As it stands, the USA is DEEP in debt, if anything this guy has been told to spread his nonsense so the USA can make a lot of profit off EU banks in trouble...
Greece has an issue, yes.
Spain has an issue, yes.
The other countries, not really.
Actually the Eurozone as a whole is in trouble and not simply because of Greece and Spain, who are only the latest cases of financial problems in the EU member body. Disaster for one member alone would be a disaster for all and I think you've forgotten some more recent things in iceland, ireland, etc. There is also a deep relationship bewteen US and EU banking industries that ensures either one being in trouble threatens the other, not to mention the Asian banks and governments that have a large amount of capital invested in both.
It's a global problem due to irresponsible investing and policy everywhere and, unfortunately, there is no silver bullet. That said, i've read some interesting suggestions and policies being produced (south korea is innovating on this front) to try and curb these behaviors.
Except the orignial keynesian models are still quite accurate and it has become (along with new keynesian stuff i'm not aware of) the industry standard, so to speak. You should know that nobody but Ron Paul and his fans actually buy into the Austrian Economic model (not even the Austrians).
I'm not sure if you bothered looking at the charts or the OCC's report but $244 trillion in derivatives is Godzilla. Keynesian models accurate? They're all falling apart right now. The EU is falling apart, the US dollar is stretched beyond credibility. Inside this century alone the trash heap of failed fiat currency is staggering. Japan debt to GDP is over 200%. You are witnessing right now the failure of Keynesian economics.
Germany Weimer Republic 1922-1923 - FAILED
Hungary 1945-1946 - FAILED
Chile 1971-1981 - FAILED
Argentina 1975-1992 - FAILED
Peru 1988-1991 - FAILED
Angola 1991 – 1999 - FAILED
Yugoslavia 1992-1995 - FAILED
Belarus 1994-2002 - FAILED
Zimbabwe 2000-2009 - FAILED
What fiat success can you point to that has stood the test of time lasted and lasted in the last 100 years? Not the dollar it's already failed twice, once under JM Keynes watch! Not the Russian Ruble it's been propped up 15 times. What you say about Austrian's not buying into Austrian economics is simply wrong. Go to Ludwig von Mises Institute web site and see for yourself, Austrian economist Marc Faber, has gotten this crisis correct far better than Paul Krugman and Peter Schiff also an Austrian economist... well you can see just how right he was. http://www.youtube.com/watch?v=tZaHNeNgrcI
How do I think it got pressured down from gold standard to Bretton woods to fiat? Simple, THEFT! The bankers robbed the wealth of the people. The FED still keeps the gold, why do you suppose that is? According to Bernanke it's for tradition, do you believe him? Bretton Woods ended because France was getting our Gold. In the 1930's the bankers were hung in the streets because the people went to the banks to redeem their claim checks on gold and were instead given notes of credit. Gold wasn't the problem, it was the fact that the bankers had engaged in fractional reserve banking and lent out more money than they had backed by gold. Is that golds fault the engaged in shifty lending practices? Of course not. Also 85% of all the gold ever produced is held, not used. Gold is just a metal that has been used as money for 5000 years, the largest use of gold outside of that is jewelry. If chocolate bunnies could do what gold does I'd be all for it. Gold isn't volatile, currencies rise and fall against gold. When you see prices of gold go up or down, it's just currency value rising or falling against the metal.
The currency was getting too big to be backed and factional lending schemes only compound that problem. Attempts to return to the gold standard have always been thwarted by better judgment.
Better judgement would be not engage in high ratio fractional reserve banking, that where the problem begins. You need to understand exactly how a dollar is created and then you begin to understand that every dollar created is debt to the people that must be paid back plus interest, every dollar is borrowed into existent and must be paid back plus interest.
As it stands, the USA is DEEP in debt, if anything this guy has been told to spread his nonsense so the USA can make a lot of profit off EU banks in trouble...
It's really, quite an eye opener.
All of society runs on debts, and the banks simply own everything in the world.
I'm not sure if you bothered looking at the charts or the OCC's report but $244 trillion in derivatives is Godzilla. Keynesian models accurate? They're all falling apart right now. The EU is falling apart, the US dollar is stretched beyond credibility. Inside this century alone the trash heap of failed fiat currency is staggering. Japan debt to GDP is over 200%. You are witnessing right now the failure of Keynesian economics.
If the global economy collapsed, sure that might indicate a failure. It hasn't yet.
What fiat success can you point to that has stood the test of time lasted and lasted in the last 100 years?
I don't quite know how you can blame fiat for those states when a cursory glance at your list reveals that other politics were the prime-motivators behind their failure. Germany was saturated in war-debt and punitive debts to the victors of WWI, Hungary was in the same boat, Yugoslavia splintered under ethnic and religious tension... etc.
The current global economy still models well, according to economists on the old models so again, i'm not sure where you are inferring the models are going out the window.
Better judgement would be not engage in high ratio fractional reserve banking, that where the problem begins. You need to understand exactly how a dollar is created and then you begin to understand that every dollar created is debt to the people that must be paid back plus interest, every dollar is borrowed into existent and must be paid back plus interest.
I'm aware of how fiat functions as debt and the problems of exponential debt. However, I haven't heard a convincing argument that a mineral substitute works better. For every dollar in circulation a grain of gold dust is paid back? Doesn't that sound just as ludacris when you consider the scale?
