Essential Economics for Politicians

Wez,
do you agree with the following?:

Number 10: There Is Not Enough Gold (or Silver) In the World to Serve as Money

Let’s begin with the obvious. We know that central banks the world over have printed money at exponentially growing rates for years. There is now so much paper and electronic money floating around the world that gold (or silver) cannot possibly be expected to keep up. You can’t print gold, after all, you need to find it, dig it out of the ground, refine it, etc., a hugely expensive and time-consuming process which practically ensures a stable rather than exponentially growing supply of the stuff.

Of course, we know that an exponentially growing supply of money is a good thing. How else can an economy hope to grow, especially one bearing in an exponentially rising debt burden! We need all that new money to pay all that new interest, don’t we? And don’t forget, most things keep getting more expensive, like food and fuel. Don’t we need more money to pay for all that too? What about government entitlements that keep growing in size? If we didn’t have a constant flow of new money, how on earth would we pay for all of that? It is essential that we keep the printing presses rolling.
Click to expand...
 
Anyone who wants to return to gold-backed economy may purchase a gold contract from a commodity dealer. The dealer will send the buyer the gold, or, as an option, store the gold securely and issue the buyer a certificate of ownership. The buyer can then search for another economic re-enactor willing to trade goods in exchange for the gold certificate, or for a contract declaring a partial interest in the certificate. The commodity dealer will send to the contract buyer, or his designated agent, the gold in question, on demand. For all practical purposes, this parallels transactions done with gold certificates before gold was confiscated in the 30's, except that improvements in technology allow much of the paperwork to be done electronically, and deliveries can be accomplished overnight.

So what are you waiting for?
 
espola said:
Anyone who wants to return to gold-backed economy may purchase a gold contract from a commodity dealer. The dealer will send the buyer the gold, or, as an option, store the gold securely and issue the buyer a certificate of ownership. The buyer can then search for another economic re-enactor willing to trade goods in exchange for the gold certificate, or for a contract declaring a partial interest in the certificate. The commodity dealer will send to the contract buyer, or his designated agent, the gold in question, on demand. For all practical purposes, this parallels transactions done with gold certificates before gold was confiscated in the 30's, except that improvements in technology allow much of the paperwork to be done electronically, and deliveries can be accomplished overnight.

So what are you waiting for?
Click to expand...
Who said I was waiting?
 
Andy Dukes said:
I would say it was hope and prayers. Why would any nation, unless it is like the Saudi's and oil, want to tie it's money to a single commodity?
Click to expand...
You mean because it is better to tie your money to nothing?

Andy Dukes said:
I ran across this article today about the top industries based on GDP for each state. Notice how few economies are based on an element.
http://247wallst.com/special-report/2016/09/23/largest-industry-in-each-state-3/2/
Click to expand...
Notice how few if any of those economies print their own currency.
 
Wez said:
I agree that CPI has become politicized and messed with too much. It's your solution I'm not down with...
Click to expand...
Most aren't despite what you just mentioned about the CPI. Homes are not in the CPI basket neither are stocks. I am reading the attached paper to the Atlantic article. I am not surprised that the Atlantic left out the two most important events, The creation of the Fed and the Federal income tax of 1913, when discussing the charts. The article makes key points about the gold standard restricting the printing of more money to combat inflation of prices. That is just a complete mis-understanding of the symptoms as opposed to the cause of inflation.
 
Bruddah IZ said:
Most aren't despite what you just mentioned about the CPI. Homes are not in the CPI basket neither are stocks.
Click to expand...

Homes shouldn't be in CPI, but rents probably should. Why would stocks be in CPI, that's not an item people need to buy?
 
Wez said:
Homes shouldn't be in CPI, but rents probably should. Why would stocks be in CPI, that's not an item people need to buy?
Click to expand...
Right but those are the items that they spend the most on in life and the two sectors where the Great recession and the great depression happened. Both events caused by an inflation of the money supply.
 
Bruddah IZ said:
Right but those are the items that they spend the most on in life and the two sectors where the Great recession and the great depression happened. Both events caused by an inflation of the money supply.
Click to expand...

You're confused as to what CPI is supposed to represent. It's not what people spend the most on, it's a sampling of typical goods and services. You can't put everything in there, stocks, Real Estate, etc. are more speculative investments that would make CPI a meaningless index. People with modest incomes and savings don't care what people are paying for their speculative investments, they need to know how much the stuff they do buy is changing in price.
 
Wez said:
You're confused as to what CPI is supposed to represent. It's not what people spend the most on, it's a sampling of typical goods and services. You can't put everything in there, stocks, Real Estate, etc. are more speculative investments that would make CPI a meaningless index. People with modest incomes and savings don't care what people are paying for their speculative investments, they need to know how much the stuff they do buy is changing in price.
Click to expand...
Totally agree. That is why I wouldnʻt use the CPI to argue against the gold standard. Printing more fiat money or extending more credit typically increases the cost of not just CPI items but goods and services as a whole. Not printung does the opposite obviously.
 
You must log in or register to reply here.
Back
Top