Gold standard NOT a good idea?

[Marc]

Thanks Gilby, the answer seems so simple.

 

[Smiley Gladhands]

The Federal Reserve Bank does not own the gold but serves as guardian of the precious metal

lol....suckers.

As to answering your question...the sooner we remove restrictions on citizens' ability to use gold as money, the sooner we allow the free market to decide whether gold or fiat is the sounder money. People can use whatever works best for them, whether it's fait or gold or silver or seashells.

It's ridiculous to tax people on their attempts to protect themselves from inflation.....unless you're a money-hungry monster of a government, that is.

 

[jon_perez]

jon_perez, i think your view of economics is false. There ARE laws of Economics that arent changeable. Like "all prices are subjective".

Sure. This "all prices are subjective" is something I found myself realizing as well every time I think about it. The law of supply and demand would seem to be another one of these immutables.

My everyday experience proves me this, as does my logical thinking . You can't "invent" Economy.

But the theories of how people behave in response to such immutable laws are what form economic theories and these are the ones whose applicability seem to change over time. When economic theories [that prescribe state interference] get entrenched as government policies, they set a 'script' for how government should behave. Thus [in a semi-free market] astute investors can try to take advantage of such predictability and the more they do, the more unbalanced things become. Perhaps this is the reason behind the eventual failure of Keynes' theories. Friedman's monetarist theories also prescribe government intervention and thus can be gamed, which could be why the existence of the Fed is coming under so much criticism lately.

Heck, if you read some Fed governors' writings, even they themselves complain about investors trying to game them and what the strategies are to counter such.

 

[nexalacer]

So if the applicability changes of theories that are supposed to predict human behavior, you're saying that human nature changes. That is the implication of saying that Keynes' theories were correct for a time and The Chicagoans were correct for a time.

This brings me back to a very important question: how do you distinguish truth from falsehood?

 

[a_european]

But the theories of how people behave in response to such immutable laws are what form economic theories and these are the ones whose applicability seem to change over time. When economic theories [that prescribe state interference] get entrenched as government policies, they set a 'script' for how government should behave. Thus [in a semi-free market] astute investors can try to take advantage of such predictability and the more they do, the more unbalanced things become. Perhaps this is the reason behind the eventual failure of Keynes' theories. Friedman's monetarist theories also prescribe government intervention and thus can be gamed, which could be why the existence of the Fed is coming under so much criticism lately.

I think you just made a good point why government intervention in the economy is at best useless and at worst disastrous.

On the failure of Keynes, read The Misesian Case against Keynes by Hans-Hermann Hoppe

http://www.mises.org/story/2492

 

[freest8r]

I guess this is as good a place as any to post this question. I understand the short-term negative consequences of inflation and a weak dollar, and I also understand some positive consequences. It seems to me that as the dollar weakens, Americans will eventually turn inward for products and services, and we will export more goods and services to the rest of the world. It may slow economic gains for a time, but won't things eventually balance out? I feel like I'm missing something and there are other VERY negative consequences that I'm not seeing.

So, my question is, what does Austrian economics predict is the eventual end game of a dramatically devalued currency? What will happen in America if the dollar continues to go down at it's current rate for the foreseeable future?

 

[freest8r]

I guess my question was kind of answered in the "What Would US Bankruptcy Look Like" thread. But I'm not convinced that we'd see hyper-inflation like they did in Germany because we've got the means to produce most of what we need ourselves. It seems like we'd just have a recession while the trade imbalance was corrected, and then we'd just start producing our own goods and services.

It wouldn't be ideal economically, and our growth would suffer, no doubt. But it wouldn't be the end of the world.

 

[Cowlesy]

Good debate here, lots of people making great points.

Gold has been a store of value for an extremely long time, but in our ever-changing world, I really think natural resources are going to be even better stores of value. Yes I know some of the counter arguments (technology can make some of them obsolete, etc), but with today's geopolitical situation, I think two basics (oil and water) are great resources to have.

Water is often overlooked, and I'm not saying this because of the drought in the Southeast or people beating the global warming drum, but we can't exist without it and if the gross world population continues to increase, demand will continue to increase. As more of the world evolves technologically, the demand for water will also exponentially increase as it becomes used in other regions like we use it here for more reasons than just satiation.

The famous Texas oilman T. Boone Pickens is making one of largest bets on water in Texas. Not just for supply, but all the land he's purchasing to run pipelines (in addition to being on top of large aquifiers) will also have have windpower installations.

 

[jon_perez]

So if the applicability changes of theories that are supposed to predict human behavior, you're saying that human nature changes. That is the implication of saying that Keynes' theories were correct for a time and The Chicagoans were correct for a time.

Human behaviour changes, human nature doesn't. While the economic theories take individual human behaviour into account, they probably neglect to factor in today's big financial institutions whose behaviour have an inordinate amount of influence on the economy.

If one looks at the case of Hong Kong (arguably the most laissez faire economy around) during the Asian Financial Crisis, the government was heavily criticized for intervening in the equity and currency markets (when speculators tried to drive both down) because it violated the principle of laissez faire. In the end, almost everyone agreed it was the correct thing to do because the alternative would have been disastrous for the HK economy and people.

So while purists may argue for one extreme approach versus another, I believe that in the end, compromises are required (yes, there is the danger of falling into a slippery slope situation) especially when it comes to exceptional situations.

 

[jon_perez]

I guess my question was kind of answered in the "What Would US Bankruptcy Look Like" thread. But I'm not convinced that we'd see hyper-inflation like they did in Germany because we've got the means to produce most of what we need ourselves. It seems like we'd just have a recession while the trade imbalance was corrected, and then we'd just start producing our own goods and services.

