Federal reserve debunkers I need alittle help

[Billdave2]

...oh hey...did I tell you guys I had an MBA?

From Wharton.

Where did you get it from? My dad saw a Harvard degree at a yard sale once.

 

[kookbreaker]

...oh hey...did I tell you guys I had an MBA?

From Wharton.

"My tires, they're full of water. Did I mention that?"

 

[kookbreaker]

Could someone toss him a twinkie and get him out of here?

A twinkie based economy? Makes as much sense as anything else you've advocated.

 

[Hokulele]

...oh hey...did I tell you guys I had an MBA?

Sorry in advance, but I couldn't resist.

 

[AlanGreenspan]

Mr. Greenspan - Maestro,

Why don't you tell us a little about your paper: Gold and Economic Freedom

What exactly do you want to know about Greenspan's paper?

But first of all, have you read it?

The simple point is that gold is the most rational basis for a global system of credit (as the global credit system if finding out).

"Global system of credit"? What on earth do you mean?

In the case you are referring to a credit system, no a scarce resource can't be used as credit. If the market demands credit and you start to limit it, then all you are doing is making is making capital more expensive which in turn will slow down investment and force the producers to raise their prices to be able to fulfill their obligations.

It's not a surprise tho, you previously said that The Fed was the cause of inflation in the U.S. because of its financing of the government deficit.

What do you say if you put a lot more thought and research into your posts? Start by not using the same "arguments" that have been regurgitated over, and over, and over ...

 

[Brainache]

So Max, what happens to your fixed gold standard dollar when some prospector out in the desert discovers a huge reef of gold? Millions of tons of the beautiful shiny stuff? Suddenly there is lots of gold for everyone... what happens to your stable dollar then?

 

[Max Photon]

Additions to the gold supply amplify the value of a gold basis.

So Max, what happens to your fixed gold standard dollar when some prospector out in the desert discovers a huge reef of gold? Millions of tons of the beautiful shiny stuff? Suddenly there is lots of gold for everyone... what happens to your stable dollar then?

Guys, you are obviously my intellectual superiors on the matter, so I will be abandoning this thread.

However let me answer Brainache's question.

The stock-to-flow ratio of gold is far higher than that of any other commodity - by almost two orders of magnitude. This makes gold the most impervious of all commodities to supply shocks.

The addition of more gold would only ADD to the above ground stock, amplifying further gold's positions as the stable basis for an economic unit.

You must remember, gold and silver are monetary metals, and do not follow supply/demand dynamics.

Have fun!

 

[volatile]

Guys, you are obviously my intellectual superiors on the matter, so I will be abandoning this thread.

However let me answer Brainache's question.

The stock-to-flow ratio of gold is far higher than that of any other commodity - by almost two orders of magnitude. This makes gold the most impervious of all commodities to supply shocks.

The addition of more gold would only ADD to the above ground stock, amplifying further gold's positions as the stable basis for an economic unit.

You must remember, gold and silver are monetary metals, and do not follow supply/demand dynamics.

Have fun!

Think about it for a millisecond, Max.

If all of a sudden gold is no longer scarce, and everyone is able to have tonnes of gold, the value of a single ounce will necessarily decrease.

 

[twinstead]

I'm new to this kind of debate, but Friedman has a point about expending the resources to take gold from one vault, the ground, and depositing it in another vault, e.g. Ft. Knox

[FONT=Times New Roman, Times, serif]The fundamental defect of a commodity standard, from the point of view of the society as a whole, is that it requires the use of real resources to add to the stock of money. People must work hard to dig gold out of the ground in South Africa – in order to rebury it in Fort Knox or some similar place

[/FONT]

 

[AlanGreenspan]

no a scarce resource can't be used as credit.

Edit: I meant currency, not credit.

 

[volatile]

I'm new to this kind of debate, but Friedman has a point about expending the resources to take gold from one vault, the ground, and depositing it in another vault, e.g. Ft. Knox

[/size][/font]

Doesn't that apply equally to printing fiat money, too, though? Real resources are used in minting coinage and printing banknotes too. What point is Friedman trying to make?

 

[twinstead]

Doesn't that apply equally to printing fiat money, too, though? Real resources are used in minting coinage and printing banknotes too. What point is Friedman trying to make?

I had the same thought. I'm still reading his stuff to find out what he means with that.

Or, I'll give up as soon as I realize I don't understand any of it

 

[jezcoe]

The greatest argument I can see against the gold standard is its uselessness to keep up with the current world market. The total world GDP in 2006 according to the World Bank 48,244,879,000,000.
http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf

Annual worldwide production of gold is around 50 troy ounces a year. The estimate of total mined gold in history is 10 billion Troy ounces.
http://money.howstuffworks.com/question213.htm

So something doesn't seem to add up. Even with the US GDP of 13 Trillion dollars there just doesn't seem to be enough gold in existence to fix in a rational amount to float a modern economy. Need more currency to back a growing economy? OH crap I have buy gold at a premium.

To support a gold standard you would have to remove from the market almost all of the gold out there in order lock it away to use its mystical powers of stablization. Goodbye Goldshclager

 

[tomwaits]

Goodbye Goldshclager

NOOOOOOOOO!!!!!