As it stands, the USA is DEEP in debt, if anything this guy has been told to spread his nonsense so the USA can make a lot of profit off EU banks in trouble...
It's really, quite an eye opener.
All of society runs on debts, and the banks simply own everything in the world.
Spot on correct BBR
I already took on this point, sufficed to say I agree delinquent banking policy is a problem. That said, I am tremendously skeptical of anyone who claims a commodity-driven currency would in any way improve the situation.
If the global economy collapsed, sure that might indicate a failure. It hasn't yet.
It did collapse in 2008 but then governments and central banks decided to step in and save themselves. Had we allowed a correction and done nothing we not have dropped into a global depression as the self serving slobs suggested. After the collapse in 08 there was loads of liquidity out there ready to invest, competent money would have run into to buy up all the bargain and bankrupt banks and we have risen with strong sound institutions. The recession would have been a sharp V shaped recession. What the government and banks have done is cause a depression (yes I submit we are in a depression), we're in a flat L shaped downturn replete with corrupt zombie banks. It left the market with inflated P/E ratios and grovelling dividends, no sane investor is going to buy something that is can't be properly valuated.
Go back and look at those FED charts, every single chart is unsustainable, parabolic rises are almost always followed by a parabolic fall. The last 3 years of stimulus and bailout has not worked, the wagon wheels are beginning to come off the global economy. The whole purpose of stimulus is to help float the thing until it can grow out of the downturn. But the numbers show we simply can't grow our way out of this mess. you have 78/m baby boomers who are now getting ready to retire into a tax base of 51/m Gen-X. There will be no growing out of this. Only Gen-Y can do that 20 years from now. This demographic problem holds true for all countries who fought in WWII. The mainstream media is not reporting what is really happening, you have hunt for the truth now like 5 pages back from the home page of the news. For example:
Bernanke Hints At QE3 - 09/30/11 http://online.wsj.co...2017811888.html If things were OK the EU wouldn't be getting bailed out for the 2nd time, QE3 wouldn't be getting hinted at. We are in a depression, the government just doesn't want to call it that. they obfuscate the truth by using hedonic adjustments in the CPI and reference on core inflation which excludes food and fuel. They lie about unemployment by excluding long term discouraged workers. You can see how these numbers use to be accurately calculated at http://www.shadowstats.com/.
I don't quite know how you can blame fiat for those states when a cursory glance at your list reveals that other politics were the prime-motivators behind their failure. Germany was saturated in war-debt and punitive debts to the victors of WWI, Hungary was in the same boat, Yugoslavia splintered under ethnic and religious tension... etc.
The current global economy still models well, according to economists on the old models so again, i'm not sure where you are inferring the models are going out the window.
Sure every country has a different story how it got into trouble but the action of the printing press to get them out ends with the same results every time. There are thousands of examples throughout history of fiat currency failing all the way back to the first money in Athens around 440 BC. Lets take Wiemar when they debased their fiat currency back to its intrinsic value of zero for example and compare it what we are doing now.
At the beginning of WWI Germany went off the gold standard and suspended the right of its citizens to redeem their currency for gold and silver. Like all long wars, WWI was a war of and by the printing press. The number of marks in circulation quadrupled during the war. Prices however had not kept up with inflation immediately and the effects were not felt because people were saving every penny. (Sound familiar?) After the war confidence returned and along with it the sidelined currency; prices rose with ravaging effects. Retail prices rose by 10 to 20 times, anyone who saved were stunned to learn that money would only buy 10 percent of what it use to only a year or two earlier.
Then the reparations came just as things appeared to improve, so the government had never stopped printing (like ours isn’t now). Prices began to rise again and by July of 1922 they rose by 700%. This was the breaking point and the people’s confidence fell through the floor having watched the purchasing power disappear to next to nothing (That is yet to come here in the not too distant future). Having been severely burned by saving their money they knew if they held their money it would be worth nothing in a short period of time, now the people began to spend their money the moment they got it, the currency became a hot potato no one wanted.
There are a lot of good parallels between Wiemar and our currency debasing of today. Our current reparations would be the exponentially growing interest rate we are paying on the $16 (now committed) trillion and growing debt we now have. We have borrowed our way into a hole we can't escape. Again each situation of debt is different, but the result of using the printing press to get out of the mess is the same, currency gets debased back to its intrinsic value of zero.
This brings home an important point, for nearly 200 years the dollar was a store of wealth. There is no intrinsic value in the dollar any longer, they rob our wealth via stealth tax, they borrow and deficit spend our money and lay the bill in the tax payers inbox for future payment. I'm old enough to remember when 5 bucks was worth something, when gas was only .60 cents a gallon, and when our silver dollars actually had silver in them. I make more money than my grandfather made as an lawyer in the 1970's and yet I don't live nearly as well as he did. I can tell you personally we are slowly having our wealth robbed from us.
I'm aware of how fiat functions as debt and the problems of exponential debt. However, I haven't heard a convincing argument that a mineral substitute works better. For every dollar in circulation a grain of gold dust is paid back? Doesn't that sound just as ludacris when you consider the scale?
