The Evil of Fiat

[Stormin_Norman]

your position in this discussion is confusing Conza88.

are you talking theoretical or practical in regards to the central banks?

your post made reference to the problem i mentioned, the lack of independence of the central bank, who have become a tool of the government in many countries, including the world's biggest one.

so are u laughing at the theory of or (more seemingly) the practical independence of the central banks?

the government shouldnt be determining quantitative easing. the central bank should be to keep a constant supply of money growth into the economy. of course i realise quantitative easing isnt physically printing money, its all done on balance sheets. its a turn of phrase.

No, theft is evil. Taxation is theft. And Inflation is a hidden tax.

which was exactly what i was saying. its tax by proxy of inflation which is very difficult to remove from an economy.

please explain why gold standard is superior to fiat money. or why the theory of fiat money is flawed if the central bank is allowed its proper independence.

kondratiev waves are an interesting theory. one could argue we're in one atm.

 

[Ageo]

please explain why gold standard is superior to fiat money. or why the theory of fiat money is flawed if the central bank is allowed its proper independence.

Stormin i thought the gold standard was in place so people couldnt print as much as they wanted??? (i.e if you wanted a trillion dollars in paper you needed to accumulate that much in gold before you could print it off???)

You see heres the problem without the gold standard, there is no control and how could you control a country in terms of printing money?????

If there was a gold standard in place then the U.S would be stuffed and wouldnt be invading countries (because they wouldnt be able to afford it). So im curious to know why you think it was worse off ?? do you believe when nixon abolished it that was a good thing???

1 thing is forsure is that paper can be manipulated so much easier than hard commodity can. (which means fiat can be more evil than gold if manipulated).

 

[sinner]

Stormin i thought the gold standard was in place so people couldnt print as much as they wanted??? (i.e if you wanted a trillion dollars in paper you needed to accumulate that much in gold before you could print it off???)

You see heres the problem without the gold standard, there is no control and how could you control a country in terms of printing money?????

If there was a gold standard in place then the U.S would be stuffed and wouldnt be invading countries (because they wouldnt be able to afford it). So im curious to know why you think it was worse off ?? do you believe when nixon abolished it that was a good thing???

1 thing is forsure is that paper can be manipulated so much easier than hard commodity can. (which means fiat can be more evil than gold if manipulated).

Errrrr I suggest you go and check what it was like when there was a gold standard.

Big countries will just add gold back to the list of things they kill people in small countries for, and make sure they and their buddies have more of than everyone else in such a situation.

This is the way it has been for millenia and was this way as recently as 1974. The only reason the US managed their con was to convince the Arabs to accept USD for oil instead of gold. Suddenly everyone has to buy USD instead of gold. But that is a whole other story. Do you really think if a gold standard was reinstated things wouldn't go back to what I have described above.

Anyway, there just isn't enough gold for a gold standard. Maybe gold+silver+copper or something. Why bother. Gold will re-exert its influence as money whenever it is required to (and you better wish it doesn't end up like this) and fiat works just fine every other time.

PS: Gold has a natural inflation rate of whatever non-recyclable consumption subtracted from production equals and this will vary year to year.

 

[Stormin_Norman]

gold was a primary reason why the great depression spread. the contraction in united states caused gold to flow from europe to america.

that contracted europe's money supply artificially, cause currency had to be based on gold.

britian went off the gold standard in 1931, the rest of europe followed as this fundamental flaw in the system was realised.

 

[Jikx]

I think you've hit the spot right on - Gold standard is not the solution. It would actually exacerbate the problem as there is insufficient Gold to go around. Unless you absolutely LOVE having prices dropping like a stone (along with your pay) then go ahead. Imagine having your pay cut in half or more, because that's what it would have been if we were on the Gold standard in the past decade.

Sorry Gold is certainly no longer a solution.

A possible solution to Fiat would be to have Gold/Other precious metals as a cash equivalent. That means no capital gains tax, and legislation designating Gold banks as being unable to lend out or derive it in anyway. You can spend your "Gold" using the standard ATM systems, and it would be converted to market cash equivalent at the point of transaction. It creates competition to Fiat money, thus decreasing the temptation from printing it.

