Why would anyone want gold standard?

[kevsta]

I didn't say you were stupid. I said just because you don't understand the Wiki or the Fed site it doesn't mean there's deliberate skullduggery afoot. I wasn't attempting to defend my point because I hadn't felt the need to do so, I merely suggested you do the hard yards for your own lazy self.

Sheesh.

The Fed is an independent quasi government agency. The Board of Directors and the Chairman are appointed by the President & the houses. Member banks of the Federal Reserve system are mandated to purchase stock in the Fed, which they cannot trade and earn 6% on regardless of economic conditions. The bank is audited by the GAO, which is an arm of Congress. All Fed profits are remitted to Treasury each year (minus expenses). Last time I made a simple calculation the Fed's expenses made up 3% of its profit. The Fed has both public and private aspects but for the purpose of our discussion re monetary policy the Fed is an agency independent inside government. The role it plays is essentially the same as any other central bank.

http://www.federalreserve.gov/faqs/about_12591.htm
http://en.wikipedia.org/wiki/Structure_of_the_Federal_Reserve_System
http://www.federalreserve.gov/pf/pf.htm

Don't be so damn lazy.

I am far from lazy, none of those links are new to me, and I did not define "the purpose of our discussion".

I simply asked if it was not true that it is privately owned, and this would appear to support my view?

[Privately owned] Member banks of the Federal Reserve system are mandated to purchase stock in the Fed, which they cannot trade and earn 6% on regardless of economic conditions.

6% regardless is actually a pretty sweet deal too, isn't it?

as to the actual levels of Government involvement, independence, congress influence etc, IMO the only realistic view here is that none of us outside of the system truly know what exactly goes on inside there.

 

[Sceptic-PK]

I simply asked if it was not true that it is privately owned, and this would appear to support my view?

6% regardless is actually a pretty sweet deal too, isn't it?

No, it isn't. It is compensation for the opportunity cost of being required to buy shares in the Federal Reserve system. It ensures that regardless of economic decisions by the Fed the member banks do not benefit from them. How did I know you'd ignore everything and focus on this? This is why I couldn't be bothered explaining anything to you in the first place. Ideologues always have an axe to grind.

Edit: I mean you and your shadowstats claim a real inflation rate of ~10%, right? 6% doesn't sound so good now does it?

The point that you're so desperately (dishonestly?) ignoring is that the make-up of member banks is irrelevant because the bank is controlled by the government.

as to the actual levels of Government involvement, independence, congress influence etc, IMO the only realistic view here is that none of us outside of the system truly know what exactly goes on inside there.

Haha. Don't project your ignorance onto others. It is a central bank. We know how central banks function. There isn't any mystery here. Well, except for people who can't read Wiki perhaps. I mean Christ, there's even pictures for you.

 

[Travis]

So, with this awesome gold standard around...........how would any future depressions be dealt with?

 

[kevsta]

No, it isn't. It is compensation for the opportunity cost of being required to buy shares in the Federal Reserve system. It ensures that regardless of economic decisions by the Fed the member banks do not benefit from them.

I would suggest you run 6% per annum through a compound interest calculator, and then compare that with the yields on treasuries over the same time periods.

How did I know you'd ignore everything and focus on this? This is why I couldn't be bothered explaining anything to you in the first place. Ideologues always have an axe to grind.

Edit: I mean you and your shadowstats claim a real inflation rate of ~10%, right? 6% doesn't sound so good now does it?

True enough. that and the deliberate compression of the 2-10-30 yr Treasury yield curves is more or less a death sentence for the banks, long term. but then hey we dont have to worry about any of that, because:

a) they're all doing so great anyway..
b) the US taxpayer has endless pockets and will pick up the bailout bills regardless.

The point that you're so desperately (dishonestly?) ignoring is that the make-up of member banks is irrelevant because the bank is controlled by the government.

haha, now who's being dishonest? either it IS a quasi government agency controlled by the government, or it is independent?

ultimately there's not really much doubt that their policies have facilitated catastrophic bubbles and massive Govt deficit spending and have contributed towards destroying the once mighty US economy.

so im leaning with not very independent in the grand scheme of things, but definitely privately owned anyway.

Haha. Don't project your ignorance onto others. It is a central bank. We know how central banks function.

I consider this statement naive in the extreme.