It already has worked better than our current currency for 200 years the US (spare times of war when we borrowed to fund the wars) had nearly zero inflation. Why? Because a dollar in 1705 was worth a dollar in 1805. If you didn't have it, you didn't spend it, and occasionally when you really needed to borrow you did so thoughtfully. We did great things in the US under this system. Our money today is literally a debt, why the hell should I have to pay interest on the very money I have in my pocket? Gold and silver have no counter party risk, they are no mans debt, it's worth what its worth. For 200 years we operated more in more a Austrian styled economy than a Keynesian one. Of course back then the economists were different, Adam Smith, Parson Malthus, David Ricardo, John Mill etc. The attraction of a credit based society like we have now is gives the perception of wealth because borrow your way into a lot of stuff, the danger is you have to pay for it at some point and then the shit hits the fan as it is beginning to now. The fundamental flaw of a fiat based system is in the fact that fact currency is borrowed into existence, all must be paid back plus interest. Fractional Reserve Banking exasperates this flaw. In order for this system to work, each succeeding generation must be larger than the last to service the debt. As I said earlier for 20 years our tax base will be smaller and we won't be able to service the debt at some point. The FED fears deflation because they can't tax it, they are now trapped by the numbers.
I already took on this point, sufficed to say I agree delinquent banking policy is a problem. That said, I am tremendously skeptical of anyone who claims a commodity-driven currency would in any way improve the situation.
A lot of people misunderstand why a commodity based economy is good and get hung up on gold and silver being a metal, the cliche line is you can't eat gold. I submit you can't eat paper either. It's not the metal that really counts, it's the function it performs. Gold and silver are relatively rare and requires significant effort to acquire, they're portable, divisible, fungible, and it's a store of value over long periods of time. Far better than fiat currency gold and silver control interest rates, prevent reckless printing and debasing of the currency, simply and easily corrects trade imbalances between other countries. It helps to control the scale of corruption. Where we get into trouble is when the government and banks corrupted, start changing the rules and allowing paper to take a more predominant role. Then we run into problems, the paper nutshell game becomes all too easy. The final straw that got us into trouble was Nixon severing the gold tie in 1971 and the FED charts prove it.
What exactly is a dollar worth today? Fiat currency obfuscates the lines between price and value, the only way to know what something is worth now is by comparing different asset classes. How much was a barrel of oil worth in 1999 to a share of the Dow? How many barrels can you buy today in shares of the Dow? If you do these comparisons you can look at charts and see the Dow was crashing against many assets classes since 1999 until today even when it was hitting all time highs around 14,000. So in terms of dollars the Dow was going up, but against industrial metals, agricultural commodities, oil, and precious metals the Dow has been losing for the last 12 years. Why? Because the dollar is has been losing value.
Here are some Austrian economists and investors who called this crisis right, worth watching them, all videos were made just inside last month.
Peter Schiff FULL Testimony Before Congress on Obama Jobs Bill 9/13/11 (Peter tells the truth to Congress like I have never seen anyone tell it to Congress before) http://www.youtube.c...h?v=dAHIf5IPQfU
Kyle Bass With David Faber - 'Greece Will Default And It's Going To Be Ugly For Europe, Germany And The U.S.' (17 Bailouts For 17 Euro Nations) This guy is simply brilliant http://video.cnbc.co...ideo=3000045554
Oh yeah, guess who didn't have a clue as to what was happening in the 2008 crash? The poster child for Keynesian economics Paul Krugman. He admitted it in his column Oct 26 2008.
“But I never anticipated anything like what’s happening now.”
You're trying to fit history to your narrative and it isn't working. Your "economists," ah: Peter isn't trained in econ, he's just a business man. Nigel Farage is an MP, also not an economist, nor trained in economics. Jim Rogers, investor. Marc Faber, your sole actual economist, is nick-named "Dr. Doom," for a good reason. He has prophecied the fall of classical economics for decades.
I understand that you can find alamist material to support your case, but this is far from mainstream or even marginally accepted economics. It's a few shrill voices arguing against the grain. And you can stop it with the inflationary scare tactics, i'm intelligent enough to know that my dollar is worth FAR less than a dollar in the early 20th century and no, that fact doesn't scare me as much as a gold standard.
Do us both a favor, lay off the propaganda, and explain your economics.
You're trying to fit history to your narrative and it isn't working. Your "economists," ah: Peter isn't trained in econ, he's just a business man. Nigel Farage is an MP, also not an economist, nor trained in economics. Jim Rogers, investor. Marc Faber, your sole actual economist, is nick-named "Dr. Doom," for a good reason. He has prophecied the fall of classical economics for decades.
I understand that you can find alamist material to support your case, but this is far from mainstream or even marginally accepted economics. It's a few shrill voices arguing against the grain. And you can stop it with the inflationary scare tactics, i'm intelligent enough to know that my dollar is worth FAR less than a dollar in the early 20th century and no, that fact doesn't scare me as much as a gold standard.
Do us both a favor, lay off the propaganda, and explain your economics.
I have been explaining my economics! I've addressed most if not all your arguments. You are either not reading what I am saying and not looking at my provided evidence or your bias for Keynesian economics is causing you to be closed to my points. If you actually were reviewing the materials I presented you wouldn't be summarily rejecting my points because you haven't really addressed my arguments at all. Look it matters not if you believe me, hard reality and capitulation will deal the lessons regardless what the banks, FED, or government does now. Go back and really see what I'm saying, I'm no spring chicken, if you keep all your money in paper assets their is a damn good chance you'll get wiped out by 2016 at the latest. I hate seeing good people getting taken to the cleaners.
