Would a gold standard keep deflation in check?
cohodk
Posts: 19,123 ✭✭✭✭✭
In another thread it was stated that a gold standard would keep inflation in check, and that inflation is bad.
So...what about deflation, which, thanks to human ingenuity and intelligence in making things and processes more efficient, plays a strong hand?
Excuses are tools of the ignorant
Knowledge is the enemy of fear
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inflation is bad?
only to spenders and savers. wait, that pretty much includes everyone!
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
If "the economy" (the overall value of goods and services) is going grow, the money supply is going to have to grow too.
A strict gold standard would mean the economy could only grow as fast as the gold supply?
And gold miners and refiners would be on charge of it all?
Liberty: Parent of Science & Industry
Inflation (along with a growing sovereign debt) creates the need for more currency. Without it the dollars in use would work just fine. In fact, creating more goods without creating more money would result in lower prices (supply and demand). Lower prices would result in a need for less currency.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
So, runaway deflation is what is being advocated?
Liberty: Parent of Science & Industry
free markets are being advocated. Let the laws of supply and demand override the laws of a manipulative central bank.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
How do we know whether it requires growth? All the measurements we have today are fraudulent .
They tell us there is no inflation for instance , true as long as you don't pay rent or health care. Is that a useful statistic?
Why can't we have an economy based on just making stuff useful ?
Lets get rid of the fraud all around us and re evaluate.
What about the GNP ? Does it include billions waste on political campaigns ? billions wasted on viagra ads ? billions wasted on make work for government employees? Billions wasted on lawsuits where at the end the money all goes to lawyers ?
Dog walkers , and fingernail painters and 7$ cups of coffee? Idiots that get a new Iphone every year? Deflate all that garbage , 10 billion single use plastic water bottles? End all of it .
Student loans for worthless degrees ? Loans that will never be paid off but are marked to market at full value
Our whole economy revolves around fraud and waste , everything we buy now is garbage designed to wear out or break in 2 or 3 years . YAYYYYYYYY GROWTH!!
Idiots that take out a note on a new car every 3 years that buried within it are thousands of dollars from the last car or two that were never settled just rolled over and over.
Sure people are stupid , but endlessly taking advantage of them is still wrong
Wow, what a rant.
So, a return to the gold standard would solve all of that?
Liberty: Parent of Science & Industry
A regular christmas miracle aint it?
Aint it great when the "know it all's' are made to think?
Dang i love this place!!!
Knowledge is the enemy of fear
That is a bit of a rant, but only we are to blame. Go to any yard sale and what do you see...a bunch of chineese made junk. Retail values in the 1000s sold for 50c or a dollar. We dont need tariffs to fix our trade woes, just individual fiscal responsibility. And since we the people dont know what that means, how can we hold our elected officials to account?
We are a pathetic lot. Lol
Knowledge is the enemy of fear
Yeah, the median individual among "We" is very, very average 😉
Liberty: Parent of Science & Industry
Under a gold standard, the government provides a mechanism for this necessary increase in the money supply: turning gold bullion into coins. Each gold coin minted increases the amount of money in circulation, even though the existing amount of gold in the country and the world remains the same. And the government can transform any amount of gold into coins and release them into circulation without running a deficit and issuing bonds.
Conversely, the money supply can be decreased at any time by either the government or private individuals melting existing gold coins.
My Adolph A. Weinman signature
not all the fault of the individual, there's the malign influence of the financial industry to thank for a large part of it. The middlemen that don't make anything , don't want us to have quality stuff , they need an endless river of transactions. They cant have you buying a cellphone outright once every 5 years , they want to tell you its free so you get one every 6 months . TV's can't last 30 years , they need them to be garbage and they need to con you into thinking a bigger one is better somehow
Then there are the schools that don't bother to teach kids about basic financial survival. By the time you are 18 someone should have told you what compound interest is, but they very conspicuously don't .
