The Second Great Depression?

[AlexanderSextus]

Honestly I think if you pull back far enough, the fact is, the entire system of economics the US uses is the problem. it's inherently flawed. We need an economy based on Austrian School Economics. It wouldnt fix everything, but it would help.


Austrian economists maintain that inflation is always and everywhere simply an increase of the money supply (i.e. units of currency or means of exchange), which in turn leads to a higher nominal price level, as the real value of each monetary unit is eroded, loses purchasing power and thus buys fewer assets and goods and services.

Given that all major economies currently have a central bank supporting the private banking system, almost all new money is supplied into the economy by way of bank-created credit (or debt). Austrian economists believe that this bank-created credit growth (which forms the bulk of the money supply) sets off and creates volatile business cycles (see Austrian Business Cycle Theory) and maintain that this "wave-like" or "boomerang" effect on economic activity is one of the most damaging effects of monetary inflation.

According to the Austrian Business Cycle Theory, it is the central bank's policy of ineffectually attempting to control the complex multi-faceted ever-evolving market economy that creates volatile credit cycles or business cycles. By the central bank artificially "stimulating" the economy with artificially low interest rates (thereby creating excessive increases in the money supply), they themselves induce inflation (often focused in asset or commodity markets) and speculative investment, resulting in "false signals" going out to the market place, in turn resulting in clusters of malinvestments, and the artificial lowering of the returns on savings, which eventually causes the malinvestments to be liquidated as they inevitably show their underlying unprofitability and unsustainability.

Austrian economists therefore regard the state-sponsored central bank as the main cause of inflation, because it is the institution charged with the creation of new currency units, referred to as bank credit. When newly created bank credit is injected into the fractional-reserve banking system, the credit expands, thus enhancing the inflationary effect.

Accordingly, many Austrian economists support the abolition of the central banks and the fractional-reserve banking system, and advocate instead a return to sound money such as a 100 percent gold standard, or, less frequently, free banking.

Money could only be created by finding and putting into circulation more gold under a gold standard. This would constrain unsustainable and volatile fractional-reserve banking practices, ensuring that money supply growth (and inflation) would never spiral out of control. Dr. Alan Greenspan asserts that economic liberty and Ludwig von Mises asserts that civil liberties would be protected.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.

If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold.

Deficit spending is simply a scheme for the confiscation of wealth.

Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings.


...just my $2.22, adjusted for inflation.

[Spino]

Honestly I think if you pull back far enough, the fact is, the entire system of economics the US uses is the problem. it's inherently flawed. We need an economy based on Austrian School Economics. It wouldnt fix everything, but it would help.


Austrian economists maintain that inflation is always and everywhere simply an increase of the money supply (i.e. units of currency or means of exchange), which in turn leads to a higher nominal price level, as the real value of each monetary unit is eroded, loses purchasing power and thus buys fewer assets and goods and services.

Given that all major economies currently have a central bank supporting the private banking system, almost all new money is supplied into the economy by way of bank-created credit (or debt). Austrian economists believe that this bank-created credit growth (which forms the bulk of the money supply) sets off and creates volatile business cycles (see Austrian Business Cycle Theory) and maintain that this "wave-like" or "boomerang" effect on economic activity is one of the most damaging effects of monetary inflation.

According to the Austrian Business Cycle Theory, it is the central bank's policy of ineffectually attempting to control the complex multi-faceted ever-evolving market economy that creates volatile credit cycles or business cycles. By the central bank artificially "stimulating" the economy with artificially low interest rates (thereby creating excessive increases in the money supply), they themselves induce inflation (often focused in asset or commodity markets) and speculative investment, resulting in "false signals" going out to the market place, in turn resulting in clusters of malinvestments, and the artificial lowering of the returns on savings, which eventually causes the malinvestments to be liquidated as they inevitably show their underlying unprofitability and unsustainability.

Austrian economists therefore regard the state-sponsored central bank as the main cause of inflation, because it is the institution charged with the creation of new currency units, referred to as bank credit. When newly created bank credit is injected into the fractional-reserve banking system, the credit expands, thus enhancing the inflationary effect.