There isn't any mystery here. Well, except for people who can't read Wiki perhaps. I mean Christ, there's even pictures for you.

[qimg]http://upload.wikimedia.org/wikipedia/commons/thumb/f/f0/Alisna_and_Summers_Central_Bank_Independence_vs_Inflation.gif/300px-Alisna_and_Summers_Central_Bank_Independence_vs_Inflation.gif[/qimg]

so wiki = the truth, the whole truth, and nothing but the truth. cool.

 

[kevsta]

So, with this awesome gold standard around...........how would any future depressions be dealt with?

lets deal with the one caused by the current system first shall we?

 

[ZouPrime]

As I said recently in another thread, why the biggest critics of the current institutions don't even seem to understand them in their present state? How can one offer any kind of meaningful reforms when one doesn't understand how things are done now? And we're not talking about deep understanding and direct experience, we're talking about taking the time to read a few wikipedia pages! If a few web pages are confusing for you, how do you expect to understand more complex concepts?

How can anyone suggest a gold backed currency, but seem completely confused by basic issues such as the effect of inflation and deflation on an economy?

Kevsta, when you first posted on this board you were welcomed with scorn. People told you we had heard it all, that it was very doubtful you could bring anything new to the discussion that hasn't been already discussed again and again and again over the years. People were sceptical about spending time on your videos and your claims. Do you understand why now?

 

[UndercoverElephant]

You people still don't get it. You are talking about depressions/recessions as if they are the problem, and economic growth is the solution. Economic growth is not the solution. The problem is that we have an economic system which only works if long-term economic growth is possible and we are hitting the physical limits to growth.

So if you are asking "how do we deal with future depressions?" then you are in fact asking completely the wrong question. The correct question is this: "What is an appropriate monetary/economic system for a real-world situation where growth is no longer possible?"

And my answer is this: "If there is not going to be any more growth, then there does not need to be any scope for arbitrarily increasing the money supply. Therefore a gold standard would be appropriate - considerably more appropriate than it was in previous times when economic growth was still possible."

If you remove the flawed assumption that growth is the solution (or is still possible in the medium and long term) then instead of asking "Why would anyone want a gold standard?" I suggest a better question is "Why would anyone want anything other than a gold standard?"

 

[WildCat]

So, with this awesome gold standard around...........how would any future depressions be dealt with?

The usual way - riots, deaths, revolution.

 

[WildCat]

I am far from lazy, none of those links are new to me, and I did not define "the purpose of our discussion".

I simply asked if it was not true that it is privately owned, and this would appear to support my view?



6% regardless is actually a pretty sweet deal too, isn't it?

as to the actual levels of Government involvement, independence, congress influence etc, IMO the only realistic view here is that none of us outside of the system truly know what exactly goes on inside there.

I thought you weren't going to parrot all the old Jewish banking conspiracies all cleaned up to remove the Jewish part? And yet here you are...

 

[WildCat]

You people still don't get it. You are talking about depressions/recessions as if they are the problem, and economic growth is the solution. Economic growth is not the solution. The problem is that we have an economic system which only works if long-term economic growth is possible and we are hitting the physical limits to growth.

"Physical limits to growth"?

 

[psionl0]

I thought you weren't going to parrot all the old Jewish banking conspiracies all cleaned up to remove the Jewish part? And yet here you are...

Here we go again.

Another pathetic attempt to play the race card even though kevsta didn't mention Jew once. Why do you have to drag Jews into any discussion about the fed? Are the economic issues too difficult for you to deal with?

 

[Sceptic-PK]

I would suggest you run 6% per annum through a compound interest calculator, and then compare that with the yields on treasuries over the same time periods.

How is that at all relevant? There are any number of investment vehicles that might give better or worse than 6%, depending on what is going on in the economy. That's the point. You don't seem to be following the discussion? Most member banks are required by law to purchase stock in the Fed. They receive 6% on those "investments". So what? Do you think it should be lower? None at all? Shouldn't have to purchase stock to begin with? What?

haha, now who's being dishonest? either it IS a quasi government agency controlled by the government, or it is independent?

