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BobK71
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The Gold Standard as Orthodox Faith A Century Ago
Feb 20th, 2019 at 8:32am
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Sometimes a small leak of information reveals a great deal of truth.

You would never guess from post-1971 mainstream commentary that the classical gold standard was as universally worshiped by economists and central bankers in its day as it is despised today.

Why the 180-degree turn?  Either it is good for the economy in the long term, or it's not.

The reason is simple.  By openly declaring their unequivocal support for the gold standard, and even elevating redemption for gold at the fixed rate to a moral commitment, the elites gave notice to all savers it was futile to hoard gold and bet on its appreciation in paper money terms.  This helped the elites stabilize the gold standard and sustain their paper-money bubble, by claiming the paper was still as good as gold.  Of course, after 1971, the dynamics work in the opposite direction.

What do you think are the implications of this (that is, besides that economists are full of it?)  Smiley
  
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kaz
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Re: The Gold Standard as Orthodox Faith A Century Ago
Reply #1 - Feb 20th, 2019 at 8:47am
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BobK71 wrote on Feb 20th, 2019 at 8:32am:
Sometimes a small leak of information reveals a great deal of truth.

You would never guess from post-1971 mainstream commentary that the classical gold standard was as universally worshiped by economists and central bankers in its day as it is despised today.

Why the 180-degree turn?  Either it is good for the economy in the long term, or it's not.

The reason is simple.  By openly declaring their unequivocal support for the gold standard, and even elevating redemption for gold at the fixed rate to a moral commitment, the elites gave notice to all savers it was futile to hoard gold and bet on its appreciation in paper money terms.  This helped the elites stabilize the gold standard and sustain their paper-money bubble, by claiming the paper was still as good as gold.  Of course, after 1971, the dynamics work in the opposite direction.

What do you think are the implications of this (that is, besides that economists are full of it?)  Smiley


Politicians hate the gold standard because it prevents the government from stealing from the people by printing more money.

Printing money is a regressive tax because it devalues the currency and the poor spend a higher portion of their income than the rich do.

Republicans don't push the gold standard because they are pathetic and useless.  Democrats oppose it because they are authoritarian leftists and are evil
  

Contest winner:  I predicted Kaz' meltdown
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SkyChief
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Re: The Gold Standard as Orthodox Faith A Century Ago
Reply #2 - Feb 20th, 2019 at 11:12am
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BobK71 wrote on Feb 20th, 2019 at 8:32am:
Why the 180-degree turn?  Either it is good for the economy in the long term, or it's not.

It's not that its good for the economy.   It's bad  for the banks.    

Banks cant' loan money unless they have assets to back the loans.

You cant have "derivative lending" with a gold standard.

Also, the Fed loses power to impose the Inflation Tax.   They cannot inject large amounts of money into the economy (Q.E.) for "stimulus".   The Fed essentially would become powerless in a gold standard.

I think China will go to a "form" of a gold standard.  But it will not be to improve their economy.  It will be to grab the coveted title of World Reserve Currency (for the Yuan).
  
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Jeff
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Re: The Gold Standard as Orthodox Faith A Century Ago
Reply #3 - Feb 20th, 2019 at 2:05pm
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BobK71 wrote on Feb 20th, 2019 at 8:32am:
What do you think are the implications of this (that is, besides that economists are full of it?)  Smiley
Your one of those economists aren't you Bob?
  
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BobK71
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Re: The Gold Standard as Orthodox Faith A Century Ago
Reply #4 - Mar 4th, 2019 at 11:34am
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kaz wrote on Feb 20th, 2019 at 8:47am:
Politicians hate the gold standard because it prevents the government from stealing from the people by printing more money.

Printing money is a regressive tax because it devalues the currency and the poor spend a higher portion of their income than the rich do.

Republicans don't push the gold standard because they are pathetic and useless.  Democrats oppose it because they are authoritarian leftists and are evil


Interesting point that the 'inflation tax' is regressive.  Thanks.

Why do you think, though, that every gold/silver standard in history failed?  (With the 'strongest' countries failing last -- the final nail was the US in 1971.)
  
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BobK71
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Re: The Gold Standard as Orthodox Faith A Century Ago
Reply #5 - Mar 4th, 2019 at 11:38am
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SkyChief wrote on Feb 20th, 2019 at 11:12am:
It's not that its good for the economy.   It's bad  for the banks.    
Banks cant' loan money unless they have assets to back the loans.

You cant have "derivative lending" with a gold standard.

Also, the Fed loses power to impose the Inflation Tax.   They cannot inject large amounts of money into the economy (Q.E.) for "stimulus".   The Fed essentially would become powerless in a gold standard.

I think China will go to a "form" of a gold standard.  But it will not be to improve their economy.  It will be to grab the coveted title of World Reserve Currency (for the Yuan).


Sure, but why, do you think, was the gold standard hailed and supported by bankers, central bankers, politicians, economists, the media, the academic establishment, etc. in its day?

Why did the elites like it then, but not now?
  
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SkyChief
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Re: The Gold Standard as Orthodox Faith A Century Ago
Reply #6 - Mar 4th, 2019 at 11:48am
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BobK71 wrote on Mar 4th, 2019 at 11:38am:
Why did the elites like [the gold standard] then, but not now?


"Gold is the money of kings; Silver is the money of gentlemen; Barter is the money of peasants; Debt is the money of slaves"

The US Dollar is representative of DEBT - or the money of slaves.   Gold and silver are representative of WEALTH.

We are all slaves to the Banks.   The elites want to keep it that way!    Smiley

 

"A dollar is a receipt for a claim check on an IOU." - Mike Maloney
  
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BobK71
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Re: The Gold Standard as Orthodox Faith A Century Ago
Reply #7 - Mar 4th, 2019 at 12:31pm
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SkyChief wrote on Mar 4th, 2019 at 11:48am:
"Gold is the money of kings; Silver is the money of gentlemen; Barter is the money of peasants; Debt is the money of slaves"

The US Dollar is representative of DEBT - or the money of slaves.   Gold and silver are representative of WEALTH.

We are all slaves to the Banks.   The elites want to keep it that way!    Smiley

 

"A dollar is a receipt for a claim check on an IOU." - Mike Maloney


The elites were no more honest and arguably more brutal during the gold-standard days, in the West.  The interesting thing is the 180-degree change with regard to gold.
  
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Jeff
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Re: The Gold Standard as Orthodox Faith A Century Ago
Reply #8 - Mar 4th, 2019 at 1:39pm
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BobK71 wrote on Mar 4th, 2019 at 11:34am:
Why do you think, though, that every gold/silver standard in history failed?
Governments destroyed them, because governments like to inflate the supply of money.
  
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Jeff
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Re: The Gold Standard as Orthodox Faith A Century Ago
Reply #9 - Mar 4th, 2019 at 1:43pm
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BobK71 wrote on Mar 4th, 2019 at 11:38am:
Sure, but why, do you think, was the gold standard hailed and supported by bankers, central bankers, politicians, economists, the media, the academic establishment, etc. in its day?

Why did the elites like it then, but not now?
I'm not so sure they all supported it, but once they discovered they could get away with stealing all the gold and issuing fiat money, they loved the power and control that gave them. And of course Lord Keynes convinced them (no doubt it was easy) that they could have permanent economic growth with never a recession to be had if they only had firm control of the supply of money and used it "scientifically".
  
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