Return to Gold Standard and price per ounce

You keep posting falsehoods and then refuse to back them up (which is IMPOSSIBLE ANYWAY since not a single reputable economic theory or model promotes the gold standard which has historically been responsible for multiple depressions). So if you accuse me of being selective...YEAH I AM. I'm posting from the facts, not the wackos....you know, professional economics from Bloomberg, the Uni of Chicago, Stern Business School, Harvard and Berkley.

Ruben

 

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http://query.nytimes.com/gst/abstract.html?res=9E04E6DD1031E033A25752C0A9659C94629ED7CF

 

http://query.nytimes.com/gst/abstract.html?res=9905EEDC1031E033A25753C2A9629C94629ED7CF

http://query.nytimes.com/mem/archive-free/pdf?_r=1&res=9905EEDC1031E033A25753C2A9629C94629ED7CF

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FINANCIAL AND COMMERCIAL; PURTHER DEPRESSION DUE TO CURRENCY CONDITIONS. The Redemption of Silver Notes Not Yet Refused -- This Week's Shipments Will More Than Wipe Out the Free Gold in the Treasury -- A Sharp Break in Mis- souri Pacific followed by Pronounced Weakness in the General List -- Chicago Gas and Cordage Without Support.

 

FINANCIAL AND COMMERCIAL; PURTHER DEPRESSION DUE TO CURRENCY CONDITIONS. The Redemption of Silver Notes Not Yet Refused -- This Week's Shipments Will More Than Wipe Out the Free Gold in the Treasury -- A Sharp Break in Mis- souri Pacific followed by Pronounced Weakness in the General List -- Chicago Gas and Cordage Without Support.

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April 20, 1893, Wednesday

 

Could you please quote one of my "falsehoods" from earlier in this link? To be honest, I don't even know why you are here or what you are trying to prove.

 

http://query.nytimes.com/gst/abstract.html?res=980CE2DB143EEF33A25750C0A9619C94629ED7CF

NOT POVERTY, BUT DISTRUST; EX-SENATOR HENDERSON ON THE VITAL SILVER QUESTION. A Clear Exposition of the Causes that Have Led to the Present Financial Depression -- Disastrous Failure of an Attempt to Bolster Up Silver in Defiance of the World -- How Gold Was Driven Away and We Were Left with a Single Depreciated Standard.

 

There are lots of devotes of Lord Keynes. Unfortunately, you can't spend yourself into prosperity as his advocates will learn, AGAIN, and again, and again....

By the way, I like how you completely glossed over the worst year of the Depression AFTER we went off the gold standard.

http://en.wikipedia.org/wiki/Keynesian_economics

 

Start with Public Dept is BAD. Again, answer the question. When someone buys public bonds with Dollars, which withdrawls the dollars from the market place, does the relative value of the dollar go UP or DOWN.

I've waited for your answer for 3 days now.


BTW - which of the recession you posted had ANYTHING to do with the gold standard contributed DEPRESSIONS.

And Admit or NOT if there is enough gold in the world to account for all the rest of the worlds monetary needs and wealth. Start being accountable for your unsubstantiated economic statements about the gold standard.


Also admit that you intentionally mislead other readers here that public debt and private debt are completely different and that you intentionally used the two interchangeably in order to obfuscate the issue and the facts.

Ruben

 

What does that mean? Are you accusing Miton Friedman of being Keyesian? Why would you throw this into the discussion if not only to confuse the readers of the thread.

Do you actually KNOW the Keynesian economic theory? Have you read it. Because, FYI, it has NEVER been proven wrong and the criticisms of it, as detailed now for over 20 years, mostly surrounding the work from the University of Chicago, doesn't attack its foundations principles, which are based proven economic models and Classical economic theory, but center on application in an increasing global economy.

Why don't you actually go to the library and READ it. And then when your there try picking up Adams, Friedman, and Gilbrath. Then come back in 6 months and we can actually discuss it, chapter and verse.

Ruben

 

He just doesn't get it.

 

Gold Standard

Over 5,000 years, the gold standard has always won. Fiat currencies and fractional reserve banking is the cause for depressions and inflations. The schools that you name were formed by the very same establishment that was designed to brainwash and control the American population. I know you may think of me as a paraniod conspiracy theorist, however I did swear to defend the constitution against all enemies foreign and domestic a month after 9/11. I served two tours of combat in Iraq, and since then I have been honorably discharged after five years of service and I'm only 27 credits away from my bachelors degree. The reason for me telling you this is because I've seen more than most people, and I am college educated as well. This may help people see my point of view on the federal reserve, and our need for a gold backed currency.