I don't think you're an idiot at all. I've heard smart people make the same claims. I've had colleagues email me those same videos. I just haven't been convinced in the validity of the premise, espcially in the historical department, or the implementation of the alternative.
And you don't have to worry about me, I'm fully invested into a diverse array of commodities and property. If the banking system died tomorrow, i'd be moving to my cabin in the mountains to live out the ensuing holocaust in peace.
Do you know why the US dollar stayed the reserve currency after Bretton Woods fell apart? Most people don't . In June of 1974, Secretary of State Henry Kissinger established the US-Saudi Arabian Joint Commission on Economic Cooperation. One of the major components of this commission stated that OPEC would officially agree to sell its oil only for dollars—meaning any country purchasing oil from OPEC had to pay in U.S. dollars. This agreement enormously increased the demand for the floating dollar, as oil importing countries now had to earn or borrow dollars to pay for their oil.
Ponder that for a moment and consider our military presence in the Mideast. It explains a great many things. It's really the only thing that gave us a leg up after Bretton Woods failed, we give the Saudi's military protection and they give us oil and ensure everyone must buy our petrodollars in order to purchase their oil. It's not going to last. I remember when Bretton Woods ended and my parents being royally pissed, my dad was swearing like a sailor when it happened. "The f***ing bastards stole our wealth!" he repeated again and again. I remember it like yesterday because he almost never swore. What I find interesting what is how people over a small period of 40 years have become convinced that a floating unconstitutional note of credit is normal and that having gold backed money at a fixed price is now craziness.
The dollar is like a train wreck unfolding in slow motion, you can see the inevitable default on our debt. 95% of the dollars value has been lost, your purchasing power is not anywhere near what it use to be. Richard Duncan who wrote in 2005 “The Dollar Crisis, Causes, Consequences, Cures” talks of 3 fatal flaws in the current monetary system:
The current international monetary system produces credit bubbles that inflict severe damage on national economies when they burst. The adjustment mechanism that prevented protracted account balances under the gold standard does not exist in the present arrangements. The present system has allowed imbalances to arise that are unprecedented in both their size and longevity. The reason we got away with our insanity so long was because we we’re allowed to settle our account deficits with debt instruments, our monetary system is lopsided and now even more so after the crash of 2008.
The world has grown dependent on exporting more to the US than importing from the US, but the rapid increase of the indebtedness of the US to the rest of the world, which is the flip side of other countries’ surplus, is not sustainable. How much longer will the rest of the world be willing to accept debt instruments from the US in exchange for real goods and services? It’s only a matter of time the US will not be credit worthy.
The dollar standard generates deflation at the consumer price level. By flooding the world with dollar liquidity, this system has facilitated an extraordinary surge in credit creation around the world, which has permitted over investment and a tragic misallocation of capital. That over-investment is now culminating in falling product prices across most industries. Falling prices are undermining corporate profitability and resulting in widespread corporate distress. When corporate profits are negatively affected then they look to cut costs to remain profitable and outsourcing has been the result.
I don't know perhaps I just see things differently.
I don't know perhaps I just see things differently.
We see what we want. If the economy sucks, we want there to be a global crisis. It's human nature.
I'm not saying there is no crisis, or that some of those causal relationships aren't apt, but I don't agree with the story being portrayed. It reads like a conspiracy drama, rather than the combined actions of independant groups that describe the historical narrative. I also come out HIGHLY skeptical of anyone who's currently pimping commodities with lines like "I just want to preserve the middle-class." (MM) I am myself invested in several commodities, but I would not think it smart to follow around some self-proclaimed guru, apocalpytic prophet, who also happens to "have your best interests in mind."
If it's too good to be true... it's probably just not true.
I don't know perhaps I just see things differently.
We see what we want. If the economy sucks, we want there to be a global crisis. It's human nature.
I'm not saying there is no crisis, or that some of those causal relationships aren't apt, but I don't agree with the story being portrayed. It reads like a conspiracy drama, rather than the combined actions of independant groups that describe the historical narrative. I also come out HIGHLY skeptical of anyone who's currently pimping commodities with lines like "I just want to preserve the middle-class." (MM) I am myself invested in several commodities, but I would not think it smart to follow around some self-proclaimed guru, apocalpytic prophet, who also happens to "have your best interests in mind."
If it's too good to be true... it's probably just not true.
I agree with sentiment, that's why I always verify anything I read from the source when at all possible. I review markets charts, the FED's charts, I'm nerdy enough to read the OCC's, CBC's, and GAO's government reports. I can tell you with 100% certainty we haven't been this far up shit creek before. Something has to give.
I agree with sentiment, that's why I always verify anything I read from the source when at all possible. I review markets charts, the FED's charts, I'm nerdy enough to read the OCC's, CBC's, and GAO's government reports. I can tell you with 100% certainty we haven't been this far up shit creek before. Something has to give.
I don't think it would be accurate to say "we've been here before," either. Having said that, I don't think it's fair to go apocalyptic given the developments we have seen in the last hundred years. Ultimately, the market is just there to match buyers with sellers. It's been expanding at a phenomenal rate since the end of the cold war, the rise of asian economies, the massive development of the third-world, and the globalization process was bound to induce a new regime of fiscal policy.
