Posted on 03/15/2011 5:54:12 AM PDT by expat_panama
Acrually, it addressed the issue --- at times sarcastically. Gold-standard lovers do with gold fiat money what socialists do with capitalism. Socialists compare real capitalism, warts and all, with an ideal socialism, where people are supermoral, altruistic, law-abiding, etc. Naturally, capitalism appears to lose.
Gold-bugs do the same: they compare the ideal gold-standard system, managed by an omniscient, apolitical, benevolent government (do such exist?), against real fiat-money system managed by real people, with their limited information and speed of processing. Naturally, fiat money loses.
Both arguments are, of course, logical fallacies.
The article actually gave two examples (e.g., Ricardo) where proponents of gold standard dismiss its failures as perversions. The point is gold standard is as susceptible to perversions as fiat money.
2. failed to justify quantitatively its conclusions that the difficulties of the gold standard are as bad as those of the Keynesian fiat money system he appears to like.
You are arguing ad stramineus homo: it was neither an objective nor a duty of the article to demonstrate which system is better quantitatively. One cannot fail in something that he never attempted to do.
It is those that propose a change --- return to gold standard --- who have the duty to justify their proposal; it is they who must demonstrate that the advantages of their proposed system justify the cost of the transition.
LOL!
(Bookmarked for later reading)
We are on a standard: mundane labor. Minimum wage laws mean that $1 = 8.28 minutes of floor sweeping, burger flipping or other work anyone can do.
Stick that into those “X standard” theories.
I am not a “gold-bug” - a term that attempts to substitute ridicule for thought. And, I am not an advocate of a gold standard managed by any government, omnicient, benevolent, or otherwise.
As for your second comment, perhaps you didn’t read the first paragraph? In the spirit of being of service, it is copied below in full.
If you read that paragraph, the first thing you will notice is that the first sentence sets up a strawman. I realize that your point, which I am coming to, was different, but that sentence is a tip-off regarding the quality of the article as a whole.
Here is your point: “...it was neither an objective nor a duty of the article to demonstrate which system is better quantitatively. One cannot fail in something that he never attempted to do.”
I now direct your attention to the following, which appears in the penultimate sentence of the first paragraph: “...800 years of Western monetary history shows that bullion-based systems offer no benefits over paper-based systems.”
This is obviously a quantitative claim. If he is going to assert that there are “no benefits” he does indeed have an obligation to show by what measure that claim is supported.
You also claim that the status quo has a privileged position when you assert that the burden of proof is on those who prefer a gold standard. There is no reason one has to accept this. In fact, it is no better than the global warming crowd’s attempt to “win” arguments by asserting the “precautionary principle.”
“The gold standard is a Holy Grail of otherworldly purity for which monetary knights perpetually quest. After all the stomach-churning, post-meltdown improvisations by central banks and governments worldwide—the Troubled Asset Relief Program, quantitative easing, and mortal entanglements with insolvent mega-debtors—it’s natural to long for nobler days. Thus World Bank President Robert Zoellick argues for returning to gold as a monetary reference point. And in the credit market, guru James Grant yearns again to pull the Excalibur of the classical gold standard from the stone. While the current run-up in gold is a signal (whether of inflation expectations, credit problems, or lemming-like investor behavior remains to be determined), 800 years of Western monetary history shows that bullion-based systems offer no benefits over paper-based systems. Like all technocratic fixes, their rigidity can make things worse.”
Thanks for being one of the few that truly understands banking, finance, and economics.
The point implementing a real gold standard one that isn’t manipulated would create a floor.
No one is advocating to adopt anything Roosevelt did or any other system that rewards cronies and allows for direct manipulation of our currency.
It brings to the top the exact problem. It really wasn’t a standard - just another hijacked term by the progressives to further their own agenda. It is not different than what the Fed does.
We need a tangible solid base for our currency.
You've just proved that agere_contra doesn't believe it either. Oh, sure he convinced enough to say he believes it, but no way in hell is he about to even consider say, dollar puts. SAJ, on the other hand, has real clear ideas about inflation --I may disagree with him on his 'how-much-and-when', but when SAJ speaks he's got the stones to back up big talk with big bucks.
Unless of course agere's already maxed out the contracts in which case I'm the one talking nonsense...
Thanks, but my take is there're lots of sane freepers like you and me, I'd even call us a majority. We're just not the noisy and obnoxious ones.
Sorry I didn’t reply earlier: I was busy writing some code.
The easiest and safest way to short a fiat currency is IMO to buy Gold.
I say safest, because if you buy puts (or buy a short dollar index or buy TIPS) you ... end up being paid in dollars, or at least in a fiat currency. That doesn’t seem like a secure trade.
If the onset of D-month is as sudden as I believe it will be, I really don’t want to out-clever myself and end up chasing the gold price. I would rather be in gold/silver and comfortably short every fiat-currency in the universe.
Assuming salaries even slightly increase as a result of a devalued dollar, it’ll help MY personal wealth-building a lot as paying off debt will be easier.
