Need some perspective from an economics standpoint

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[saku39]

You can propose an amendment.

You mean like the amendments our government currently don't pay attention to? If they really did pay attention to the constitution, we would have never been off the gold standard in the first place.

The amount that people make is totally arbitrary. Poor people get screwed over rent and lower wages, not inflation. Inflation barely hurts them.

With respect, you are completely wrong.

Inflation definitely hurts poor people. It takes away value of money they have saved. And it takes away the value of the money they are earning now and in the future.

Consider savings. You have a savings account at a bank that pays 1% a year, but inflation is at 6%. That means your money is losing 5% of it's value by sitting a bank account.

Consider the value of money. Say prices go up do to monetary inflation of 6% a year. You make $10 an hour. Over the course of 2 years your $10 is actually now worth $8.84. But, in addition to that, rent is up $30-50, weekly groceries are up $15-25, water bill up $10, etc. It adds up and it definitely hurts.

Money is not designed. Gold WAS money, not the backing of money. Money evolves out of barter.

This is completely true. Money is just a means of exchange. It can be anything that a majority of people find valuable. For example, in prison, money is cigarettes.

 

[saku39]

Ok, if you think you can just start trading silver, platinum, etc. without the help of the government, then go do it. Oh that right, you can't.

Actually you don't need the government to do anything. You can trade whatever you want.

The problem arises because currently, most people only accept dollars. Also another problem with gold and silver now is that there are capital gains taxes. But that's due to central bank and government involvment and coercion. They want to make other means of exchange unprofitable and difficult. If they control the currency, they have greater control over people.

It's important to remember that originally, money came from people, not government.

 

[Wilkero]

Another point to remember is that it is not necessary to use only gold to back currency. It is possible to have your currency backed by several different hard assets (gold, silver, platinum, etc.). This would alleviate some of the hypothetical problems that could occur due to the limited amount of gold.

Money is not designed. Gold WAS money, not the backing of money. Money evolves out of barter.

If you notice, I specified "currency" and did not use the word "money" in my post. Sorry to quibble over semantics, but I was deliberate with my word choice. While it is possible for money to be currency, currency is not always money. Currency can function as a representation of money. So, while money might evolve out of barter, currency does not have to.

 

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[saku39]

So how do you think we'll get on the gold standard then?

By creating a competing currency standard that is completely independent of the Federal Reserve.

As I pointed out, rent takes up basically all of what they earned and they don't get the perks that middle class people get. Let's do some math, $1000 x 12 = 12000. That's already almost all of it. What do they have to show for? Nothing. What does the person with the house get in return? A million dollar house.

So money for the doctor, medication, weekly groceries, gas, electricity, water, cleaning supplies for the kitchen and bathroom, toilet paper, shampoo, clothes, etc don't count? The inflation of the things needed to be a normal functioning member of society don't matter what they cost?

So what they pay rent and don't get the house at the end? That's why it's rent. And they do get something out of it-- They get to not pay property taxes, a mortgage that is more than rent, insurance, much larger water/gas/electric bills, repairs/upkeep, HOA fees, mello-roos, and lastly and most important-- They get a place to live.

You aren't looking at the underlying problem. You're only looking at the symptom.

Why are they putting it into a savings account? Because they have no money to work with and most likely their job doesn't even offer a 401k and definitely not a pension or good insurance.

The poor do live check to check, but there are many that save. Anybody with sense tries to save. They save for an education, for a new car, etc. Otherwise, how do some poor people become middle class or rich?

My father used to pick tomatoes in fields. He used to fill up vending machines. He used to be a night manager at Long John Silver's. He saved for a house and an education. I know he's not the only one that's done this or is doing it.

Go start trading with gold then. That's right, it isn't accepted unless the government says it should be the means of exchange.

Like I said, you don't need the government to do anything.

Getting back to the original issue, fiat currency and the inflation that comes with it are terrible. We need to go back to a commodity back currency.

 

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[murrayrothbard]

F3d what's the point of all of this? What is the relevance of all this poor vs middle class rambling?

 

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[saku39]

How are you going to enforce this competing currency?

You don't enforce anything. If people want to use it, they will use it. It only needs to be more valuable, that way there's an incentive to use it.

You shouldn't add doctors in there. They don't get the same perks as everyone else like I said.

Poor people, just like everybody else, do need medical care from time to time. Some choose not to get it, but most do. Because of this, I think doctor bills are perfectly justifiable. What will usually happen is they will be treated and they will be set up on a payment plan.

People go to a health clinic if their kid is sick or they have an infection or they broke their arm.

But chronic diseases like cancer or MS or whatever are the ones that usually don't get treated.

Inflation across everything is only 3% They've been cooking the books so that's why it's lower than what it should be.

