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Petitions circulating to SECEDE FROM UNION -- this is going viral (!)
- Thread starter gingerale
- Start date
unspoken
Member
The massive U.S. tax cuts between 1981 and 1984. What happened? The private savings rate did not rise. Real interest rates soared. With fiscal stimulus offset by monetary contraction, real GNP growth was approximately unaffected. It grew at about the same rate as it had in the recent past.
The European depression of the 1980s. The Keynesian explanation is straightforward. Governments, led by the British and German central banks, decided to fight inflation with highly restrictive monetary and fiscal policies. The anti-inflation crusade was strengthened by the European monetary system, which, in effect, spread the German monetary policy all over Europe.
Ron Paul and other Austrian economists have been screaming for over 30 years that hyper inflation is around every corner and is just about to get us.
I have by no means mastered keynesian theory, and I am definitely open to other points of view. I feel like because I have an opinion and am sharing it in a public form people think I am calling them stupid, so I want to point out now, that I think Ron Paul is a smart guy, a lot of the people posting in this thread also seem like really intelligent people, and I'm not trying to say that I am smarter than anyone.
There are certain aspects of Austrian theory that are almost undeniably correct and have been great contributions to the field of economics, particularly regarding unemployment:
1: (Involuntary) unemployment is caused by excessive real wages.
2: Using inflation to reduce real wages (i.e., if the wage is fixed in nominal terms, then ceteris paribus inflation reduces the real wage) is at best unreliable, and in any case not a long-term solution to the problem of unemployment.
The biggest problem I see in the austrian business cycle is that entrepreneurs must be irrational actors for it to be true. The problem is supposed to be that businessmen just look at current interest rates, figure out the PDV of possible investments, and due to artificially low interest rates (which obviously can't last forever) they wind up making bad investments. But why couldn't they just use the credit market's long-term interest rates for forecasting profitability instead of looking at current short-term rates??
The Austrian theory does not predict an increase in employment during a boom, or a decrease in employment during a bust. It also predicts an increase in output during a bust.
unspoken
Member
Because gold has such a stable value? What is gold other than a mildly useful metal? Something that we decided we could trade for other things? The price of gold changes and it has nothing to do with the needs of the economy
Its interesting, you will almost never encounter an intuitive thinker that says "I feel". Feelers say this and people who think with their emotions are always getting butt hurt.
In fact, you think people look down on you because your "feelings" imo cloud your judgment as it directly pertains to logic, so you are incapable of interpreting it any other way.
what is it we are even talking about.. Oh yeah, its pointless to invest any further in the idea that what the US has become is anything remotely close to sustainable. The fundamental point is that nothing that is currently being done is ever going to fix anything. Weve sold our bonds, or "little" pieces of our debt backed by gold currency to alot of countries, and In the event we cant pay up, just like wall street, the country will crash.. We are getting close, dont worry..
Its not like, oh, I wonder if it could, brother, its knocking on our fucking doorsteps.
The gold will never diminish in "value" and the guns are to protect yourself in a society the likes of which you cannot imagine. Religion will soon be the last thing people are arguing over when they are hungry.. We are animals... without the trivial comforts of intellectual society, we are just a bunch of stray dogs fighting for scraps..
Could I be wrong? I dont pray, but if I did pray, Id pray that never happens... We crash, the world crashes..
http://www.youtube.com/watch?v=P1sGIY6wvHo
Guess what, we are going to war with Iran, Ive intel from sources in the military, and god I wish I was lying bro...
What the fuck are you basing the value of gold on? the us dollar?
The gold is supposed to back the dollar, but you will never see it.
The us dollar bill used to say "redeemable for gold" but thats not even possible now as the amount of money printed is more than the gold in reserve to back it.
You just dont get it. you dont.. just dont...
Without fiat currency, or accurate currency to reflect the gold backing it, the purchasing power is negated, everything is paid in gold, or a currency that accurately reflects and can be redeemed by GOLD, meaning every thing has a "gold value"... you dont understand this because you cant let go of the idea that gold is backed by carbon paper that is really not that valuable..
I, I just....
