And, as it is obvious, China wants to stop the printing money machine as well. https://www.fxstreet.com/analysis/c...raw-that-breaks-the-dollars-back-202405061717
Would you care to explain in your own words, using bullet points and simple language that a dumbo can understand why a gold standard is now forever ridiculous.
The EU and the U.S. both have mixed economies. The EU seems clearly better than is the U.S. at compartmentalizing what parts of their economies are better socialized and what parts are best suited to a capitalist approach. A consequence seems to be that the E.U. courts have been somewhat better than the U.S. at protecting capitalism where it exists in their respective economies. E.U. regulations clearly reflect their greater vigilance over and protection of competition. (Protection of competitive markets is a core area of failure in fascist economies. In fact, this may be a defining characteristic of fascist economies.) Competition is not an essential component of stable and successful capitalism, rather it is the essential component. A measure of capitalism's success is how closely economic rents* are driven to zero by competition. Capitalists everywhere of course hate competition and continually strive to eliminate it. Thus capitalists are among Capitalism's worst enemies. The EU is clearly more protective of competition than is the U.S. in those areas of their respective economies where they have decided to let capitalist forces prevail. ___________________ *A working definition of "economic rents" would be the difference between actual price and the price that would be paid in a perfectly competitive market. This is obviously a theoretical concept, because whereas the actual price can always be known, theoretical price in a perfectly competitive market can only be estimated. Near exceptions might be markets in which there are many suppliers of virtually the same good. In this instance, if the price is virtually the same regardless of supplier, and assuming a lack of price collusion among suppliers, economic rents approach zero. By contrast, consider the price for an appendectomy where there is, for practical reasons, only one supplier. There is, in this instance, virtually no competition. In the absence of remedial, restrictive price regulation one might expect economic rents to approach extremes; yet it might be difficult to evaluate the rent which could amount to thousands of dollars.
You forget to include the massive level of corruption that we see in the US. The congress got to a point where people are asking politicians to wear brands on their jackets like if they were F1 pilots. When you have politicians that regulate in favor of multinationals the obvious gap with a healthy society is clear. If you add on top the ability to print free money when they want, you see a country that is going to end in one possible way. Civil unrest. Europe, Russia and China see that clearly. They have seen the US starting wars all over the world with that printing machine. Now they are going to stop it, not because they want to clean the economy, but just because when the US runs out of countries to attack they will attack them. That never ending cycle based on military presence is way too dangerous. Look at Israel for example right now, in any world that is run by common sense they will be labeled and punished as they should for their ethnic cleansing. You recite capitalism like none of us have books about economy. Geopolitics are way too different than those fancy names that you are studying right now, but eventually you will grow away from your books and will realize that economics and political systems are very nice on paper, but in reality you have to include people's corruption. The EU is trying to go back to gold because the US has been exporting inflation to the rest of the world for decades. That has to stop. And one way to do it is by asking every single country to back their debt and their currencies in something that can be measured. Many of you keep saying the the US has more gold than the result of the world combined, but do you think that the US has enough gold to back its debt? I don't think so.
Glad you asked. If you are going to base a currency on a commodity, then you must be able to control the price of the commodity. If the price of the commodity fluctuates, then by definition, the buying power per unit of the currency based on the commodity will also fluctuate. At Bretton Woods Keynes warned that as the war ravished economies recovered, their productivities along with their demand for goods and services would grow. He also understood that to prevent both inflation and deflation in a currency backed by gold the units of each nations currency would have to be increased in step with their productivity gains; that would require accumulation of more gold to maintain the backing, but there was no reason to think that one could always obtain more gold at the same price. The Bretton woods system was based on the promise that the U.S. would hold the price of gold constant at 35$/Oz. Keynes knew that an increasing demand for gold would result from expansion of the units of currency issued, and this increasing demand was certain to put pressure on gold price, which would in turn force a devaluation of all of the currencies linked to gold. He was convinced that it would soon enough become impossible for the U.S. to control the gold market and the price of gold in dollars would eventually have to rise. This is precisely what happened. The Bretton Woods agreement of 1944 wasn't fully implemented until 1957, and just ten years later the exchange mechanism that the Bretton Woods parties had agreed to was already in trouble. By 1971 France was redeeming dollars at the U.S. Treasury for gold at 35$/Oz. while elsewhere gold was selling for 40$/Oz. ! Ouch! Nixon was left with no choice other than to close the gold window. The Bretton Woods agreement failed just 14 years after it was fully implemented. If you can't control the price of a commodity, i.e., corner its market, you can't base your currency's purchasing power on that commodity. Incidentally, it's a curious thing to me that no one seems to ask how the U.S. acquired gold in the first place, or cares; yet the answer to the question sheds considerable light on the nature of gold backed money versus fiat money. Lets start by ruling out scalping Arawak Indians and taking their gold. (That's how Columbus got Queen Isabella's for her.) In fact, we got our gold by "printing it." WTF you say. Well, we didn't print it directly but we might as well have. What we did print is "Gold Certificates" which we declared as legal tender and exchangeable at the U.S. Treasury for a specified amount of gold. Because these Gold Certificates were readily exchangeable for gold and were a heck of a lot more convenient to carry around, they were readily accepted at gold smelters in exchange for actual gold. Which if we didn't cheat, would be their first stop. Now the U.S. had x dollars worth of gold and the smelter had a gold certificate backed by that same gold. The certificate, being legal tender, could then circulate in the economy and likely would eventually end up back at the Treasury or Central Bank --- there has been a couple others beside the present Fed and this was a long time ago --- in payment for money owed to the government. Then the government would have had the option of taking the gold certificate out of circulation and replacing it with a non-exchangeable Bank Note of the same purchasing power. And there you have it. Gold standard money is fundamentally the same as fiat money in that they both originate by being "Printed out of Thin Air." It's just that if you are in a hurry to expand the money supply. Just printing the money directly and skipping the gold step makes so much more sense because it is a heck of a lot simpler, more convenient, and allows money to get circulating and return to the Government one heck of a lot faster... And lets not forget, all our U.S. money is always exchangeable for Gold. But the exchange rate is no longer $35/Oz. and no one is guaranteeing us that the price after we exchange our bucks for gold won't change, and possibly quite dramatically.
Politicians can now roll out any policy knowing that the FED will "push button" to get the funds for it. That cart blanche incentive that the politicians have will be a lot less when you are not able to scramble to funds together otherwise. Isn't that the whole point ?
I think you may have convinced me that we could stand to elect a few better educated (the ones who have read more books!), more competent, and more honest politicians.
If one is holding dollars when it's devaluing, one must invest, it forces people to invest, its either that or lose your money. Do you think devaluation of money is planned in order to get people to be more money savvy? We get savvy when forced to by the printers. In a way, devaluation is theft by government, would that be correct?