 

[Ageo]

The reason there might not be enough precious metals (gold/silver etc..) to cover money is because prices have been artificially rising because of fiat and its practices.

Whatever the solution the current system we are in now is not the answer.

How can you justify $8 for milk and bread now? it was only 3 decades ago when this figure was cents. With this rate of inflatin what happens in 50yrs? $50 for bread and milk?? whats the average wage going to be???

At the end of the day the fiat system has to be backed by something otherwise all the paper they print represents no value.

 

[Stormin_Norman]

inflation isnt a problem of fiat money. its a problem of over supply of money.

that's not fiat's fault. that's the printing press and supply and demand's fault.

deflation caused by a gold standard is far far a bigger problem then the inflation problem.

 

[Conza88]

your position in this discussion is confusing Conza88.

are you talking theoretical or practical in regards to the central banks?

If you "theory" doesn't work in reality, then it's bull**** and wrong. You can't have "good in theory" and wrong in reality.

I'm saying it's wrong in both the theoretical and practical sense. Just like Communism is wrong in theory, it's wrong in reality too.

your post made reference to the problem i mentioned, the lack of independence of the central bank, who have become a tool of the government in many countries, including the world's biggest one.

so are u laughing at the theory of or (more seemingly) the practical independence of the central banks?

I'm laughing at you because you think a Central Bank would ever be, or remain "independent", and Murray Rothbard completely and utterly destroyed the notion in that excerpt, go read it again, and again - until you come to grips with what was said.

the government shouldnt be determining quantitative easing. the central bank should be to keep a constant supply of money growth into the economy. of course i realise quantitative easing isnt physically printing money, its all done on balance sheets. its a turn of phrase.

They "should" do a lot of things. Like resign for starters.

Let us put it this way: give any man or group power, and it will tend to use that power. If the power is inherently abusive, then that power will be abused. Our present system gives to the federal government and its Federal Reserve System the unlimited power to counterfeit. The problem is that if the Fed has the power to counterfeit, it will inevitably use that power. Why? Because the power to counterfeit is too tempting. The power to create money means that it is far more tempting to print it than to work for it. It means that the counterfeiter can pay his debts, spend more money, give more money to his friends and associates. In the case of government, the power to counterfeit means that government's debts can be paid without levying taxes, that government spending can increase, and that political allies can be purchased and maintained.

The power to counterfeit is the power to abuse. It is not enough to urge the government to use it more moderately. The power must be taken away. Counterfeiting is fraud, and no one should have the right to counterfeit, least of all government, whose record of counterfeiting throughout history is black indeed. Money and banking must be separated from the State, just as Church and State are separated in the American tradition, just as the economy and the State should be separated.​

Gold, Peace and Prosperity - Dr. Ron Paul

which was exactly what i was saying. its tax by proxy of inflation which is very difficult to remove from an economy.

All fiat is backed by nothing but force / faith.

please explain why gold standard is superior to fiat money. or why the theory of fiat money is flawed if the central bank is allowed its proper independence.

Get over your "proper independence" bs. It, ain't ever, nor will ever happen. What is your problem? How can you not understand, an institution which has been granted a monopoly by the government, won't ever stay or remain politically independent.

kondratiev waves are an interesting theory. one could argue we're in one atm.

You could try. But you'd be wrong. The Kondratieff Cycle: Real or Fabricated?

 

[prawn_86]

Conza,

While all types of opinions are allowed at ASF, please try not to deliberatly provoke or be condescending to other members.

Thanks

Prawn

 

[Jikx]

How can you justify $8 for milk and bread now? it was only 3 decades ago when this figure was cents. With this rate of inflatin what happens in 50yrs? $50 for bread and milk?? whats the average wage going to be???

Well that's taking a pot shot. Look on the other side of the coin. A computer with the computing power of your wrist watch would have cost millions just a few decades ago! The average car is more sophisticated than the vehicles that sent people to the moon. It's almost insane the pace of technological advance which counter balances the cost of basic goods.

