border on fiscal insanity. The Federal Reserve CAN, however.

Trying to blame the gold standard for the Great Depression is like trying to blame a bullet for killing someone. Your friend should be made aware that the Federal Reserve had been established hardly 15 years prior and immediately instituted the "business cycle" paradigm we have suffered over the last 90 years. There was mass liquidity in the 20s creating the roaring twenties, and in 1929 the big banks began closing up their vaults. The predictable result: Over-speculation leading to mass delusion and then a huge crash. It's the same tactic that has created this mess of a housing/mortgage problem.

 

[akovacs]

I guess what everyone is trying to say is that saying the depression happened with a gold standard is like saying that a car accident happens when you're driving. It doesn't say anything about the actual vehicle (In this case, gold).

 

[apc3161]

I have your answer right here

Milton Friedman (greatest American economist of all time) explains why the federal reserve was responsible for the great depression. Had they followed the gold standard CORRECTLY, it would have been a small little recession, and not a depression.

http://video.google.com/videoplay?d...l=4&start=0&num=10&so=0&type=search&plindex=0

apc

 

[tremendoustie]

Actually, the Fed was already manipulating money at that time -- we'd had the fed since 1913 (thanks Woodrow!!). At Friedman's 90th birthday in 2002, Ben Bernanke, Chairman of the Federal Reserve, acknowledged that Friedman was right to blame the Federal Reserve for the Great Depression.
http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm

Freedom works, people, and market or monetary manipulation and controls causes more harm than good.

 

[tremendoustie]

I have your answer right here

Milton Friedman (greatest American economist of all time) explains why the federal reserve was responsible for the great depression. Had they followed the gold standard CORRECTLY, it would have been a small little recession, and not a depression.

http://video.google.com/videoplay?d...l=4&start=0&num=10&so=0&type=search&plindex=0

apc

Hehe, our posts crossed in the ether. Great minds think alike obviously.

 

[fsk]

The USA abandoned the gold standard in 1913 when the Federal Reserve was created.

The Federal Reserve slashed interest rates in the 1920s, causing a massive money supply expansion.

The Federal Reserve jacked up interest rates in 1929, causing the money supply to crash.

The insiders who controlled the Federal Reserve made a *FORTUNE*. They knew to stop issuing loans before the crash, and then bought up assets cheap at the bottom of the depression.

 

[Nash]

Federal Reserve Instituted: 1913
Federal Income Tax Created: 1913
Depression: 1930's.

On top of that Tarriff's on imports were extremely high as was the top end of the income tax during the Hoover administration.

People think of Hoover as some kind of Free Market policy president when the fact is his tax policies were a disaster. High tariff's hurt trade and the wealthiest were taxed into oblivion which crushed production.

A recession was inevitable. The federal government turned it into a depression with their horrid economic policies. Roosevelt pulled the US out of it by going to war and rejuvinating the manufacturing base. He did this in spite of the new deal, not because of it.

 

[Ninja Homer]

I posted this a while back in response to questions about the Great Depression and the New Deal:

I'm not an expert in this, but this is how I understand it.

First of all, I want to make sure that it is understood what money is. Money is just a tool to make trade easier, so you can trade your chickens for money then trade the money for bread, rather than just trading your chickens directly for bread. Money is only worth what you can trade it for. Even if it is backed by gold, it can lose trade value if people believe that they won't be able to trade it for the gold it is backed by or if people believe that gold has less value.

The Federal Reserve intentionally caused the Great Depression. The Fed expanded the money supply in the 20's, which lead to a credit boom. There were a lot of loans. Then the Fed started reducing the amount of money in circulation in 1930. Then there were still plenty of resources, and people were still able to work, but there wasn't enough money to trade. So then people could work for trade, but it was hard to find work for money, because the money just wasn't there. Because they didn't have money, they couldn't pay on their loans, and they lost their businesses, farms, and homes to banks. Banks began to fail, and many people took their money out of banks because they didn't trust that it would still be there. Many of the businesses, farms, and homes became the property of the bankers behind the Federal Reserve, which were then turned into corporations.

Then came FDR's New Deal. All the money and gold the Fed had been hoarding was pumped into Federal Reserve banks. This knocked out almost all remaining banks that would compete with Fed banks. FDR, through executive order, required that all privately owned gold be exchanged for paper money. Then they started pumping money back into circulation through socialist programs. This money, for the most part, was given to the corporations that the Fed bankers owned. So now people could work for money, money was back in circulation, and the Great Depression ended. The New Deal was hardly a good thing, because there are plenty of other ways to get money into circulation. The end result of the Federal Reserve's manipulations was that they took over a lot of businesses and then the previous owners became employees. Of course, we still haven't seen the true end result of the Federal Reserve's manipulations, because it continues to this day. FDR was the worst president ever.

 

[ConstitutionGal]

If you really need for someone to understand what caused the great depression (along with every market boom and bust since then as well as who profitted from same), have your friend devote the time to watch "The Money Masters" which is available at the following link in its entirity:

http://video.google.com/videoplay?d...=76&start=0&num=10&so=0&type=search&plindex=0

It's over 3 hours long but, once someone sees it, they'll have a grasp of who controls the money markets and currency and just how we are all being manipulated for the gain of the few.

 

[Thomas Paine]

Do a google search on the Smoot Hawley Tariff Act (Wikipedia) and you will find the primary cause of the Great Depression. There were other factors but it was Congress that sent the national and world economy over the cliff into a depression with this single legislation.