GatesOfVienna: Chump Change

[73Zeppelin]

The problem with the gold standard is that there simply isn't enough physical gold to back all those dollars. Additionally, the cost of extracting and producing a unit of gold is increasing significantly. Then there is also the problem that a currency has to be manipulated to maintain exchange rates, etc.. What you really need is money that isn't just empty emmission - it has to be backed by something that is, itself, capable of growing. This is why I have become interested in the work of a small group of economists who propose to back money by production so that when a central bank emits money it is backed by a form of output; it comes from somewhere and from something concrete. Unfortunately, their writings are mostly in French. And yes, watch those credit ratings...in fact, talk of credit ratings alone is enough to stir things up about the security of a country.

[Lost User]

Oakman wrote:

go back on the gold standard,

There isnt enough to go around. Unfortunately, we are stuck with what we have. Perhaps a global currency and global government are the answer.

Morality is indistinguishable from social proscription

[Oakman]

73Zeppelin wrote:

The problem with the gold standard is that there simply isn't enough physical gold to back all those dollars.

Maybe that's less of a problem with the gold standard than it is with all those dollars? Remember I proposed to get rid of a lot of them by repudiating the national debt.

73Zeppelin wrote:

What you really need is money that isn't just empty emmission - it has to be backed by something that is, itself, capable of growing.

David Gerold at one point proposed a currency based on calories. Which, when you get away from dieting, is a measure of the potential for producing energy. In truth, I have no axe to grind about gold, except that it is rare enough to be valuable, and portable enough to be used as currency. We could go back on the seashell economy if that worked. But having dollars worth Swiss francs while Swiss francs are valued in dollars is, in my humble opinion, a scam - one that is becoming apparent. As someone on CNBC said, a receding tide reveals all the garbage.

Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

[Oakman]

fat_boy wrote:

There isnt enough to go around.

The assumption in your statement is that is we have to back all our worthless currencies with gold. Repudiate the national debts; burn all the toxic assets.

Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

[Lost User]

I suppose you could revalue/devalue currencies but that has its problems. Currency Devaluation and Revaluation[^] But to "Repudiate the national debt" itself is not necessarily an answer Ludwig von Mises Institute article[^] Burning those toxic assets - frankly some (the home owners etc) are going to glee with pleasure and many (the investors and consequently the taxpayers) will feel the pain of being cheated. Squaring that circle is a political nightmare.

[Oakman]

Richard A. Abbott wrote:

But to "Repudiate the national debt" itself is not necessarily an answer Ludwig von Mises Institute article

You and I must be getting something slightly different from the article or I misread the import of your comment. Rothbard seems to support my position almost completely. The terrible shame is that since the article was published, the public debt has grown from 4 trillion to 12 trillion (reducing the share of it held by the SSA) and we can no longer talk about the government confiscating our money through 'voluntary' taxes, but the wealth (real and imagined) of our children and our grand children. I cannot, for the life of me, imagine my grandniece thinking that she should be required to pay one red cent to cover the follies and chicanery of the last thirty years - whether it was an ill-advised war or an artificially created housing boom that was created by governmental fiat and kept going with lies and subterfuge. As Rothbard points out, expecting the inhabitants of a country that has just thrown out a corrupt and greedy regime is morally indefensible as well as realistically a waste of time. I absolutely love the idea of kicking the UN out and selling their property to start paying off the Social Security portion of the debt, and like Rothbard, I think there are a number of other governmentally-owned structures that could be sold to make sure that the folks who had money taken out of their paychecks under false pretenses get back at least what they put in. I have a particular desire to see the Kennedy Center sold off since it has always seemed to me like it belonged in France not the U.S. of A. But imagine what the interstate would bring in if we sold it off to folks who would turn it into a series of toll roads. :cool: Alternately, we could start a war with China. That would pretty much take care of about half our public debt and a fair amount of a private debt as well. The unemployment rate would drop as soon as we reinstituted the draft and simultaneously ramped up what is left of our manufacturing capability. The car manufacturers would swing into three shifts as they began building combat vehicles and Boing and McDonnel Douglas would make their home cities into boomtown, USA. Even recycling would stop being a pita and become a patriotic act.

Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that

[Lost User]

We both read from the same article. This government debt is now so large that payment of interest is nigh impossible let alone repayment of the original capital. But what damage could be done to the American (and British and ... ) nations if repudiation of nation debt occurred. As China and other countries are largely the creditors I am concerned that any such act of repudiation could be cause for war. They are not going to sit back and do nothing. If war has to come, it is most likely if not definitely be a nuclear war where the whole of humanity will be the victim, there won't be too many victors at its conclusion. Then what? Start again with a combined population of what? And with what resources? Any such conflict of such scale would see the Black Death of the Middle Ages or the Influenza epidemic of the early 20th century as a mere minor inconvenience. I don't know the answer to this question of national debt. The numbers involved are just too large.

[Oakman]

Richard A. Abbott wrote:

But what damage could be done to the American (and British and ... ) nations if repudiation of nation debt occurred

What other course is there? If I thought that somehow, some way there was another, less painful mechanism for creating a valid medium of exchange in this country or globally, I would embrace it wholeheartedly. Printing more and more paper money is simply not an option, though sometimes I think the Keynesians are counting on paying China back with dollars that are worth 1/1000th of the ones we borrowed. Ask yourself this - what happens when farmers no longer accept paper money in exchange for their goods? London and New York share many things in common - one of which is that they are three days of non-deliveries of food away from starvation. What happens when Putin wakes up and realises that selling oil and gas to the west at any price is giving away something for nothing? What happens when you realise that you cannot work for anyone who cannot pay you in real goods, because no-one will accept your paper in exchange for anything worth having?

Richard A. Abbott wrote:

I am concerned that any such act of repudiation could be cause for war. They are not going to sit back and do nothing.

I sure as hell wouldn't if I were one of their leaders - but China values its yuan (yuans?) in dollars. When the US currency becomes worthless, theirs will at the same time and to the same extent. And to keep our peerless leaders (This is not an attack on Obama, by the way, he may accelerate the slide a bit or he may delay it, but the process is inevitable unless we (see post about repudiating the debt and revaluing the currency) which neither he nor any other politician has the gonads to do) from getting to the point where they can pay off the debt with our brand spanking new $100,000,000 bills (each of which can buy a loaf of bread, a jug of wine and a hunk of cheese) they would at least consider sending their navy over to San Francisco to start collecting payment. If Russia enters the global war, it's much more likely to go nuclear than if China does - and Russia doesn't trust China any more than I do, so there's no reason to assume that they'll fight on the same side. China, it's guesstimated has maybe 500 nukes as opposed to Britain's 200 and the US's 4,500. (Russia's got over 5K, but there's a big question as to how many of them have been kept or returned

[Lost User]

Oakman wrote:

no-one will accept your paper in exchange for anything worth having?

Looking into the abyss and seeing a reflection of Zimbabwe on the face of the US Dollar, or the £ sterling no doubt would cause many headaches, but do you really believe that Washington and London would permit the wholesale destruction of these important currencies to match that which Zimbabwe now experiences. I truly can't see our political and financial masterminds ever permitting that kind of dramatic failure to occur. But these important currencies are indeed vulnerable. Which begs the question, have the IMF and the World Bank became almost irrelevant. Iceland recently borrowed funds from the IMF but really, the amount of cash and gold these organizations now have available is looking pitifully small compared to the problems this planet not enjoys. Sanity needs to make a return to this world of political and financial fortunes. I do have some views on what could be, but getting there is horrendously difficult. I'll say no more about those views right now - don't want to make myself look a fool.

[Oakman]

Richard A. Abbott wrote:

I truly can't see our political and financial masterminds ever permitting that kind of dramatic failure to occur.

They are, I am afraid, not all powerful. It appears that the governments of most modern countries have become addicted to solving the problems of today by attempting to increase the money supply faster than inflation can restore balance. But the curve grows ever steeper and ther comes a point where it might as well be straight up. At that point comes a collapse, whether the leaders or the majority of citizens wish it, or not.

Richard A. Abbott wrote:

Sanity needs to make a return to this world of political and financial fortunes.

I suspect that a number of folks are sane enough to know whats going on - but addicts cannot break away from their drug simply because they are sane enough to know they are killing themselves.

Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.