Can you really argue the share of basic goods / services from the average wage has gone up? All I can see is more and more descretionary spending.

No the problem is most assuredly the over borrowing / lending that always occurs before the busts. Keep the standards watertight, and ignore the cries for financial deregulation. Finance is the one industry that produces nothing but fluff anyway.

 

[kotim]

The whole system is based on credit and its expansion. That is why fractional reserve banking and all its progeny is the only way to go for a civilisation that wants to "expand"

See if you can get a hold of a book that used to be printed in America called Money mechanics and you will realise that there is not enough printed money in the world to cover all the "Money" that is being used. The whoe system is based on faith and credit of those buyign and selling.

Without a credit based system we would not be anywhere near as technologically advanced as we are today, it's as simple as that. The system is a tool and it just comes down to how the tool is used. If the person using the tool is"evil" then evil will result, if person is good then "good" will result.

Any system that would not allow for credit expansion would be a very bad system, becasue it would require the constant "brotherly love" potion so that those who have look after those who do not. It is hard enough now poreventing fights and wars, but if youwent away from a credit system as such then there would be far more turmoil inthe world, which is not something that aprogressive society wants.

The Gold standard is like saying people wish for the good old days, and in some cases it is true, but look to the downside of what things used to be like and many people would not be so quick to ask for the good old days.

 

[Ageo]

inflation isnt a problem of fiat money. its a problem of over supply of money.

that's not fiat's fault. that's the printing press and supply and demand's fault.

deflation caused by a gold standard is far far a bigger problem then the inflation problem.

Hehe but its much easier to say collect another $1trillion with fiat then it is if you had a gold standard no???

And please explain how deflation (supposedly caused by gold) is a much bigger problem???

Can you really argue the share of basic goods / services from the average wage has gone up? All I can see is more and more descretionary spending.

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?

 

[Stormin_Norman]

gold and the depression. fiat money and inflation.

milton friedman:

http://www.youtube.com/watch?v=O7pnjzCuSv8

 

[Dowdy]

gold and the depression. fiat money and inflation.

milton friedman:

http://www.youtube.com/watch?v=O7pnjzCuSv8

that was a good clip UNTIL he started talking about John Maynard Keynes as one of the greatest economist!

It's his principles that the credit crisis is based on and the current stimulus ideas to try and go back to it.

 

[Stormin_Norman]

keynsianism, invented by his followers gave keynes a bad name.

 

[Conza88]

gold and the depression. fiat money and inflation.

milton friedman:

http://www.youtube.com/watch?v=O7pnjzCuSv8

Please don't lie and say you're an Austrian Economist.

No Austrian agrees with Ben Bernanke and the Monetarist / Chicago school... which had no idea this crisis was coming, or any other for that matter.

He's attacking a Gold EXCHANGE standard. Which the Austrian said would fail as well.

Milton Friedman: "John Maynard Keynes as unquestionably one of the greatest economists of all time."

Hahahahaha !

keynsianism, invented by his followers gave keynes a bad name.

No, he achieved that himself with his incoherent general treatise, a 'General Theory'. Which requires his followers to try understand, just exactly, wtf he was trying to say. lol

Treasure trove of truth:

http://www.youtube.com/profile?user=misesmedia&view=videos&query=gold

 

[Stormin_Norman]

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

 

[Ageo]

gold and the depression. fiat money and inflation.

milton friedman:

http://www.youtube.com/watch?v=O7pnjzCuSv8

Mate are u serious??? and you say you base your economic theory on austrian principles?

Milton Friedman: "John Maynard Keynes as unquestionably one of the greatest economists of all time."


That has to be the post of the month. Anyone have any real evidence that the gold standard is much worse off than the current fiat system????

 

[Stormin_Norman]

u asked how gold caused the deflation (and depression) to spread.

you talked about inflation.

that video touched on both of them.

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.

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.

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?

 

[Glen48]

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