Posted on 12/01/2005 10:13:36 AM PST by Travis McGee
Perhaps you can give us the goldbug cure for deflation?
"If recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that the Federal Reserve System would take steps to ease the money supply and so check the movement."
--Harvard Economic Society, Oct. 19, 1929
Today, we all understand how simple this is. That's why Japan solved their problem in a matter of months after 1990, simply by dropping interest rates to the zero limit, and giving away bushels of money to all comers. Presto! Problem solved!
(You mean...it didn't work like that?)
Oh goody... "Last Call!!!" :-)
Don't misunderstand, please... I'm not denying the terminology, nor its accuracy. I'll even use it myself: Most money in the world can be called "fiat money". OK... of course it is.
And yes... there can be disastrous monetary policy that can happen. So? A bigger disaster would be shackling the price of a dollar to some amount of metal.
Now we are riding the tiger, and when the music stops, there is going to be carnage. This is a result of unbridled creation of fiat money through an endless easy credit fiesta. The bill will come due when the foreigners stop ponying up to the bar, and America "goes Argentina."
The day of reckoning for our decades of credit binging is coming due. We will suffer the fate of EVERY NATION IN HISTORY which has climbed ever further out onto the unilmited fiat money branch.
Or perhaps (to ask you for the 20th time) you will now answer the question:
NAME ONE COUNTRY IN HISTORY WHICH HAS PRINTED ENDLESS FIAT MONEY AND GORGED ON DEBT CONSUMPTION, WHICH HAS NOT COLLAPSED IN RUIN AND TEARS.
Just one. Surely, you can name just one.
I can name example after example of unlimited fiat money / easy credit systems collapsing in utter ruin, often leading to violent revolution, dictatorship, starvation etc.
Against that, I would posit the American 19th Century, when we tamed a continent, crisscrossed it with railroads, built a world beating industrial base and so on.
Yes, it was far from perfect, but it never collapsed into ruin, riot, revolution and dictatorship. Just look at American progress across that century!
And it did so all while "shackled to metal."
The economy is rotten, and the choices at this point are BOTH bad.
The "solution" is sound money, and not climbing a mile out onto the flimsy branch of unlimited fiat money and debt/credit consumption.
Of course, that will have to come AFTER we rebuild from the ashes of our now-inevitable crash.
He says he does...the Fed's been saying it for years...and, over the last 10 years, they've successfully lowered the inflation rate as measured by the CPI by making, what the Feds call "hedonic adjustments."
But, of course, the Fed and the federal government have an interest in keeping the CPI low...the Bureau of Labor Statistics website states:
The index affects the income of almost 80 million people as a result of statutory action: 47.8 million Social Security beneficiaries, about 4.1 million military and Federal Civil Service retirees and survivors, and about 22.4 million food stamp recipients....Since 1985, the CPI has been used to adjust the Federal income tax structure to prevent inflation-induced increases in taxes.
Its why the CPI does not account for food costs, energy costs...or the biggest expense for most Americans...the price of homes and the accompanying mortgage payments. So the CPI reports that inflation is historically low...but we've seen housing prices more than double in some parts of the country over the last 5-10 years...but no worry...CPI tracks average rental costs instead...convenient because when money is loose and interest rates are kept low (and housing prices accordingly rise), rental prices stay low (people buy rather than rent)...as does the CPI
The United States has not printed endless fiat money or gorged on debt consumption.
So, there is no goldbug cure for deflation? Or do you just not know it? Or do you know it and just won't tell us? Is it a secret? Do we need to know the secret handshake first?
Exactly. There is no inflation or deflation under a gold or silver standard. LOL!!
It is all over the lot making good points and bad. Certainly it would not convince those who do not have a supersitious love of Gold that the Gold standard should be attempted YET AGAIN. I have a beautiful chunk on my finger worth about $800 but wouldn't want to use it as money.
But by all means buy gold as much as you please, like any other commodity there are reasons to buy it if you like it.
But gold will never again be a monetary instrument.
You are incorrect.
CPI-U includes food and energy costs. It also includes housing costs.
CPI tracks average rental costs instead..
How do you think housing prices should be included in CPI? Spell it out.
I would rather find a painting by Picasso that she bought with a couple of those gold pieces than the gold pieces. Or a baseball card of Honus Wagner that she bought with a copper penny. Are baseball cards a better investment than gold?
That is not an honest question because the answer is already in the question. It is like condemning sports cars because some loons kill themselves by driving too fast.
There has NEVER been a responsible modern government do what you claim they all do. Weimar Germany did it to eliminate the shackles of the reparations.
You show me ONE responsible, advanced country which has just opened the printing presses and let 'er rip. JUST ONE.
You posted this claim on other threads. Perhaps you are unaware that the railroad expansion was financed by BRITISH capital until around the Civil War. By then Greenbacks were part of the money supply plus new deposits of gold had increased gold stocks and the money supply. Without those serendipitous discoveries the economy would have continued the stagnation resulting from Jackson's refusal to recharter the Second Bank of the United States. That foolish action plunged the US into a twenty year depression.
Gold will never again by a monetary instrument. Anymore than sailing ships will carry freight across the seas. Both are obselete.
That can be said of anyone who's trying to interest you in any moneymaking proposition. So, rather than simply questioning their motives, try to determine if the arguments for a higher gold price are valid, e.g. debased currency, artifically suppressed gold prices, etc.
What fraction of the public rents, and what fraction owns? Reflect that ratio, and what the underlying markets do. For example, if 1/3 rents and 2/3 own, and rents get cheaper by 10%, but new houses double, have the "housing" part of the index show 1/3 of .9, plus 2/3 of 2.0, or, 1.633 net increase in average cost.
I think back when gold was $80 per oz., for the same $80 you could buy a very nice suit...and now that gold is about $500 per oz., that same $500 will buy you a very nice suit.
JMO.
If 75% is the current homeownership rate, 75% of the country is not purchasing a house. My house could double in price tomorrow and this would not cost me anything. My mortgage payment is unchanged. If gasoline doubled in price that would impact me because I'll buy gas this week, I won't buy a new house for 10 or 15 years.
I'm not incorrect...core CPI (the most oft cited measure by the Fed and its cheerleaders in the financial media) specifically excludes food and energy prices
As for how to track housing costs...I'm not a statistician but if the purpose of the CPI is to measure the living costs incurred by the average household...why limit the cost of housing criteria to rental prices? All things being equal, as the cost of buying a house goes up...the rents landlords can charge should go down.
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