Only the Chicken Little conspiracy theorists are saying that a US bankruptcy is imminent. However, I believe more and more people are being made aware that unless the present course is altered, bankruptcy is definitely in the cards.

We owe so much to Ron Paul (and many others) for waking Americans up to this situation.

 

[nexalacer]

Your inability to answer the most fundamental question in philosophy, the root of politics, indicates your lack of a consistent methodology for determining truth.

If you cannot determine truth, your arguments are baseless.

If your arguments are baseless, then you're a troll.

Cya.

 

[jon_perez]

Your inability to answer the most fundamental question in philosophy, the root of politics, indicates your lack of a consistent methodology for determining truth.

If you cannot determine truth, your arguments are baseless.

If your arguments are baseless, then you're a troll.

Cya.

... and you're a... jerk?

 

[fsk]

Once again, trolls have successfully disrupted debate on this forum.

The point is: Ron Paul has clearly stated that he prefers a gold standard to the current monetary system. Realistically, a hybrid system is achievable, by removing the taxes and regulations that prevent people from using gold as money.

Ron Paul has clearly stated that he likes the gold standard. Anyone posting on this forum who is strongly opposed to the gold standard either doesn't understand Ron Paul's positions or is a troll.

IMHO, these are the two main attraction points of Ron Paul's campaign:

- His opposition to the Federal Reserve.
- His opposition to the income tax and the IRS.

If you don't believe either of the above, then why are you trolling this forum?

 

[jon_perez]

Your comment is all the more laughable since you claim...

Once again, trolls have successfully disrupted debate on this forum.

... what is there to "debate" about, if anyone who tries to present a counter-opinion is labeled a troll? Maybe you should look up the definition of 'debate'...

 

[ClampIt]

Gallon gains on Liter

Which is my point, that Economics is not a hard science, unlike say, Physics. Soros uses the concept of Reflexivity. People are conscious, people understand Economic theory. Therefore the big players can game the theory...

....If you're going to teach Mises, you should also study Friedman and Keynes and illustrate why the 2 are wrong (or no longer correct). Otherwise you're just spouting religion.

I've enjoyed reading you stuff and you make very excellent points. "Currency" is just that: a convenient here and now as a medium of exchange. "Value" is only that which you can get for it, which can only be measured by a willing buyer and a willing seller as of the instant of the transaction. There is a discordant harmony in the free market which we need to measure to see how things are going. The metric is money. I suppose Ron Paul's argument is, like physics, the yard stick has to be reasonably constant to be meaningful.

Wouldn't it be silly to consider a "market" for the conversion factor of inches to meters? Imagine the headline from Science Today "Gallon gains on Liter"

That would have some physicists rubbing their hands if not their heads.

Governments routinely maintain "weights and measures" as reproducible standards. We routinely certify scales. Gold can (and has) been counterfeited, debased, adulterated and routinely stolen. Issuing paper "backed in gold" is only as good as the fellow signing it its value is not the Holy Grail of Economics. Ideally, shouldn't it be as constant as a gallon?

 

[nexalacer]

Your comment is all the more laughable since you claim...



... what is there to "debate" about, if anyone who tries to present a counter-opinion is labeled a troll? Maybe you should look up the definition of 'debate'...

In a debate, there are three possible choices:

1. Accept the other person's argument.
2. Disprove the other person's argument logically and rationally.
3. Get the hell out.

You refuse to accept. You refuse to disprove. Both of these are related to your apparent misunderstanding of truth. Of course, you could change my mind about this by answering my question: how do you distinguish between truth and falsehood?

Your only option remaining is get the hell out of the debate, but you also refuse to do that. Therefore, I feel quite just in calling you a troll.

 

[jon_perez]

^ Just so you know, I also feel quite justified in considering you a jerk and an a-hole.

Furthermore, you smell like a sock puppet to me...

 

[sickmint79]

http://www.youtube.com/watch?v=Cilwld5fj48

 

[Gilby]

So, my question is, what does Austrian economics predict is the eventual end game of a dramatically devalued currency? What will happen in America if the dollar continues to go down at it's current rate for the foreseeable future?

Well, when the dollar is expected to keep going down then people will start dumping it, or worse, countries that have large reserves will start dumping. Both result in hyperinflation.

What has happened in other countries as a result of hyperinflation is los of price fixing and other attempts to manage the economy. People would get paid several times a day and have to rush out to buy up whatever they can before the money loses even more.

The dollar crisis we have now is that we are losing our grip on being the world's reserve currency, which means inflation, and we are at the end of a very large housing bubble that has burst. When you have the threat of inflation, the fed would need to raise rates, and thereby contract the money supply. When you have a bubble that has burst, the fed wants to lower rates to prevent a recession (though all they do is cause another boom in the process).

What's likely to happen is that the dollar will fall and the foreigners will be the ones that are able to outbid us for all the goods we have in our possession (but don't own since we don't save and live off credit cards and home equity loans).

 

[zinite]

Hi,

I'm new to posting on this forum, so cut me some slack. I'm 17, and turning 18 in 2 weeks. I've been a Paul supporter for about 6 months, and I plan on voting for him here in the Arizona primaries. I apologize in advance for my ignorance, I'm fairly new to the political spectrum.

I was discussing the idea of a gold standard with a colleague of mine, and he brought up a point I'd like to see addressed. If the US adopts a gold or silver standard, we have to then collect the metal and store it some place, correct? There needs to be physical gold somewhere in the United States that the paper money represents. I know Paul disagrees with the concept of fiat money, but what methods would be put in place to collect the gold? Does the United States have gold in its stores right now? Where would this gold be stored (Knox?).