The Evil of Fiat

[refined silver]

i'm still trying to figure out what youre trying to say.

Conza follows Austrian economics. This is often confused with classical/neo-classical or monetarist theory. While there are many similarities there are very important points of difference also.

Your take on gold and the Great Depression is a Monetarist view as espoused by Freidman (and Anna Schwartz). The Austrians would strongly disagree with Friedman's analysis and conclusions here.

 

[Ageo]

chaining money supply to a physical good is silly. why not make it backed by cheese, or whales, or common garden rocks?

I agree better than not backed by nothing eh? perhaps it should represent the resources that country has which in turn determines how much paper they can print?

P.S Isnt all this printing and money pumping part of keyens theory?

 

[Stormin_Norman]

Conza follows Austrian economics. This is often confused with classical/neo-classical or monetarist theory. While there are many similarities there are very important points of difference also.

Your take on gold and the Great Depression is a Monetarist view as espoused by Freidman (and Anna Schwartz). The Austrians would strongly disagree with Friedman's analysis and conclusions here.

id challenge the notion that all austrian school economists back a return to gold.

sensible money supply yes, but need that be forced by a gold standard?

 

[refined silver]

id challenge the notion that all austrian school economists back a return to gold.

sensible money supply yes, but need that be forced by a gold standard?

Basically they do. They assume that human nature and politicians being what they are, a sensible money supply is impossible in the long run, unless backed by something that can't be increased at will.

There are many arguments about HOW to have an effective gold standard especially in the light of modern commerce, there are many ways to do this and still have a flexible system.

 

[Stormin_Norman]

so what about the effects of contagion bought about by having a base currency?

 

[Jikx]

Basically they do. They assume that human nature and politicians being what they are, a sensible money supply is impossible in the long run, unless backed by something that can't be increased at will.

There are many arguments about HOW to have an effective gold standard especially in the light of modern commerce, there are many ways to do this and still have a flexible system.

If you could give some links, I would be interested to read.

A small country like Australia could be backed by Gold, but imagine a large developed country (US, Germany, Japan)? Within a single year of average growth (2%) and a single country would eclipse the increase in Gold supply but a large factor. How would the Gold standard work in this case?

 

[Jikx]

You think so? so a loaf of bread today (from a local baker) is the same compared to wages then it was yrs ago?

care to explain?

I'm not talking about just bread. I'm talking about how much our income has far outpaced that of basic goods. For example, we all liked to complain about the price of petrol but as the percentage of our pay it was quite normal. It's all about relative.

As I mentioned above, how do you reconcile the huge magnitude of global growth and the tiny increase in Gold supply?

Here's an odd thought - Gold standard would merely shift people from one unproductive industry (finance) into another (Gold exploration and mining).

 

[refined silver]

If you could give some links, I would be interested to read.

A small country like Australia could be backed by Gold, but imagine a large developed country (US, Germany, Japan)? Within a single year of average growth (2%) and a single country would eclipse the increase in Gold supply but a large factor. How would the Gold standard work in this case?

There is no problem with the amount of gold in the world. Just the price. When Nixon ended gold convertability in the 70s, gold went from $35 to $880.

The price of gold rose so that the reported gold reserves in the US balanced external liabilities of the US. A google search will reveal those two amounts today. Jim Sinclair, who speaks of a revitalised gold certificate ratio in one of the links below, predicted this final price of gold in the early 70s and got out on the day it peaked.

http://www.gold-speculator.com/jim-sinclair/2673-more-federal-reserve-gold-certificate-ratio.html

This is Part 1 of a long dialogue on gold and the money supply, by a modern Austrian advocate

http://www.lewrockwell.com/north/north687.html

Academia's war Against Free Mkt Money
http://www.lewrockwell.com/north/north666.html

The rest of the Lew Rockwell site or Mises.org will give you Rothbard or Von Mises full works as two leaders of the Austrian school.