When I was going to college you had to prove you had some sort of plan before anyone gave you a cent , there was no taking lump sums of financial aid and using the money for spring break
. There are lots of idiots walking around today with loans that can never be discharged and if you really examine where the money went its disgusting . These colleges build fancy new dorms just so they can charge more to live at school and all that lodging cost is getting financed . These people don't know that they are still going to be paying interest on lodging 30 years later , most of them never had a full time job before they sign those papers . There should never be a situation where an 18 year old can borrow 100,000 dollars to get a degree , seriously that should be impossible . The money isn't real , the lenders are not afraid so they hand it out like candy
To get back to a gold standard angle , there would be no loans to idiots under the gold standard , because it would actually be real money. The lenders would die without it so they would need it back , there would be no second mortgages for dummies to buy snowmobiles , or midlife crisis harley davidsons , strip clubs and casinos would still exist but they wouldn't take credit cards , most people would have maybe 1 credit card some would have none. Fiscal responsibility would be enforced via lack of credit.
If money is real and in short supply people wake up pretty fast. Money isn't real anymore it is too easy to come by . I think that needs to stop if we want to turn things around.
If we don't fix this we are going to have blood in the streets and some of us will still be here when it happens , its not multiple decades away
Fiat money is a drug and the downside of easy credit is similar to the downside of being able to buy heroin for $3 , it destroys people.
I at length see what lies beneath bronco2078's relentless cynicism.
Here's a warning parable for coin collectors...
Yes, completely and wholly without exaggeration.
Knowledge is the enemy of fear
What happens if there is a war or major natural disaster, famine, disease, ect? That sort of stuff seems to happen on occasion.
How would the rebuild or armament be paid for?
Knowledge is the enemy of fear
This sounds likes a communist and cashless society. Produce what the people need, not what they want. Eventually driving all of them into poverty since the need for money becomes nonexistent.
Knowledge is the enemy of fear
the other countries won't have free money either. Where do they get money to attack with?
The whole colonialism thing is the only way that worked before, there aren't any corners of the earth left to sail to and murder the natives of.
Baley you read the book , you don't recognize where we are right now?
another "russian meddling" distraction? Old trick, doesn't work any more.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Well now... I was feeling great this morning...then I read this thread...
Of course, then I also realized that I am well situated and supplied....So, I feel great again.... I will deal with what ever comes... 
Cheers, RickO
*Baley you read the book , you don't recognize where we are right now? *
Who is John Galt?
Liberty: Parent of Science & Industry
Foundation
The Asimov book?
Liberty: Parent of Science & Industry
The very one ! Call me Raven Seldon
The supposed capital is a festering heap of garbage . They are busy pretending everything is fine , but the US empire is collapsing by the day .
Things that used to work smoothly are falling apart , roads, bridges , power distribution , corruption is everywhere , the supposed solutions are just endless rearrangements of deck chairs on the titanic.
We aren't in space we live on a round world which we are busy destroying and there is nowhere to hide , no frontier to escape beyond. Busy fighting over limited resources , while simultaneously trying to prop up our wasteful lifestyles and deny people of 2nd and 3rd world countries the chance to lift themselves out of the muck.
The ultimate steel cage match!
Safe to say , without the insane levels of fiat spending on our military they would have pulled us down already.
Printing endless free money and still being 20 trillion in the hole is quite the accomplishment.
Then i guess you really didnt understand what you were writing?
I suppose its all a conspiracy to you also knowing tha the greatest inflations and deflations in this country occurred when we were on a gold standard.
This always makes me of you.
https://images.app.goo.gl/43q4WchVj17zDukz7
Knowledge is the enemy of fear
Personally I want both the inflations and the deflations , I think that is like a healthy stock market , you can go long or go short.
Right now what we have is just government kicking the savers in the teeth over and over again while enabling the spenders and gamblers
>
Ok, yeah, have read through all of the Foundation and related Robot books a couple of times, but it's been years. Still have them and a couple hundred other classic science fiction paperbacks in a box, used to devour them in my teens and twenties.
Anyway, on the macro, I hear ya, though it's not overall as calamitous as the most shrill are shrieking, is it?
It's on the individual and group basis that I have more confidence, after all, everyone on the PM forum, for example, is far, far above average in wisdom, ability, and survival advantage, aren't they? 😉
Liberty: Parent of Science & Industry
If only they listened to that codhock dude.