Officially, inflation is around 4%. But in reality inflation is over 6%.

That's a drop in the bucket compared to rent and their wages. What a joke, they pay electric bills. Gas? You could if you want to barbecue something. Water? I already said they have to pay 1.25 to wash and 1.25 to dry clothes. That's how they get screwed.

Again, you are looking at the symptoms and not the core of problem. Fiat currency inflation is the problem.

Property taxes are still a drop in the bucket. That's once a year and their mortgage most likely is less. They also get to pass a house down.

Property taxes are not a drop in the bucket and in California they are collected twice a year.

When do you have to repair something? Never. Especially with these newer houses.

Having owned a house, I can tell you that garbage disposals break, landscaping needs to repaired when flooded, windows sometimes break, lights sometimes go out, etc. Newer houses are not immune to needing repairs, they might need less than an old house, but they will still need repairs and maintenance.

They also rely on federal and state aid so they get away from inflation.

Welfare is not indexed to inflation and welfare does not cover everything no matter where you are.

Also, many do not get welfare.

5 years ago, I was homeless. I was however, lucky to have a car. I lived in my car for about a month. I never bothered with welfare. I've met people in similar situations.

Not everyone can do this. It also depends on the state. You're not getting any house in California. Even middle class people will have trouble.

That is because of the market and also because of fiat currency. The housing bubble is a consequence of the credit bubble. The credit bubble exists because of low interest rates and the inflation of the money supply.

Then do it right now if you want to. If your point was you can trade without government, then no $h!t. lol My point is that you'll get nowhere.

You're not understanding what I am saying.

What I am saying is that money does not need to be the domain of central banks or governments.

Individual people, acting with their own self interest in mind can organize and create a money all on their own. We adopted the dollar because of Spanish milled dollars in the 1700's. Techinically, they were Spanish, but they were accepted because people knew the value. The concept of value came from the people, not a central bank and not a government.

The Japanese invested in tons of capital by inflating their currency. Why do you think it was called the Japanese miracle? They wouldn't have been able to do that with a gold standard. I was merely defending fiat money with the argument comparing a middle class person to a poor person.

It should be noted that the Japanese have had a recession that lasted about 20 years.

There was a boom. And then a bust-- Inherent to all fiat currencies.

 

[Abegweit]

Can someone who has a better understanding of currencies please read the following and comment. This is the argument someone has presented to me against the gold standard.

There are so many fallacious arguments here that it is difficult to know what angle to approach it from.

To start with, imbalances in trade do not cause pressure on currencies. Imbalances are inevitable, as your friend pointed out. Given that the major currencies were largely fixed against each other from the end of the Napoleonic Wars until the beginning of World War I and again from Bretton Woods until Nixon removed the last link to the Gold Standard in 1971, the notion that they cause currency pressure is clearly false. In the same fashion, there are imbalances in trade between New York and California. Yet there is no pressure on the New York dollar to move vis a vis the Californian dollar.

Imbalances in trade must be balanced by imbalances in cash flows in the opposite direction. This is true whether the imbalance is between NY and CA or between the US and China. The Chinese may use the American dollars they get for their goods to buy American equities or securities, to holiday in the US. They may also use them to buy of goods, equities or services in third countries which then would be exchanged by these folks for something of value in the USA.

There is one and only one cause of pressure on a currency - printing money. Because of the way that fractional reserve banking works, when the FED reduces interest the rate this has the effect of increasing the amount of money in circulation. Since there are now more dollars relative to the number of Yuan than there were before, each dollar is worth less and pressure is put on the dollar to fall. Sooner or later it has to.

The government and its cronies print money. To make it simple. say that the number of dollars in circulation is doubled. This makes the dollar in your pocket worth half what it was formerly. because there is twice as much currency chasing the same number of goods. The price of milk doubles, the price of gold doubles and, yes, the price of the yuan doubles. Voila! Currency pressure.

This is why Ron Paul calls it the Inflation Tax. The government prints money and uses it as it pleases and the value of the dollar in your pocket goes down. That's a tax.

The Canadian dollar was worth 62 cents in Nov 2002. Then Bush went to war. Today it is worth more the USD. That's an increase of more than 50%. That means that when you want to buy a bottle of Seagram's, it costs that much more. Governments always finance wars by printing money. It's easier to put over on people than hiking taxes.

Yet another cost of the war.

As for the question of what happens when one currency to pegged to gold (or anything else for that matter) and another is not, it simply means that the price of this currency and the price of gold float together relative to the other currency. They also float together relative to anything else, like eggs for example. In order this to be true, the amount of currency issued must remain constant relative to the amount of gold in the world. This would likely imply a gradual increase in the money supply as more gold is mined.