Something indeed has to give, no policy of any kind can survive without review for very long in this day and age. But, I'm not at all convinced this is a matter of complete collapse, and I certainly don't give any credence to the folks who imply that mineral wealth should return to center-stage. As the fellow pointed out, we've exhausted a huge part of our silver supply in the last fifty years. Gold itself is also increasingly useful in our super-conductor driven marketplace. The idea we'll suddenly buy out the world's gold and silver supply for the sole purpose of exchange is far-fetched at best and at-worst a very underhanded means of spiking the price of said commodities.
If people want to talk about the future of money, the future of currency, and the global marketplace: they're going to have to come up with something more modern than backing things with a heavily-consumed commodity. I think the next generation of exchange will simply be a new incarnation on fiat, perhaps a more heavily regulated fiat, perhaps an advent of a more electronic solution (bit-coins). If you haven't noticed yet, I take a neutral stance (a historian's point of view) on these matters. If there is a compelling argument to be made, i'll listen. Economics is a social science, and you will be hard pressed to find anyone who's right about it most of the time.
Like I said, I don't think they're making no good points. I just don't agree with the whole narrative being developed or the narrow range of solutions/outcomes given.
proletaria I really, really, hope you are right, I'm not apocalyptic, that would require WWIII to break out in my mind. I'm not of the camp to pack guns, gold, and food in some bunker. But never before in history has a single currency permeated the world as it does today. I do believe we are in the early stage of a Kondratiev winter cycle. Not sure if you read about Nikolai Kondratiev but Stalin didn't like his economics much, he had him killed.
If I seem pessimistic about our economy it's because I have been hearing the warnings about our national debt for over 30 years. I wrote a paper on it in 1982 for my high school intro to economics class just as the national debt had just passed $1 trillion and I wrote a few more papers for my economics classes in college. It's angering all these years to know this was a problem we all knew threatened our long term prosperity and watch the incompetent f***ing slobs on Capitol Hill continue to piss away our future. I assure you there will be a restructuring of debt by a good many countries, out of it we will see a new monetary system. What that will be is anyone's guess. We're past the point of no return as far as paying down the national debt, the rule of thumb is 70% of debt to GDP, we are at 100% and over 500% when you tack on unfunded long term obligations.
Things may not get as bad as my worst nightmares imagine, but I am certain the news is far too complacent and it will be harder than most think.
I dunno I'm starting to feel like something isn't quite right...
My guess about what is going to happen... Obama is going to offer something like another small bailout and some money to people (forget what they called that) and people will accept that as a victory and Obama looks like a savior.
This whole thing at this point just wreaks of a government shill operation. I think it's been taken over sadly.
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Actually the Eurozone as a whole is in trouble and not simply because of Greece and Spain, who are only the latest cases of financial problems in the EU member body. Disaster for one member alone would be a disaster for all and I think you've forgotten some more recent things in iceland, ireland, etc. There is also a deep relationship bewteen US and EU banking industries that ensures either one being in trouble threatens the other, not to mention the Asian banks and governments that have a large amount of capital invested in both.
It's a global problem due to irresponsible investing and policy everywhere and, unfortunately, there is no silver bullet. That said, i've read some interesting suggestions and policies being produced (south korea is innovating on this front) to try and curb these behaviors.
I'm not sure if you bothered looking at the charts or the OCC's report but $244 trillion in derivatives is Godzilla. Keynesian models accurate? They're all falling apart right now. The EU is falling apart, the US dollar is stretched beyond credibility. Inside this century alone the trash heap of failed fiat currency is staggering. Japan debt to GDP is over 200%. You are witnessing right now the failure of Keynesian economics.
What fiat success can you point to that has stood the test of time lasted and lasted in the last 100 years? Not the dollar it's already failed twice, once under JM Keynes watch! Not the Russian Ruble it's been propped up 15 times. What you say about Austrian's not buying into Austrian economics is simply wrong. Go to Ludwig von Mises Institute web site and see for yourself, Austrian economist Marc Faber, has gotten this crisis correct far better than Paul Krugman and Peter Schiff also an Austrian economist... well you can see just how right he was.
http://www.youtube.com/watch?v=tZaHNeNgrcI
How do I think it got pressured down from gold standard to Bretton woods to fiat? Simple, THEFT! The bankers robbed the wealth of the people. The FED still keeps the gold, why do you suppose that is? According to Bernanke it's for tradition, do you believe him? Bretton Woods ended because France was getting our Gold. In the 1930's the bankers were hung in the streets because the people went to the banks to redeem their claim checks on gold and were instead given notes of credit. Gold wasn't the problem, it was the fact that the bankers had engaged in fractional reserve banking and lent out more money than they had backed by gold. Is that golds fault the engaged in shifty lending practices? Of course not. Also 85% of all the gold ever produced is held, not used. Gold is just a metal that has been used as money for 5000 years, the largest use of gold outside of that is jewelry. If chocolate bunnies could do what gold does I'd be all for it. Gold isn't volatile, currencies rise and fall against gold. When you see prices of gold go up or down, it's just currency value rising or falling against the metal.