Without fiat currency, or accurate currency to reflect the gold backing it, the purchasing power is negated, everything is paid in gold, or a currency that accurately reflects and can be redeemed by GOLD, meaning every thing has a "gold value"... you dont understand this because you cant let go of the idea that gold is backed by carbon paper that is really not that valuable..
I, I just....
What you are saying is inherently true, but what you are missing IMO is that the same applies to paper currency. In the monetary game, at the very core it is about perceived value of commodity (notice I didn't say a commodity) based on scarcity. It's a psychological phenomenon. Markets at the very core are based on human psychology. Human actors making irrational decisions at times.
The inherent worth of a piece of paper is not much either. It has utility when I'm out of TP in the woods. It is backed by only a promise. Promises back by politicians which these days are inherently worthless. And there in lies the fundamental problem.
unspoken
Member
Basing it on its purchasing power. " Gold will never lower in value"...you are kidding yourself man. Don't worry, next time I'll say, "empirical evidence indicates people are getting their jimmies rustled." instead of "I FEEL" You don't have to be a robot to be logical. Anyway, on with the logic:
First we need to understand the usefulness and benefit of having control over our currency vs. having something else like gold or another currency establish the value of our currency. Ready? I don't care if you're ready. In fact, I don't care about anything except the data. Listen up. What happens in reality when everyone loses confidence in your currency and wants to cash in on your debt (bonds)? I tried to explain this earlier, but I just said it matter of factly, and it seems like everyone either didn't read it or didn't want to respond (or believe me) because it completely contradicts all of their "I know better than pretty much every economist on earth" attitude. I'm going to use the UK here, why? because I FEEL like it. Ok not really, I'm going to use it because I'm going to compare them with another country that is more like them than us. The principle remains the same though here in the US. OK, so, UK, POUNDS not EUROS right? So, say confidence is lost in the UK's ability to service it's debt, and people want to start cashing in their bonds for POUNDS. Holy shit, interest rate goes up and the world is ending according to Gramps. Hold on to your hats boys, we have another issue at hand. Now, all of these people have pounds, and they're going to want to get rid of them. Probably in a foreign exchange market, right? The effect is that the price of a pound would have to drop until other people were willing to buy those pounds. This means that most of those pounds would stay in England, or the money stock would remain unchanged. Hell, some of those funds would even be used to buy more UK government securities. But even if that wasn't the case, and the UK govt couldn't find the dough to roll over its debt at a reasonable interest rate, that would force the bank of england to buy the govt securities. So wait a second, am I saying this means the UK govt is ensured liquidity to fund its debt? Yeah, that's what I'm saying. Investors could not possibly cause a liquidity crisis in the UK. Was your mind just blown? 'Cause wait, there's more.
Ok, so nobody uses gold anymore. Because honestly, it's not a great idea. So I can't really give you an example of that. What we do have, is an example where a country is not in control of their own currency. A country where their currency is tied to something else...a monetary union, liiiike...THE EURO.
So, let's go back to the beginning of the UK story, but insert Spain. So, say confidence is lost in the Spain's ability to service it's debt, and people want to start cashing in their Spanish bonds for Euros. Shit. Interest rates go up, and everyone takes their money and invests it in German bonds. Do you see the problem here? There is no exchange market, there is no flexible exchange rate to stop them from taking the money out of spain. It was, boom. all of the money out of spain and into germany. Huge liquidity problem in Spain. Sure the ECB could provide liquidity, but Spain doesn't control the ECB. Let's hope they are feeling generous, eh boys?
Another problem for spain....as pounds are sold in the foreign exchange market from bonds, the national currency depreciates. The Uk economy gets a little boost and inflation increases. In spain, this wouldn't happen. There is no relative change in price when all of the money leaves. That's not very good. That's not very good at all.
Debt to GDP Ratio is higher in the UK, but check this out:
Source: IMF
Whoa! it's cheaper for Britain to borrow money even though they have more debt? Yes, yes it is, because they have control.
