Trump Meeting with John Allison: Wants to abolish Federal Reserve and return to Gold Standard

[Zippyjuan]

Why should a Pepsi cost the same in 1980 as in 2040? Is there no change in the costs of producing and distributing them along with no change in the supply and demand of Pepsi? Maybe instead of fixing money the government should fix prices so they can't change?

Is there no change in prices on a gold standard? No price inflation or deflation? Is there a monetary system which avoids price changes- keeps it same value all of the time?

 

[Dr.3D]

He would say no because the dollar loses value. He would say a can of Pepsi should be the same price in 2016 as it was in 1980 and should be the same in 2040.

Unless the supply of Pepsi went down and it became more valuable due to scarcity.

 

[CaptUSA]

Isn't it a unit of measure now? A measure of relative values of objects and activities? A unit of exchange? You exchange your labor for it and then use it to exchange for goods and services.

Yes. A unit of measure. Just like this guy:

 

[Origanalist]

Here ya go.

http://www.businessinsider.com/trum...ank-ceo-abolish-the-fed-gold-standard-2016-11

Thanks. I tweeted it but the phone didnt seem to let me comment. I'll do more with it when I get home.

 

[Zippyjuan]

Does gold always get you the same things at the same prices?

http://www.forbes.com/sites/louiswo...ood-investment-the-economy-sags/#70c4aebe2886

In 1967, 57.14 ounces of gold would buy you a new VW Beetle with no air conditioning, no power anything, and 53 horsepower. On September 6, 2011, the same amount of gold would have allowed you to purchase a new 2012 Mercedes S550 with 429 horsepower and every luxury feature known to man.

In 1967, an ounce of gold was worth $35.00, which would buy 78 Big Macs. On September 6, 2011, McDonalds would have been happy to sell you 466 Big Macs for the $1,895.00 that you could have obtained for the same one ounce of gold. Yesterday (June 26), an ounce of gold would still have gotten you 301 Big Macs.

(article from 2013)

 

[Krugminator2]

Why should a Pepsi cost the same in 1980 as in 2040? Is there no change in the costs of producing and distributing them along with no change in the supply and demand of Pepsi? Maybe instead of fixing money the government should fix prices so they can't change?

I understood that when I made the post. I left that qualifier out because I thought it was assumed.

What (I think) he is saying is every other variable like production costs and supply and demand for a product can float to determine the price but the decreased value of the dollar because of inflation should not factor into the price.

Unless the supply of Pepsi went down and it became more valuable due to scarcity.

I used Pepsi because market forces aren't going to dramatically affect the price of Pepsi.

A 12 oz can was a nickel at one point. The reason the price is over a dollar now isn't because of a supply shock or a dramatic increase in demand.

 

[presence]

Does gold always get you the same things at the same prices?

no.

...but metal commodity pricing does tend to get you MORE as time progresses whereas inflationary fiat pricing tends to get you less.

In 1967, 57.14 ounces of gold would buy you a new VW Beetle with no air conditioning, no power anything, and 53 horsepower. On September 6, 2011, the same amount of gold would have allowed you to purchase a new 2012 Mercedes S550 with 429 horsepower and every luxury feature known to man.

in 1967 57.14 ounces of $35.50/oz gold was worth $2028.47
today that $2028.47 would get you a rust bucket beater or an ounce and change of gold

 

[Cleaner44]

This is what I was talking about when I said that there might only be a 5% chance of Trump doing good, but that is 5% more than Hillary or Jeb!

Just the fact that this is being discussed is a win.

At least now we have people thinking outside of the box.

 

[specsaregood]

I used Pepsi because market forces aren't going to dramatically affect the price of Pepsi.

A 12 oz can was a nickel at one point. The reason the price is over a dollar now isn't because of a supply shock or a dramatic increase in demand.

Not to go too far off topic, but in 1999 the CEO of Coca Cola proposed the idea of a soda machine that raised the prices of soda based on the temperature outside.

Also, in 1953 cocacola lobbied the US treasury to mint a 7.5cent coin as they needed to raise the price from a nickel due to inflation, but felt a dime was too much.

