Is it time to return to the gold standard?

[stj]

Holiday distractions and all that. Plus, you have to wonder about the futility of discussing anything with the kind of people who pretend the US kept using greenbacks after the Civil War and that this caused the farmers in the Nineties to go broke. Plainly, these are the kind of people who really do want to nail mankind to a cross of gold.

STJ, you can't pick and choose which countries have failed by simply removing those countries have been at war in the past, was once part of a socialist regime or falls prey to a douchbag like Mugabe.

You can not assume that because a handful of countries that used a fiat currency and later suffered a hyperinflation, therefore fiat currency causes hyperinflation. That's a logical fallacy called "post hoc, ergo propter hoc." Not testing seemingly favorable evidence is a flaw in thinking called "confirmation bias." So, yes, I most certainly can say the primary cause of hyperinflation is losing a war. The number of countries on that list that had a hyperinflation subsequent to defeat at least constitutes a prima facie case...for my position. By your logic, the US government's greenbacks would have led to hyperinflation. Facts refute you.

Also, insinuating that any bout of hyperinflation consitutes "failure," is sneaking in mental images of Weimar Germany or post-war Hungary or today's Zimbabwe. The US inflationary spiral of the Seventies almost qualified as a hyperinflation. Hyperinflation in most cases is not as damaging as deflation (aka depression.) A scare word is not a substitute for rational analysis of economic policies.

Lastly, I didn't know you were a plantation owner, who would have a rational reason for hating Robert Mugabe. Otherwise, it would just be blind racism. I can't say much for Mugabe, but he's not scum like Morgan Tsvangirai.

You state this is not a prima facie case for fiat hyperflation. I counter argue, please name me one fiat currency that has lasted more than 50 years off a gold standard, be that a full or partial gold standard.

Fifty years is arbitrary. Many currencies have lasted for decades off a gold standard. Gold standard currencies fluctuate dramatically over long periods of time too. The Price Revolution of the Sixteenth Century is a well known example to those who study real history, instead of the propaganda versions. Actually most currencies continue after bouts of hyperinflation (the German mark is still with us!) If you don't get metaphysical and deny they are the same currencies, I won't get into the theology of grieving over the souls of dead currencies.

Your proposition can be formally stated: If a nation uses a fiat currency, it will suffer a hyperinflation. The contrapositive, if a country doesn't suffer a hyperinflation, it isn't using a fiat currency is contradicted by decades of experience of the vast majority of nations.

I will remind you that one nation, Japan, uses a fiat currency and has suffered a deflation for over a decade, to its great detriment. Properly speaking, the entire global economy, taken as a whole, hasn't been using a gold standard but it's suffering a deflationary crisis as well. Whole sectors, such as minerals like copper or agricultural products like sugar have had prolonged price drops. Gold standard monetarism not only doesn't have sensible answers to economic questions, it is so benighted it doesn't even have sensible questions.

It is astonishing to have to remind anyone that Adam Smith established very clearly that The Wealth of Nations is their economies, not hoards of gold. I personally have issues with the Scottish Enlightenment but everyone should despise the lovers of darkness.

You quote that countries that win wars don't hyperinflate. Well Israel has won all of its wars, so what is their problem? Why have they hyperinflated?

Israe hasn't won all its wars. It's even a question whether it constitutes an independent economy. In any event, the war in Lebanon failed in its main aims, even if a stretch of territory was held for some years. There are counterexamples to the war as main cause of hyperinflation explanation, but Israel isn't one of them.

The key question is who survived and prospered after these hyperinflations? Those who held assets outside the fiat system.

A hyperinflation is not the only way that vested interests can profit from a national economic catastrophe. Bubbles, whether in tulips or housing derivatives or the Albanian lottery, serve exactly the same purpose. A gold standard has exactly nothing to do with such criminality. Focusing on soft money as the great economic problem ignores the real problems troubling world economy. That's because it's a deliberate smoke screen spread by lying academics, especially the political hacks in places like the Cato Institute. It's always extraordinary that conservatives who don't believe people are born with a right to live are always so willing to be the kind of people who couldn't earn the right to live. If academic integrity were required, Cato Institute would be an abattoir!

As to the belief that the world will rise up and stop using the dollar, the Euro is right now falling to pieces because of deflationary crises exacerbated by the loony policy of hard money. Harder money, gold, can only be even more ruinous. As to China? The recent events in Korea are not aimed at that titanic threat to humanity, the super-powerful Kim Il-jong! They are military threats to China.