Better judgement would be not engage in high ratio fractional reserve banking, that where the problem begins. You need to understand exactly how a dollar is created and then you begin to understand that every dollar created is debt to the people that must be paid back plus interest, every dollar is borrowed into existent and must be paid back plus interest.
Here watch this video from 22:15 and see how dollars are actually created.
http://www.youtube.com/watch?v=tj2s6vzErqY
If that doesn't bring it home then perhaps something more entertaining will.
http://www.youtube.com/watch?v=d0nERTFo-Sk
http://www.youtube.com/watch?v=GTQnarzmTOc
Spot on correct BBR
If the global economy collapsed, sure that might indicate a failure. It hasn't yet.
I don't quite know how you can blame fiat for those states when a cursory glance at your list reveals that other politics were the prime-motivators behind their failure. Germany was saturated in war-debt and punitive debts to the victors of WWI, Hungary was in the same boat, Yugoslavia splintered under ethnic and religious tension... etc.
The current global economy still models well, according to economists on the old models so again, i'm not sure where you are inferring the models are going out the window.
I'm aware of how fiat functions as debt and the problems of exponential debt. However, I haven't heard a convincing argument that a mineral substitute works better. For every dollar in circulation a grain of gold dust is paid back? Doesn't that sound just as ludacris when you consider the scale?
I already took on this point, sufficed to say I agree delinquent banking policy is a problem. That said, I am tremendously skeptical of anyone who claims a commodity-driven currency would in any way improve the situation.
If the global economy collapsed, sure that might indicate a failure. It hasn't yet.
It did collapse in 2008 but then governments and central banks decided to step in and save themselves. Had we allowed a correction and done nothing we not have dropped into a global depression as the self serving slobs suggested. After the collapse in 08 there was loads of liquidity out there ready to invest, competent money would have run into to buy up all the bargain and bankrupt banks and we have risen with strong sound institutions. The recession would have been a sharp V shaped recession. What the government and banks have done is cause a depression (yes I submit we are in a depression), we're in a flat L shaped downturn replete with corrupt zombie banks. It left the market with inflated P/E ratios and grovelling dividends, no sane investor is going to buy something that is can't be properly valuated.
Go back and look at those FED charts, every single chart is unsustainable, parabolic rises are almost always followed by a parabolic fall. The last 3 years of stimulus and bailout has not worked, the wagon wheels are beginning to come off the global economy. The whole purpose of stimulus is to help float the thing until it can grow out of the downturn. But the numbers show we simply can't grow our way out of this mess. you have 78/m baby boomers who are now getting ready to retire into a tax base of 51/m Gen-X. There will be no growing out of this. Only Gen-Y can do that 20 years from now. This demographic problem holds true for all countries who fought in WWII. The mainstream media is not reporting what is really happening, you have hunt for the truth now like 5 pages back from the home page of the news. For example:
IMF Scrambles To Double Bail Out Capacity To $1.3 Trillion, May Issue Bonds - 09/30/11
http://www.zerohedge...y-issue-bonds-0
Bernanke Hints At QE3 - 09/30/11
http://online.wsj.co...2017811888.html
If things were OK the EU wouldn't be getting bailed out for the 2nd time, QE3 wouldn't be getting hinted at. We are in a depression, the government just doesn't want to call it that. they obfuscate the truth by using hedonic adjustments in the CPI and reference on core inflation which excludes food and fuel. They lie about unemployment by excluding long term discouraged workers. You can see how these numbers use to be accurately calculated at http://www.shadowstats.com/.
I don't quite know how you can blame fiat for those states when a cursory glance at your list reveals that other politics were the prime-motivators behind their failure. Germany was saturated in war-debt and punitive debts to the victors of WWI, Hungary was in the same boat, Yugoslavia splintered under ethnic and religious tension... etc.
The current global economy still models well, according to economists on the old models so again, i'm not sure where you are inferring the models are going out the window.
Sure every country has a different story how it got into trouble but the action of the printing press to get them out ends with the same results every time. There are thousands of examples throughout history of fiat currency failing all the way back to the first money in Athens around 440 BC. Lets take Wiemar when they debased their fiat currency back to its intrinsic value of zero for example and compare it what we are doing now.
At the beginning of WWI Germany went off the gold standard and suspended the right of its citizens to redeem their currency for gold and silver. Like all long wars, WWI was a war of and by the printing press. The number of marks in circulation quadrupled during the war. Prices however had not kept up with inflation immediately and the effects were not felt because people were saving every penny. (Sound familiar?) After the war confidence returned and along with it the sidelined currency; prices rose with ravaging effects. Retail prices rose by 10 to 20 times, anyone who saved were stunned to learn that money would only buy 10 percent of what it use to only a year or two earlier.
Then the reparations came just as things appeared to improve, so the government had never stopped printing (like ours isn’t now). Prices began to rise again and by July of 1922 they rose by 700%. This was the breaking point and the people’s confidence fell through the floor having watched the purchasing power disappear to next to nothing (That is yet to come here in the not too distant future). Having been severely burned by saving their money they knew if they held their money it would be worth nothing in a short period of time, now the people began to spend their money the moment they got it, the currency became a hot potato no one wanted.
There are a lot of good parallels between Wiemar and our currency debasing of today. Our current reparations would be the exponentially growing interest rate we are paying on the $16 (now committed) trillion and growing debt we now have. We have borrowed our way into a hole we can't escape. Again each situation of debt is different, but the result of using the printing press to get out of the mess is the same, currency gets debased back to its intrinsic value of zero.
