myths about the federal reserve

[dujac]

Myth #1: Stability.

Then the first "bubble". The roaring 20s. The Stock Market Speculation Bubble. This, of course, led to The Great Depression. Since then, on average, there has been a recession every 4.5 years.

what about these?

Panic of 1797
Depression of 1807
Depression of 1815
Panic of 1819
Panic of 1825
Panic of 1837
Panic of 1847
Panic of 1857
Panic of 1866
Black Friday (1869)
Depression of 1873
Panic of 1884
Panic of 1890
Panic of 1893
Depression of 1896
Panic of 1901
Panic of 1907
Panic of 1910-1911

 

[Travlyr]

it didn't work like that throughout history, the 19th century economy in the usa was erratic

All due to bimetallism, fiat money, and government monopoly protections. Everybody, except bankers and politicians, can do much, much better in the 21st century with honest sound money.

 

[dujac]

All due to bimetallism, fiat money, and government monopoly protections. Everybody, except bankers and politicians, can do much, much better in the 21st century with honest sound money.

what do you think gives gold its value?

and just so you know, there are extremely rare things that have little to no value

 

[Mogambo Guru]

slow gradual inflation is good
slow gradual deflatoin is bad
central banks provide stability and are good for an economy
that a sound money standard cant work
deflationary spiral

i think it's better to have stability rather than wild fluctuations, like in the 18th & 19th century

Ever stop to think about this a little more?? we didnt experiment with central banks back then??

gold & silver are volatile commodities, they're not all that sound when it comes to using them as currency

its inelasticity of supply is the primary problem

this is its primary benefit.. the supply of money does not matter, that only changes price structure and enables redistribution of wealth and manipulation

i don't hate capital savings, but i think deflation is more problematic than inflation

if you dont hate savings, why do you prefer to punish it? also, again the lie that slow deflation is worse than slow inflation..

a zero inflation monetary policy is likely to lead to unpredictability and instability

based on what??

economic instability as a result of gold and silver imports from the americas, in the 16th and 17th century, lead to the downfall of spain as a leading world power

I am not sure about this, but was the real downfall of spain because it overextended itself?? Lack of gold/silver being the symptom of the problem rather than the cause of the problem?? I am not sure..



That should be a start.. I am very curious about this "deflationary death spiral" LOL

 

[hazek]

dujac I have 1 simple question for you:

Can you explain to me in simple terms why is it that it used to be enough for the man of a family to have 1 job and they could afford a nice house and raise 3 children and provide them with everything they needed, pay for their education, have two cars and go on a vacation 2 times a year when nowadays all members of the family have to tear themselves apart just to make ends meet and they probably have some debt on top?

What might be the reason for that? Hmmmm

 

[Travlyr]

what do you think gives gold its value?

Desirability, divisibility, durability, scarcity, portability.

and just so you know, there are extremely rare things that have little to no value

And there are plentiful things that are way overpriced... houses and cars.

 

[dannno]

in 1895 it took the average worker over a month of labor to be able to buy a bicycle, now it takes a day or two

the 20th century brought vast improvements in nearly every category

i have 30 acres and i didn't pay anything near a million for it

Bicycles used to be hand made, now due to technology they are very cheap to produce large quantities.

A nice hand-made toga and hand-made shoes used to cost about 1 oz. of gold back in the days of Rome. Today a hand-made suit and hand-made shoes cost about 1 oz of gold. Let's keep these comparisons more realistic.

 

[dujac]

Desirability, divisibility, durability, scarcity, portability.

you're ticking off what you think are gold's characteristics, not what gives it value

 

[hazek]

what do you think gives gold its value?

and just so you know, there are extremely rare things that have little to no value

The fact that you're asking this question shows just how little understanding you have of what money really is and how it came about. Do us all a favor and go to: http://mises.org/media.aspx?action=search&q=money and brush up your economics. Thanks!

 

[Mini-Me]

what about these?

