The issue was "no other way," but there is a way. You just want to 'complain' it isn't to your liking.
I didn't say it was, or was not, the 'best' way either; just that 'there is a way'.
One example, assuming you found one, doesn't make it 'common'.
It doesn't because France DID print money consistent with the gold inflows, so the fact is they did not "hold more gold than they issue[d] paper." The problem was the economic money multiplier.
The Fed, on the other hand, WAS sterilizing gold.
Fer Christ's sake, with no paper currency how the hell can it be "hold[ing] more gold than they issue PAPER?" Since they didn't ISSUE paper?
Except they didn't.
And I quote "Finance Minister Paul Reynaud (1933, 258) pointed out that new francs had been issued in almost equal value to the amount of gold accumulated between 1928 and 1932 ?as is required by the gold standard system.?
Perhaps, but there was only one during the time in question.
If that's the 'point' then it's off topic because we weren't talking about 'how' panics 'happen' but the irresponsibility of government officials promoting economic lynch mob bullshit.
Oh, wait, I forgot. That IS it's purpose, says Pres. Obama.
No, was talking Great Depression, just like everything else in the post was.
There must be some sort of phase lag for the fed printing more dollars? Printing more dollars that are immediately worth less, doesn't make sense.
The difference is technology is temporary, and real estate is forever, just like diamonds. Old technology ends up in the trash can, while real estate has limited supply.
It makes terrific sense if you already owe a lot of money. By printing dollars you not only now have money to 'pay' the debt but it's being paid off with cheaper dollars.
You're just concerned that now things costs more but we can solve that by printing more dollars to spend. Well, not you, the Fed can.
Actually, that's one reason why the Fed is allegedly a 'separate' agency. Otherwise Obama would be out there turning the crank himself but, as is, it shows up as debt.
But, yes, the economy is a complex thing so it isn't as if you can 'push a button' and immediately see light 'A' come on. However, the government also falsifies the inflation index by simply not counting things like food and energy. On top of that they 'adjust' the actual cost of things for esoteric 'evaluations'. Like a new TV might cost $300 but they'll decide it's 'improved' over last years so it's 'really' only $200 and, poof, 'no inflation'. Except, of course, you can't buy any of them for $200. They also decide that if prices rise then you'll 'substitute' something cheaper and, voile, 'no inflation' because you're now eating hamburger instead of roast beef, and never mind that they both cost more than last year.
So you don't know there's inflation, you see. Well, you do but we just don't say so.
People will work, sure, but they're not going to save (people forgot how). It's far more beneficial to borrow against tomorrow's paycheck. Yes, I remember the '80s well.
That such an 'option' (actually a 'trillion buck' coin) is even discussed, much less seriously, should be proof enough this country is teetering on the ragged cliff edge.
Fortunately the Treasury said they wouldn't mint it and the Fed said they wouldn't buy it, ostensibly because both think it essentially illegal (unconstitutional) and improper. Gee, ya think?
The Constitution gives Congress sole power to coin Money and regulate the value thereof but the 'gimmick' is the 'platinum coin' wouldn't be 'money'. It's 'authorized' under the Treasury Department's program of coining 'collectable coins' for 'profit'. I.E. they strike some commemoratives, or whatever, for, say, 1 buck a coin and then sell them to collectors for whatever they think the market for such things will bear.
So the proposal was to simply strike a coin, 'price' it at 1 trillion, and somehow get the Fed to buy it. Why bother? Get a couple of napkins, let Obama doodle something profound on them, 'price' them at a trillion, and ask the Fed to buy those 'collectables'.
What made them think this was a bad idea? Oh, like maybe there's no market for such stupidities, which is why you have to feign a 'sale' to the Fed since no one else is dumb enough to buy it.
The, so called, 'Constitutional option', based on the 14'th amendment's declaration that the "validity" of the public debt of the United States "shall not be questioned," is also absurd as there isn't anyone 'questioning' it's 'validity'. Yep, we owe it. And no one going into bankruptcy 'questions' that debt either. Yep, they owe it, they just can't pay it (and operate)
However, the matter is moot because even with no increase in the debt ceiling there's plenty of revenue to service the debt. There's just not enough to do that AND fund 100% of everything else.
The purpose of that section of the 14'th was to explain 'United States debt' was valid but NOT debt of (the Confederate) States during rebellion or insurrection.
Les, Taking a look at the article, then half of the potential outcomes result in increases in rents, and half do not. However, in real life, you have to consider 'Who owns the rental units?' If a majority, or even large percentage are held by small landlords who will not have to pay the tax, then you might expect rents to remain the same. In real life, most rental units are not held by small companies, but by large companies and corporations who will be hit by the tax, vastly increasing the possibility of rent increases. Also, the alternatives, such as buying a home are less likely. While prices have gone done due to the 'adjustments' of the last few years, and interest rates are down, requirements to obtain a loan are not a lot more difficult to meet. Again, rents go up. Also, since expenses across the board are going up (even as the government insists that inflation is 'under control') then rent will rise.