This brings home an important point, for nearly 200 years the dollar was a store of wealth. There is no intrinsic value in the dollar any longer, they rob our wealth via stealth tax, they borrow and deficit spend our money and lay the bill in the tax payers inbox for future payment. I'm old enough to remember when 5 bucks was worth something, when gas was only .60 cents a gallon, and when our silver dollars actually had silver in them. I make more money than my grandfather made as an lawyer in the 1970's and yet I don't live nearly as well as he did. I can tell you personally we are slowly having our wealth robbed from us.
It already has worked better than our current currency for 200 years the US (spare times of war when we borrowed to fund the wars) had nearly zero inflation. Why? Because a dollar in 1705 was worth a dollar in 1805. If you didn't have it, you didn't spend it, and occasionally when you really needed to borrow you did so thoughtfully. We did great things in the US under this system. Our money today is literally a debt, why the hell should I have to pay interest on the very money I have in my pocket? Gold and silver have no counter party risk, they are no mans debt, it's worth what its worth. For 200 years we operated more in more a Austrian styled economy than a Keynesian one. Of course back then the economists were different, Adam Smith, Parson Malthus, David Ricardo, John Mill etc. The attraction of a credit based society like we have now is gives the perception of wealth because borrow your way into a lot of stuff, the danger is you have to pay for it at some point and then the shit hits the fan as it is beginning to now. The fundamental flaw of a fiat based system is in the fact that fact currency is borrowed into existence, all must be paid back plus interest. Fractional Reserve Banking exasperates this flaw. In order for this system to work, each succeeding generation must be larger than the last to service the debt. As I said earlier for 20 years our tax base will be smaller and we won't be able to service the debt at some point. The FED fears deflation because they can't tax it, they are now trapped by the numbers.
I already took on this point, sufficed to say I agree delinquent banking policy is a problem. That said, I am tremendously skeptical of anyone who claims a commodity-driven currency would in any way improve the situation.
A lot of people misunderstand why a commodity based economy is good and get hung up on gold and silver being a metal, the cliche line is you can't eat gold. I submit you can't eat paper either. It's not the metal that really counts, it's the function it performs. Gold and silver are relatively rare and requires significant effort to acquire, they're portable, divisible, fungible, and it's a store of value over long periods of time. Far better than fiat currency gold and silver control interest rates, prevent reckless printing and debasing of the currency, simply and easily corrects trade imbalances between other countries. It helps to control the scale of corruption. Where we get into trouble is when the government and banks corrupted, start changing the rules and allowing paper to take a more predominant role. Then we run into problems, the paper nutshell game becomes all too easy. The final straw that got us into trouble was Nixon severing the gold tie in 1971 and the FED charts prove it.
What exactly is a dollar worth today? Fiat currency obfuscates the lines between price and value, the only way to know what something is worth now is by comparing different asset classes. How much was a barrel of oil worth in 1999 to a share of the Dow? How many barrels can you buy today in shares of the Dow? If you do these comparisons you can look at charts and see the Dow was crashing against many assets classes since 1999 until today even when it was hitting all time highs around 14,000. So in terms of dollars the Dow was going up, but against industrial metals, agricultural commodities, oil, and precious metals the Dow has been losing for the last 12 years. Why? Because the dollar is has been losing value.
Here are some Austrian economists and investors who called this crisis right, worth watching them, all videos were made just inside last month.
Peter Schiff FULL Testimony Before Congress on Obama Jobs Bill 9/13/11 (Peter tells the truth to Congress like I have never seen anyone tell it to Congress before)
http://www.youtube.c...h?v=dAHIf5IPQfU
Nigel Farage: Wake up to the misery you're inflicting on millions! (Nigel is very entertaining)
http://www.youtube.c...h?v=PTtu_8yiwq4
Marc Faber Warning - Bigger Financial Crisis on the Way
http://www.youtube.c...h?v=AFzBQaTCGDc
Jim Rogers: Next global recession will be worse than 2008
http://www.reuters.c...&videoChannel=5
Kyle Bass With David Faber - 'Greece Will Default And It's Going To Be Ugly For Europe, Germany And The U.S.' (17 Bailouts For 17 Euro Nations) This guy is simply brilliant
http://video.cnbc.co...ideo=3000045554
Oh yeah, guess who didn't have a clue as to what was happening in the 2008 crash? The poster child for Keynesian economics Paul Krugman. He admitted it in his column Oct 26 2008.
http://krugman.blogs...currency-crises
I understand that you can find alamist material to support your case, but this is far from mainstream or even marginally accepted economics. It's a few shrill voices arguing against the grain. And you can stop it with the inflationary scare tactics, i'm intelligent enough to know that my dollar is worth FAR less than a dollar in the early 20th century and no, that fact doesn't scare me as much as a gold standard.
Do us both a favor, lay off the propaganda, and explain your economics.
I have been explaining my economics! I've addressed most if not all your arguments. You are either not reading what I am saying and not looking at my provided evidence or your bias for Keynesian economics is causing you to be closed to my points. If you actually were reviewing the materials I presented you wouldn't be summarily rejecting my points because you haven't really addressed my arguments at all. Look it matters not if you believe me, hard reality and capitulation will deal the lessons regardless what the banks, FED, or government does now. Go back and really see what I'm saying, I'm no spring chicken, if you keep all your money in paper assets their is a damn good chance you'll get wiped out by 2016 at the latest. I hate seeing good people getting taken to the cleaners.
