It ain't "reckless abandon," it's "bold, upfront action"

[Ilion]

Oakman wrote:

As my Field First used to say: Fat f***ing Chance,

Well then, if/since we won't address the real problem, then I suppose we'll just have to keep suffering these "unexpected" shocks-to-the-system until the whole thing implodes.

[Stan Shannon]

Oakman wrote:

Which would have had to start with restoring the gold standard

Fine by me. But I don't believe it would have the salubrious affect you imagine.

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.

[Oakman]

Ilíon wrote:

It's impossible to create wealth simply by destroying wealth: neither the New Deal nor WWII either created wealth or ended the Great Depression.

I know what you're trying to say and I wouldn't argue that you are 100% wrong. However, the economy is not simply a matter of how much wealth there is. The opportunity to create wealth is equally important. FDR's public works projects actually cut down on those opportunities for everyone by monopolizing them. Once the projects were wound down more opportunity was available to private individuals. Once the government became a voracious consumer, more opportunities came into being. The fact that much of the goods purchased were ultimately destroyed doesn't matter since it wasn't the government that was amassing wealth, it was the private sector which not only amassed wealth, but made capital investments with that wealth that long outlasted the war.

Jon Smith & Wesson: The original point and click interface

[Oakman]

Ilíon wrote:

Well then, if/since we won't address the real problem, then I suppose we'll just have to keep suffering these "unexpected" shocks-to-the-system until the whole thing implodes.

I wish I could say I saw an alternative. What I suspect will happen is that we will continue to put bandaids on our faltering economy until inflation either destroys our national cohesiveness, or the Chinese decide that we're bought and paid for and come to collect.

Jon Smith & Wesson: The original point and click interface

[Rob Graham]

I think the Chinese need to be properly nervous. One way to wipe out (or at least trivialize) a large debt is to inflate the currency until the debt is not meaningful. I worry that may be some of the method in this madness.

[Oakman]

Stan Shannon wrote:

Fine by me. But I don't believe it would have the salubrious affect you imagine.

I take Zep's word that it is impossible. There literally isn't enough refined gold in the world to support the global economy. And, since much of what there is is not in the hands of the US, we will never go back. But, what I am sure of is that as long as the Feds can print fiat money, they will flood the market with it - as you see them doing right now, and as they have done on an ever-increasing scale since the 70's. Had our currency any real value, then Freddie and Fannie could not have used scrip provided by Bernanke to buy up all those bad mortgages. Had our money real value, there would have been no spike in oil prices (check back, you'll see that gold, pretty much, came along for the ride when oil began go crazy - what became less valuable was the monopoly money issued by the oil-importring countries.

Jon Smith & Wesson: The original point and click interface

[MidwestLimey]

Consider this, under the gold standard your capacity to increase your profits by selling more of your services is ultimately rendered by the central governments ability to increase it's supply of a transition metal that is practically useless unless alloyed. The only intrinsic value of this transition metal is that other people believe it has intrinsic value. Granted, it has a pretty colour. Being a transition metal, it can't be created. There's limited scope for mining more. Thus to increase supply and thus increase your scope for profits we must get other people's supplies. Getting their supplies will reduce their wealth, so they're unlikely to give it up voluntarily. Trading away their supply only makes sense if what is received in return has guarenteed reverse convertability and a likely avenue for reversal. So in a world with limited scope for mining the 79th element, using it as a basis for our wealth requires either: Our acceptance that we reduce our consumption and output based on the ability of mining companies. Or a mandated convertability of other goods (and services??). Or "hostile takeovers". i.e. we invade.

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[John Carson]

Oakman wrote:

Failing being exposed to such a radical idea (it is after all a politically-correct ivy-league school) he might still have noticed that while the economy did slowly get better during the eight pre-war years that FDR continued the policy of throwing money at the economy, the crises -- far from what he claims -- lasted for years and years. It may be a simplistic construct, but it appears that Tojo and Admiral Yamamoto did far more to get the US out of the depression than Hoover and FDR combined.

And how did Tojo and Admiral Yamamoto do that? By inducing the government to undertake massive government spending. Stan and I have already been through this. See here and the following posts: http://www.codeproject.com/script/Forums/View.aspx?fid=2605&msg=2950218[^] The chart here is especially telling: http://www.usgovernmentspending.com/downchart_gs.php?year=1920_1950&view=1&expand=&units=b&fy=fy10&chart=F0-total&stack=1&size=m&title=Total%20Spending&state=US&col=c[^]

John Carson

[Oakman]

Rob Graham wrote:

One way to wipe out (or at least trivialize) a large debt is to inflate the currency until the debt is not meaningful

Simultaneously you are kicking folks up into a higher tax precentage. It's a double win for the Washington Suits.