 

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[Abegweit]

One other thing that is important to understand: Ron Paul is not proposing a return to the Gold Standard, which after all was a government monopoly. In that regard, it;s no different than today's fiat money. Paul wants to go back even further, thousands of years further back - to the days when government was not involved in the production of money at all. Imagine that, a free market in money!

 

[saku39]

Then why don't you do that right now!?

Well, I do own gold, but I don't use it as money. There are possible capital gains taxes and at the moment it's more convenient to keep federal reserve notes as currency.

They get state funded care that's much less. Of course there's no way they'll be able to afford it especially with no insurance.

No, many do not get state funded care. There are private clinics in major cities. Having been in that situation, I can tell you that what I am saying is true.

It's 3% How is it 6%? Maybe in some sectors in the economy but overall it's around 3%

It is not 3%. Officially it's 3.6% based on CPI. But CPI is crap, those numbers are skewed and they leave things out. I don't know what the actual inflation is, I am guessing it's over 6% for the past year. The thing to remember is that we don't experience inflation until a year or a couple years after it happens. So, we're currently experiencing the effects of policies instituted up to 2 years ago. If there was a change money supply, expansion or contraction, we wouldn't feel it until much later. What we tend to experience much quicker is the interest rate manipulation.

Sub prime loans will still be some ridiculous interest rate. Just like how colleges will put your dues in collections and reap 33% off of you. Poorer people also don't have an option of getting a 15 year housing payment.

So what? Sub-prime shouldn't have existed anyway. It's why the real estate market is in the gutter across the country. It's why 2 Bear Stearns hedge funds loaded with SIV's (mortgage backed securities) imploded this summer and in the process lost over $4 billion. It's why Countrywide, one of the biggest lenders in the country has closed many of it's offices and it's stock is in the toilet. It's why over 150 mortgage companies have gone out of business in the past year.

What does that have to do with your defense of monetary inflation and fiat currency?

Most likely you still pay less per year than someone living in an apartment and all that money that went into it is an investment. California homes are worth a ton so you get way more than you bargained for. Only a LVT can get rid of land speculation so land owners don't benefit from people & businesses moving around in the area.

Not correct at all. You base your assumption on raising prices. Currently, California home prices are dropping like rocks. The foreclosure market in California is gigantic and it is a major contributiing factor to the falling prices.

Say you bought a home for $500,000 about 2 and a half years ago. Because of easy sub-prime lending you get a no down payment, 30 year mortgage with a 3 year term that is interest only? After 3 years the nice low payment will change. The payment is much large than before (in some cases it's double) what it was previously. You have less then 6 months to come up with the cash to pay the much much larger mortgage payment.

You know that the loan you got left you with almost no room to juggle your budget. At double the original amount, you know you can't make the the monthly payments after the 3 year term is up. It's ok, you planned for this. You were going to either refinance or sell the home. You bought the house and got the loan based on the idea that the price of the house would increase. You bought it for $500,000 and 2 years later it's should have increased to $520,000 based on the past years' market.

But the market is really bad. The house you bought for $500,000 is now worth $400,000. And since it was interest only for 3 years, you don't have any equity. So if you sell, you owe the mortgage company $100,000 in addition to closing costs. What ends up happening? The property goes into foreclosure.

(If you rented an apartment you wouldn't have that problem.)

Now, the housing bubble wouldn't have existed if it wasn't for the Federal Reserve tampering with interest rates and inflating the money supply. Sub-prime loans wouldn't have existed and there wouldn't be a gigantic supply of homes and a lack of buyers as it stands now.

In response to LVT: What does land value tax have to do with anything? Poor people living in apartments have nothing to do with that non-sequitur. You keep saying that rent is the problem-- it is not, it is inflation and fiat currency.

Lights going out? You get your own at an apartment too. Some of these are just funny. When does a window break or who does landscaping? lol

I'm going to assume you've never owned a house.

Shorts in the house's fusebox cause lights and electrical outlets to go out. Windows break when the kids around the neighborhood accidentally throw a football through them or they break when somebody breaks into the house. In a house, you are responsible for the upkeep. In an apartment, the landlord is.

Underground water mains busting or heavy rains can cause flood damage to a yard. Or if theres a neighborhood dog that likes to dig up bushes. Or say the yard is fine, but it still needs to be mowed, you could pay somebody or do it yourself. If you live in a neighoborhood with an HOA and CCR's, you have to make sure your front yard looks good or you'll be fined. In a house, you are responsible for the upkeep. In an apartment, there is no yard, so there's no expense.

It's like a car. There's a cost of ownership involved. A car requires gas and periodic maintenance and other fees. You don't just buy a car without figuring in the cost of insurance, state registration, license plates fees, monthly gas usage and oil changes, etc. A house is the same way, it requires money for upkeep. An apartment, you would need some cleaning supplies to keep it clean, but that's it. Anything breaks, it's the landlords responsiblity.