How can you be this ignorant when you hold such strong beliefs on the subject? The Fed is both. It is a quasi government agency because it has private member banks but with a Congress-appointed board and profits returned to the US Treasury etc. It is independent within government because its monetary policy decisions are not subject to review/change by politicians. It is independent in the same way that judges are independent, or how Statutory Offices are independent. Christ. It is the same for virtually any central bank you care to name. Independent within government. They are designed that way to separate monetary policy from politicians. The bank is "controlled by government" because the Board is the government.

Are we f'n there yet?

ultimately there's not really much doubt that their policies have facilitated catastrophic bubbles and massive Govt deficit spending and have contributed towards destroying the once mighty US economy.

If you say so. I don't see the point in opening up yet another pointless topic.

so im leaning with not very independent in the grand scheme of things, but definitely privately owned anyway.

Whoopie do. You can continue being wrong as much as you like.

I consider this statement naive in the extreme.

Again, your ignorance is no reason to make assertions about what the rest of the world knows about central banking.

so wiki = the truth, the whole truth, and nothing but the truth. cool.

No, I just figured pictures might be easier for you to understand since you obviously didn't grasp the words.

 

[WildCat]

Here we go again.

Another pathetic attempt to play the race card even though kevsta didn't mention Jew once. Why do you have to drag Jews into any discussion about the fed? Are the economic issues too difficult for you to deal with?

I didn't say he mentioned Jews. I'm merely pointing out that all his claims originated in anti-semitic Jewish banking conspiracy theories and they were complete BS back then and they're complete BS now. Substitute anything you like for "Jew", and all you've done is turn a racist nonsense conspiracy theory into a non-racist nonsense conspiracy theory.

 

[UndercoverElephant]

"Physical limits to growth"?

Yes. What a strange idea! Here we all are living on a finite physical planet which has a finite amount of natural resources and a finite capacity for absorbing our waste, and that means there are physical limits to economic growth. And yet even though this is stark, staring obviously true loads of people out there respond to the idea with:

They think what I'm saying is mad. What is really mad is believing we can go on growing the human operation on Earth as if there were no limits.

Trying to create economic growth is not, regardless of what the mainstream media is telling you, the solution to our current difficulties. The solution is to accept there are limits to growth and build an economic/monetary system which takes this into account instead of living in a fantasyworld where economics and politics somehow over-rule physics.



Malthus was right, the Club of Rome were right, and a whole load of people who currently think they can respond to ideas like those by laughing at them have got a harsh period of adjustment to reality ahead of them.

 

[GlennB]

"Physical limits to growth"?

Availablility of water, energy, food, space, minerals. Stuff like that.

However clever society might be, a physical limit arrives eventually.

 

[WildCat]

Availablility of water

There's the same amount of water we've always had. It's impossible to use it up, short of blasting it into space.

energy

Again, nearly infinite supplies are available. Until the sun burns out (no more solar or wind power), or until fissionable material runs out (thousands of years), or the moon gets knocked out of orbit thus eliminating tidal power.

food

Again, not in the foreseeable future. We're nowhere near that point as UE claims.

space

Fly over the planet on Google Earth. Almost nothing but empty space.

minerals.

Like water, an endless supply. Can be recycled forever.

Stuff like that.

Yeah, just like that!

However clever society might be, a physical limit arrives eventually.[/quote]

 

[UndercoverElephant]

There's the same amount of water we've always had. It's impossible to use it up, short of blasting it into space.

This answer sort of demonstrates another part of the problem: the chronically poor understanding of the situation, even amongst supposedly educated westerners. Actually, the amount of water on the Earth is increasing due to continually arriving lumps of icy rock from space. This is not what "availability of water" means with respect to the human race. The water in the oceans is no use to us as it is - we need to use vast amounts of energy to remove the salt, and there is now a serious problem with extremely high salination levels in the sea where desalination plants are common - the worse problem of all being the red sea, which is in some places about ten times as salty as it ought to be. A large amount of the water we depend upon (globally) also comes from aquifers which are not re-filling at anything like the rate we are depleting them and glaciers which are disappearing due to climate change. Once these are gone then they are gone. On top of all that there are problems with increasing levels of pollution of rivers/lakes in many parts of the world and in other places increases in usage for agriculture and industry are resulting in the disappearance of entire inland seas.

But hey...there's no problem with availability of water...

Again, nearly infinite supplies are available. Until the sun burns out (no more solar or wind power), or until fissionable material runs out (thousands of years), or the moon gets knocked out of orbit thus eliminating tidal power.