 

http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm

However, in 1963, Milton Friedman and Anna J. Schwartz transformed the debate about the Great Depression. That year saw the publication of their now-classic book, A Monetary History of the United States, 1867-1960. The Monetary History, the name by which the book is instantly recognized by any macroeconomist, examined in great detail the relationship between changes in the national money stock--whether determined by conscious policy or by more impersonal forces such as changes in the banking system--and changes in national income and prices. The broader objective of the book was to understand how monetary forces had influenced the U.S. economy over a nearly a century. In the process of pursuing this general objective, however, Friedman and Schwartz offered important new evidence and arguments about the role of monetary factors in the Great Depression. In contradiction to the prevalent view of the time, that money and monetary policy played at most a purely passive role in the Depression, Friedman and Schwartz argued that "the [economic] contraction is in fact a tragic testimonial to the importance of monetary forces" (Friedman and Schwartz, 1963, p. 300).

To support their view that monetary forces caused the Great Depression, Friedman and Schwartz revisited the historical record and identified a series of errors--errors of both commission and omission--made by the Federal Reserve in the late 1920s and early 1930s. According to Friedman and Schwartz, each of these policy mistakes led to an undesirable tightening of monetary policy, as reflected in sharp declines in the money supply. Drawing on their historical evidence about the effects of money on the economy, Friedman and Schwartz argued that the declines in the money stock generated by Fed actions--or inactions--could account for the drops in prices and output that subsequently occurred.2

Friedman and Schwartz emphasized at least four major errors by U.S. monetary policymakers. The Fed's first grave mistake, in their view, was the tightening of monetary policy that began in the spring of 1928 and continued until the stock market crash of October 1929 (see Hamilton, 1987, or Bernanke, 2002a, for further discussion). This tightening of monetary policy in 1928 did not seem particularly justified by the macroeconomic environment: The economy was only just emerging from a recession, commodity prices were declining sharply, and there was little hint of inflation. Why then did the Federal Reserve raise interest rates in 1928? The principal reason was the Fed's ongoing concern about speculation on Wall Street. Fed policymakers drew a sharp distinction between "productive" (that is, good) and "speculative" (bad) uses of credit, and they were concerned that bank lending to brokers and investors was fueling a speculative wave in the stock market. When the Fed's attempts to persuade banks not to lend for speculative purposes proved ineffective, Fed officials decided to dissuade lending directly by raising the policy interest rate.

The market crash of October 1929 showed, if anyone doubted it, that a concerted effort by the Fed can bring down stock prices. But the cost of this "victory" was very high. According to Friedman and Schwartz, the Fed's tight-money policies led to the onset of a recession in August 1929, according to the official dating by the National Bureau of Economic Research. The slowdown in economic activity, together with high interest rates, was in all likelihood the most important source of the stock market crash that followed in October. In other words, the market crash, rather than being the cause of the Depression, as popular legend has it, was in fact largely the result of an economic slowdown and the inappropriate monetary policies that preceded it. Of course, the stock market crash only worsened the economic situation, hurting consumer and business confidence and contributing to a still deeper downturn in 1930.

The second monetary policy action identified by Friedman and Schwartz occurred in September and October of 1931. At the time, as I will discuss in more detail later, the United States and the great majority of other nations were on the gold standard, a system in which the value of each currency is expressed in terms of ounces of gold. Under the gold standard, central banks stood ready to maintain the fixed values of their currencies by offering to trade gold for money at the legally determined rate of exchange.

The fact that, under the gold standard, the value of each currency was fixed in terms of gold implied that the rate of exchange between any two currencies within the gold standard system was likewise fixed. As with any system of fixed exchange rates, the gold standard was subject to speculative attack if investors doubted the ability of a country to maintain the value of its currency at the legally specified parity. In September 1931, following a period of financial upheaval in Europe that created concerns about British investments on the Continent, speculators attacked the British pound, presenting pounds to the Bank of England and demanding gold in return. Faced with the heavy demands of speculators for gold and a widespread loss of confidence in the pound, the Bank of England quickly depleted its gold reserves. Unable to continue supporting the pound at its official value, Great Britain was forced to leave the gold standard, allowing the pound to float freely, its value determined by market forces.

With the collapse of the pound, speculators turned their attention to the U.S. dollar, which (given the economic difficulties the United States was experiencing in the fall of 1931) looked to many to be the next currency in line for devaluation. Central banks as well as private investors converted a substantial quantity of dollar assets to gold in September and October of 1931, reducing the Federal Reserve's gold reserves. The speculative attack on the dollar also helped to create a panic in the U.S. banking system. Fearing imminent devaluation of the dollar, many foreign and domestic depositors withdrew their funds from U.S. banks in order to convert them into gold or other assets. The worsening economic situation also made depositors increasingly distrustful of banks as a place to keep their savings. During this period, deposit insurance was virtually nonexistent, so that the failure of a bank might cause depositors to lose all or most of their savings. Thus, depositors who feared that a bank might fail rushed to withdraw their funds. Banking panics, if severe enough, could become self-confirming prophecies. During the 1930s, thousands of U.S. banks experienced runs by depositors and subsequently failed.