Most sensible people want to own a house. There's nothing wrong with that. What I'm saying is that rent is cheaper in comparison. And if rents are too high, that's because of the market and problems with inflation. You can't control the market, but if you got rid of the Fed, you would control inflation.

I'm not talking about welfare. I'm talking about grants for education and subsidized loans. It's easy to get rid of the inflation that makes prices go up a little i.e. progressive tax. That isn't the problem though. It's mostly rent.

You said, "They also rely on federal and state aid so they get away from inflation." You didn't mention education, it read like a argument for welfare. Poor people can and have become middle class or rich without any government program. If anything, government grants and government subsidized loans are actually part of the problem. As for progressive tax, that is essentially wealth destruction. Taxing people doesn't make inflation go away. Again, high rents aren't the problem, they're the symptom.

It's because of Bush's war and the poor always have to pay the highest interest rates because of the risk.

Bush's war is only part of the problem. The rest of it is out of control spending on entitlement programs, the Federal Reserve and our foreign policy of interventionism. And high interest rates are normal if you are a credit risk. There's nothing wrong with that. People making the loans have to protect themselves. It's up to them to decide if your case requires them to safeguard themselves by charging more interest.

Yeah, I know exactly what you're saying. You're wrong though. It was granted legal tender status by the Second Continental Congress.

Actually, I'm not wrong. What I said was that the people decided the value. If they decided to use jade or diamonds instead of gold, the 2nd Continental Congress would have granted legal tender status to jade or diamonds.

Where did these coins come from anyways? If someone doesn't have control of the design, then anyone can come up with a counterfeit. Who controls how much go around?

They came from Spain. You can't counterfeit a 1 ounce gold coin anymore than you can counterfeit plutonium. No one person controls the supply. It is useful and extremely scarce, that is why it is deemed valuable.

lol, that wouldn't be a recession then, it would be a depression.

Whatever it was, it disproves your point about the Japanese economy.

 

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[saku39]

I thought capital gains was just a tax on gains in stock value? It's also very minuscule compared to the other taxes.

Capital gains are for antique collectible sales and commodities as well. As of 2003, long term capital gains are 5%-15% based on the tax bracket. Short term capital gains are 35%. And that's only if you're dealing with the commodity value. If you're dealing with a "collector" value (on something like an antique coin, like say a Spanish gold coin from the year 1650) you would have a straight 28% rate.

Maybe because not all want to get it. Poor people also congregate to the city. Have you seen a poor person in a rural area?

Everybody congregates to the city. As for rural areas, I couldn't speak about poor people in I_Can't_Think_of_a_Name, Mississippi. But in a city, state and federal welfare is not some magic wand and they will never be. In fact, it is nothing but a weight on the system.

3% or whatever is still a small amount.

To a poor person living on the margin, 3% is not a small amount.

Take the simple act of saving money. Let's say I'm doing everything in my power to save $20 a month and by the end of a year, I have $240. But due to inflation, I actually lose $7.20 worth of value. My $240 now has a purchasing power of $232.80. So even though I accumulate money, I lose the value of it, as it is stolen from me by an invisible force created by the Fed. And having lived on $2 a day I can tell you, if you're living on the margin, any money you can get and any value you can get are very important.

But it doesn't end there with savings.

Let's say I work at a warehouse for $9.50 an hour. After a year, the purchasing power of my $9.50 has fallen by 28 cents due to 3% inflation. My $9.50 is now worth $9.22 in the same money a year ago. (9.50*.03=0.285) & (9.50-.28=9.22)

Let's take the year's worth of inflation I experienced and continue it for another year. At 40 hours a week, that 28 cents of value I lose is $11.20. If I work 50 weeks out of the year, that is $560 worth of value I've lost from the pevious years inflation in addition to whatever amount of inflation occurred during my 2nd year. That's a bare minimum of $560 of value I've lost. All because of inflation. (.28*40=11.20) & (50*11.20=560)

Having worked in a warehouse years ago, I can tell you that raises (when they do come) are not enough to cover the depreciation of money due to inflation.

Now remember that this inflation doesn't just effect the purchasing power of the poor person's money, but everybody else's too. A company sees that it costs more money to mine and acquire the raw materials it sells, so it increases its prices. A factory sees that the prices of raw materials for its products are increasing, so it raises prices. The store notices the increase in price and to keep its profit margin, it raises its price as well. So prices go up and the poor person's money is worth less than it used to be. It leaves them losing value and they haven't even done anything but try to hold a job and pay their bills. Why should people living on the margin be taxed like that?

They would pay high interest rates even with a gold standard. It just wouldn't be a variable interest rate.

It would be a variable interest rate, a fixed interest rate or whatever the lender would decide was the best for the mortgage. Without a Fed, interest rates would be totally market based, they could be anything that a lender decided it to be.

