You are juvenile, trite, boring, and not in the least interesting, informative, or entertaining.
Posted on 08/21/2007 11:34:38 AM PDT by BGHater
You are juvenile, trite, boring, and not in the least interesting, informative, or entertaining.
Hey Duke,
The supply of gold is not constant, since we can dig more up or less up, it is just harder to inflate the supply of gold, since you have to work to mine and smelt it, than it is to print up more unbacked currency. And again, Paul is not advocating gold alone- he is advocating “commodities”.
But what would really happen if the supply of gold was constant and the population doubled was that the value of each “real dollar” held would go up. Even if wages were cut in half, they could buy the same amount of stuff. And for the person who saves, why they could buy more with those dollars than they could on the day they earned it without even putting it in an interest bearing account (see why the banks want you to write Paul off as a kook!)
There are TWO kinds of deflation, one is good, and one is bad. The bad kind is when people are too strung out on debt to buy anymore and factories go idle. The good kind is when your currency is strong and so prices go down in a bid to get your more valuable currency.
Now your point that the value of the commodities that I held would go up it absolutely right. Still, most of us just have a small portion of our assets in savings. We are not living off of our investments, but our wages. And the value of those same wages keeps dropping. That is why using your wages to buy commodities does not solve the problem. Ten years ago I bought a gallon of gas with my dollar of wages. If I still have the gas that is good, but the odds are I had a crunch somewhere along the way and had to trade it or use it. That same dollar will get me about six ounces of gas today.
Bottom Line: I can’t turn my depreciating wages into the same amount of commodities, whereas if we fixed the value of a dollar as being equal to (just an example) one gallon of gas the buying power of my wages would be constant over time.
Now you say that you have “about” tripled your wages in the last twenty years. I went to the inflation calculator and I see that if you had tripled it then your buying power increased 65% in real terms over that amount of time. That is, for every $1 you made back then you make $1.65 now in constant dollars (assuming 3x pay).
I would say you are doing well. It is my guess that you are a more valuable employee than you were 20 years ago, and so a more fair comparison would be to see what the wages are of an entry level person at the position you held back then makes. If they are not making almost double what you made 20 years ago, then they have lost buying power. When you go on social security and your income is fixed, you will lose buying power. Dishonest money hurts the most vunerable.
Why should we distribute huge sums of our nations wealth the acquire large amounts of the rest of the world's gold?
I don't know about dumping gold; has gold ever been dumped in the past?
From my understanding, the actual dumping of the gold doesn't have much effect, because no one is likely to dump enough or be able to dump enough to effect the market price very much on their own. However, market prices are often based more on perceptions rather than on actual values.
If one large holder of goals starts dumping gold at below market price, does it make others nervous that it might become a trend? Are others going to dump their gold and buy into something else, at least temporarily?
The same is true about currency trading. China often makes threats that they are going to diversify their holdings of foreign dept, meaning they are going to sell off a large share of our debt. They say the reason is because they fear America's debt is becoming a less secure investment. However, it is mainly a political ploy. A crash in the value of the dollar would hurt China at least as much as it would hurt us. They have kept the value of their currency at a much lower value than the dollar intentionally to stimulate trade. While China is expanding their trading with other nations, they are very, very dependent on the prosperity of the US.
The economies of most of the world are interdependent. They are in competition, but at the same time they need each other to prosper.
The reason we are having paper currency foisted on us is that IT PREVENTS us from hoarding what is ours. We can appear to hoard cash, but by the process of inflation, our wealth is taken without our consent and before we are ready to let it go in exchange for something else.
That's not really true. Has not gold generally appreciated over time more than the rate of inflation? You can hoard things that are good investments. What you can't hoard are Federal Reserve Notes. The slow inflation encourages people not to hoard money. Inflation means that the value of goods goes up compared to the value of the money, so hoarding goods, as long as they aren't goods that lose value doesn't hurt you.
However, there are usually investments that will appreciate in value faster than goods. Gold is a stable investment, but it has a relatively low rate of return, so you are most likely better off in the long run investing part of your money in something other than gold.
No, equilibrium does not infer that it doesn't fluctuate. Equilibrium infers that prices of things find their level on their own and that when the gold fluctuates, others will self-adjust.
I understand what you are saying, but that isn't what equilibrium means. An equilibrium is a steady state, a state of rest.
Markets tend to be self correcting systems, but they are never in a state of equilibrium. The closest they come to equilibrium is in a depression when people fear to both invest and to borrow.
The gold supply is steady. Gold doesn't have huge fluctuations in supply. It's price variations are mainly due to changes in demand. It has a solid history of demand because it has a long history of representing wealth. Since people perceive it as representing wealth, it has such value.
While gold has the aesthetic value of looking pretty, it's real value is in people's belief that it is valuable. It isn't like oil that has value because there is a productive use for it. Our currency is valuable for the same reason. It's value is based on people's faith in the American economy, but also in people belief that it has value.
Gold has the advantage in that it has been perceived as valuable for much, much longer than paper money, but it's value is still mainly in people's minds.