 

[Tippit]

I had the same thought. I'm still reading his stuff to find out what he means with that.

Or, I'll give up as soon as I realize I don't understand any of it

His point is that capital has to be allocated to expanding the stock of money, that is, mining gold out of the ground, capital which could otherwise be employed in more productive ways. The costs of creating fiat money are inconsequential, but of course, this is the essence of the problem when you realize that the business of money creation is a zero-sum game with a few winners (the recipients of the new money) and many losers (everyone who holds existing money).

The fact that it is hard work to mine gold isn't a bug, but a feature. Scarcity is a desirable property of money which is designed to function as a store of value, because that value doesn't depend on the trust of some monetary authority.

 

[AlanGreenspan]

His point is that capital has to be allocated to expanding the stock of money, that is, mining gold out of the ground, capital which could otherwise be employed in more productive ways.

While Friedman specifically mentions workers (labor), here we have Tippit saying he's talking about allocating capital in activities that offer lower returns. The more he posts, the less surprised i am with his previous, ignorance-filled, posts.

this is the essence of the problem when you realize that the business of money creation is a zero-sum game with a few winners (the recipients of the new money) and many losers (everyone who holds existing money).

Some people never get tired of regurgitating the same old nonsense. The gains of these recipients of the "new money" are quickly offset when the price level raises affecting every agent in the economy. This why there is no "business of money creating" outside your imaginary world.

Who wants to bet that Tippit will just ignore this post and repeat the same nonsense a few months from now?

Scarcity is a desirable property of money which is designed to function as a store of value, because that value doesn't depend on the trust of some monetary authority.

A desirable property? The desirable properties could be the ability to be easily stored, transported and used once it is retrieved.

Scarcity of the currency will only contribute to slowing down growth. If workers productivity increases and more goods/services start to be produced at a rate higher than the growth in the money supply, you are effectively deflating the economy. Which means productivity will be met with decrease in the price level, which may translate to the stagnation of the wages, and possibly a reduction ... now that's quite an incentive for the workers of that economy, eh Tippit?

 

[twinstead]

I would imagine that even if we went immediately to the gold standard again, wouldn't this new 'backup' for the dollar be only as good as the government's willingness to stick with the standard?

If a government can go on, it can go off, right?

 

[Par]

So just becuase you can fix the weight and puity of gold that makes it the base for a monetary system? Why use gold then? You can fix the weight and purity level of water too, would it make a good base for a monetary system? Why not?

Water would make more sense. It has inherent value, after all!

 

[Par]

So just becuase you can fix the weight and puity of gold that makes it the base for a monetary system? Why use gold then? You can fix the weight and purity level of water too, would it make a good base for a monetary system? Why not?

Could someone toss him a twinkie and get him out of here?

(I think that means that he doesn’t want to answer the question.)

 

[JonnyFive]

Wrong, the function of a Central Bank is one: to maintain price stability.

I hate to be pedantic, but technically the function of the Federal Reserve specifically are six:

1. Full employment.
2. Economic growth.
3. Price stability.
4. Interest rate stability.
5. Stability of the financial system.
6. Stability of foreign exchange markets.

The Federal Reserve Notes issues are IOU NOTHINGS - Little Green Lies. The Federal Reserve Notes issued are certainly not money. (For the slow, debt is not money.)

You apparently don't know what money is.

The functions of the Federal Reserve are many.

Yes.

The primary function is to surreptitiously siphon off the productive gains from "dollar" holders, present and future, by facilitating an unconstitutional check-kiting scheme between the US Treasury and the Federal Reserve. Both issue paper that serves as collateral for the other, yet that neither has any intention of, nor ability to honor. (We would go to prison if we did the same thing.)

No. This represents a grotesque misunderstanding of the setup of the modern US economy and its central banking system.

The dance of deception between the Federal Reserve and the US Treasury facilitates deficit spending, of which Alan Greenspan, former chairman of the FR for 17 years, said, "Deficit spending is simply a scheme for the confiscation of wealth."

Did he really say that, or are you just making it up? Got a source for that quote?

What is the publicly-claimed function of the Federal Reserve? Why, it's to protect us from inflation.

No, it isn't. The Fed makes no promises about "protecting" anyone from inflation. You have not studied money and banking, you have forgotten what you learned about the central banking system of the US, or you are trying to deceive us.

What a cruel, sick joke. The FED is the dynamo of inflation. Inflation is nothing but currency devaluation. The FED deliberately inflates or debases the currency! That is it's function!

No, that is not its "function." Inflation is a side-effect of the tools the Fed has available to perform its various functions.

(And remember, if he is right about the FED, you might want to consider what he is saying about 911 truth.)

That does not logically follow.

P.S. I have an MBA from the Wharton Graduate School of Finance, if that means anything.

You having or not having an MBA is completely irrelevant to this discussion. MBA programs are not intended to focus on economics in the first place, and you have demonstrated either a complete lack of knowledge of the workings of the central banking system or a willingness to be extremely deceptive to try to push a point.

ETA: By the way, "Federal Reserve" is the greatest marketing name ever.

No it isn't.