Why are you giving me a short run example? In the long run, the investment will be positive. Look at La Jolla. Anyone who bought a house decades ago is totally rich for doing absolutely nothing. All because of land speculation.

Because life isn't static. You're the one taking the short view. Life isn't at a standstill. People move. They lose jobs, the kids go off to college, family members die, companies downsize, families grow, people get sick, people retire, etc. There is a California Association of Realtors statistic that shows that in California, many people move every 3-4 years. I assume that around the country it is similar.

Consider this: If you have a 2 bedroom townhouse and you are expecting a 3rd child, you will want to move up in size. Conversely, if you are retired and your kids have moved out, you will want a smaller home.

You would have to be an idiot to get rid of the home unless if you could get a good deal on another home. Of course the home is going to go up in price sometime. How much was the average home years ago? Almost no one ends up with a house that declines in value. It's obvious to point out the houses that would decline in value also.

You are short sighted. Sometimes people have to take losses short term to take gains long term. What if you get an out of state job offer? Or if the area you live in has gotten too expensive and you know Montana would be cheaper? What you're married and your spouse dies-- your spouse had job and now without that income, you can't pay for the house. In situations like these, which are very common and happen every day-- you have to sell it no matter what.

On top of everyday life, there are also people that speculate. My example about the person that bought a $500,000 house now worth only $400,000 is very common right now. In the past few years, there are many people that made huge amounts of money specualting in real estate. There are also many that lost huge amounts of money as well.

The funny part is hearing the horror stories of losing a home for some people. Welcome to apartment life. You didn't lose anything. It's just like you've been living in an apartment the whole time.

Don't misunderstand me. Losing a house to foreclosure is always bad. Some people will choose to declare bankruptcy before they foreclose. Your credit is ruined. You have to pay larger deposits on things like utilities, phone, and your new apartment. If you want to buy a new car, you might have trouble getting a good interest rate. And if you want to buy a another house in a few years, you will have a lot of trouble.

In addition to your credit problems, there's the effect on the market to consider. Foreclosures tend to be cheaper than regular resale homes. The bank just wants to get this asset off the books and get the money, so they will sometimes price 5-10% less than a resale home. But then the resale homes cut their price to compete. The problem arises when people don't have enough equity in their house to sell for the lower price. The house stays on market and they are stuck with that house.

If you are a home owner trying to sell because your job transfers you to another state or whatever, you are stuck at that house. Because it costs too much for you to sell now because prices have fallen below what you can afford to sell for.

In an apartment, you might have to pay a penalty for ending the lease before term, but for the most part, you don't have to worry about equity that you might not have, you don't have to worry about the tens of thousands of dollars you might lose in a bad housing market and you also don't have to worry about thousands of dollars in closing costs.

You'd still have a ton of foreclosures. They just made a big deal out of this one.

You wouldn't have a ton of foreclosures in a normal market. The foreclosure rate increases whenever bubbles burst and bubbles burst due to money supply and interest rate manipulation that you've been trying to defend.

And they made a big deal out of it because there haven't been this many in such a short period of time in decades. It's huge. Foreclosures have doubled compared to the year previous. Another problem is that market is weak. In southern California, sales are down as much as 50% from last year. I don't care what industry you're in, if prices are falling and you're selling 50% less product than you were a year ago, you're in trouble.

The weak housing market and this huge inventory of foreclosures are direct results of fiat currency.

The LVT helps the poor people living in apartments. Section 8 allows abuse and is a bad solution. Home owners hate this idea because they won't benefit from speculation anymore.

Land value tax is just a tax, not a silver bullet-- It does not protect poor people anymore than personal income tax, capital gains taxes or the minimum wage. Any tax is bad because as I have said, taxes are essentially wealth destruction.

But my parents own one and I lived in it.

So what? I've gone to the hospital, does that make me qualified to speak about the pressures of being a doctor? Just because you've lived in a home doesn't make you an expert in the all bills the paid and all the maintenance required to keep it clean and in good condition.

You must have a crappy electrical system if you're getting shorts. My dad owns an old 90 year old house and we only had a short twice.

We have cold winters and the pipes never busted. Kids breaking glass? Make the kid's parents pay for it.

I was giving examples to show that houses are more expensive. These things do and have happened. I've personally had to pay around $7500 for landscaping in a backyard as per HOA CCR's. Just recently, a friend of mine had to pay a few hundred bucks to replace his garage door that wasn't working. I know one lady that lost the keys to her house and had to call a locksmith, that house call was $50. In an apartment, these repairs and upkeep costs don't exist. Houses are better than apartments, but there is a cost of ownership involved that you need to remember.