You seem to have an interest in keeping it cheap for those who want gold teeth, jewelry, electrical contacts, etc. Why? Why shouldn't they pay market price for gold?
They pay the market price for gold now. If the government were to choose to make gold a currency, that is the government stepping in and artificially inflating the value of gold. That's not an action of the market.
You seem too ready to condemn that if there is a feeling of stability, that it would have to be illusory.
The value of money is only in what it can buy. When you hoard wealth in the form of a currency, you are really hoarding up a potential to buy things. It does not matter what that currency is, if there is a famine, the amount of food you can buy with that currency is going to go down. If someone finds a way to produce and deliver a product cheaper and in quantity, the price of that item will go down and you will be able to buy more.
The difference with paper money is that the supply of the currency isn't as constant as it is with gold, so as the Federal Reserve slowly increases the money supply by a small amount, the value of the currency decreases slightly compared to what gold would.
However the Fed can also choose to shrink the money supply somewhat, or simply slow the growth of the supply of money. By doing this they can exercise some control over inflation so that it doesn't become excessive and devastate the economy. One of the reasons the Fed was created was because a few huge eastern banks had gained too much control over money lending in the US. The Fed spread the control over money out over more banking establishments across the country and created government oversight.
For one thing, it is illegal and violates principles our nation was founded on. The First Money Act of April 2, 1792 was never repealed.
New laws supersede old laws. It is not illegal for Congress to pass a new law that supersedes an older law. For Congress to not have had the authority to do so, that act would have had to be implemented as a constitutional amendment.
The Constitution tells the states to always see that debts are paid in gold and silver coin and nothing else.
Article I, section 10, first paragraph:
No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.
That means that the states can't coin their own money, or attempt to bypass that by using something else as currency.
These are powers explicitly prohibited by the states. The same paragraph prohibits the states from entering into treaties and alliances, but it obviously does not prohibit the federal government from doing so.
The plain text of the constitution does not prohibit the Federal government from authorizing something other than gold or silver to be used to settle debts.
The use of gold and silver here and the use of the term "coin" money does make it less than perfectly clear if the framers of the constitution meant to place restrictions on what was used for money, or if they were just using terms that coincided with what they were used to in reference to money. However, the explicit restrictions aren't really there.
If the federal government has the authority to regulate the value of the currency, how can it be required to tie it to the value of gold and silver?
Is the reference to coining money a prohibition on paper currency? You can argue that gold certificates really just represented gold, so gold was really the currency, however, that comes in conflict with congresses ability to regulate the value of money again.
Does the prohibition on the States requiring debts be paid in anything but gold and silver mean that nickels and pennies are unconstitutional, or did the federal government have the authority to coin those?
You can argue that there is some ambiguity, but there's no clear prohibition on what congress did and there is a constitutional basis for them having the authority to do what they did.
The courts could have interpreted the constitution differently, and it would have then taken an amendment to switch away from a currency of precious metals, or to even coin pennies and nickels.
However, I doubt you're going to gain much support outside of those who already agree with you using the argument that it was unconstitutional, when you have to ignore some clauses to come to that conclusion.
If you don't like the law, lobby to have it changed, repeal the 1792 act and amend the constitution to allow debts to be paid with the debts of others. Then the current abusers of debt-as-money can be legal; it would be like legalizing prostitution, just a matter of changing the law, people ignore the law and pay for sex anyway.
If congress passed a law legalizing prostitution they would not have to go through all the former laws that included prohibitions on prostitution and explicitly repeal them in order to make it legal. The same goes for the 1792 act.
If a currency is debt-based, then how do you measure debt?
Debts are paid in the currency agreed upon when it was borrowed. If you borrow x number of dollars with a commitment to pay back that many dollars plus interest, the debt gets paid back in dollars. If you don't have dollars, you need to exchange what you have for dollars to pay back the debt, or get the lender to agree on a value in dollars for what you are repaying with.
If I want to know what my worth is, I might add my assets (house, car, boat) to any money owed me, and subtract money I owe. Under a gold system of official money I can signify my wealth in terms of a weight of gold.
How is that different than signifying it with a pile of bills? The gold and the bills are both worth what you can buy with them.
There would only be short term debts. If everyone decided at once not to be a borrower or lender, debt could be immediately removed from the system (by being paid) and still there'd be plenty of money left over in the form of gold and silver coin with no loss of collateral.
You lost me there. Are you saying that if we used gold as currency, no one would borrow more than they could pay back from their liquid assets? I don't understand what point you are trying to make.
But the old saying about the national debt, it's ok, we owe it to each other, what sense does that make?
That's a strange and frighteningly socialist saying. Can't say I've heard that one used, at least not by people who were being serious.
In a debt based system, all the money there is arises because all the debtors (including the government) went into debt.
All the money arises from the credit of the United States which Congress is authorized to borrow againt in Article I, section 8, paragraph 2 of the constitution.
If I want to know my worth now, I'll be adding the currency value of my assets to currency owed me minus currency I owe and arrive at a number. But what does the number mean? .00000034% of the total community debt? 95% or 105% of my rival?
