Posted on 12/06/2011 10:37:39 AM PST by appeal2
The United States has run up a cumulative $7.5 trillion Trade Deficit. The last time the country ran a trade surplus was in 1976. Nixon closed the Gold Window in 1971. Do you believe it's just a coincidence that the rise of an un-backed Fiat Dollar and the rise of the Trade Deficit haapened so close in time? The Country has been in a pronounced economic decline since the 1970's and when the Gold Window was closed. Since then the money supply has increased many times and so has inflation.
While living standards have declined, so has domestic energy production. This has exacerbated the Trade Deficit and has cost consumers countless billions. The ability to print up currency and dump it on a willing world, in exchange for their production, has enabled the Government to present the illusion that things are alright. But look at the dying industrial cities in America. Detroit, once a paragon of industrial success, has fallen upon hard times. The average Detroit home is going for $6,000, only 25 percent of students graduate from high school and unemployment among men has reached nearly half of the work force.
Such trade imbalances were much less likely to occur under a Gold Standard. Countries were not likely to allow complete depletion of their gold reserves. Fiat currencies can keep being produced regardless how bad the imbalance becomes. Then it is up to the trading partners to decide whether or not to accept the currency. At some point enough will be enough and it will be game over.
Depressions, the “bust” part of the natural boom-bust cycle, are like a bout of the flu. They are hard, but they quickly pass.
Monetary inflation is a infection like termites to wood, and like cancer to the body. Both analogies serve to show its problems, and the termite one shows how the damage can continue hidden, with few observed ill effects until the whole house is in immediate danger of collapse. Natural inflation (booms) self-correct, like the natural depressions (busts) do.
To work long-term fiat money requires men at a level of honor men simply do not have. Fiat money enables and serves as a growth medium for cronyism, corruption and in end stages, hyper concentration of paper wealth. Paper wealth is distinguished from tangible, real wealth, paper forms of wealth requires compliance to the terms set out by a judge, a master or a strong man to enforce when it is disputed. Corruption and cronyism ALWAYS cause disputes, and they are intrinsically irredeemable disputes.
For a time people go along as by force of habit and a sense of peacefulness with a system that has become corrupted. But the irresolved disputes build up; they are injustices.
Eventually rule by force of arms and violence is needed to enforce the corrupted contracts, and to protect the massively concentrated ill-gotten stores of wealth.
THAT IS FIAT MONEY.
As the Founders knew, and expressed in a few key clauses of the Constitution, fiat money is a ruination.
No it's your response that is "self-delusional". The FED is doing exactly what the FED should be doing.
By focusing on the Federal Reserve, you're ignoring the real problem, which is Congress's lack of Fiscal Discipline.
Both are problems! The FED is easier to solve. Shutter it, return to coinage of standard weight, and notes payable in same, as the Founder’s established in the Constitution.
Only a rare and temporary Congress will have the fiscal discipline pure fiat money requires. Reasonable men do not rely on such rarity for the regular operation of government. To do so is insane, immature, delusional.
Congress can borrow and spend beyond their means on a gold standard just like with fiat money. And a fiscally irresponsible congress can and will promise that your children will repay their debts in gold.
I've already shown a graph that Congress reached even higher levels of debt to GNP while on the gold standard than current levels of debt.
Sorry, DannyTN, simply not true.
The Talmud says: “Bad coins acquire good coins, but good coins do not acquire bad coins.”
Using the worst of all bad coins — fiat money — the corrupt eventually acquire all of “good coin”, that is hard assets.
If you want a long term store of value and don't want to invest in industry or earn interest through banking, then by buy gold with your dollars.
But if you want a currency that minimizes year to year fluctuations which is good for business, is mildly inflationary so that it stimulates investment, is not subject to foriegn influences, then stick with the dollar.
Gold is a pain in the ass to use. There's not enough gold to go around. It's scarity means that it's subject to manipulation by the likes of Soros. China is the major gold producer today, they would have more say over our monetary policy than we would. There is not an ounce of gold for every person alive today. I hope you like really really small coins. It's ridiculous to try to manage a modern economy on the gold standard. You might as well go back to barter than to use gold.
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