 

[Darth Picardous]

Holiday distractions and all that. Plus, you have to wonder about the futility of discussing anything with the kind of people who pretend the US kept using greenbacks after the Civil War and that this caused the farmers in the Nineties to go broke. Plainly, these are the kind of people who really do want to nail mankind to a cross of gold.

Huh? Green backs were backed by a gold standard from the 1870's onward. The farmers went broke in the 90's as the US Government tried to maintain an artificial ratio of silver to gold. Unfortunately the farmers liked silver.

You can not assume that because a handful of countries that used a fiat currency and later suffered a hyperinflation, therefore fiat currency causes hyperinflation. That's a logical fallacy called "post hoc, ergo propter hoc." Not testing seemingly favorable evidence is a flaw in thinking called "confirmation bias." So, yes, I most certainly can say the primary cause of hyperinflation is losing a war. The number of countries on that list that had a hyperinflation subsequent to defeat at least constitutes a prima facie case...for my position. By your logic, the US government's greenbacks would have led to hyperinflation. Facts refute you.

So then we can rephrase this by saying that a war in conjunction with a fiat system (i.e easy money) leads to hyperinflation. No suprise, during the Am Civil War the number of greenbacks were increased by a factor of three in only four years. As stated above, the greenbacks were converted to gold backing after the war.

i am also confident that the users of this website would not appreciate me listing all 400+ known cases of fiat hyperinflation to have occurred throughout history that would provide a better spread of evidence.

Also, insinuating that any bout of hyperinflation consitutes "failure," is sneaking in mental images of Weimar Germany or post-war Hungary or today's Zimbabwe. The US inflationary spiral of the Seventies almost qualified as a hyperinflation. Hyperinflation in most cases is not as damaging as deflation (aka depression.) A scare word is not a substitute for rational analysis of economic policies.

So the images of cars waiting for petrol in the 1970's that were the first indicators of the inflating US dollar after dropping the gold standard, i.e more worthless US dollar, and hence OPEC's rebellion isn't good enough scare for you?

Lastly, I didn't know you were a plantation owner, who would have a rational reason for hating Robert Mugabe. Otherwise, it would just be blind racism. I can't say much for Mugabe, but he's not scum like Morgan Tsvangirai.

Nope , just an open minded person who has met a few white Zimbabweans who have emigrated.

I will remind you that one nation, Japan, uses a fiat currency and has suffered a deflation for over a decade, to its great detriment. Properly speaking, the entire global economy, taken as a whole, hasn't been using a gold standard but it's suffering a deflationary crisis as well. Whole sectors, such as minerals like copper or agricultural products like sugar have had prolonged price drops. Gold standard monetarism not only doesn't have sensible answers to economic questions, it is so benighted it doesn't even have sensible questions.

Have you seen the price for metals and agricultural products lately?

It is astonishing to have to remind anyone that Adam Smith established very clearly that The Wealth of Nations is their economies, not hoards of gold. I personally have issues with the Scottish Enlightenment but everyone should despise the lovers of darkness.

Well if you think Gold Standard advocates are lovers of darkness then I think you should burn and digitally erase all the works of Mises, Rothbard, Fekete and hundreds of other economists.

As to the belief that the world will rise up and stop using the dollar, the Euro is right now falling to pieces because of deflationary crises exacerbated by the loony policy of hard money. Harder money, gold, can only be even more ruinous. As to China? The recent events in Korea are not aimed at that titanic threat to humanity, the super-powerful Kim Il-jong! They are military threats to China.

Yes, but once the Euro dumps the Greek, Irish and other under performers, the US dollar had better watch-out. But then again the Euro started at parity and is higher, so who is really the stronger currency?

 

[stj]

Huh? Green backs were backed by a gold standard from the 1870's onward. The farmers went broke in the 90's as the US Government tried to maintain an artificial ratio of silver to gold. Unfortunately the farmers liked silver.

From your friend and ally in this discusson:

The creation of "greenbacks" took the power away from the states and privately owned banks to distribute money which was backed by gold. The federal government can now print money when it wants. Fast foward to the 1890s, finance industrial capitalism has taken over. An agrarian society cannot survive and the South is forced to industrialize slowley. What used to be used as capital, such as a farmers crop cannot be used because banks won't give out that type of credit. A credit based economy begins to form. Governments and companies no longer have to save and spend or tax and spend, but instead borrow and spend.

Spare us the fake indignation.

So the images of cars waiting for petrol in the 1970's that were the first indicators of the inflating US dollar after dropping the gold standard, i.e more worthless US dollar, and hence OPEC's rebellion isn't good enough scare for you?