First we need to understand the usefulness and benefit of having control over our currency vs. having something else like gold or another currency establish the value of our currency. Ready? I don't care if you're ready. In fact, I don't care about anything except the data. Listen up. What happens in reality when everyone loses confidence in your currency and wants to cash in on your debt (bonds)? I tried to explain this earlier, but I just said it matter of factly, and it seems like everyone either didn't read it or didn't want to respond (or believe me) because it completely contradicts all of their "I know better than pretty much every economist on earth" attitude. I'm going to use the UK here, why? because I FEEL like it. Ok not really, I'm going to use it because I'm going to compare them with another country that is more like them than us. The principle remains the same though here in the US. OK, so, UK, POUNDS not EUROS right? So, say confidence is lost in the UK's ability to service it's debt, and people want to start cashing in their bonds for POUNDS. Holy shit, interest rate goes up and the world is ending according to Gramps. Hold on to your hats boys, we have another issue at hand. Now, all of these people have pounds, and they're going to want to get rid of them. Probably in a foreign exchange market, right? The effect is that the price of a pound would have to drop until other people were willing to buy those pounds. This means that most of those pounds would stay in England, or the money stock would remain unchanged. Hell, some of those funds would even be used to buy more UK government securities. But even if that wasn't the case, and the UK govt couldn't find the dough to roll over its debt at a reasonable interest rate, that would force the bank of england to buy the govt securities. So wait a second, am I saying this means the UK govt is ensured liquidity to fund its debt? Yeah, that's what I'm saying. Investors could not possibly cause a liquidity crisis in the UK. Was your mind just blown? 'Cause wait, there's more.
Ok, so nobody uses gold anymore. Because honestly, it's not a great idea. So I can't really give you an example of that. What we do have, is an example where a country is not in control of their own currency. A country where their currency is tied to something else...a monetary union, liiiike...THE EURO.
So, let's go back to the beginning of the UK story, but insert Spain. So, say confidence is lost in the Spain's ability to service it's debt, and people want to start cashing in their Spanish bonds for Euros. Shit. Interest rates go up, and everyone takes their money and invests it in German bonds. Do you see the problem here? There is no exchange market, there is no flexible exchange rate to stop them from taking the money out of spain. It was, boom. all of the money out of spain and into germany. Huge liquidity problem in Spain. Sure the ECB could provide liquidity, but Spain doesn't control the ECB. Let's hope they are feeling generous, eh boys?
Another problem for spain....as pounds are sold in the foreign exchange market from bonds, the national currency depreciates. The Uk economy gets a little boost and inflation increases. In spain, this wouldn't happen. There is no relative change in price when all of the money leaves. That's not very good. That's not very good at all.
Debt to GDP Ratio is higher in the UK, but check this out:
Source: IMF
Whoa! it's cheaper for Britain to borrow money even though they have more debt? Yes, yes it is, because they have control.
unspoken
Member
Don't worry man, you'll understand someday. If you study real hard...
I never said gold will not ever not lower in "value". Markets are cyclical through thousands of years for a reason.
Wiki
If you are trying to write out a logical argument you phrase your shit properly. Definitions and shit. Alliteration and shit if you are feeling poetic and shit.
You don't have to explain to me currency exchange and why the PIIGS are fucked and everyone else is kind of scraping by right now.
You are still missing the point.
Ya dig what I'm putting down? And yeah you are blowing my mind bro. Blowing my fucking mind.
Wiki
Don't what me to be all "roboty."? Lol. Give me a fucking break dude. Must be this new tin foil.
If you are trying to write out a logical argument you phrase your shit properly. Definitions and shit. Alliteration and shit if you are feeling poetic and shit.
You don't have to explain to me currency exchange and why the PIIGS are fucked and everyone else is kind of scraping by right now.
You are still missing the point.
Ya dig what I'm putting down? And yeah you are blowing my mind bro. Blowing my fucking mind.
unspoken
Member
I was talking about jbonez in regards to being robotic (he said I was not a logical thinker because I said I feel like people are gettign pissed) and saying gold will never lower in value(he said that, not you).
What point am I missing? The point is that commodity backed currency is a solution to a non problem.
Being in control of the value of your money = good
Not being in control of the value of your money = bad
How's that for logic?