Accordingly, many Austrian economists support the abolition of the central banks and the fractional-reserve banking system, and advocate instead a return to sound money such as a 100 percent gold standard, or, less frequently, free banking.

Money could only be created by finding and putting into circulation more gold under a gold standard. This would constrain unsustainable and volatile fractional-reserve banking practices, ensuring that money supply growth (and inflation) would never spiral out of control. Dr. Alan Greenspan asserts that economic liberty and Ludwig von Mises asserts that civil liberties would be protected.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.

If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold.

Deficit spending is simply a scheme for the confiscation of wealth.

Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings.


...just my $2.22, adjusted for inflation.

For years (hell, decades) anyone who even hinted that we ought to get rid of the Federal Reserve (an 'independent' central bank in its own right), fractional reserve banking and go back to the gold standard has been viewed as a being crazy as a moonbat. The populist view (supported enthusiastically by most of our elected leaders) is that the Fed has served as a bulwark against disaster, not a facilitator. Take a look at how Ron Paul was received by his fellow Republicans during the debates... they all cast him those 'nutty as a moonbat' looks when he brought the subject up.

[Lemur]

This is amusing:

[AlexanderSextus]

For years (hell, decades) anyone who even hinted that we ought to get rid of the Federal Reserve (an 'independent' central bank in its own right), fractional reserve banking and go back to the gold standard has been viewed as a being crazy as a moonbat. The populist view (supported enthusiastically by most of our elected leaders) is that the Fed has served as a bulwark against disaster, not a facilitator. Take a look at how Ron Paul was received by his fellow Republicans during the debates... they all cast him those 'nutty as a moonbat' looks when he brought the subject up.

Just because they thought he was crazy doesnt mean he actually was crazy. Hell, they're Neocons, they want us to give up as much freedom to them as we can. After all, like I said,

Dr. Alan Greenspan asserts that economic liberty would be protected and Ludwig von Mises asserts that civil liberties would be protected.

They dont want that to happen.

And as for the Democrats,

The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold.

They dont want it to happen either.

Read this part again:

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings.

[Koga No Goshi]

Just because they thought he was crazy doesnt mean he actually was crazy. Hell, they're Neocons, they want us to give up as much freedom to them as we can. After all, like I said

Neocons are pretty much bat-crazy. I think of them as elite businessmen with delusions that they can follow in the footsteps of Charlemagne. Except Charlemagne actually put funding into education didn't he? :) Of course, some people simply call them as close as you can get to an openly fascist party in the U.S. That works too.

[Incongruous]

Neocons are pretty much bat-crazy. I think of them as elite businessmen with delusions that they can follow in the footsteps of Charlemagne. Except Charlemagne actually put funding into education didn't he? :) Of course, some people simply call them as close as you can get to an openly fascist party in the U.S. That works too.

Or just the stupid Republican form of Democratic hawks?

[Koga No Goshi]

Or just the stupid Republican form of Democratic hawks?

The only Dem anywhere near bad enough to blend in with them is Lieberman.

[ICantSpellDawg]

The only Dem anywhere near bad enough to blend in with them is Lieberman.

Lieberman isn't a Dem.

[Spino]

The only Dem anywhere near bad enough to blend in with them is Lieberman.

I don't want to burst your bubble but Bopa Magyar & PanzerJaeger hit the nail on the head. The Neo-Con movement within the Republican party can be directly attributed to the migration of Cold War era hawkish Democrats & like minded intellectuals to the Republican Party during the 80s & 90s. It was the total mismanagement & incompetency of the leadership of Johnson & McNamara during the Vietnam War and subsequent fallout that led directly to the creation of the modern Democratic party that you identify with. The fact that Lieberman, an archetypical Democrat in the Truman/Kennedy/Johnson mold, has become a virtual outcast within his own party shows you just how much the Democratic party has changed over the last 40 years.

[Papewaio]

Gold standard isn't actually a standard.

The worth of gold fluctuates based on emotion more so then most currency. Just look at how the gold price shot up after 9/11 and the wars that followed.