 

Wrong - it has ALWAYS failed and failed MISERABLY. Because you say it doesn't make it so. And the single BIGGEST example of that failure was the destruction of the Spanish Empire which was flooded with so much gold that it destabilized its ENTIRE currency and allowed for Brittish economy based on WEALTH creation, instead of GOLD HORDING, as well as easy credit and large national debt, you basically destroy Spain's empire in a 10 year period.

Ruben

 

Go back to school then and learn some economics. And as for our "Need" for gold backed currency, you still don't have even close to enough gold, not to mention the political revolt you'd have thrown the country into. If you don't like the current federal spending policies, you would have LOVED what would have happened with a Gold Standard economy, and 40% unemployment that would have resulted from it.

Ruben

 

I didn't see your question to me burried somewhere in your mountain of spam.

Regarding the debt, when debt is issued and purchased by individuals or institutions with existing funds, the transaction will be neutral except for the necessity to pay interest which can be inflationary or deflationary depending on how the policy-makers decide to fund it. When debt is issued and added to the Fed's balance sheet, it is generally inflationary depending on whether or not the growth of debt is faster or slower than the growth rate of the economy. When debt is purchased by foreign entities, they have the option of monetizing it in their own country by holding the debt, or exporting the inflation back to the US. None of this is important when the debt is small. When it approaches the level of GDP and is growing faster than GDP [as it is now], a policy decision will have to be made to either monetize the debt [inflation] or stay the course [deflation]. Either decision is disruptive. I hope that clarifies things for you.

Regarding depression vs recession, neither has anything to do with the form of currency in use. It is related to things like inventory build or changes in the amount of leverage used in banking and commerce.

There is not enough gold to replace all of the world's wealth. There is also not enough fiat currency to replace all of the world's wealth. I don't think you understand anything about money and banking if you think this is the case. Currency is a MEASURE of wealth. It is not the wealth.

And I deny that I have misled anybody about public and private debt. Also, you never provided the quote from me that I asked for to back your accusations. I am waiting.

 

What you have described is the failure of mercantilism, not gold. Again, you have demonstrated that you don't understand the relationship of currency to economics. The Spanish Empire would have failed regardless of what was used as currency because they were operating under a false economic premise.

Edit: I'll bet this results in another three pages of cut and paste.

 

Thats nice, Mr Brooklyn and type what is in some book. I don't think he realizes that the Federal Reserve is a private corporation which is in direct violation of the Constitution Article I Sections 8 and 10. There has been more economic problems since its inception in 1913. For nearly 120 years of the gold standard before the federal reserve there was nearly zero inflation and no economic problems at all. The creation of the Great Depression was easy money. People borrowed money and used it to buy stocks, ( the reason for the roaring twenties) and then when the banks called back on that lent out money, all the money that created the roaring twenties was sucked out of wall street and created the great depression. This was purposely created by the Federal Reserve because at the time, the Fed was competing with gold backed notes from the Treasury. Then FDR outlawed gold, mandating that everyone return their gold to the nearest Federal Reserve building, and in return would get $20. At the same time, everyone outside of the U.S. would get $35 for each ounce of gold. FDR robbed the U.S. people, created welfare, social security and did created jobs that just put this nation into debt. The only good thing he did was establish the Glassel and Steagal Act which seperated investment banking from savings banking.
During Clinton's administration, Geithner and his gurus repealed the Glassel and Steagal Act and formed Citi Group. Citi Group was actually illegal when it started bc Clinton had not yet signed off on the bill. This is what started MBS's and CDO's which were the problem of today's housing bubble, (which Obama is blaming the Bush administration for). And now Obama hires the same people in his cabinet that started the mess, he continues the fake war on terrorism that Bush started, and still America is still sleeping.

Sorry to rant on everyone, but we really need to wake up, and return to the Gold Standard.

 

A bit too on the political side. That will only get this thread shut down.

 

Good Looking out Cloudsweeper99. It won't happen again. That guy Mrbrklyn really gets me going. It may seem a little on the political side, however, those politics are affecting the economics that directly relates to the argument of gold backed money vs fiat currency. Anyways, I just want to say thanks once again.

 

You are right that there is not enought gold to back what currency is in circulation now, and yes there would be a political revolt because the government is run by the same people that own the monetary system. We wouldn't be in the mess we are in now if it wasn't for the Fed in the first place. The best way to return to a gold standard is to allow for competing currencies and let the market decide. The market is the one that eventually makes the decisions anyways, not the government. Recorded history of over 5,000 years proves that. I read and study economics from people who have a proven record and continue to predict future economic outcomes based on current political policies. You're quoting from people who have created the mess, THINK ABOUT IT!