Hello....reality calling, reality calling....

What we require is energy in a form that we can actually use, and technologies which do not create massive unwanted side-effects. If you think there is no problem with energy availability I suggest you look up the last 20 years worth of average energy bills in the western world.

Again, not in the foreseeable future. We're nowhere near that point as UE claims.

You have not done your research. It is not just me who is claiming we face a food crisis in the near future. Lots of people are saying the same thing.

Also, you have to understand that just like oil prices, food prices are limited by what people are able to pay. If you are starving and but cannot afford to buy the food at the market then you will starve even though food is "available." It's just not available to you.

Fly over the planet on Google Earth. Almost nothing but empty space.

Sure! We can all live in the middle of the Pacific Ocean!!!!

Hello???? Anybody home?

 

[GlennB]

Again, nearly infinite supplies are available....

This is what's wrong with your thinking. "Nearly infinite" is totally meaningless.

We used to think that stocks of whale and cod and salmon and herring were so vast we could go on fishing them to our hearts' content. How wrong we were. There are physical limits.

 

[OMGturt1es]

Did I just wake up in 1973?
..
words demonstrating that you have no idea what you're talking about
...
But keep the predictions coming. I love the lulz!!!

http://en.wikipedia.org/wiki/Peak_oil

 

[kevsta]

jews jews jews blah blah blah jews jews jews

why dont you just say "I have no clue about anything so I just smugly accuse anyone I don't agree with of being anti-Semitic, whatever they are talking about" ?

you're not fooling anyone. back on ignore for you.

Kevsta, when you first posted on this board you were welcomed with scorn. People told you we had heard it all, that it was very doubtful you could bring anything new to the discussion that hasn't been already discussed again and again and again over the years. People were sceptical about spending time on your videos and your claims. Do you understand why now?

I had no idea you brainboxes already all know everything there is to know and would refuse to even consider the words of someone like Rickards, who I will repeat, knows more about this, than you, I, and likely everyone else on this board put together. The height of arrogance and conceit all in one place. well done one and all, you must be very proud

How is that at all relevant? You don't seem to be following the discussion?

someone cant seem to follow discussions round here, but it is not I. because I don't agree with your assessments does not mean I don't understand the websites or you.

There are any number of investment vehicles that might give better or worse than 6%, depending on what is going on in the economy.

there are indeed, but if you had the faintest idea about real world finance you would know that 6%, guaranteed, forever, is an exceptionally good deal. you clearly don't, so that says it all.

How can you be this ignorant when you hold such strong beliefs on the subject?

how can you even type this without seeing the irony of your statement?

The Fed is both. It is a quasi government agency because it has private member banks but with a Congress-appointed board and profits returned to the US Treasury etc. It is independent within government because its monetary policy decisions are not subject to review/change by politicians. It is independent in the same way that judges are independent, or how Statutory Offices are independent. Christ. It is the same for virtually any central bank you care to name. Independent within government. They are designed that way to separate monetary policy from politicians. The bank is "controlled by government" because the Board is the government.

what you actually have is the worst of both worlds, it doesn't work. but I'm done trying to point this out to you, lets let the guys with pitchforks sort it out in due time.

Are we f'n there yet?

personally, I dont think you're ever going to be there, you don't appear to have the processing capacity to think outside of wiki and government sites

Whoopie do. You can continue being wrong as much as you like.

we shall see who is wrong. be sure I will be here laughing at you when the time comes.

Again, your ignorance is no reason to make assertions about what the rest of the world knows about central banking.

we (the rest of the world) mostly know it is a failed model, you can believe whatever makes you happy.

No, I just figured pictures might be easier for you to understand since you obviously didn't grasp the words.

here's a picture for you with the same reasoning

Malthus was right, the Club of Rome were right, and a whole load of people who currently think they can respond to ideas like those by laughing at them have got a harsh period of adjustment to reality ahead of them.

it's called evolution, those who refuse to see and adapt, die. I just wish I could be there when the penny (or the axe) finally drops for these types.

Hello....reality calling, reality calling....

lots of thirsty horses round here.

so really, yes I do see there's nothing more to be said, except to come on and laugh at you all from time to time, as your paradigm changes all around you.

greatly looking forward to that.