 

[William R]

He'd be an excellent choice for Treasury.

 

[helmuth_hubener]

Not to go too far off topic, but in 1999 the CEO of Coca Cola proposed the idea of a soda machine that raised the prices of soda based on the temperature outside.

Also, in 1953 cocacola lobbied the US treasury to mint a 7.5cent coin as they needed to raise the price from a nickel due to inflation, but felt a dime was too much.

That is fascinating! Sometimes the off-topic posts are the most interesting.

Wow, 7-1/2 cents -- just think of the long-term ramifications. You could price things in half cents. How annoying! Or would it be convenient? With sound money, it probably actually would be convenient.

 

[Origanalist]

Zippy sounds like he's been triggered pretty badly.

 

[Dr.3D]

Zippy sounds like he's been triggered pretty badly.

Maybe he needs a 'safe space.'

 

[Origanalist]

Maybe he needs a 'safe space.'

He's going to need medication if it ever happens.

 

[helmuth_hubener]

He's going to need medication if it ever happens.

Probably, but the beneficent gradual deflation of sound, stable money will make Juan better and better able to afford those medications. The rising tide of monetary honesty will lift all ships!

Unless he gets deported.

 

[oyarde]

Oh no. Not that.

Please, please, not that.

I think I could work with 51K .

 

[oyarde]

That is fascinating! Sometimes the off-topic posts are the most interesting.

Wow, 7-1/2 cents -- just think of the long-term ramifications. You could price things in half cents. How annoying! Or would it be convenient? With sound money, it probably actually would be convenient.

From 1793 - 1857 the US made Half Cents , 1857 is also when the One Cent was reduced in size to what people are accustomed to now .Two Cents pc.'s made from 1964 to 1872 , Three Cent pc.'s 1851 to 1881 ( after 1881 the mintages were so low until it was done away with in 1890 that I really cannot count them ). A postage stamp was three cents . The 3 Cent was originally in silver and switched to nickel like the Five Cent pc. , that was silver until 1866.

 

[oyarde]

The argument that I heard Steve Forbes make on CNBC was that the dollar should treated as a unit of measurement like yard or an ounce. He didn't really make a good case why that is so crucial.

A dollar is supposed to be a unit of measurement , 412 1/2 grains of 90 percent silver or 1.672 grams of 90 percent gold .Something close to that , that is from memory.

 

[devil21]

US Treasury has 261,498,926 troy ounces as reserves. At $1200 (today's rough spot price) that is would be worth about $315 billion dollars. https://www.fiscal.treasury.gov/fsreports/rpt/goldRpt/current_report.htm

Is that enough to back the US dollar with gold? The economy is over $14 trillion a year. As measured by M2 (the most commonly used money supply measure), the supply of money is $13.2 trillion. https://fred.stlouisfed.org/series/M2 or 43 times the value of our gold reserves.

It's a huge assumption that there is any gold other than in private hands, however the dollar could be "gold backed". Just revalue gold to account for outstanding dollars. Based on your calculations, gold would be revalued upward 43x its current spot price. $51,000 per ounce would effectively establish a gold backing. Sure makes current gold prices look like a steal, no? But in reality such a revaluation would effectively declare the FRN to be trash. Hmmm, so how to get around that? Get rid of the FRN maybe and phase in a national currency? Yes that will work.

(fwiw, bankers decided on this gold backing scenario a couple years ago...it's all scripted)

 

[jbauer]

Isn't it a unit of measure now? A measure of relative values of objects and activities? A unit of exchange? You exchange your labor for it and then use it to exchange for goods and services.

The only issue I have with the dollar is that the Fed can create new ones devaluing the ones in my pocket without giving me the realized inflation protection due on the notes in my pocket. Now truth be told if you went back to a gold standard we'd blow the economy up because you'd see that your FRN is nearly worthless. No more 90" TVs on black friday for $1k. No new cars for $25k. No new houses for $250k. The economy would come to an absolute standstill overnight which is why its not going to happen until we have a currency crisis.

Contrary to a yard or ounce you cannot change the length of a yard or the weight of an ounce.