Anyone that thinks that gold based currency is any more "solid" than pure fiat is delusional. Gold has little intrinsic value. Gold was used as a currency which derived its value almost exclusively from exchange. Gold-backed currency is barely different then currency-backed currency. Any and all currency is always backed by the output of the nation(s) that recognize the currency for barter purposes. Income is backed up by output not by one commodity in exchange but by the feasibility of its redemption value in aggregate. Even a commodity that has intrinsic value, if used to back-up a currency, would then be subject to the dual pressures of the ratio of currency to commodity and the valuation of the commodity in exchange. Gold backed currency can easily be inflated by printing more bills. So to say that the gold-standard magically solves the "problems" of inflation (a small amount of inflation is preferable for many behavioral reasons) is ludicrous. The only thing that can solve reckless monetary and fiscal policy is an intelligent voting populace. Even if we used precious metals as currency, gold coins etc. What is to stop the mint from mixing junk metals into the alloy (bite that coin!). Excessive inflation is a result of a lack of regulation by a centralized mint and bank and/or a reckless mint and bank.
. Gottschalk: The only thing that can solve reckless monetary and fiscal policy is an intelligent voting populace. ************ February 19, 2007 SouthAmerica: Many countries from around the world have been sending their savings year after year to the United States because they think that the US dollar is the best way they have to preserve the value of their wealth. By the way, since the US dollar became an international reserve currency in 1946/1947 that US$ 1.00 today it is worth only a âDIMEâ. I would say it is hardly a way for anyone to preserve its wealth against the destructive power of inflation. ******************* Hydroblunt: You do not even know what inflation is or how it works. There is no direct relationship with WAR and INFLATION. The conditions of war just happen to exarcebate inflation, but there is a certain chain of events or a system that allows it to happen. And it does not always happen. Money is not pissed away, it is only transfered. ****************** SouthAmerica: Reply to Hydroblunt When you said: âYou do not even know what inflation is or how it works.â That is a very funny statement when you are saying that to a Brazilian. I did not say war and inflation. I said Defense Spending and inflation. You also said: âMoney is not pissed away, it is only transfered.â The right word is wasted. .
Gottschaulk wrote..... Anyone that thinks that gold based currency is any more "solid" than pure fiat is delusional. Gold has little intrinsic value. Gold was used as a currency which derived its value almost exclusively from exchange. Gold-backed currency is barely different then currency-backed currency. Any and all currency is always backed by the output of the nation(s) that recognize the currency for barter purposes. Income is backed up by output not by one commodity in exchange but by the feasibility of its redemption value in aggregate. Even a commodity that has intrinsic value, if used to back-up a currency, would then be subject to the dual pressures of the ratio of currency to commodity and the valuation of the commodity in exchange. Gold backed currency can easily be inflated by printing more bills. So to say that the gold-standard magically solves the "problems" of inflation (a small amount of inflation is preferable for many behavioral reasons) is ludicrous. The only thing that can solve reckless monetary and fiscal policy is an intelligent voting populace. Even if we used precious metals as currency, gold coins etc. What is to stop the mint from mixing junk metals into the alloy (bite that coin!). Excessive inflation is a result of a lack of regulation by a centralized mint and bank and/or a reckless mint and bank. ................................................................................................... Excellent Commentary The real question here could be....is not gold just another commodity ? It has no sovereignty...and is not productive... Does not value come from productivity and usefulness ?... What one may note is that the countries of the world do have largely calculable economics...in the forms of their outputs and person to person money flows... A person is somewhat like a walking and risky bond in that the revenue stream is not clear over a certain period of time....as is a sovereign country... Thus the currency of a sovereign country is reflective of its people in relation to its businesses...and so on... And the number of jobs is mostly definable...such as is the case that the US has over 180 million jobs ....which some portion ...perhaps 40 million are transportable to other sovereign countries...via globalization etc.... However the currency values are reflective of both its productive capabilities and its costs.... Its seems that gold does not represent itself as a replacement of sovereign productivity and consistent economic capabilities.... More value is attached to a more certain capability than to a less certain capability... Thus when you go down the list of the countries of the world...and you think in terms of productivity....consistency... The question is are there really any surprises ....and the likely answer is probably not.... And just how is it that the consistency and productivity rely on the commodity gold...platinum ...silver...uranium...etc...