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| James E.Thompson, CTO | mens |
| Analog Innovations, Inc. | et |
| Analog/Mixed-Signal ASIC's and Discrete Systems | manus |
| Phoenix, Arizona 85048 Skype: Contacts Only | |
| Voice:(480)460-2350 Fax: Available upon request | Brass Rat |
| E-mail Icon at http://www.analog-innovations.com | 1962 |
I love to cook with wine. Sometimes I even put it in the food.
Ayup - although the REITs that hold these properties will have some idea what the sensitivity to a rent increase will mean for the bottom line.
True enough.
It's not that clear that expenses are going up. Some commodities - mainly metals - have been fluctuating a lot. The other stuff across 2011 hasn't changed that much.
The French were the ones who drove the price up in the first place. I don't know why they did it. I suppose they wanted to hold gold. We see the same thing these days with private individuals paying too much for gold.
Under Bretton Woods, the reserve currency was the dollar.
It is not like there *was* a market price* for gold under Bretton Woods. Mere mortals who were not designated traders on behalf of a government were not allowed to trade gold.
*other than $35 dollars...
Explained above.
I really wish I knew. It's one of the most "WTF?" things I have ever read about. It's utterly crazy...
But you got the sign wrong; most countries that have "cheated" have done so in a way that would cause them to hold more gold; they would *under*issue currency.
It has nothing to do with my liking; it has much more to do with historic shortages of the medium of exchange and account. You'll end up with a hidebound economy.
but in the absence of money, you start small and stay small. There's no way to develop capital goods for the improvement in production.
The only reason the US wasn't in as dire straits as Britain in the 19th Century is that the US had a lot more land and people could leave.
But it's not the only case. It's *an* example.
No, they did not. This has nothing to do with any multipliers. France was sterilizing half again to two times what the US was.
So you really don't see this? Wow. Okay then. The pathology *with France* was specific to paper vs gold; with Spain it was silver vs just about everything else. Else why did the Spanish Crown continue to have bankruptcies for a century after?
I don't have tie to do a full treatise here. But this covers a lot of it:
Add Barone to my list. Haven't seen any circuits by you. ...Jim Thompson
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| James E.Thompson, CTO | mens |
| Analog Innovations, Inc. | et |
| Analog/Mixed-Signal ASIC's and Discrete Systems | manus |
| Phoenix, Arizona 85048 Skype: Contacts Only | |
| Voice:(480)460-2350 Fax: Available upon request | Brass Rat |
| E-mail Icon at http://www.analog-innovations.com | 1962 |
I love to cook with wine. Sometimes I even put it in the food.
Ah, but it does. And that is what we are trying to explain to you. Quit acting like a petulant child and face the reality of other explanations of the situation which fit the observations better and predict (a little) better.
Maybe you should investigate it because things don't happen for no reason.
The value of something is what people are willing to pay for it.
Yup, and that was a problem.
I suppose you think all jewelry and industrial uses of gold suddenly vanished worldwide under Bretton Woods.
However, the same applies even if we consider 'only' reserve exchanges. (see next)
Let's take a simple example from an earlier time, simply because circumstance make it trivially easy to see., but the underlying principle is the same, regardless.
In 1933 gold was $20.67/ounce. In 1934 it was $35/ounce.
Now, it's trivial to see that either gold was underpriced in 1933 or overpriced in 1934, possibly both. (Unless you think inflation was running 69% during a Great Depression deflationary cycle, which it clearly wasn't.)
Now, it's theoretically 'possible' it might have been STILL underpriced in 1934, as happened when Nixon first tried devaluing the dollar up to $43/ounce, but we can look at gold flows to see it was, indeed, overpriced as gold reserves increased from 8,998 tonnes in
1935 to 19,543 tonnes in 1940.
The notion that a 'gold standard' precludes a 'gold market' is nonsense. All it does, in the extreme case you imagine (no private or industrial use), is restrict who the market players are.
Now let's zippity-do-da to post WWII. In 1953 the U.S. still had
20,000 m.t. of gold reserves with Western Europe holding only 4,840 m.t. but, as Western Europe's economy improved, 10 years later it held over 15,400 m.t. and by 1967 (the last full year of $35 gold) Europe?s stock was up to 18,640 m.t. and US stock was down to
10,722 m.t. However, there weren't HALF as many U.S Dollars in circulation so just stomping your foot and stubbornly declaring that, by golly, it's still $35/ounce, despite having HALF as much gold, simply doesn't work.
