Guardian article on the Gold Standard

[Republicanguy]

Duncan Weldon wrote an article on the Gold standard, there are very few articles ever written by that newspaper on this subject.

http://www.guardian.co.uk/commentisfree/2012/jul/03/gold-standard-no-economic-sense

 

[torchbearer]

yeah, we live in fucked up orwelian times.
if you read the comments on this article you will see that people equate honest money with poverty, and a theft based system of central banks printing money with prosperity.
we are doomed.

 

[rpwi]

I am not an advocate of the gold standard...but did find the author's misleading.

Falling prices might sound like a good thing, and in individual cases they often are, but a falling general price level is usually associated with severe economic strains. Why buy anything today if it will be cheaper next week? The end result tends to be falling output, rising unemployment, falling wages and a large increase in the real burden of debt.

Falling prices ARE a good thing. They mean you don't have to borrow as much to buy a house, you don't have to save as much for retirement, you don't have to earn as much at your job and it rewards thriftiness and frugalness. It is the means by which an economy's rise in productivity is roughly evenly distributed to all. The author's specific logic makes no sense. Say we have a drop in prices...and people stuff their money under their bed because they hope to buy later at lower prices. Sure this will lower prices additionally...but this is a great thing. Lower prices = higher demand for everybody else. If you are able to buy a car at 15k, but not at 17k then lower prices mean you are able to purchase that which you couldn't before and this helps in production. Prices will certainly not go into zero as suggested. This is the opposite of Keynesian logic...which tells us we need to build as many mud pies as possible and create as much money as possible all in the name of creating jobs. But the Keynesians don't understand that lower prices encourage economic activity and not the opposite. Sure people will hoard...they're producing real wealth, selling it for money (not real wealth)...and then not exchanging that money to us for real wealth. That means there is more real wealth for the rest of us if they save beyond the equilibrium rate.

Too many economists fear lower prices more so because contracts like debt are somewhat inflexible which would lead to many defaults. Not the worst thing as many of these contracts/debts should not have been created to start with. The problem with raising the money supply to counter this is that it mostly goes to the bankers. The money is essentially lent to banks at no interest (which is a giveaway), then banks are able to create more money on top of this using FRB by 'lending' away our deposits. This is a very undemocratic distribution of rising monetary aggregates.

Most economists now accept that both the Long Depression of 1873 to 1896 and the Great Depression of the 1930s were aggravated by the gold standard. In the 1930s the sooner countries came off gold, the faster they recovered.

Again...not a fan of the gold standard...but this demonstrates an ignorance of how FRB works. Ron talked about this in the FRB hearings...of how the instable nature of FRB caused these 'gold era' depressions while gold got all the blame. If you want to end depressions you have to end FRB...we've gone off the gold standard and still suffered from the business cycle so that is not the culprit.

Now again the gold standard is flawed...but not for the reasons mentioned in the article. A gold standard would directly and indirectly bestow an artificial government privilege to gold (over competing forms of money). This privilege would be a form of tyranny. It depends on the type of gold standard we would go on...but say we went on a 100% backed one. This means that we (well non-gold holders) would have to buy gold from gold sellers the means by which to facilitate transactions between us. So we would have to send real wealth (food, machine tools, equity, etc...) to the gold sellers and in turn get gold which has very little intrinsic value. Gold is hoarded far and above fabrication demand (and much of fabrication demand is for jewelry) which means it is VERY overpriced. Gold current price minus what gold would cost for true fabrication demand (like for speaker wire and dentistry) means gold as a commodity is GREATLY overvalued and if the public were to be forced to buy it, that would be a significant economic hit to the rest of us.

 

[matt0611]

yeah, we live in fucked up orwelian times.
if you read the comments on this article you will see that people equate honest money with poverty, and a theft based system of central banks printing money with prosperity.
we are doomed.

LOL yep, if you look at any article of the gold standard on any mainstream website, it will be filled with baseless arguments, myths, non-facts, etc

They usually just associate the gold standard with the past -> and then since we were less wealthy a century ago so obviously the fact that we don't have the gold standard is what has increased our prosperity.

 

[matt0611]

"gold standard cost jobs and hindered recovery" <- irony

 

[William R]

"gold standard cost jobs and hindered recovery" <- irony

Actually the evidence is pretty clear, when the dollar is convertible into a fixed weight of gold the unemployment rate has always been lower.

 

[echebota]

I saw many people on this forum are losing their hope in restoring liberty due to the fact that overwhelming majority in the world are either ignorant and lazy or plain too stupid to understand that liberty and free-market (including honest money) empirically proven to be the most efficient economical and political system the most moral system, providing by far the best results for ALL people regardless of the race, gender, age or initial social status.

I'm afraid I'm falling into a category of the "giver uppers" as well. I'm tired of trying to argue with facts and mathematics and history and then being ran over with illogical nonsense and changing subjects and outright not being able to process the info I'm giving out.

People want to be slaves, they are gradually and surely becoming ones, unfortunately dragging us with them. The comments for this article is another confirmation.

 

[pmbug]

Someone should post this in the comments to the Guardian article:

http://www.cato.org/publications/br...rd-still-gold-standard-among-monetary-systems

 

[torchbearer]

I saw many people on this forum are losing their hope in restoring liberty due to the fact that overwhelming majority in the world are either ignorant and lazy or plain too stupid to understand that liberty and free-market (including honest money) empirically proven to be the most efficient economical and political system the most moral system, providing by far the best results for ALL people regardless of the race, gender, age or initial social status.

I'm afraid I'm falling into a category of the "giver uppers" as well. I'm tired of trying to argue with facts and mathematics and history and then being ran over with illogical nonsense and changing subjects and outright not being able to process the info I'm giving out.

People want to be slaves, they are gradually and surely becoming ones, unfortunately dragging us with them. The comments for this article is another confirmation.

yup. you can't fix stupid.