I think you should go back and look into it more careful; don't forget Japan; you will see the bigger picture. There are only more geopolitics than anyone can imagine. Once again; the stronger US dollar is back with stronger military; aka more defense spending; and bigger government. At the same time; China eyes on foreign technology from every industry where is available and applied them to advance its military at a alarming speed. IF you still don't see where is the inflation; you aren't too smart after all.
Ok, you're hopeless. You do not know what inflation is, nor will you bother to learn what it is. Trying to say that it is only caused by massive defense spending is pure idiocy, being that inflation has roots to times when the modern concept of defense spending barely existed. I think I will stop replying to your idiotic spew, now I can tell why most others have done the same. Depends. There are arguments to both sides. There are a few threads on it. The process of inflating a hard currency or a pure hard metal currency is called debasing by the way. However, a hard currency is still better than fiat. It's harder to inflate when the core reserves are gold rather than just debt & paper. In the real world, nowdays, the most stable currencies are hard currencies. Swiss franc for example. Austrians promote free competitive banking, which had real life examples. Fiat or hard, does not matter then. We're pretty much on the same page. Bretton Woods has origins to 1930s, back when Japan was still isolationist & stuck in the feudal era. Major Bretton Woods developments were made prior to Japan even making the cheap electronic crap they used to make, let alone prior to names like Sony becoming famous. Japan practices predator economics and is not your standard capitalist type system. Yakuza, ever hear the term? Their economic system is a whole nother world and culture. And I'm fully aware of their stockpile of US debt and committment to being a buyer. What you probably do not remember is their reconstruction effort and who was involved. Or maybe the fact that Japan has no real army, nor has the potential for one. Or maybe that they were motivated to build their own brands, vs being a nation of offshored sweatshops. I think I have pointed out the correlation between defense spending and going to fiat several times, moreso in the past. I was trying to point it out to southamerica but he is a moron. China eyes technology but they are being stiffed. Look into their deals and trade politics with Russia, they are being made a sucker each time and they are not too happy. They got robbed on arms deals a couple times, but then Russia throws in some MiGs and soothes the situation. Japan is just apprehensive, they like using the cheap Chinese labor but they see China gunning for what Japan has become. Same with South Korea. I don't exactly see that as very smart. It's one thing if you develop your economy from within with your wealth of natural resources & endless slave-like labor (both of which China has). It's another when your employment situation & economy becomes dependent on the nation versus whom you are trying to jockey for top position.
. Hydroblunt: Ok, you're hopeless. You do not know what inflation is, nor will you bother to learn what it is. ************* February 20, 2007 SouthAmerica: United States government actual budget United States Government Annual Budget during the Bush administration. Each year, on the first Monday in February, the President of the United States submits his budget request to Congress for the following fiscal year: United States federal budget, 2008 - $2.9 trillion (submitted February 2007 by President Bush) United States federal budget, 2007 - $2.8 trillion (submitted February 2006 by President Bush) United States federal budget, 2006 - $2.6 trillion (submitted February 2005 by President Bush) United States federal budget, 2005 - $2.4 trillion (submitted 2004 by President Bush) United States federal budget, 2004 - $2.2 trillion (submitted 2003 by President Bush) United States federal budget, 2003 - $2.1 trillion (submitted 2002 by President Bush) United States federal budget, 2002 - $2.0 trillion (submitted 2001 by President Bush) --------------------------------------------------------------------------------------------------- Total US government Budget for period year 2001 to year 2007 = US$ 17 trillion. We can estimate that the US government budget for the last year of the Bush administration it will be at least US$ 3 trillion dollars â a figure that will bring the total US government budget for the 8-year period of the Bush administration to US$ 20 trillion dollars. ************** Here is Bushesâ military spending - this does not include ANY costs related to Afghanistan or Iraq as they are all in supplemental spending bills: For Fiscal Year 2007 it is $470.0 billion For Fiscal Year 2006 it was $441.6 billion For Fiscal Year 2005 it was $420.7 billion For Fiscal Year 2004 it was $399.1 billion For Fiscal Year 2003 it was $396.1 billion. For Fiscal Year 2002 it was $343.2 billion. For Fiscal Year 2001 it was $ 296.0 billion Iraq and Afghanistan