We know that gold was overvalued at least up to 1940 because the world was converting gold into dollars as fast as it could (see above reserve numbers). But after 1952 the incessant inflation of US dollars made the rest of the world realize that thirty five of them just weren't worth an ounce of gold any more and massive redemptions of dollars, in exchange for gold, depleted the Treasury's gold reserves.
Okay, now I'll support that statement.
Estimating what the price of gold 'should have been' is problematic because the 'official line', of course, is that it was $35/ounce but we can make some reasonable estimates from gold flows and the CPI.
Let's begin by just pegging gold in 1933 at $20.67/ounce. That means we can determine when gold was really worth $35 an ounce by looking at how the CPI (Reserve Bank of Minneapolis) changed since 1933. And doing so we find that from 1933 to 1947 there was a 69% increase in the CPI, so $20.67 in 1933 would have been worth $35 in 1947. As a 'sanity check', this coincides reasonably well with the flow of gold into the Treasury up to 1950 (20,279 tonnes), peaking in 1952 (20,663 tonnes) and then declining rapidly as the realization that inflation had caught up with the gold price led to the redemption of dollars.
Now, having determined our methodology reasonably corresponds to reality, at least reserve flows, we can further project to the 'Nixon shock'. Since we know that gold was worth $35 an ounce in 1947 we can calculate what the price of gold should have been in 1971, and compare it to what actually happened.
Dollar inflation from 1947 to 1971, offset by gold inflation, meant that the gold price should have been $103 an ounce when the Gold Window was closed, which is damn close to the '3 times' number I've mentioned.
Okay, let's do another sanity check because, after the gold window was closed, gold prices floated so if we do another projection, using our CPI methodology, we have an 'actual', this time, to compare against. In doing so we find that by 1978 the gold price should have been $199/ounce and, in fact, its average price for that year was $193/ounce.
That's a pretty damn good correlation with both reserve flows and 'actual' (open) market price, and while we may be off a buck or two, or a year or two, because we arbitrarily pegged 1933, when it may have been underpriced, it doesn't affect the overall trend or the validity of the analysis. And note that the analysis is based solely on the internal CPI and nothing 'France did'. They merely reacted to it.
So, in a nutshell, the dollar was increasingly off value from 1952 onwards, culminating in wildly off by 1971, and it's a bit self serving to say that someone who 'notices' this little problem, aka France, is 'cheating'.
The problem is PAPER money. When your currency is gold coins there is no 'currency' inflation/deflation, relative to gold, because it IS the currency. The only way you can mimic this behavior with 'paper money' is if it is truly a 'certificate of deposit' accurately representing that 'real gold', in that exact value, is being held 100% 'on deposit', so the paper is simply a 'convenience' over carrying a pound of gold in your pocket. But as soon as you print more than the actual gold held (I.E. now 'reserves) it becomes a 'market' since, if you print too many, people go and 'get the gold' they are allegedly 'worth' (or vice versa). Unless, of course, you make it illegal for citizens to own gold, as money, but that only means they're removed from the market but leaving France, and every other country on earth, in it.
Don' take that as my saying the gold standard is the cat's meow because, as previously discussed, there are other problems with not the least of which being your monetary policy is at the mercy of whoever can find however much of it where and, as but one example, if your people are 'more productive' than your miners it creates a deflationary spiral... or so the theory goes.
Frankly, I'm beginning to think that no monetary system is secure once government decides to 'help'.
Yes, I did.
Well, if one doesn't know 'why' then it's rather problematic trying to claim someone 'did it wrong' and, worse yet, 'this is how to do it right'.
Simply not true and the fact it's a leveraged, fractional, gold 'reserve' is de facto proof. It's all, by definition, OVER issued.
And no, I didn't get the 'sign' wrong. It's just that your perspective is that the country which sees you're devaluing the currency by printing huge quantities of unbacked dollars is 'cheating' when they cash them in at the price YOU said they are 'worth'.
It's the same problem with any fractional reserve banking: a 'run on the bank'. Were all those panicked people in 1930, who simply wanted 'their money' back 'cheating'? They have a deposit slip saying "you have X dollars here." Okay, I want MY money. That was 'the deal' when I put it in here.
It's no different with that pretty piece of paper you say is worth 35 per ounce of gold, and the only reason I've got the dern things to begin with is because you said they're worth 35 per ounce of gold. And methinks... well, it doesn't matter what methinks... I just want the gold that's owed to me. That was 'the deal' when I took these things as being 'worth something'.
Of course, 'the problem' preventing "the mythology and beliefs required" is precisely the same one that makes fiat money not work. It's just that pegging to something of intrinsic value makes it stand out like a sort thumb.
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