 

[pilbara]

For example, we all liked to complain about the price of petrol but as the percentage of our pay it was quite normal.

complaining about high petrol prices is justified, because the oil price bubble is the bubble of last resort, it has a corrosive inflationary effect and can truly shock the world economy, affecting the profit of every productive industry, causing a slowdown in demand for everything. When the world's economy stops then gold becomes relevant as the ultimate measure of wealth, but during normal times oil is more important. Gold is the ultimate measure of wealth because of its rarity -- all of the gold in the world would fit on a tennis court -- but oil is priced like it is an infinite resource. With true scarcity the price of oil will break free of supply/demand elasticity, and become more like gold.

 

[Conza88]

keynes is one of the greatest economists of all time. there is far more to keynes then government deficits.

other great economist are friedman, smith, marx, ricardo, schumacher, walrus, marshall, pareto, fisher.

many of them profoundly disagree. all of them offered insightful views which shouldnt be discounted.

Haha, I have no idea how you could possibly ever call yourself an Austrian Economist, besides you think it's cool?

Look, this really ain't worth my time. So I'm not going to both highlighting the fallacies and hundreds of years all those clowns set back real economics.

Since you're focusing on depressions some what. Play close attention:

The Great Depression: Mises vs. Fisherby: Mark Thornton

"Ludwig von Mises established the foundations of modern Austrian economics while Irving Fisher established the foundations of modern mainstream macroeconomics and central bank policy. Fisher helped create and was a proponent of mathematical economics, statistics and index numbers, and a monetary policy that “stabilized” the value of the dollar. Fisher claimed that his scientific approach established a new era of prosperity during the 1920s.

Mises published a book in 1928 that critiqued Fisher’s approach and predicted that it would lead to an economic crisis and collapse. Before the stock market crash in 1929 Fisher proclaimed a perpetual prosperity for the economy and continued to recommend investing in stocks long after the market had collapsed. In this important case study, Mises passed the “market test” while Fisher lost his personal fortune during an economic crisis that his economics help create."​

do those arguing for a gold standard realise that gold standard would mean there is no such thing as monetary policy???

i am yet to hear a good reason for abandoning monetary policy as a tool to aid recovery from economic downturns.

I'm not actually for a Gold Standard, if by that you mean - Government maintains control over monetary policy in any regard.

I would allow competing currencies, get rid of legal tender laws, basically a free market monetary system.

You know - allow Capitalism to create it's own money, for the first time, like ever. (Central Banking rocked up in England in 1800's) To finance wars, with FIAT! above all else... lol So if you are for peace, you're for the Gold Standard / Free market monetary system.

monetary policy would be limited to the production of gold. there is about $6 trillion dollars worth of gold in the world at current prices.

how do you move towards that?

sensible monetary growth is needed. money is the oil of an economy's engine. too much oil is messy, too little oil and the thing grinds to a halt.

chaining money supply to a physical good is silly. why not make it backed by cheese, or whales, or common garden rocks?

What has Government Done to Our Money? by Murray N. Rothbard

Can't paste it all, but here is an excerpt:

II. Money in a Free Society
8. The "Proper" Supply of Money

Now we may ask: what is the supply of money in society and how is that supply used? In particular, we may raise the perennial question, how much money "do we need"? Must the money supply be regulated by some sort of "criterion," or can it be left alone to the free market?

First, the total stock, or supply, of money in society at any one time, is the total weight of the existing money-stuff. Let us assume, for the time being, that only one commodity is established on the free market as money. Let us further assume that gold is that commodity (although we could have taken silver, or even iron; it is up to the market, and not to us, to decide the best commodity to use as money). Since money is gold, the total supply of money is the total weight of gold existing in society. The shape of gold does not matter?except if the cost of changing shapes in certain ways is greater than in others (e.g., minting coins costing more than melting them). In that case, one of the shapes will be chosen by the market as the money-of-account, and the other shapes will have a premium or discount in accordance with their relative costs on the market.

Changes in the total gold stock will be governed by the same causes as changes in other goods. Increases will stem from greater production from mines; decreases from being used up in wear and tear, in industry, etc. Because the market will choose a durable commodity as money, and because money is not used up at the rate of other commodities--but is employed as a medium of exchange--the proportion of new annual production to its total stock will tend to be quite small. Changes in total gold stock, then, generally take place very slowly."​

 

[Conza88]

Think they will be a new World currency created once this is all over?

