..gold standard had closed shop in August 1914... ...Gold Reserve Act of 1934, the United States continued..." That's controversial. U.S. currency during that period was in fact gold backed (click to enlarge) and FDR changed the gold certificates to federal reserve notes.
He also made changed w/ stuff like paying gov't contracts in gold.
imho this Forbes piece is a good example of a bad example of getting to the facts --but hey, this is how people are thinking these days...
Wasn’t Keynes a raving homo pederast who buggered countless victims?
Good morning investors! Last week everyone traded the whole time locked in tight ranges for both stocks and metals --it was either nail-biting time or they were all off on vacation. Today's different. Futures traders say metals are to be +2.30% and stock index contracts see 'em -0.47% ---and we got no major econ stats coming out to confuse things.
See you in the funny papers:
A Summer of Shocks Threatens Market Mayhem - Peter Spence, Telegraph
What It Will Take for S&P to Scale 'Wall' of 2,100 - Mark DeCambre, MW
Inconvenient Truth About Treasury Auctions - Scaggs/Hannon, Bloomberg
End the Fed? Fed Ends Itself w/Bank Strangulation - John Tamny, Forbes
Robots are Taking White Collar Jobs Too - Joelle Renstrom, The Daily Beast
How Facebook Is Changing the Rules of Hollywood - Geoff Yang, Fortune
The American Left's Grand, Green Vision - Steve Moore, Washington Times
Jobless Report Dents 'Economy is Great' Narrative - Louis Woodhill, RCM
Graduating & Looking for a Passion? Be Patient - Angela Duckworth, NYT
Why Americans Love Uber Economy - Jared Meyer, Washington Examiner
For Driverless, Citylike Test Sites Too Unpredictable - Neal Boudette, NYT
Don't Push Globalization into Retreat - Robert Samuelson, Washington Post
Trade Restrictions Would Do Terrible Harm, Kill Jobs - Editorial, USAT
Trump Much Greater Threat Than Brexit - Larry Summers,Washington Post
Didn’t Keynes also design the Soviet Union’s monetary system as well?
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
“This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
From the last two paragraphs of Gold and Economic Freedom by Alan Greenspan. 1966.
see: http://www.constitution.org/mon/greenspan_gold.htm
The Wizard of Oz (ounce) is a political satire about taking America off the gold standard (follow the yellow brick road)
From the Wicked Witch of the East (industrial revolution) who turned normal people into workaholic machines (tinman) and brutalized the little people (munchkins) to the Wicked Witch of the West (the drought) who oppressed the farmers, believing they had no voice in DC (scarecrow)
Even then they knew the power of popular issues (poppies) to put the people to sleep and keep the voters’ attention off the shenanigans in Washington.
The article made me take a little time to watch the following video from Uncle Milt (Milton Friedman) and his comments on the gold standard and the Depression. I get the impression that the wrong lessons were learned as to why the United States took itself off the gold standard. Not surprising Milt’s comments were in about 1979 that the Depression was caused by “too little money, nowadays the problems are from too much money”.
https://www.youtube.com/watch?v=MvBCDS-y8vc
"...Trump, the presumptive GOP presidential nominee, is on record as strongly appreciating the gold standard..."
Should be cause for us to re-visit the Presidential aspirations of JFK that (some believe) prompted his assassination
Not to promote Wicki, but there has always been a lot of Conspiracy Theories surrounding the death of John F Kennedy
Suffice it to be true, Donald Trump needs prayerful protection
Gold has no intrinsic worth. Nor does Wampum, dollars, rubles, pounds, real estate, or Euros. Nothing has value without organized, productive WORK to go along with it. So it has always been, and so it always will be.
Thanks for the bit of educational info.
I thought we were supposed to blame Nixon for taking us off the gold standard. Who to blame?
I am all in favor of an “expanded” gold standard, that could be called a “precious metals” standard.
Gold is lovely stuff, but there just isn’t enough of it, which makes it both a volatile and fragile market. However, if you combine other precious metals in the same monetary regime as gold, you get lots of added value.
While each metal still floats in its own market, their interchangeability with each other stabilizes all of them. For example, say the price of Rhodium suddenly skyrockets. You can take advantage of that jump by selling your Rhodium and buy more stable Palladium. That is, you are much less hesitant to profit-take
If you think about it, you could even include valuable metals like various kinds of stainless kept in good condition after processing.
America also has boucoup copper, silver, and aluminum. And last but not least, having all this metal as currency makes it the equivalent of a strategic reserve.
It is my understanding based on one of Ayn Rand’s books that Britain tried to remain on the gold standard after WW1.
To help the Brits, America adopted a low interest rate policy.
The low interest rates of the 1920’s produced a tremendous boom. The introduction of massive consumer credit availability, cars, radio and electrical appliances also helped make America boom.
Booms are always created by busts. Why?
Prices get too high during booms. People stop buying because they are priced out or realize the prices are unreasonable. Then construction and production workers lose jobs - this make boom prices seem and be even more absurd.
Things get restored by corrections. Stock markets adjust within about twelve months. Real estate markets can take years or even a decade to adjust.
There is also a product durability factor. The new cars and radios bought in the 1920’s continued to function in the 1930’s and through WW2.
[The car manufacturers in the 1970’s thought they found a way around the product durability factor. Honda and Toyota taught the US carmakers a lesson by 1980.]
A new generation after WW2 was ready to buy cars and houses for itself, so the civilian economy recovered.
The way to manage an economy is to pull the interest rate punch bowl away as soon as the party gets into the swing.
A gold standard isn’t really possible in a world with seven billion people.
As a money holder, what I look for is bank interest rates that exceed in-store inflation.
If the local banks pay ~1% or less on CDs and grocery stores raise their prices by about 5% a year, the money stinks.
If there is a real chance an Obama or Hillary can stay in office for eight years, I’ll not trust the money.
Anybody who buys a 10-year 1.79% bond is a fool. At no time in my life did prices rise by less than 1.79% over a ten-year period. And that doesn’t factor in the harmful impact of taxation on the interest paid.