Gold isn't 100% non-useable for anything else. Gold can have a value other then arbitrary because it does have uses other then jewelry. It can be used in industry and as such its value can change with demand.

Not only can golds value change because of demand it can be supplied by other means then just from a bank. You can mine it, and as such all you are swapping is currency supplied by a government for currency supplied by a mine site. Not much of an improvement if any.

Now that is just looking at gold in the ground. If we get fusion going then we can filter the seas of the world for far more gold then we have mined yet. Add in space exploration and we can have so much gold that we could all be housed in it.

Gold has value because it is rare. In time that rarity only gets less and less. As such the gold standard is subject to the same inflationary pressures on a system as money.

Wishing for the gold standard is wishing for old times.

[Don Corleone]

The problem with the gold standard and the theory of sound money is that it constrains the power of wealth generation.

How is wealth generated?
Taxation? Nope, that's just a transfer of wealth.
Government spending? Ditto.
Wages? Ditto.
Creation of goods and services? Ditto.

At the end of the day, there is only one economic activity that actually creates wealth. That is the flow of capital investment. In an economic system where specie is based off faith in the monetary and fiscal policies, one need only be a member to participate in this system.

But in a system where specie is based off of some tangible good, like gold, access to that gold controls access to the credit system.

Let me give you an example of what might happen if we returned to the gold standard.

A few banks, like Morgan-Chase, maybe Citi-group, maybe Goldman would rush out and buy every last ounce of whatever the value-backing commodity is. They would then control access to said currency. If they find it more profitable to hoard it rather than flowing it around, they simply stop lending. Think about that for a second... Morgan Chase can decide that too many people own houses in this country and the very next day, they've dried up the money supply. In fact, this very phenomenon used to happen. Do you think "Potterville" is a fantasy creation of Hollywood in "It's a Wonderful Life"?

I understand the allure of 'sound currency theory', but in fact, instead of being controlled by the federal government, you're turning the power of your financial system over to those large enough and moneyed enough to purchase a stake in it.

You, me and everyone else with less than $50 million of assets is left out in the cold. It doesn't prevent tyranny, it shifts its source from an elected government to a few autonomous tycoons.

[PanzerJaeger]

Neocons are pretty much bat-crazy. I think of them as elite businessmen with delusions that they can follow in the footsteps of Charlemagne. Except Charlemagne actually put funding into education didn't he? :) Of course, some people simply call them as close as you can get to an openly fascist party in the U.S. That works too.

Nobody told me that we were just making stuff up now.

Neoconservatism is a valid and well thought out ideology. What exactly is bat-crazy about it? Or fascist?

In any event, you do know many of them used to be democrats, don't you?

[Fragony]

Take a look at how Ron Paul was received by his fellow Republicans during the debates... they all cast him those 'nutty as a moonbat' looks when he brought the subject up.

What a loss he is not being the one running for president for the republicans. Bit too low on fanfare and hallelujah which are sadly too important in US elections which is a real shame. Can we have him?

[yesdachi]

What a loss he is not being the one running for president for the republicans. Bit too low on fanfare and hallelujah which are sadly too important in US elections which is a real shame. Can we have him?

Ron Paul has some interesting ideas and wouldn’t make a worse president than the candidates we have except for the fact he acts like he is nutty as a moonbat. You can act all kinds of ways except nutty as a moonbat.

[AlexanderSextus]

Ron Paul has some interesting ideas and wouldn’t make a worse president than the candidates we have except for the fact he acts like he is nutty as a moonbat. You can act all kinds of ways except nutty as a moonbat.

he acts nutty as a moonbat by saying that maybe we need to get rid of keynesian economics?



oooooooookaaaaaaay.....

McCain acts nutty as a moonbat all the damn time!

Ron Paul would make a much better Prez than either candidate.

[AlexanderSextus]

What a loss he is not being the one running for president for the republicans. Bit too low on fanfare and hallelujah which are sadly too important in US elections which is a real shame. Can we have him?

NO! WE NEED HIM REALLY BAD!!!!!

[Alexanderofmacedon]

I'll sum up my views instead of making you all read a lot.

We're in trouble. We've brought others into this trouble as well.