Knowledge is the enemy of fear
That is soooooo 2017 thinking. We be at 23 tril now.
Knowledge is the enemy of fear
Reminds me of that old line, if you owe the mob 10 thousand, and can't pay it, you have a problem.
If you owe them 10 million and can't pay, then The THEY have the problem!
Liberty: Parent of Science & Industry
The only thing that will save us is to CONSUME. Don't ask, consume!
Also, Merry Christmas!
If "the economy" (the overall value of goods and services) is going grow, the money supply is going to have to grow too.
I call "BS" on this statement. Merry Christmas, guys.
I knew it would happen.
Good stuff, Bronco2078.
One thing that's been in our favor is the great efficiencies and abundance of this country over the years. Otherwise, we'd have had a famine and civil war long before now.
The banker's fiat money machine doesn't help anyone but the insiders - the bankers and politicians.
I knew it would happen.
Can you please explain your thoughts on why this is "BS"?
Knowledge is the enemy of fear
I think its BS because we all know there are 2 economies. There is a lot of double counting in the GDP , plus things in it that provide no real value, thats the tv talking head economy
Then there is the actual economy of things that are truly valuable and useful and that to me is contracting.
There is a whole list of things that are not legitimate parts of the economy.
Example #1 , anything with the word green in the title or description. If you buy an electric car then it doesn't count as part of the economy . We know the economics of electric cars are fake , without subsidies which are carefully swept under the rug not even one would sell. They would never be made in the first place if the costs weren't hidden.
We don't get to count military equipment like the F-35 fighter , a trillion bucks and will never fly? that garbage doesn't count.
Anything to do with lawyers doesn't count , we need to start shooting them not pretending they are useful parts of society,.
Health care doesn't count , (call it the F-35 rule , if it doesn't function you can't count it)
You take out all the garbage and fluff and you have below zero growth even with fiat money.
Government statistics: liars figure and figures lie
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
If "the economy" (the overall value of goods and services) is going grow, the money supply is going to have to grow too.
I call "BS" on this statement. Merry Christmas, guys.
Can you please explain your thoughts on why this is "BS"?
My observation is simply this - that if two parties want to transact, they don't need fiat money created out of thin air by bankers and politicians in order to transact.
If the money supply remains constant, whether it's gold or dollar bills - when a farmer makes five bushels or a factory makes five widgets - if the bushels or widgets are desirable enough to have demand, they will be sold for a price.
That price might change, but the transactions aren't dependent on the notional value of the money - they are dependent on the intersection of supply & demand.
The price might be 1/10th oz of gold one day and 0.055 oz of gold the next day. So what? Decimals can be your friend.
If a factory needs a loan, it can be 20 oz of gold or 0.00055 oz of gold. Decimals allow things to proceed without the need to create a boatload of banker notes (available only through your friendly fiat middleman banker at a small fee on every single transaction you make in your lifetime).
It sure would put a crimp on the bankers & politicians if they both had to account for where their money comes from.
But...…..the bankers and politicians don't have to follow the same rules of accounting, finance and ethics that the rest of us do.
Merry Christmas!
I knew it would happen.
_"The price might be 1/10th oz of gold one day and 0.055 oz of gold the next day. So what? Decimals can be your friend.
If a factory needs a loan, it can be 20 oz of gold or 0.00055 oz of gold. Decimals allow things to proceed without the need to create a boatload of banker notes"_
I believe you really do not understand what you are writing. The situations you have described would lead to massive disruptions in the supply/demand equation and price discovery would be nearly cumbersome on a local level, and nearly impossible on a national or global level. The middleman that you so ascribe to destroy, would have more work than imaginable.
Knowledge is the enemy of fear
hey we are heading for a collapse anyway , lets not screw around with half measures.
the gold standard had help in the form of real bills , I'll allow those to return.
Gold standard tends to be deflationary, so it would not keep deflation in check.
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."
Thomas Jefferson
“You can’t believe everything you find on the internet”
Abraham Lincoln
The situations you have described would lead to massive disruptions in the supply/demand equation and price discovery would be nearly cumbersome on a local level, and nearly impossible on a national or global level. The middleman that you so ascribe to destroy, would have more work than imaginable.