Panic of 1797
Depression of 1807
Depression of 1815
Panic of 1819
Panic of 1825
Panic of 1837
Panic of 1847
Panic of 1857
Panic of 1866
Black Friday (1869)
Depression of 1873
Panic of 1884
Panic of 1890
Panic of 1893
Depression of 1896
Panic of 1901
Panic of 1907
Panic of 1910-1911

That's a lot to answer in one post, no? There have been some books written on 19th century panics and depressions from an Austrian point of view though. Here are a few by Rothbard:

• A History of Money and Banking in the United States
• The Mystery of Banking
• The Panic of 1819

There are a bunch of others by various authors which address at least one. I wish it was all in one place for easy reference, but...blah. Right or wrong, the Austrians are at least able to address these panics and defend the ABCT in light of them.

BTW, gold gets its value the same way everything else does: As a function of supply and demand. Demand exists for industrial and cultural reasons, but primarily because it had historical value as money, and many people are smart enough to realize that fiat money is a terribly misguided fad in the grand scheme of things. It became money in the first place because its nearly ideal characteristics (I'll add chemical and physical stability to Travlyr's list) make it a better (if imperfect) choice of money than probably any other substance on earth, or possibly in the entire universe, interestingly enough (gold is rare everywhere).

 

[Mogambo Guru]

what about these?

Panic of 1797
Depression of
Depression of 1815
Panic of 1819
Panic of 1825
Panic of 1837
Panic of 1847
Panic of 1857
Panic of 1866
Black Friday (1869)
Depression of 1873
Panic of 1884
Panic of 1890
Panic of 1893
Depression of 1896
Panic of 1901
Panic of 1907
Panic of 1910-1911

Ahem... These were not caused because of sound money... Main causes were manipulations to sound money and the creation and destruction of central banks, among other things. Also, many of these I think were regional.

and what about

changes in the government's regulatory, fiscal, trade and monetary policies. Cycles in agriculture, consumption, and business investment, and the health of the banking industry also contribute to these declines.

Many of those crisis are the result of paper currency, central banks, wars, governments.. not a sound monetary system.

 

[dujac]

 

[dannno]

you're ticking off what you think are gold's characteristics, not what gives it value

No, that is what gives it value as a currency. What gives fiat currency value? The guns behind them. Yes, violence.. what a great way to give currency value

 

[dannno]

You mean we've had increases in technology that have led to higher productivity since 1890? Wow, who would have thunk it..

 

[hazek]

dujac are you going to answer my simple question?

 

[Travlyr]

Oh boy! Here we go with the charts and graphs. Yea.

Do yourself a favor and follow hazek's friendly advice.

The fact that you're asking this question shows just how little understand you have of what money really is and how it came about. Do us all a favor and go to: http://mises.org/media.aspx?action=search&q=money and brush up your economics. Thanks!

 

[Mogambo Guru]

you're ticking off what you think are gold's characteristics, not what gives it value

another lie... gold has been desired for thousands of years, care to dispute that?
it is durable, care to dispute that?
it is divisible, care to dispute that?
it is scarce, care to dispute that?
it is portable, care to dispute that?

These are essential functions of money, arent they?

 

[Mini-Me]

dujac are you going to answer my simple question?

I doubt it. He has so many posts to pick from that he's just ignoring the stronger ones. I really wish he'd concede that I refuted his idea of a "deflationary spiral" in post 54 though.

Anyway...time to eat. LUVUBAI!

 

[hazek]

it is durable, care to dispute that?
it is divisible, care to dispute that?
it is scarce, care to dispute that?
it is portable, care to dispute that?

These are essential functions of money, arent they?

They're not if you are a banker/politician and want to rob the public blind.

 

[Mogambo Guru]

Pulls the GDP on us, LOL... GDP is basically a measure of money changing hands... so long as we can continue to borrow, we can have a +GDP!

How about the fact that Q42010, it took $6 of credit to produce each $1 of GDP?