Most houses around here are 200000 - 400000. Their mortgage is probably 1000/month for 30 years. A LOT of apartments are a little more than that right now and you pay till you're dead.

You've got it backwards. Apartments are cheaper than houses. With apartments, as I have said, there are no taxes, no maintenance fees, no repair costs, no insurance payments and no interest to pay.

What do you mean wealth destruction? You want to talk about wealth disparity? What about all those people taking advantage of the foreclosures? It just ridiculous. Everyones' wages are arbitrary. I thought inflation hurts the poor? Then you can give them some relief.

Taxes, like inflation, are wealth destruction. (Taxes less so.) What about the people taking advantage of the foreclosures? Usually they are regular home buyer's looking for a cheap house. What's wrong with that?

Inflation does hurt the poor. It's hurts them the most. And you can give them relief by not having a fiat currency.

SS and Medicare hasn't hit the fan yet but it will. Bush's war accounts for most of the problem.

No, as I said, Bush's war is only a part of the problem. It is not most of it. Ron Paul is correct when he refers to our network of military bases as an empire. It costs us almost $1 trillion dollars a year.

Chalmers Johnson, a former CIA analyst, wrote a book on the subject. This man is an old school Cold Warrior to the highest degree. He supported things like NATO and the mass of US military bases overseas. After the Cold War was over, he was at a loss to see why the bases still continued to exist in places that made no sense strategically. He has written and spoken out about this and he rightly calls us an empire.

The UN offically recognizes approx 195 independent countries in the world. We have over 700 military bases spread around 140 of them. Johnson goes on to say that to get the same level of defense, we would need maybe 50. Having these bases incites people. Robert Pape, a well known political science and foreign policy expert, and Michael Schuerer, the former head of the CIA's bin Laden unit have both said that our presence and intervention in foreign countries incites people to hate us and attack us. This not only costs us in money, but in lives.

So, we have an empire of military bases at costs us almost $1 trillion a year. Add on top of that the cost of the Iraq war which by some estimates could cost $2.4 trillion. Like I said, Bush's war is a problem, but it's only part of the larger mess we have at hand.

You're not going to get a gold standard anytime soon then. lol I guess people want fiat currency right now so you'll just have to go along with it

When the barriers against sound money a removed, people will switch. Any money use is based on a combination of it's efficiency, convenience and value. At the moment, it is more convenient for people to keep federal reserve notes. Of course, that doesn't stop people buying gold to store value.

For example, if you bought gold a year ago, you paid about $620. If you were to try and buy it today, you would have to pay about $790. That's an huge increase in price of approx 29% in a years time. Two things have happened: The gold has gone up in value and the dollar has sunk in value.

Or look at oil. It's about $95 per barrel right now. Part of this is because of the war, the other part is because our currency has lost it's value.

The trend is very noticable. Look at the dollar index. It's in the mid-70's. It's never been that low. Or compare with other foreign currencies compared to ours. Our currency has never been as weak.

Do you want to use gold only for currency and no paper money?

Both. Gold coins, silver coins as well as paper receipts (backed by gold, silver or some other commodity.) You can also have a debit card gold account as well.

Not really. When did this happen? That has got to be the longest depression ever for an industrialized country. I don't believe it. Even then, it's mostly because the U.S. can take advantage of everyone. The U.S. dollar is the reserve currency of the world and we have lots of natural resources.

Sure it did. You said that Japan benefitted from fiat currency. I pointed out that fiat currency helped bring about the boom as well as the huge bust-- the complete downturn of their economy for 20 years. The US dollar hedgemony had little to do with Japan's economic collapse-- A crappy currency, a well as a Japanese real estate and stock bubble crash (which were helped along by the same monetary inflation you're trying to defend) are why they fell.

 

[nickcoons]

You don't enforce anything. If people want to use it, they will use it. It only needs to be more valuable, that way there's an incentive to use it.

Then why don't you do that right now!?

Some of us already do:
http://www.libertydollar.org

 

[porcupine]

He's saying that when we have fiat currencies people try to reduce the trade deficit?? Has he seen our trade deficit??

Second, there's no reason that people would "exchange" their currency for gold...in a sound money system the gold would BE the currency. There'd be nothing to exchange.

 

[F3d]

....

 

[Guitarzan]

Gather around, boys and girls. I’m going to tell you a story. These are not my own words…but a friend's take on facts he's gathered. There will be a one question quiz at the end of it, so please pay attention. It’s a long story, but I promise you an interesting read…

Part 1. The Evolution of Modern Banking.