The US defeat in Vietnam, along with the massive budget deficits paying for it, played a role in Nixon dropping the gold standard in the first place. The end of the gold standard was an effect, not a cause. Most of all, the OPEC "rebellion" was intimately tied into the Yom Kippur war. Nothing you gold nuts say can be taken as accurate.

Nope , just an open minded person who has met a few white Zimbabweans who have emigrated.

Why am I not surprised to read such vicious twaddle?

 

[Darth Picardous]

The US defeat in Vietnam, along with the massive budget deficits paying for it, played a role in Nixon dropping the gold standard in the first place. The end of the gold standard was an effect, not a cause.

So remind me again. If gold is such a useless asset and the budget deficiets during the Vietnam War were reducing the gold holding of the US, why was the dollar to gold convertability window closed? What purpose would there to be to protect and retain your gold holdings if the US fiat dollar is so strong, unless there is/was a plan to re-introduce a gold standard at some point in the future?

Most of all, the OPEC "rebellion" was intimately tied into the Yom Kippur war. Nothing you gold nuts say can be taken as accurate.

Oh thats right I remember after the Yom Kippur War the price of oil fell to its pre-war value. Oh hang on, it didn't. Have you ever heard the expression "never waste a good crisis"? OPEC had been complaining since the close of the dollar to gold convertabillity in Aug 71 that they were now receiving useless fiat paper for their oil. The Yom Kippur War gave OPEC the excuse required to raise the price of oil to meet their costs to compensate the inflated dollar. Nothing you paper nuts say can be taken as accurate.

Why am I not surprised to read such vicious twaddle?

Attack the argument not the man.

 

[Nowhere Man]

The US defeat in Vietnam, along with the massive budget deficits paying for it, played a role in Nixon dropping the gold standard in the first place. The end of the gold standard was an effect, not a cause.

So remind me again. If gold is such a useless asset and the budget deficiets during the Vietnam War were reducing the gold holding of the US, why was the dollar to gold convertability window closed? What purpose would there to be to protect and retain your gold holdings if the US fiat dollar is so strong, unless there is/was a plan to re-introduce a gold standard at some point in the future?

Most of all, the OPEC "rebellion" was intimately tied into the Yom Kippur war. Nothing you gold nuts say can be taken as accurate.

Oh thats right I remember after the Yom Kippur War the price of oil fell to its pre-war value. Oh hang on, it didn't. Have you ever heard the expression "never waste a good crisis"? OPEC had been complaining since the close of the dollar to gold convertabillity in Aug 71 that they were now receiving useless fiat paper for their oil. The Yom Kippur War gave OPEC the excuse required to raise the price of oil to meet their costs to compensate the inflated dollar. Nothing you paper nuts say can be taken as accurate.

Why am I not surprised to read such vicious twaddle?

Attack the argument not the man.

http://www.youtube.com/watch?v=z1xedaZRoh8&feature=related

 

[Darth Picardous]

The US defeat in Vietnam, along with the massive budget deficits paying for it, played a role in Nixon dropping the gold standard in the first place. The end of the gold standard was an effect, not a cause.

So remind me again. If gold is such a useless asset and the budget deficiets during the Vietnam War were reducing the gold holding of the US, why was the dollar to gold convertability window closed? What purpose would there to be to protect and retain your gold holdings if the US fiat dollar is so strong, unless there is/was a plan to re-introduce a gold standard at some point in the future?



Oh thats right I remember after the Yom Kippur War the price of oil fell to its pre-war value. Oh hang on, it didn't. Have you ever heard the expression "never waste a good crisis"? OPEC had been complaining since the close of the dollar to gold convertabillity in Aug 71 that they were now receiving useless fiat paper for their oil. The Yom Kippur War gave OPEC the excuse required to raise the price of oil to meet their costs to compensate the inflated dollar. Nothing you paper nuts say can be taken as accurate.

Why am I not surprised to read such vicious twaddle?

Attack the argument not the man.

http://www.youtube.com/watch?v=z1xedaZRoh8&feature=related

Hillbilly I think you will find this presentation most interesting..

http://www.youtube.com/watch?v=ckEoUxAjgls

 

[stj]

Fast forwarding from Civil War greenbacks to the implication that fiat currency led to the farmers being dispossessed is a lie. And refusing to admit it is collaborating in a lie.

