Discussion in 'Coin Chat' started by GoldFinger1969, Mar 1, 2023.
Ty Can't wait to get it!
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Glad you said that
That’s so nice
I don't know how you can be the world's reserve currency AND be on the gold standard AND not drain gold.
Being the world's reserve currency implies running trade deficits and current account surpluses....which means monetary growth is higher than normal (interest rates LOWER than normal)....which means if you were on the gold standard (like we were post-Bretton Woods) you'd lose gold.
Maybe if the price of gold were set artificially high it would be tolerable for a while. But that would entail other problems surfacing.
There never was a real default; it was a devaluation. FDR was unnecessarily overzealous in going off the gold standard. It had to be done sooner or later. No way money today could be backed by any precious metal … the sum total of the PM holdings of all governments is way less than the money supply. Precious metals are pipsqueaks compared to the huge world economy.
However, the economy in the 1930s would have improved just as fast, maybe faster, if the gold clause in existing contracts and bonds had been left intact and only prohibited in the future. Gold certificates and coins when voluntarily deposited in banks or paid to the government would be exchanged for fiat dollars. All new printed currency would be in fiat dollars. And no need to confiscate gold. The gold-based economy would have withered without the prolonged, distracting and expensive legal and political battles that took place.
Going off the gold standard was only part of the resolution effort by FDR, there were many other programs … some of which were helpful, some not. I give the guy credit though that he was willing to experiment because something had to be done. Trying different new things was better than doing nothing. The book repeatedly discusses FDR’s obsession with agricultural commodity prices. This is explained by the fact that over half the labor force was employed in agriculture in 1930; it's less than 5% today.
Just as important was creating new laws and regulations to address the main cause of the depression which was unregulated and uninsured lending by banks and brokers. Wasn’t addressed or enforced adequately which led to the great recession of recent times.
The truths could be told, as I recently did in response to a query post, to earn my first warning/deletion,
I described a possible coin that would probably be as popular around the world, as our current leaders' efforts.
Beware of what you post, as others may not appreciate!
Yeah, I had other items pop up over the last month that slowed me down and on those nights -- like last night -- that I read it late at night, I conked out and fell asleep !!
What did you think about the focus on the "gold clauses" in bonds ? That was something new to me (I'm just now getting to the arguments before SCOTUS).
That's what the consensus thought would happen; that you couldn't make it retroactive but could prohibit it going forward. I haven't read the actual decisions yet but did read FDR's arguments that they could change monetary policy at will.
So basically you had 3 items that comprised the War On Gold:
Prohibition on holding gold coins and gold bars (the metal) except 5 coins per adult excluding numismatic coins with special value.
Prohibition on gold certificates.
Prohibition on gold clauses being followed in bonds.
Less than 2%, I believe. Maybe even less (I think it was 2% when I was in college in the 1980's).
100% agreement on commodity price obsession -- again, we were mostly a rural agricultural economy back then.
Could have used more than footnotes to talk about all the bank failures in 1932-33 (about 7,000 I believe) and relate this to the falling money supply as talked about by Friedman/Schwartz in A Monetary History.
Note the turf wars alluded to in the book between the Fed and Treasury. Back then, the Fed was basically under the Treasury's thumb. It wasn't until 1951 when you had the Fed-Treasury Accord of 1951 that the Fed was truly independent and in charge of monetary policy.
Separate names with a comma.