Zeev, Follows cut & paste from your post this is a reply to.
Hed at May 29, 2001(GPM thread)
"... tying monetary systems to gold will bring permanent inflation,
or doom the world to sub par economic growth....."
Then you ask for an answer in reference to above.
"... why such tie will bring price stability?"
You then place restrictions on any answer, as follows.
"... Don't invoke "disciplining the printing presses" arguments,
it is a vacuous argument, particularly in view of the new realities
of fluid and open currencies markets doing all the disciplining required.
Use the simple route of determining a price of gold
that can back the required monetary base in the world,
and the growth rate in gold production required to maintain
the growth rate of the world economies, assuming, of course,
that monetary aggregates must grow at least at the same rate
as the GWP. Then try and find out if that growth rate can be
sustained indefinitely without having to, every so often, "repeg"
currencies, since there will not be sufficient gold extractable
at the old price to satisfy both the monetary as well as
the other demands on gold (which themselves should grow
at the same rate as GWP)."
Not only will you not allow above referenced answer,
which you supply as the answer not allowed,
you then after disqualifing that answer
provide reasons you know of on why its a bad solution(answer.)
Parallels to the answer given to you by your mentors long ago
when they stated to you something like ther following.
"If the material rsulting from the combination is green,
then discard it since green materials do not work."
So I ask, but first I have to "invoke" your words above.
[... "disciplining the printing presses" arguments... ]
Rather than I use that argument, I will circumvent it
so that it will not enter, but only be present.
So I ask, in the format of a statement with an answer implied.
If in the last 3 years the amount of new paper fiat usa currency
created by the Fed, plus the credit wealth created outside the
functioning of the Fed using GSEs (gov't sponsored enterprises),
not be created in the manner done, would the Dow and Nasdaq
take on the appearance & nature of a gambling casino?
(eXtra)
replace above "gambling casino"
with "corrupt and/or criminal and/or immoral gambling casino"
To me the answer is no.
Implications would be that those threads of this Silicon Investor
would not only not exist, but this Silcon Investor & Raging Bull
type boards would have very low attendance. To further this thought
is for me to say that a regulated usa fiat currency with an object like gold
would have prevent speculation the like have occured that allowed
wide swings of values attached to shares, and creation of those
worthless dot-com business models. Rather than a cup of coffee
that cost ten cents a few years ago now costing fifty cents,
it may cost eleven cents. As for the stock markets, your ability
to create and develope tools to predict the markets as you have
done these past years, the characteristics of the markets that are
required for such tools would not be present, and you would have to
make money the old fashion (& current) Warren Buffet way,
which requires reading and learning about businesses for long term
returns in single numbers. Not as fun and exciting with a short term
ability to receive over and over in days or weeks, a win.
A gambling casino transfer wealth between two parties
using an object or medium containing no wealth,
as dice cards or a ball falling into a hole, just like
some or most of those dot-com companies.
A gambling casino does have predictability factored into it,
as the house has to make a profit to remain a business,
and enough wealth has to exchange the hands of customers
so that a win can be obtained. Whats happening in this
environment is simple human nature elements that will
repeat and form patterns over time. Can be model'ed
and applied to other people events that have similiar
structures of people versus people to exchange money
using objects to represent but hold no actual worth.
A gold standard prevents non worth items from being traded
in the economic markets of the world. Note, replace above
word prevents with lessens and restricts, as you are correct
in that a gold standard will have problems in use, but comparied
to what is now may be the foundation of why we disagree
in that the chaos and wrong'ness I see today is what I understand
is required for you to continue you activity on Silicon Investor.
To me a gold standard removes Hot People Marks or whatever
they were called, simply because certain objects would not be
available to allow people "working" them to be modeled.
Physical gold has the ability to bring correctness to the markets
of the world, and a Dow or Nasdaq that changes very little
over time short and long takes away your type trading ability
to make the kind of cash you now are able to, along with the
ability to place a bet and win more than you lose in a short
time frame, along with amount percentage wise win or lost
being a multiple x10 of the type possible in a Buffet market.
Require for you in my opinion to continue to trade as you have been.
(1) fiat currency creation regulated only by government thoughts
(2) if you think a gold standard is possible if enough supply
could be found and mined, then a discovery like desert dirt gold
not come to be
dougak |
