Those who oppose a gold standard

[jim4silver]

Here is a great writing from 1966, written by none other than Alan Greenspan himself. I know TreasurePirate will not approve of this message, but at least it is coming from someone who cannot be called a per se PM bug (at least not currently).

Worth reading, and even a blind person will see that what he describes as being the result of NOT having a gold standard is exactly what is and has been going on in the past and will continue in the future.

321gold: Gold and Economic Freedom by Alan Greenspan 1966


PS I know a real gold standard is not possible here anymore because the debt level is so high and we and other countries have "partied" too long and really are beyond fixing. But I cannot argue with Greenspan's former opinions.

Just my opinion.

Jim

 

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[TreasurePirate69]

Interesting read. He makes some valid points. But unfortunately, most of those points are based on idealistic laws of economics like "supply and demand" which don't always hold true. In other words, it's a lot of speculation based on commonly accepted principles. Those principles are commonly accepted to be true most of the time but may not be true all of the time.

This article also only concentrates on the positive aspects of a gold standard while completely ignoring the negative aspects. It is akin to saying something like "a gold standard is great because it keeps people from borrowing more than they can afford" while completely ignoring something like "a gold standard can completely kill your economy if other countries take all of your gold away through arbitrage (no gold, no economy)". In order to determine if a gold standard is workable you need to compare the positive and negative aspects and decide if the overall result is positive. He completely fails to do this. What we've seen in actual practice is that the overall result is NOT positive and there are many, many reasons why the gold standard ALWAYS fails.

Many people want to say that all fiat currency systems have failed throughout history. This is patently false. What IS true however is that all attempts throughout history to use a gold or silver standard HAVE failed.

 

[jim4silver]

Interesting read. He makes some valid points. But unfortunately, most of those points are based on idealistic laws of economics like "supply and demand" which don't always hold true. In other words, it's a lot of speculation based on commonly accepted principles. Those principles are commonly accepted to be true most of the time but may not be true all of the time.

This article also only concentrates on the positive aspects of a gold standard while completely ignoring the negative aspects. It is akin to saying something like "a gold standard is great because it keeps people from borrowing more than they can afford" while completely ignoring something like "a gold standard can completely kill your economy if other countries take all of your gold away through arbitrage (no gold, no economy)". In order to determine if a gold standard is workable you need to compare the positive and negative aspects and decide if the overall result is positive. He completely fails to do this. What we've seen in actual practice is that the overall result is NOT positive and there are many, many reasons why the gold standard ALWAYS fails.

Many people want to say that all fiat currency systems have failed throughout history. This is patently false. What IS true however is that all attempts throughout history to use a gold or silver standard HAVE failed.

All fiat attempts have failed too over time. So then what is best? Surely you don't believe what is going on now, and has been going on financially speaking is working?

Jim

 

[UncleMatt]

Not that I agree with that statement, but all human civilizations have failed over time, not just their currencies. Nothing humans do is permanent.

 

[TreasurePirate69]

All fiat attempts have failed too over time. So then what is best? Surely you don't believe what is going on now, and has been going on financially speaking is working?

Jim

The statement "all fiat attempts have failed too over time" simply isn't correct. As long as we have fiat attempts that are still ongoing then not all of them have failed.That's basic logic. It is true that some of them MAY fail. But it is not a given. Saying it over and over again doesn't make it true. And many people who make this statement don't realize that there ARE some fiat currencies that are working well. Hong Kong is a good example.

You ask if I believe what is going on financially speaking is working.... this is binary thinking. It's not a matter of whether it is working or not. It is a matter of how well it is working. It's not black and white, it is gray. How well it works fluctuates from year to year. Right now, we are in a very bad position due to the events of 2008. But many people (including myself) believe we would be in MUCH worse shape if the Federal Reserve did not have the ability to offset the dangers of deflation by carefully inflating the money supply. So in 10 years you might be looking at an economy that has fully recovered thanks to the ability to control fiat currency. At that point you might look back and realize that it is in fact "working" right now.

It's like the war on drugs. Most people see the drug problems we have and announce "clearly the war on drugs is not working". But how do they know that? Have they ever considered what the US would be like if there were no war on drugs (here's a hint... look at Mexico)? Just because we still have problems with drugs does not mean that the war on drugs is not working. Sure, it is not working as well as we would like it to work. But to say it isn't working is to say that things would actually be BETTER if we stopped the war on drugs and legalized ALL controlled substances. If you think we have drug problems now then you can imagine what that would be like.

It's like declaring that chemotherapy isn't working yet failing to realize that by going through chemotherapy you have potentially added 5 years to your life.