In the early days of banking (in the middle ages), gold was kept in strong boxes belonging to goldsmiths. A fee was charged for the safe keeping of your gold and this is how the goldsmiths made their living. If you wanted to buy something with your gold, you could visit the goldsmith and remove some or all of your gold and go make your purchase, payment, or what have you. It didn’t take long for people to realize that gold was heavy, and an inconvenient method of payment. In response, the goldsmiths starting issuing receipts to their customers for the gold kept in the ‘bank’. At any time, a receipt could be brought back to the originating bank and redeemed for the gold it represented, at which time the receipt would be cancelled (destroyed). These receipts eventually started to be traded between consumers, with the end result being a rudimentary form of paper money. Of course, it didn’t take long for the smiths to realize that at any given time most of the gold was still in the strong boxes. In other words, even though people were trading their receipts, they rarely came in to actually redeem the receipts for real gold. As a result, they realized that they could cover loans far in excess of the value of the gold in their strong boxes. They simply wrote more receipts for the gold on hand and offered them as loans. One bar of gold or one sack of gold coins may have had five to ten receipts for it in ‘circulation’ at any given time. Quite simply, the bankers were creating ‘money’ (gold receipts) out of thin air. Better yet, the loans were repaid, with interest, in gold. The bankers were making profits on gold that wasn’t even theirs to start with. From this point, even a child would realize that this power enabled the bankers to control the circulation of ‘money’ by either making more money available for lending or less money available for lending. In this manner they could create shortages of money resulting in foreclosures. Think hard about this point for a second. The banks could now foreclose on property that:
Was originally funded by ‘money’ created out of thin air in the first place.
They could now sell to another customer by creating more money and loaning it to him.
Perhaps worst of all is the fact that the bank penalized the original owner for transactions that never involved real money in the first place. In other words, the Bank simply created the money to loan for the purchase, then turned around and took the property back when the customer couldn’t repay in real cash even though “real cash” wasn’t an issue when the bank had to come up with the money to loan out in the first place.

In the same manner, bankers could buy up entire corporations for fractions of their actual worth. This is exactly what happened later, in the US after 1929. A point that I will return to later.

Modern day banks operate on exactly the same principles. Sure, there are supposedly “rules” and “procedures” in place, but by and large this is the way banks make their money to this day. There are a few notable exceptions to this that I will get to later in this post, but perhaps now you understand why banks will now actually ‘pay’ you to keep your money in their vaults rather than utilizing the original model which had the customer paying the ‘bank’ for the safe keeping of their gold. They ‘pay’ you a meager return (interest) but loan out ten times the amount you deposited at three or four (or even higher) times the interest they are paying you to keep your money in their vault. They are quite simply gambling that you will not come in tomorrow and withdraw all of your money.

Ok…enough of rudimentary banking (that most of you probably knew already anyway), let’s move on…

Part 2. The Bank of England – A Bloodless Transfer of Power.

"Give me control of a nation's money and I care not who makes her laws."
- Meyer Rothschild

As the financial power of the bankers began to rise exponentially, some notable names climbed above the rest. First and foremost was the enigmatic Rothschild family. The Rothschilds realized that there was no reason to limit their business model to common folks. Indeed, entire governments could be brought into the fold. All that was needed was the perfect setup. Being in positions of vast wealth and power, these banker were able to bring these changes about through patience, the proper backing of Royalty and politicians, and the general ignorance of those they sought to catch in their carefully laid trap. Meyer Rothschild, after amassing uncountable sums of money sent his sons to the five most prominent business centers in Europe. Each of them built up small empires, all ultimately owned by the House of Rothschild. So intricate, rich, and powerful was this house that rules were put into Meyer’s will that shaped the way the House would operate for centuries after his death.

For years European bankers had fought for a centralized private bank in England. Many already existed across Europe, but the hold out was (at the time) the most powerful Country on Earth. England. For a long time the House of Stuart was able to thwart the plans of the bankers, but only at a heavy price. Their respective short-lived reigns were plagued with Royal murders, wars, and religious clashes. Finally, after King James II was deposed, a Dutchman by the name of William of Orange took the throne. He signed the charter for the Bank of England and with a stroke of his pen changed the course of history forever. William was closely associated with the Dutch central (private) bank called Wisselbank, an earlier success story of the international banks (such as the Rothschilds). The Bank of England was now a privately owned bank that took over the issuing and creation of money for England. It became known as “The Crown” a title previously conferred on the Royal House of England. With this feather in the caps, the international bankers were able to fund many wars. Not just one side, mind you, but both sides of every war that has happened since this transfer of power. War is the greatest money maker in the history of the world, provided that you are in the right position to capitalize on it, and capitalize they did. This was the brilliance of the Rothschilds. It’s what set them, and several other Houses apart from the other bankers. The ability to put themselves into situations where outcomes didn’t matter because they won either way. That continues into the present day. However, there was still one more big thorn coming, and that would be the American Revolution and the subsequent rise to unparalleled power of a people not under their monetary control.

Part 3. The United States – not an easy fight.