Being comfortable with lies is prerequisite to swallowing the crackpot economics of von Mises' and Rothbard's ilk. Human Action and "catallactics" (if I remember the BS correctly) is deranged even by the very lax standards of political conservatives. Austrian economics survives solely because wealthy businessmen paid for sinecures (called chairs of economics) for propagandists. Whether Rothbard hid any original contributions to economics, Austrian or otherwise, in amongst the turds floating in the cesspool called his work, I've forgotten. Fekete I've barely heard of, no doubt because he is even less distinguished by original thought of any value or consequence. Nothing these hacks said or wrote bears on the real world. It's all made up history and failed reasoning in service of a political agenda.

It is beyond folly to pretend that "OPEC" boycotted the dollar because the dollar was inflating. The dollar is inflating now and there is no boycott. There are some things that can't be excused on grounds of mental derangement.

There are no sound arguments made for a gold standard in this thread. You have to give some reason to even consider that fiat money inevitably leads to hyperinflation, and that hyperinflation is worse than the deflation a gold standard so often causes. Both these propositions are untrue. They are supported only by ignoring simple facts, or by flagrant falsehoods.

On a deeper level, a theory for a gold standard needs to establish that gold is in fact the substance of the wealth of nations (good luck refuting Adam Smith on that one!) And that within the nation it is morally and socially necessary that wealth be preserved intact, never diminishing in value no matter how much change, such as economic growth, occurs. There is no escaping it: The desire to show that is despicable.

 

[Darth Picardous]

Fast forwarding from Civil War greenbacks to the implication that fiat currency led to the farmers being dispossessed is a lie. And refusing to admit it is collaborating in a lie.

Take that up with Hillbilly, or I will extract posts from other users on this topic that were supporting your case and use them against you.

Being comfortable with lies is prerequisite to swallowing the crackpot economics of von Mises' and Rothbard's ilk. Human Action and "catallactics" (if I remember the BS correctly) is deranged even by the very lax standards of political conservatives. Austrian economics survives solely because wealthy businessmen paid for sinecures (called chairs of economics) for propagandists. Whether Rothbard hid any original contributions to economics, Austrian or otherwise, in amongst the turds floating in the cesspool called his work, I've forgotten. Fekete I've barely heard of, no doubt because he is even less distinguished by original thought of any value or consequence. Nothing these hacks said or wrote bears on the real world. It's all made up history and failed reasoning in service of a political agenda.

Thanks for the Strawman arguments. Why are these theories crackpot and on whos evidence? What political agenda are you speaking of?

It is beyond folly to pretend that "OPEC" boycotted the dollar because the dollar was inflating. The dollar is inflating now and there is no boycott. There are some things that can't be excused on grounds of mental derangement.

Thats right, unless their is a gold component involved in oil purchases. Lets make a bet. Wikipedia lists Saudia Arabia's gold holdings as 322 tonnes. If I am right, in the future we will learn SA actually has 5-6,000 tonnes of gold. If I am wrong and you are right, this figure will not substantionally change in the future. I expect there will be an announcement from SA of "oops, we just came across a shitload of gold this week" in a few years if a gold standard is reintroduced.

There are no sound arguments made for a gold standard in this thread. You have to give some reason to even consider that fiat money inevitably leads to hyperinflation, and that hyperinflation is worse than the deflation a gold standard so often causes. Both these propositions are untrue. They are supported only by ignoring simple facts, or by flagrant falsehoods.

As I have asked previously, show me a fiat currency that has lasted more than 50 years. Please show me how a person who keeps their fiat notes in a shoe box under their bed has the same purchasing power as a note fixed to a gold standard also stored in the same shoe box. We measure time and distance with a standard, why does money not receive the same respect?

And why is hyperinflation worse than deflation? It may have something to do with a holder of fiat notes loses purchasing power while the economy accelerates, while a gold backed standard note will have greater purchasing power in a growing economy due to the restrictions on the money supply.

On a deeper level, a theory for a gold standard needs to establish that gold is in fact the substance of the wealth of nations (good luck refuting Adam Smith on that one!) And that within the nation it is morally and socially necessary that wealth be preserved intact, never diminishing in value no matter how much change, such as economic growth, occurs. There is no escaping it: The desire to show that is despicable.

I don't know if you would class a population of people stuck on i-pads as wealth of a nation. A silly example , yes, but the people alive today are not everything. Adam Smith and many generations after him are dead. However their legacy can be stored as knowledge (books) and wealth (gold) to benefit future generations. To say that " that within the nation it is morally and socially necessary that wealth be preserved intact, never diminishing in value no matter how much change, such as economic growth, occurs. There is no escaping it: The desire to show that is despicable." is in fact stating that every society has based their money on a gold standard is despicable. This in fact shows an ignorance in history and throws faeces into the faces of those people who try to preserve their labor in a form of wealth, which you want to steal from them via stealth.