Your assets are worth what you can sell them for. A currency is a convenient way to measure such things, but if you want you can convert that to how much gold you could exchange those assets for, or you can convert it into how many Wendy's Jr. Bacon Cheeseburgers you could buy.
It is like a race which has people running backwards and is won based not on when someone crosses a finish line, but when a horn blows, everyone stops and we measure the distance between people. Those further back lose and those further ahead lose too because the race has been rigged so that the horn was blown before they ever got close to the starting position.
Now you are really losing me. Maybe that is because I don't feel the need to be better off than other people in general. I don't feel that someone else making money makes me poorer. That doesn't mean I don't consider what other people are being paid to be a factor as to what I am worth in the job market. I do feel I should be paid competitively.
However, I also don't feel oppressed because the really high level managers in the corporation for which I work make 10 times what I make.
Maybe I'm headed down the wrong path with these comments, since I don't really understand your point.
If all the debtors decided to be debt free, there'd be no official money left, and because of the mathematics of debt, some interest on the debt would remain and the lenders would require the surrender of collateral to settle the last of the debt.
Why would you possibly want to see all debtors decide to be debt free. Do you know what happens when when lenders stop lending and debtors stop borrowing? An economic depression is what happens. Economic growth is fueled by investment. People with money invest that money in the ideas and hard work of others hoping for a good return on that investment.
Being a lender in most cases doesn't mean they aren't a debtor as well. I have investments in stocks, and in my 401K and Roth IRA funds, but I also have a mortgage on my house, and even a few thousand in a home equity loan.
If I sold my stock and sucked the money out of my retirement funds I could pay off my mortgage and home equity loan.
I don't do it because I have faith that the money is going to make a much larger return where I have it invested than I am paying in interest on my mortgage.
You act like using gold as currency avoids the problem of there not being enough cash to go around if everyone collects their debts at once. It doesn't.
Let me try and example. A large bank lends money to a small bank. That bank lends money to a business. That business in turn invests in another business.
For each borrower to pay back their debt, the need not only the money they borrowed, but the interest on that debt. It is also important to point out that most companies are borrowing money even as they pay back debt. The keep a certain amount of cash on hand to cover immediate expenses, but they are also buying goods on short term credit to sell. They leverage credit to have more goods on hand than if they were to have to put the money down up front.
That's all fine as long as the money is flowing in steadily.
If you hit some bad times you need to borrow a bit more to get past those rough spots. Farmers borrow more to get past a year with a bad crop. Clothing stores borrow more to because they guess wrong about what the next clothing fad would be. It's part of doing business.
The problems is when a lot of companies all start doing bad at once. People have to cover their own debts so they stop depositing as much money in banks. Banks have less to lend, and at the same time the risk of default on the money they have loaned out goes up. They have less money to loan out, and loaning money becomes more risky.
Companies that had been able to buy on credit no longer can do so. They need cash. However, their cash is being eaten up paying back debt and at the same time they can't get enough product in their stores to sell, and since this is happening widespread, even if they can get product, people aren't buying.
The supply of available money shrinks, even though the total amount of currency hasn't. This is because people were spending on credit rather than with cash on hand, and the people they were getting credit from were also borrowing money. There were more promises to pay than actual money flowing through the economy.
The result is that the markets crash, few people have money, and those that do have it are afraid to lend it to anyone because why lend money to someone to make something when people don't have the money to buy it, the risk is too high.
So why don't we just not lend people more money than they can reasonably pay back in a short period of time? Because the economy would stagnate at best.
Most small businesses go years before making a profit. Few businesses could be started if they couldn't go deep in debt at the start.
Most larger businesses have a lot of cash flow, but not unnecessarily cash on hand. You need to invest money before you can expect a return on that investment, and sometimes you are going to be investing more than you are receiving for a period of time.
Growth requires investment. If you want to see what happens without investment, go to Mexico. Mexico is a wealthy country with the wealth concentrated in the hands of a few. Those few don't make loans to just anybody. They make loans to family and friends. They invest in companies that will build their control and power. They could likely make far more money if they would make capital available to the common people, but if the common people gain wealth, their power becomes diluted, and they want power more than wealth, so the economy of Mexico is in such a state that millions flee here illegally for the opportunity to make a decent living.
You seem to be like toddsterpatriot, loves the smooth line in the graph since 1940, hates the wriggly line up until 1940.
Guilty as charged.
Regulating the value means protecting the UNIT. The original dollar was the UNIT and was of the value of the spanish milled dollar, the world reserve currency at that time.
You are talking about coining gold coins. How do you regulate the value of gold coins. The value of a currency is in what it can buy. If one dollar buys you less food now than it did last year, the currency is devalued despite it still being the exact same amount of gold as it was before.
SO how do you regulate the value of a gold coin? Do you recall all the coins and remint them with more or less gold? You can't effectively regulate the value of gold currency. When you use gold as currency you are tying the value of your currency to the value of gold.
What they did not want to do was debase the UNIT.
Well they sure didn't want rapid inflation. However, once you choose to make gold your currency, you give up the ability to regulate its value.
Thank you for the exchange.
Thank you as well.
It's good. If you can check your program and see it, it would be worth a watch.
FYI
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