Last edited by conviction; 08-09-2012 at 09:00 PM.
I think regardless, whether its a gold standard, silver standard, etc we gotta take steps to a stronger currency, simple reduction of fiat currency could suffice for the solution provided by reserves.
Here's Krugman getting owned by another Austrian in the politest way possible, and then responds with personal attacks, never saw the man so redfaced before - http://www.youtube.com/watch?v=K2tPfUJ90XI
And then society carries on with more powerful gold ounces and prices fall as a result.Not when China holds huge reserves of gold and can take it out of circulation as it sees fit. The gold standard doesn't work.
Hoarding isn't actually a problem. All the gold is held by society at any one point anyway and money doesn't circulate, it just gets transferred from one person's cash balance to another and that gold that is hoarded is doing just as useful a taks as if it were 'circulating' since it allows the owner the the present ability to perform exchanges at anytime
Your not proving the gold standard doesn't work by your example and even if China sucked up all the gold in the world and never let it out then another commodity standard would arise.The gold standard is not the only standard possible, it's just a commonly used example because that's what's been mostly chosen when society is free to determine a monetary standard free of government controls.
Admittedly, I don't have the history of the gold standard in the USA branded in my brain so I do have to research a lot of this as I go (just being honest and not trying to pretend I know what I'm talking about 100% in this discussion - but research is always good)
"Countries that held to the gold standard through 1933 (like the United States) or 1936 (like France) suffered the worst from the Great Depression"
The gold standard was suspended twice during World War I, once fully and then for foreign exchange. At the onset of the war, U.S. corporations had large debts payable to European entities, who began liquidating their debts in gold. With debts looming to Europe, the dollar to British pound exchange rate reached as high as $6.75, far above the (gold) parity of $4.8665. This caused large gold outflows until July 31, 1914 when the New York Stock Exchange closed and the gold standard was temporarily suspended. In order to defend the exchange value of the dollar, the US Treasury Department authorized state and nationally-charted banks to issue emergency currency under the Aldrich-Vreeland Act, and the newly-created Federal Reserve organized a fund to assure debts to foreign creditors. These efforts were largely successful, and the Aldrich-Vreeland notes were retired starting in November and the gold standard was restored when the New York Stock Exchange re-opened in December 1914.
As the United States remained neutral in the war, it remained the only country to maintain its gold standard, doing so without restriction on import or export of gold from 1915-1917. During the participation of the United States as a belligerent, President Wilson banned gold export, thereby suspending the gold standard for foreign exchange. After the war, European countries slowly returned to their gold standards, though in somewhat altered form
I've yet to see anything that would convince me that a change to the gold standard really changes anything as far as today's issues that we are facing.
"So we see that it takes almost nothing to adopt a gold standard system. The Rentenbank held little if any gold. The rentenmark was not convertible into gold. No preparation was necessary. No staff was necessary. No time was necessary. The only thing that was necessary was a clear policy, namely to maintain the value of the rentenmark equivalent to a prewar gold mark, and a clear means to accomplish this policy, by restricting the supply of rentenmarks to maintain its value.
Germany was not the only country to suffer from hyperinflation after the First World War. Austria returned to gold in 1923, Poland in 1924, and Hungary in 1925.
It amuses me today when people invent this, that or another reason why a gold standard system is "impossible." What they usually mean by that is: they don’t know how to do it. You can’t be in a worse position than Germany on Nov. 15, 1923. If it was possible then, it is possible at any time."
"I've yet to see anything that would convince me that a change to the gold standard really changes anything as far as today's issues that we are facing." - To reduce a central planned economy!! It doesn't work, it won't work now. They've caused these problems, and we task them them to fix the very monsters they create.
“We can’t solve problems by using the same kind of thinking we used when we created them.” – Albert Einstein
Last edited by conviction; 08-10-2012 at 06:36 PM.
"The gold standard failed on repeated occasions during the 19th and 20th centuries essentially because it is a fixed exchange rate system. The same reasons that historically caused the fixed exchange rate system under the Gold Standard to fail in various nations are the same reasons why the Euro will ultimately fail today. These are also the same reasons why a gold standard system would fail today and always."
Returning to gold wouldn't solve the problem, it would be a start though. Until the Federal government is reigned in instead of being free to leach off the economy, we won't return to growth.
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