What you say is simply not true and you have no basis for your statement. Any phone can scan an airline ticket with a barcode and there's no reason why pricing on any item can't be programmed the same way. Why do you think that crypto currencies were created? To cut out the banker middlemen and reduce transaction costs across the board. We know that the bankers and politicians won't allow us tax donkeys to escape the system without a fight, so the question is unresolved at this time.
I knew it would happen.
95% of the people in the financial industry would need to learn how to hold and operate shovels
thats what happens with a gold standard
who could be against that?
Lots of industries could go on the same diet
insurance
healthcare
advertising
blah blah
Yes indeed. A strong economy and nation built on ditch diggers!!!
Didnt the French try that once?
Knowledge is the enemy of fear
Perhaps i was mistaken then jmski. Please help me understand what you meant by this..
"The price might be 1/10th oz of gold one day and 0.055 oz of gold the next day. So what? Decimals can be your friend"
Have you calculated that change ininterest rate by going from 1/10 to 0.055? Because thats what it is. Who determines what if there should be a change? The govt? How would such a change be accounted for?
For someone who chides big govt and accounting rule changes, you surely seem to be advocating for just that.
Imagine the farmer taking his crop into town expecting to get 3 oz of gold and is told its only worth 1.5 oz now. Me thinks there would be knuckles flying. Your system is no different than what we have today, except for being even for ripe for abuse and compromised.
"If the money supply remains constant, whether it's gold or dollar bills - when a farmer makes five bushels or a factory makes five widgets - if the bushels or widgets are desirable enough to have demand, they will be sold for a price
That price might change, but the transactions aren't dependent on the notional value of the money - they are dependent on the intersection of supply & demand
"The price might be 1/10th oz of gold one day and 0.055 oz of gold the next day. So what? Decimals can be your friend"
Supply and demand varies greatly from the local to global arena. Are we just supposed to move a decimal point to account for this? Dont you see the opportunity in this dislocation? The arbitrage is incredible. Would be just like CA in 1849. Whoohoo!!! Dig that dirt and make me rich.
Knowledge is the enemy of fear
Why do you think that crypto currencies were created? To cut out the banker middlemen and reduce transaction costs across the board.
You really think thats why cryptocurrencies were created?
Hahahahahahahahahah!!!!!!!!!
Knowledge is the enemy of fear
We are not building the economy on ditch diggers , they each dig one ditch and we shove them into it and fade to black ............... FINIS
economics is fake news , we will do fine without it , economics is religion not a logical framework , law of supply and demand he says
.... yeah .....that works like TV weathermen , as in well yesterday it rained ,I'm 100% certain of that but for tomorrow ? get back to me next week and ill tell you
the law of gravity is an actual law , step off a roof and its proven
The situations you have described would lead to massive disruptions in the supply/demand equation and price discovery would be nearly cumbersome on a local level, and nearly impossible on a national or global level. The middleman that you so ascribe to destroy, would have more work than imaginable.
BS. There's no reason that markets can't be transacted the way that they are transacted now with stocks, on a platform that reflects current pricing of any commodity on a real time basis, and to the third or fourth decimal.
Supply and demand varies greatly from the local to global arena. Are we just supposed to move a decimal point to account for this? Dont you see the opportunity in this dislocation? The arbitrage is incredible. Would be just like CA in 1849. Whoohoo!!! Dig that dirt and make me rich.
You really must believe that nobody else in the country can figure out markets and pricing. Based on your replies, you really must believe it, or you are just talking trash to keep your clientele confused and dependent. Sad. The reality is that (most) normal people get smart when it's required.
Why do you think that crypto currencies were created? To cut out the banker middlemen and reduce transaction costs across the board.
You really think thats why cryptocurrencies were created?
Hahahahahahahahahah!!!!!!!!!
Your massive arrogance is showing. Tell me why you think that cryptos were created? You deride people's comments and almost never contribute to the discussion. Why is that?
Even I don't think that cryptos were a stealth attempt by the bankers to corner the market on transactions. Not that they don't want that, but only because they came late to the game.
I knew it would happen.