 

[jim4silver]

You ask if I believe what is going on financially speaking is working.... this is binary thinking. It's not a matter of whether it is working or not. It is a matter of how well it is working. It's not black and white, it is gray. How well it works fluctuates from year to year. Right now, we are in a very bad position due to the events of 2008. But many people (including myself) believe we would be in MUCH worse shape if the Federal Reserve did not have the ability to offset the dangers of deflation by carefully inflating the money supply. So in 10 years you might be looking at an economy that has fully recovered thanks to the ability to control fiat currency. At that point you might look back and realize that it is in fact "working" right now.

It's like the war on drugs. Most people see the drug problems we have and announce "clearly the war on drugs is not working". But how do they know that? Have they ever considered what the US would be like if there were no war on drugs (here's a hint... look at Mexico)? Just because we still have problems with drugs does not mean that the war on drugs is not working. Sure, it is not working as well as we would like it to work. But to say it isn't working is to say that things would actually be BETTER if we stopped the war on drugs and legalized ALL controlled substances. If you think we have drug problems now then you can imagine what that would be like.

It's like declaring that chemotherapy isn't working yet failing to realize that by going through chemotherapy you have potentially added 5 years to your life.

With all due respect I think this "binary thinking" argument that you often utilize is overdone. It kind of reminds me how the liberal progressives (and other different groups) try to rationalize something that many feel is bad or undesirable. We have seen this time and again with many of their "agendas" that over time we have been conditioned to believe are good things when in reality the agendas are not in our best interests. So instead of saying something is bad or good, they say it's neither and then ramble on in some manner about why having this "thing" will be beneficial somehow, while completely ignoring any negative attributes. ObamaCare is a perfect example of this. Seems pretty black and white on how that is working now, and will work in the future if they ever get it "fixed".

There is something called a "zero-sum game". I won't go into detail about it, but it stands in contrast to your "binary thinking" argument. To use a more relaxed vernacular, sometimes there are only two choices: $h!t and shinola. No binaries hiding in there.

Just my opinion.

Jim

 

[pippinwhitepaws]

look at mexico? for how the war on drugs is going?

I find it difficult to believe in this day and age...with all the informational technologies availed to most everyone...that statements like this exist.

mexico has terrible issues with drug gangs and violence due to the untied states citizens demanding drugs, and using mexico as a transport corridor.
prior to the war on drugs being declared...mexico had no drug gangs, most violence was political based or domestic type...
reading history is a wonderful thing.

 

[Fletch88]

look at mexico? for how the war on drugs is going? I find it difficult to believe in this day and age...with all the informational technologies availed to most everyone...that statements like this exist. mexico has terrible issues with drug gangs and violence due to the untied states citizens demanding drugs, and using mexico as a transport corridor. prior to the war on drugs being declared...mexico had no drug gangs, most violence was political based or domestic type... reading history is a wonderful thing.

Profit is the driving force behind it all. Take the profit incentive out if the equation through legalization and the whole Mexican drug trade would vanish almost overnight. Not to mention Dominos stock prices would go through the roof!

 

[TreasurePirate69]

... prior to the war on drugs being declared...mexico had no drug gangs

Since this is a precious metals site and not a political forum or anti-drug forum, I have no desire to debate the war on drugs (or Obamacare for that matter). I shouldn't have even used it in my example. But since you chose to respond specifically to my statement, I only have this to say and then I'll let it go....

To say Mexico never had "drug gangs" prior to the war on drugs is bit of a misnomer. What they had and continued to have is drug cartels. These cartels gained immense power because there was no war on drugs and the government was extremely corrupt as well. It was the lack of a war on drugs that allowed these cartels to gain the power they were able to gain. If you allow this to happen and then SUDDENLY decide that a war on drugs is a good idea, then you are going to have trouble. What you are confusing is cause and effect. The newly declared war on drugs did not cause the problems they have today. What caused the problems they have today is failing to have a war on drugs for so many years in the first place. You can't turn that off and expect not to have some push back from those organizations that your government gave the green light to for 40 years.

For the sake of the forum I won't discuss it further. I apologize for bringing it up in the first place.

 

[TheCoinKid]

Profit is the driving force behind it all. Take the profit incentive out if the equation through legalization and the whole Mexican drug trade would vanish almost overnight. Not to mention Dominos stock prices would go through the roof!

Legalization won't make the drug trade vanish, but I do think some of the cartel-related problems would.

 

[TreasurePirate69]

Profit is the driving force behind it all. Take the profit incentive out if the equation through legalization and the whole Mexican drug trade would vanish almost overnight. Not to mention Dominos stock prices would go through the roof!

Right...... because legalization during the days of prohibition sure did cause the mafia to disappear overnight.... oh wait, no it didn't. People who think that legalization is going to somehow put the cartels out of business must also assume that the people running the cartels are somehow going to "go straight" and get respectable jobs instead of just changing to bigger and badder things.

And NOW I am officially done talking about drugs...