STJ, your are obviously an intelligent person, but please let me know why Austrian economics is so poisonous to you.

 

[Nowhere Man]

I will adress my statements which keeps getting brought up about farmers in the 1890s. I did skim over some things. I did not think I had to go into into a detailed account of American history to get a freaking point across. I mean, you don't have to tell the entire history of WW2 to tell the story Pearl Harbor, but whatever. Maybe taking Macro and Micro Econ. in College doesn't mean a whole lot, but it does mean/count for something. I come from a small Southern town where most don't go on to college and I think my level of intellegence is pretty high compared to other people I know. I also think it is on par with most college educated people in this country or on this web site. We all sit and pretend to be experts on everything, but we are not. I'll admit, I'm no economist and I'm no expert. I just know what I was taught and I know what I read in the news or whatever. I also understand things on basic/general levels. I come to my own conclusions based on the combination of all the things mentioned. I then do further research or further reading and find out that I'm not the first one to come to these conclusions. It turns out there are experts who live and breathe this shit, they figured this shit out long ago. By coming to this epiphany, I think to my self maybe these people are right.

I used to drink the cool aide and eat the bullshit that was fed to us all and I was in disbelief and questioned it too. Then I explored history and began to see what the fuck these guys were taking about. I started realizing, holy shit these guys know what they are talking about. You claim that on this thread there have been no evidence to support a gold standard, you have not been paying attention. I have provided articles and article quotes from reputable sources. I have provided videos that helped explain my thoughts. You were too busy being a complete dick to notice. Go ahead and flame me for calling it like I see it. I'm just sick of reading posts all over this board with people who think their so fucking smarter than everyone else, it's ridiculous.

So to adress the farmers thing. What I meant was, after the Civil War, Amarecica changed from agrarian to industrial. I know the North was already beginning to industrialize, but the South had catching up to do. The creation of greenbacks was the destruction of the last great check that the states had on the federal gov. Finance Capital industry requires credit to be established, this drove out the ability of a farmer to pay on the type of credit they had established already. What I mean is before a farmer could purchase things on credit with the local bank and when his crop came in, he would pay it back. Sometimes it may take a few years. It wasn't perfect, but it worked. The farmer could save up for his equipment and maybe use some credit from the bank. Then spend, the whole community had a vested interest in making sure that crop came in. With financial industrial capitalism the farmer doesn't have to save up for the new tractor or barn, he simply puts it on credit and has a massive amount of debt that is never really paid off. If he gets in a bad crop and can't pay, banks are not intesrested in waiting, they just foreclose on his land and resell it. This may not be due to going off the gold standard, but when you put an entire country under these conditions less stable booms and busts. This is what was going on in the 1890s with farmers, the Greenback labor party came from that. They wanted silver coined, I think it was Cleveland who decided against it. He realized it was a mistake.

Going back to the gold standard is not the end of all of our struggles, it's just one of many steps to reverse the damage done by 150 years of coorperate rule. I admit, gold is worthless in it's own, but something has to be used as a medium that everyone can agree on. It is and was a medium because it was a rare precious metal. That is what makes it's value, people decided that bartoring didn't work. Most agreed on gold and silver. It works as a good medium and a good commodity. If banks print money that is backed by that commodity, then it is worth something. When banks print money backed by nothing it is worthless. It can only be cashed in for more paper. Adam Smith was not against a gold standard, he saw how paper money can replace a gold coin or bar. For transactions you can use a piece of paper that is backed by gold.

By going off of a gold standard, you perpetuate corrupt corporations and dirty bankers who just want to exploit consumers. You allow governments to not be held accountable for their spending of our money. You create an environment where debt is rewarded and people are kept under the thumbs of these corrupt institutions like slaves. You perpetuate a growing poverty level a minority upper class of people who enjoy a majority of say in the world. That is what's despicable in my opinion. You call me fake and say I don't care, but I do care deeply. I see friends and family go into great debt that they can never repay, but they've been told it's ok, just put it on your credit card. We were told this for decades and when the shit hit the fan who got bailed out? Not the ones in debt, but the ones who created this mess. Not only did they get bailed out, but the CEOs got bonuses and the shareholder's got paid. Limited liability is great. So, yeah I do care. I want to see an end to this shit, anyone who doesn't is the one who is dispicable, not me and not Darth.

The politicians of the 19th century may have been corrupt, but they weren't stupid. Even Lincoln knew that going off the gold standard could only be temporary. It's like Darth said, name one country that has gone more than 40-50 years off the gold standard. All the inside guys know it's coming. Believe it, don't believe it, I don't give a shit, it's your loss.