A better question is whether or not we're better off than we were in 1971 when Nixon dropped the gold standard. I'd say the answer is an unqualified 'no' at this point, especially for the bottom 90%.
Posted on 04/17/2011 5:58:28 PM PDT by johnsmom
Ben Bernanke, testifying before the Senate Committee on Banking yesterday, was asked about a possible return to a gold standard – his disingenuous reply was that there isn’t enough gold in the world to cover the US money supply.
This really has to be one of the most pernicious fallacies that haunts the entire discussion of money*. The truth is there is always enough gold, it is simply a matter of price. Of course the dollar denominated price of an ounce of gold would be many multiples of the current price, but that just serves to demonstrate that gold is still significantly undervalued at the current levels. Creating a gold standard for the Dollar is simply a matter of dividing the total weight of gold that provides the backing, by the money supply to be backed. Each dollar is redeemable for a fixed weight of gold. The price does not matter. What matters is that new dollars cannot be created out of thin air without adding a proportional weight of gold to the reserves.** This is why Bernanke does not want a gold standard and perpetuates simple myths about money.
The Federal Reserve is arguably the most powerful institution in the world as it maintains the sole legal right to counterfeit the world’s reserve currency without limit and without oversight. This allows them to bail out the too big to fail banks, manipulate currencies, support foreign central banks and corporations and allow near endless government spending above and beyond what the government can pay for through direct taxation. A true, enforceable gold standard would put an immediate end to all of that. Responsible people who live within their means and save would not have the efforts of their labor stolen through inflation. These are all positive outcomes. So the problem isn’t that there is too little gold in the world but rather too little discipline and honesty in Washington DC.
You’re overlooking one of it’s prime attractions...
They aren’t making more of it.
Tough to dilute its value. We could use a basket of commodities and equate them to a fixed number of dollars. Any change in that exchange would dilute the value of the associated currency
We shouldn’t mix cause & effect though. Those graphs are predicated on the idea that “gold holds its value not matter what”.
That is true, *except* when a huge country like the US makes a decision about currency backing. As I discussed above, backing artificially raises the price of gold, and likewise, removing the backing drops the price of gold back down.
So those graphs can be interpreted as the drop in gold price, in real terms - how much other of all other commodies an ounce could buy - immediately after 1971, then things getting substantially better.
Then the third part of those graphs is the drop after 2000, which clearly represents the rise in gold price.
In some ways we’re definitely not better off than we were 80 years ago. Now it seems that for many families, both man and wife have to work just to stand still, where previously just the man working was enough. But is that just because of their unneccessary trappings?
I don’t mean to be the anti-goldbug. If I had money to invest a sizeable portion of it would be in metals. But I would like people who have their whole nest egg in gold to step back from gold madness that makes them cheer when the dollar falls and think that $100k gold would be perfectly reasonable.
I don’t think his reply was disingenuous either, I just don’t think he understands how a gold standard works.
You don’t need a large amount of gold for everyone to make it work, the government doesn’t even need to hoard most of the gold. All that needs to happen is for them to open the gold window, and the dollar / gold oz price remains the same as the market determines what the demand for dollars is. As demand for dollars decreases, people go to the gold window to redeem for gold, removing excess dollars, and as demand increases, people redeem dollars for gold, thus keeping the dollar / gold price the same.
I don’t think you know how a gold standard works. It will not happen.
The price of gold soared when it was deemed only a commodity not when it was legal tender.
The entire pile of gold ever mined in history would make an approx 82 foot cube (more than half of that has been mined since about 1950), or 952,763,904 cubic inches, or 7+ humans per cubic inch. That quantity of gold would represent your lifetime earnings. His reply wasn't disingenuous.
Gold can be beaten out to 5millionths of an inch, so 952*106 by 5*106 is 4760*1012 or 33*1012 sq.ft.
The total US coin and paper (which is the only thing that need to be replaced by physical gold) is 800 milliard dollars http://www.pagetutor.com/trillion/calculations.html states that 1000 milliard in Benjimans stacked 7ft high world cover 96768 sq.ft. call it 100,000 to allow for the sides. Even in singles it's only 10 million sq.ft.
The gold available is a million times more than adequate to cover that.
I don’t understand it very well either.
But I’m not the Chairman of the freaking Federal Reserve!
From what I do know, it needs to be explored.
Meant to ping you to post 49 too.