Jon Smith & Wesson: The original point and click interface

[Oakman]

MidwestLimey wrote:

Our acceptance that we reduce our consumption and output based on the ability of mining companies.

Did you know that you can graph the declining output of the Roman siliver mines that were not too far from the capital, and end up basically showing the declaine and fall of the Empire? The Emperors tried to delay the problem, of course, by alloying the silver in their coins to other, 'base,' metals.

MidwestLimey wrote:

Our acceptance that we reduce our consumption and output based on the ability of mining companies. Or a mandated convertability of other goods (and services??).

like goldbacks and silver certificates?

MidwestLimey wrote:

Or "hostile takeovers". i.e. we invade.

Well, Canada has a lot of gold. . .and oil. . .so does Mexico. . . :-D

Jon Smith & Wesson: The original point and click interface

[Lost User]

Zep's observations regarding the "Gold Standard" I fully appreciate. However, something tangible has to be established that we can call a financial asset that currencies can be valued against. It is all well and good the Bank of England printing these words on its currency notes "I Promise To Pay The Bearer On Demand The Sum Of XXX Pounds" but unless it is based, like I said, on something tangible, then that promise becomes almost meaningless.

[Oakman]

John Carson wrote:

By inducing the government to undertake massive government spending

It's not whether the government is spending, it's whether the government is consuming or producing. Because of FDR's agenda, he kept putting the government in the role of being a producer, especially during his first term. He effectively monopolized the use of capital for awhile, leaving few opportunties for anyone else could accumulate any and less reason to make capital investments. Once he allowed private enterprise to take over the role of producing, and, simultaneously, began purchasing goods from the market at a rate never seen before, the economy quickly, got back on its feet.

Jon Smith & Wesson: The original point and click interface

[Lost User]

With the Trillions of Dollars spent by the worlds Governments this past few months, now and during the next few months, higher taxation is all but guaranteed for the foreseeable future. This money has to be repaid by some means unless there is the intention to offend all creditors by unilaterally/bilaterally/multilaterally canceling this debt, and that could be the cause for open hostilities with, for example, mainland China.

[Oakman]

Richard A. Abbott wrote:

However, something tangible has to be established that we can call a financial asset that currencies can be valued against.

Zep (and I, fwtw) agrees (if I understand him and can speak for him in this instance). The only problem is: what???

Richard A. Abbott wrote:

I Promise To Pay The Bearer On Demand The Sum Of XXX Pounds

Ironic, when you remember that pound used to be a pound of silver - so did dollar, for that matter.

Richard A. Abbott wrote:

then that promise becomes almost meaningless.

As Rob pointed out - that's what is making the Chinese nervous. They've finally caught on to having purchased billions of pieces of toilet paper with real goods. That they have poisoned a few of us with these transactions probably provides cold comfort.

Jon Smith & Wesson: The original point and click interface

[Oakman]

Richard A. Abbott wrote:

unless there is the intention to offend all creditors by unilaterally/bilaterally/multilaterally canceling this debt,

It's been done before. By countries that attended the G20 summit and lectured Obama on economic policy.

Jon Smith & Wesson: The original point and click interface

[Ilion]

Oakman wrote:

... and I wouldn't argue that you are 100% wrong.

Wisdom? For, after all, what I said is 0% wrong.

[Oakman]

Ilíon wrote:

For, after all, what I said is 0% wrong.

All-wise, all-powerful, all-knowing, eh? :laugh: :laugh: :laugh:

Jon Smith & Wesson: The original point and click interface

[Ilion]

Oakman wrote:

All-wise, all-powerful, all-knowing, eh? :laugh: :laugh: :laugh:

Considering the competition, sure.

[Rob Graham]

It is cold comfort that the higher taxes that Washington will collect will be paid in those same worthless dollars. Wonder if they even suspect that this might be a no-win game?

[Stan Shannon]

Oakman wrote:

There literally isn't enough refined gold in the world to support the global economy.

That makes sense.

Oakman wrote:

But, what I am sure of is that as long as the Feds can print fiat money, they will flood the market with it - as you see them doing right now, and as they have done on an ever-increasing scale since the 70's.

There is no good reason that a fiat based economy cannot be made to work. The notion that it is an easy way to solve financial problems is what must be avoided. Failed institutions need to be allowed to fail. Economic downturns need to be allowed to work themselves out in the markets. What ever control is exercised by manipulation of economic parameters needs to be kept to an absolute minimum.

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.