“Whomsoever controls the volume of money in any country is absolute master of all industry and commerce and when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.” – President James Garfield 1881.

A few weeks after he made this very statement publicly, Garfield was assassinated. A tactic you will soon see has been repeated several times in America. In 1791, the first attempt at a US Central bank was made. The bank was created with a renewable Charter. In 1811, under heavy pressure from the public out of the fear of the power the Bank held, the Charter was not renewed by Congress.

Just a few years later, they tried again, and again were successful. A new central, privately held bank was created, again with a renewable Charter. In 1828 Andrew Jackson worked feverishly and in the end successfully lobbied for the non-renewal of the Bank’s charter. Shortly after this, two attempts were made on his life, both of which he survived. After this period, debt free banking reigned supreme. That is, until the next window of opportunity presented itself to the greedy international bankers. The American Civil War. In this war, the bankers saw an opportunity to divide the only powerful western country to defy them. By funding both sides of the war via direct loans and loans to each sides allies, they hoped to reach a stalemate that would result in to smaller, and more importantly, weaker Republics. The joke was on them. When faced with the prospect of borrowing money at 30 percent interest from the international bankers, Lincoln essentially told them to ‘fuck off’. He empowered his government to print its own money. He declared that money ‘legal tender’ (an important designation) and paid his troops, bought his supplies, and paid for foreign aid with it. After restoring the Union and returning coining power to the government (where the Constitution says it must lie, he was thanked with a bullet that killed him.

Finally, we arrive at the end result. In 1913, during the Christmas holiday when most of Congress was away, Woodrow Wilson enacted the Federal Reserve Act. This act created the Fed, as we know it today. It’s a privately held bank charged with creating and controlling the money supply within the United States. Less than a year later came the 16th amendment which created the IRS, the enforcement arm of the new Government. Since that time, the United States has always been in debt. Our taxes, forced on us by this illegal act, do not pay down this debt. They pay the interest on it. When the US government needs cash, the Fed simply creates it, out of thin air, just like the goldsmiths of yesteryear did. In November of the following year (1914) the Fed had set up it’s twelve regional ‘banks’ and the coup was complete. It’s no coincidence that in this same year, WW1 began in Europe. Before long, the Fed, like all of the other Central Banks of thw world, were funding the war on all sides. Three years into the war, England was on the verge of defeat. At risk were billions of pounds lent to the English government. In order to ensure repayment of that money, it was decided that the United States must enter the war. By way of engineering the outlook of an isolationist favoring population via events like the sinking of the Lusitania, America entered the war and the rest, as they say, is history.

When Wall Street crashed in 1929, amazingly enough, all of the players on the international scene were cash heavy. This means that they had almost completely withdrawn from the stock markets of the world prior to the fall. Of course, this enabled them to gobble up corporations left and right at the cost mere pennies on the dollar. Many of these Houses, and the corporations they scooped up would go on to become important players in the run up to WWII. Finally, in 1933 President Roosevelt issued Presidential Order 6102. This order required all Americans to turn in their gold and silver to a local Federal Reserve Bank. Our nation was now bankrupt and completely reliant on loans from the Fed to survive. What did the Fed do with all of this gold? Simple, they sold it at twice it’s market value to foreign investors.

World War II was an eerily similar setup with far reaching goals unknown to most of the players in the war. Namely another step in the eradication of nationalism. Toward this end, the cartels funded Hitler, an unlikely leader, and with those funds he produced a war machine the likes of which the World had never seen. The number of American and British firms and banks that bankrolled Hitler is staggering, and I encourage you to do some research in this area.

Part 4. Custard’s, uh, I mean Kennedy’s last stand.

Since the passage of the Federal Reserve act, many American’s have voiced their objections to it. Not the least of which was Woodrow Wilson himself, the very man who enacted it. He later went on to recant his views on the Fed and wisely foretold of the dark times to come as a result of it’s creation. There have even been speeches on the floor of Congress, that are still available in the Congressional Record.

Perhaps the most noteworthy (and last real challenge to the Fed) opponent was John F. Kennedy. On June 4th, 1963 JFK signed Executive Order 11110. This EO was designed to strip the Fed of it’s power and return the control of money to the government, where it rightfully belongs. As a result, new Silver Certificates called ‘United States Notes’ were issued by the government and backed by hard silver reserves in the possession of the government. In November of that same year, of course, Kennedy was assassinated. Immediately, the printing of United States Notes was discontinued and within about 5 months, most the bills in the hands of the public were withdrawn from circulation. Interestingly enough, EO 11110 was never repealed by a later President. It is still in affect to this day. It’s just not enforced. Why…I can not say. I can only guess that perhaps it’s still on the books because by being there it, in effect, prevents future President’s from enacting something similar by way of redundancy.