supplementary spending including 2007 = over $ 500 billion. -------------------------------------------------------- Total Bush administration actual defense spending for 7-year period 2001 to 2007 = US$ 3,266.7 billion For Fiscal year 2008 we can very conservatively estimate that Defense Spending will be at least another US$ 500 billion. Including this estimate for defense spending for 2008 that would bring the total defense spending for the 8-year period of the Bush administration to the amount of US$ 3,766.7 billion. Plus the supplementary amounts that the government it is going to request the total adjusted amount for defense spending for the 8-years of the Bush administration it can reach the US$ 4 trillion dollar level. ********** Under normal circumstances inflation would already be under way in the United States. The Bush administration total budget expenditures during the 8-year period would be US$ 20 trillion dollars â and from that total 20 percent or about US$ 4 trillion dollars were wasted in defense spending during that time â in the past that kind of level of defense spending it did generate inflation in the United States as it was the case during the Vietnam War and the years following the end of that war. Today we are just pushing forward the same type of inflation by borrowing lots of money from foreign sources and also by buying everything in sight from China and in that manner we keep the prices in check in the US economy â at least for a while. But the day of reckoning it is not far in the future when foreigners are going to demand from the US government a higher rate of return because of the declining value of the US dollar in world markets. Then interest rates it will go up in the United States and US government borrowing will push the US interest rates even higher â at the same time foreign goods become more expensive in US dollars and in turn helping push inflation even further on its way up. The China solution it is only a temporary solution after that there is no more a free lunch. What happens when you have a high volume of defense spending on your economy? â For example the US government is spending a ton of money and in this particular case we are talking about US$ 4 trillion dollars â the people who work on the defense industry gets all this money but these people canât buy the products and services that they provided to the US economy on a regular store such as Wal-Mart, Target, a Realty company, or an automaker showroom such as Ford. In another words these people canât go to your local store and order a F-16 aircraft, or a mother of all bombs, a military attack helicopter and so onâ¦â¦ And all these extra money that the US government is placing on the hands of the people who work in the defense industry â this money it will chase the goods that are available in the local economy including houses, all the goods sold on Wal-Mart and Target, or a GM showroom â in turn helping to push the prices up inside of the economy. .
Check your history please; it is just pure nonsense. The first draft of Bretton woods is assigned in 1944. Ok; you just throw a bunch nonsense in again; the way China played out; with cheap USD to exchange better relationship with Russia throughout 90s after the collapse of USSR; which China played a major role too; and US had never thought China could changed its position so fast; every other countries looked the other way. In the contras; Japan had never step away from US since world war 2.
. February 20, 2007 SouthAmerica: As I mentioned above these people canât go to your local store in any city around the United States and order 10 F-16 aircraft, or a few mother of all bombs, or 15 military attack helicopters, or 5 nuclear submarines armed with nuclear warheads, or 2 aircraft carriers, or 10 stealth bombers, and so on⦠Regarding the service area you canât go to your local US Army base and ask if you can rent about 10 marines for the weekend for a special mission â letâs say to fight the local illegal drug gang that has been harassing the people around your town. There is also another negative aspect related to the type of US defense spending. â The United States is borrowing a ton of money from foreign sources to keep this system going and the US government keeps increasing its cumulative outstanding debt year after year â and the US government have to pay annual interest on all this debt. Then the US government uses this borrowed money on US Army bases around the world in turn Injecting this US government borrowed money into the local economy of all these countries where they have these US Army bases â and all these countries receive the positive benefit of the multiplier effect of money on their economy. In the mean time the US taxpayer get stuck with the debts from the borrowed money and the multiplier effect of money instead of benefiting the US citizens inside of the United States â it does benefit people inside these other countries. .
Only if you can win a war; the payout of winning a war is far greater than whatever you have to spend on. Just leave it; don't argue with it. Period. The rest is just bunch of noises.