And you don't have to worry about me, I'm fully invested into a diverse array of commodities and property. If the banking system died tomorrow, i'd be moving to my cabin in the mountains to live out the ensuing holocaust in peace.
Ponder that for a moment and consider our military presence in the Mideast. It explains a great many things. It's really the only thing that gave us a leg up after Bretton Woods failed, we give the Saudi's military protection and they give us oil and ensure everyone must buy our petrodollars in order to purchase their oil. It's not going to last. I remember when Bretton Woods ended and my parents being royally pissed, my dad was swearing like a sailor when it happened. "The f***ing bastards stole our wealth!" he repeated again and again. I remember it like yesterday because he almost never swore. What I find interesting what is how people over a small period of 40 years have become convinced that a floating unconstitutional note of credit is normal and that having gold backed money at a fixed price is now craziness.
The dollar is like a train wreck unfolding in slow motion, you can see the inevitable default on our debt. 95% of the dollars value has been lost, your purchasing power is not anywhere near what it use to be. Richard Duncan who wrote in 2005 “The Dollar Crisis, Causes, Consequences, Cures” talks of 3 fatal flaws in the current monetary system:
We see what we want. If the economy sucks, we want there to be a global crisis. It's human nature.
I'm not saying there is no crisis, or that some of those causal relationships aren't apt, but I don't agree with the story being portrayed. It reads like a conspiracy drama, rather than the combined actions of independant groups that describe the historical narrative. I also come out HIGHLY skeptical of anyone who's currently pimping commodities with lines like "I just want to preserve the middle-class." (MM) I am myself invested in several commodities, but I would not think it smart to follow around some self-proclaimed guru, apocalpytic prophet, who also happens to "have your best interests in mind."
If it's too good to be true... it's probably just not true.
I agree with sentiment, that's why I always verify anything I read from the source when at all possible. I review markets charts, the FED's charts, I'm nerdy enough to read the OCC's, CBC's, and GAO's government reports. I can tell you with 100% certainty we haven't been this far up shit creek before. Something has to give.
I...
They...
We...
Fucking cops...
A badge means you get to do whatever you want, huh?
I don't think it would be accurate to say "we've been here before," either. Having said that, I don't think it's fair to go apocalyptic given the developments we have seen in the last hundred years. Ultimately, the market is just there to match buyers with sellers. It's been expanding at a phenomenal rate since the end of the cold war, the rise of asian economies, the massive development of the third-world, and the globalization process was bound to induce a new regime of fiscal policy.
Something indeed has to give, no policy of any kind can survive without review for very long in this day and age. But, I'm not at all convinced this is a matter of complete collapse, and I certainly don't give any credence to the folks who imply that mineral wealth should return to center-stage. As the fellow pointed out, we've exhausted a huge part of our silver supply in the last fifty years. Gold itself is also increasingly useful in our super-conductor driven marketplace. The idea we'll suddenly buy out the world's gold and silver supply for the sole purpose of exchange is far-fetched at best and at-worst a very underhanded means of spiking the price of said commodities.
If people want to talk about the future of money, the future of currency, and the global marketplace: they're going to have to come up with something more modern than backing things with a heavily-consumed commodity. I think the next generation of exchange will simply be a new incarnation on fiat, perhaps a more heavily regulated fiat, perhaps an advent of a more electronic solution (bit-coins). If you haven't noticed yet, I take a neutral stance (a historian's point of view) on these matters. If there is a compelling argument to be made, i'll listen. Economics is a social science, and you will be hard pressed to find anyone who's right about it most of the time.
Like I said, I don't think they're making no good points. I just don't agree with the whole narrative being developed or the narrow range of solutions/outcomes given.
If it were the 60's they would have shot a few protestors by now. =/
If I seem pessimistic about our economy it's because I have been hearing the warnings about our national debt for over 30 years. I wrote a paper on it in 1982 for my high school intro to economics class just as the national debt had just passed $1 trillion and I wrote a few more papers for my economics classes in college. It's angering all these years to know this was a problem we all knew threatened our long term prosperity and watch the incompetent f***ing slobs on Capitol Hill continue to piss away our future. I assure you there will be a restructuring of debt by a good many countries, out of it we will see a new monetary system. What that will be is anyone's guess. We're past the point of no return as far as paying down the national debt, the rule of thumb is 70% of debt to GDP, we are at 100% and over 500% when you tack on unfunded long term obligations.
Things may not get as bad as my worst nightmares imagine, but I am certain the news is far too complacent and it will be harder than most think.
That describes a lot of people. =)
http://www.youtube.com/watch?feature=player_embedded&v=2UxjIMhWUpo#!
The EU itself is going to have to re-structure. They've got too much confederation for a centralized currency.
The police are doing enough violence for themselves and us combined.
Funny thing? No protester has thrown a punch.
My guess about what is going to happen... Obama is going to offer something like another small bailout and some money to people (forget what they called that) and people will accept that as a victory and Obama looks like a savior.
This whole thing at this point just wreaks of a government shill operation. I think it's been taken over sadly.