Bernanke AND Paulson were both appointed by Bush.
========================================
REFERENCE TARP was not designed to be a pool of money available for bailout of just anything that didn't move, like a couple of bankrupt unionized companies in the automobile industry. It was very specific in its purpose to provide liquidity to frozen banking and financial system and stave off the run on the banks (attack on the financial system, by proxy) and allow the 'netting' of the [frozen] assets on the books of financial institutions, in the aftermath of fall of Lehman Bros and run on trillions of dollars in the money market funds in the consequent "breaking the buck" by private Reserve Primary Fund managed by Bruce Bent.
The $700B TARP Bailout is now being called, "A MASTERFUL DECEIT." Paulson, et al, may not have pulled a fast one when he testified in favor of the TARP before Congress----but Congress' phony outrage is a puzzlement. If HR 1424 was a 'MASTERFUL DECEIT' then CONGRESS didn't do its job.
TITLE I—TROUBLED ASSETS RELIEF PROGRAM (required 'Congressional Oversight' sections listed)
Sec. 101. Purchases of troubled assets.
Sec. 102. Insurance of troubled assets.
Sec. 103. Considerations.
Sec. 104. Financial Stability Oversight Board.
Sec. 105. Reports.
Sec. 107. Contracting procedures.
Sec. 108. Conflicts of interest.
Sec. 111. Executive compensation and corporate governance.
Sec. 116. Oversight and audits.
Sec. 118. Funding.
Sec. 119. Judicial review and related matters.
Sec. 121. Special Inspector General for the Troubled Asset Relief Program.
Sec. 125. Congressional Oversight Panel.
Sec. 127. Cooperation with the FBI.
Sec. 129. Disclosures on exercise of loan authority.
In HR 1424, there are enough rules, regs and CONGRESSIONAL OVERSIGHT REQUIRED that not one Thin Dime should have been 'misspent.' So if anything crooked did go on Congress should look in a mirror. They dropped the ball -- again. And the same Gangster Government will run our healthcare.
" Golly Ben, bailing Wall Street banksters and greedsters is hard work."
"Keep bailing, Paulson."
Obama’s Deficit Avalanche isn’t Bush’s Fault / scottuystarnes.com / 2/9/2010
SOURCE http://scottystarnes.files.wordpress.com/2010/02/obama-deficit.jpg?w=400&h=308
Washington Times reports: Even more staggering than the mountains of snow in the capital are the deficits the Obama administration plans for the next decade. Huge spending increases will add about $12 trillion to the national debt for budget years 2009 to 2020.
The scariest part is that these deficits are based on unrealistic budgeting assumptions; the real fiscal outlook is much bleaker. In the proposed 2011 budget, the White House defensively attacks the “irresponsibility of past” deficits.
For example, the 2009 budget deficit of $1.4 trillion is blamed on the George W. Bush administration as if President Obama’s $862 billion stimulus package and more than $400 billion supplemental spending bill had nothing to do with it. Mr. Obama’s planned 2010 budget deficit rises to an even higher record level of $1.6 trillion.
By comparison, all of Mr. Bush’s deficits from 2002 to 2008 – the seven years during which his team had the most control over the budget – produced a combined deficit of $2.1 trillion.
Obama has spent more in 2 years than Bush did in 7 years. Obama’s BIOB (Blame it on Bush) defense just won’t work anymore.
"You suck."
Looks like somebody had their paradigm challenged and didn't like it.
“The price of gold soared when it was deemed only a commodity not when it was legal tender”
It was because the currencies it is priced in were inflated.
If it doesn’t happen, we’re doomed to continue these economic boom and bust cycles. This country was founded on classical economics, which is the foundation for modern conservative economics. It mandates a stable currency that does not change in value.
Gold is in every way the ideal money.
” Obama has spent more in 2 years than Bush did in 7 years. Obama’s BIOB (Blame it on Bush) defense just won’t work anymore “
I sincerely HOPE not!
5 millionths of an inch — for those who really think they need gold currency. Thanks for the laugh anyway.
Gold is a commodity, nothing more.
Gasoline would make a nice standard for those who need standards, as would pork bellies — both are consumed and/or have expiration dates, and are in part the product of labor. Instead, both are commodities, and they have no fixed price. That’s not anarchy, it’s free market economics. Too bad so many people are in love with feudal times.
He is a criminal...not an idiot...nothing he does makes sense to law-abiding citizens...
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