Not that I have that much debt really, but still...
I would indeed buy physical Gold and Silver (as well as making the usual domestic precautions).
Also consider shares in world-leaders that are likely to do well in suddenly impoverished societies: e.g. WalMart.
Also: miners of Gold and Silver, as long as they are based outside of the US. Canadian miners for choice.
Pay off asap any kind of debt or standing cost that goes up with inflation. But if you have any kind of fixed debt then that is going to rapidly diminish, as I think someone else on this thread has already said.
Hope this is helpful. As I say, I suspect the hit will come between end Jun and end Dec. Others say we have about 18 months. But in this situation too early is obviously better than too late.
Say you've got an idea for a new car company. You need to borrow $1 billion for your factory. Every year you have to cut your prices by 3%. Can you get your employees to agree to a 3% cut in salary every year? Will it be easier or harder for your employees to pay their mortgage when their income drops 3% each year? Will it be easier or harder for you to pay back the factory loan with your revenue per car dropping 3% each year?
Could people delay their new car purchase because they know it will be 3% cheaper next year? 6% cheaper the year after that?
lol! --my work just picked up too; I just hate it when doing something useful gets in the way of my important freeping ;-)
You and I may have been cross-communicating here. The way you posted a number and date with economics means something very different to me in my line of work than it would for say, 'normal' people. Hence my hyperventilating.
We just talk different, and that's fine. My way is I'd just say I'm expecting inflation at < 2% continuing as it has for another year or so, given the fact nothing of any import's been happening with the economy lately.
That's just it, gold is excessively volatile and back when we had the gold standard we'd go from double digit inflation one year to double digit deflation the next --totally random with no way of predicting.
Not only does the record of past performance speak for itself, gold's current price swings are just as bad as ever. Right now gold can be bartered for twice as much crude oil as it could two years ago. That's deflation at a forty percent annual rate for two years.
And then you have Fed apologists who then go on to compare Gold-standard lovers to Socialists and in doing so, of course, perpetuate the very same logical fallacy against which they rail.
It is has become a common misconception to think that any two things that are encountered in the same sentence are being compared. However, unfortunate and common this misconception is, it is still a mistake.
Reread the post. It did not NOT offer any comparisons between gold-bugs and socialists (and could not: I am not interested in the topic). It compared instead two arguments that are of the same form. These arguments could'be been about Mars and Venus.
Hysteria in various forms appears to have displaced logic. Having become irate with my post, you did not even bother to see first what made you irate. So much for your detection of fallacies.
Yes, of course. We and everybody else on earth needs that. And everyone that lived before us since Lydians started to use coins.
That is not what we were discussing, however. The question is whether gold standard is free from the ills of fiat money. It is not, as history amply demonstrates. Most proponents of gold standard are Utopians who simply disregard history and logic in order to conclude that gold standard is superior.
Perhaps in some but certainly not in me. I have not seen ridicule in the use of this word, although it is true that gold lovers are ridiculed sometimes. In any event, I was not ridiculing anybody: to me a gold bug is a person that has irrational attachment to gold. Since you are not one of them, we don't have to go further.
the first sentence sets up a straw man
I respectfully disagree. As far as I know, there is quantitative measure of the manipulability of a financial system by a government, and there is no quantitative measure of its inflexibility. A person demonstrating such qualities can resort only to a factual demonstration of events in history wherein (i) gold standard was manipulated/assigned arbitrarily and (ii) exhibited considerable inflexibility and inability to accommodate changing economic conditions. That the article has done admirably, in my opinion: the author gave great many details and pointed to great many specific event in economic history. To me, that is the only sense, if any, which which the word "quantitative" could be used at all.
Having analyzed those events, the author makes a very modest claim: gold standard is no better. There is no straw-man argument as far as I can see.
the status quo has a privileged position when you assert that the burden of proof is on those who prefer a gold standard. There is no reason one has to accept this.
Actually, there is a reason. This is just a special case of benefit-cost analysis. If a current action A is at least as beneficial as a proposed alternative B, then status quo A is strictly better than B (because switching is always costly). Stated differently: because switching is always costly and net benefit has to be at least zero, the benefit of B must be strictly greater than the benefit of A. The burden of proof is always on the one putting forth a claim.
Yes, the deflation of the thirties was bad.
But my understanding of that period was that the FED made it worse and you add in FDR who piled on bad policy and socialism into the mix, and voila, years long with no real recovery.
The problem we have today is that the dollar is only strong because of the reserve currency status. It seems though that that status is declining, which is bound to happen. When we lose that, this country, with exported jobs, uneducated idiots thanks to the teachers unions, a population that is heavy in debt (which was engineered by the FED since Greenspan) and it will be a very tough road.
But even with the deflation that was in the thirties, the deflation kept cash valuable. A nickel was a nickel. Today, a nickel is worth MORE than a nickel, in base metals.
People want value again. A piece of paper that is losing world wide influence (just look at Ozombie and the middle east) why wouldn’t a stronger currency be better?
We are already at or near Depression level unemployment as it is.
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