They are trying hard... Nothing really wrong with it, if there's no world central back, world government and it isn't a Fiat dollar.

i.e Gold or silver etc... as the global currency is fine. Basically automatically means free trade with all countries, international division of labour.

Shame they're following the Keynesian dream though.

Conza follows Austrian economics. This is often confused with classical/neo-classical or monetarist theory. While there are many similarities there are very important points of difference also.

Your take on gold and the Great Depression is a Monetarist view as espoused by Freidman (and Anna Schwartz). The Austrians would strongly disagree with Friedman's analysis and conclusions here.

Thanks Here's a goody:

Milton Friedman Unraveled by Murray N. Rothbard

There is no problem with the amount of gold in the world. Just the price. When Nixon ended gold convertability in the 70s, gold went from $35 to $880.

Yep, another thing for people to note is that was another "market test". Every school of thought had a take on which way Gold would go when Nixon cut ties with the Gold Standard.

Keynesian, Chicago, every other school vs the Austrian Economists.

The clowns said it would go down to about $6 an oz. The Austrians said it would rise, to about 75 oz. Which was unheard of. It went up. The Austrians won.

And over time it's gone higher and higher, and will continue to do so. Hyper inflation here we come, quantitative easing! Yeahh!!

 

[Dowdy]

id challenge the notion that all austrian school economists back a return to gold.

sensible money supply yes, but need that be forced by a gold standard?

Having your currency pegged to a hard asset that can't be manipulated will create discipline to the money printers (the fed) in the world and will stabilise prices

They will still have the printing press but it will be like having the gold as their ink as you only have so much.

You can't have a 'sensible money supply' if there is nothing stopping their temptation to print more. Gold create the discipline. It's not basic economics, it's basic psychology

 

[Conza88]

Think they will be a new World currency created once this is all over?

The G20 Moves the World a Step Closer to a Global Currency by Ambrose Evans-Pritchard

A single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the global financial order.

"We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity," it said. SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century.

In effect, the G20 leaders have activated the IMF's power to create money and begin global "quantitative easing". In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it.

It has been a good summit for the IMF. Its fighting fund for crises is to be tripled overnight to $750bn. This is real money.

Dominique Strauss-Kahn, the managing director, said in February that the world was "already in Depression" and risked a slide into social disorder and military conflict unless political leaders resorted to massive stimulus.

He has not won everything he wanted. The spending plan was fudged. While Gordon Brown talked of $5 trillion in global stimulus by 2010, this is mostly made up of packages already under way.​

 

[Ageo]

Thats funny and scary at the same time.

IMF has its own currency? wow

 

[numbercruncher]

Thats funny and scary at the same time.

IMF has its own currency? wow

Yup it doesnt matter who makes the rules and laws if you control the money supply ..... this is all part of an ongoing evil plan surely ....

 

[Conza88]

Yup it doesnt matter who makes the rules and laws if you control the money supply ..... this is all part of an ongoing evil plan surely ....

lol​

 

[greggles]

Watching this 2014 documentary 10 years later was an eye opener. People are working harder but wages aren't keeping up with inflation and many are going backwards. Continued skyrocketing debt and money printing is only going to fuel more high inflation resulting in lower standards of living. COVID-19 has accelerated the whole process.

The people have been betrayed by those in power.

 

[qldfrog]

Nahh, you are just a forever pessimistic negative guy, afraid of changes

 

[Sdajii]

Watching this 2014 documentary 10 years later was an eye opener. People are working harder but wages aren't keeping up with inflation and many are going backwards. Continued skyrocketing debt and money printing is only going to fuel more high inflation resulting in lower standards of living. COVID-19 has accelerated the whole process.

The people have been betrayed by those in power.

Covid19, the virus with the political name, did almost nothing. Insane government policies and idiots willingly complying with and allowing them caused the problems.