Ron: You're a good historian. I can tell you must enjoy it, as I do.
<< Saying we have the highest debt level in history is a misleading statement when you fail to take into account the growth of national GDP.
But I can't quibble about there being too much debt. I agree that there is and that is why any surplus should go to paying it down, or as a compromise, 1/2 to debt paydown, 1/2 to tax cuts so that consumers have the choice, not the gov't. >>
*** It's not misleading, because I'm making the statement normalized by GDP. And it's not just government debt, but muni, corp, and consumer debt too that adds up to a tremendous indictment against this fiat pyramid you so defend. There is no "surplus" - it's a financial sleigh of hand. They took Social Security from the debit side and moved $200 Billion of it over to the asset side. Just look at total debt. It increased last year some $150 Billion. And the off-balance sheet US fed debt is $17 TRILLION. Can you say "SCHMOKIN?" ***
<< And Jacksoninan economics were disastrously inflationary, with America defaulting on numerous loans extended by European banks (defaults under a gold standard?? Heaven forbid!!).
However, where cities like Chicago were literally non-existent in 1830, 30 years later the place was a bustling metropolis vastly worth more than those loans there were originally extended to build it. Jacksonians also built a number of infrastructure projects like canals and railroads so that goods could be readily transported to market.
The fruit of those investments were long-term, not short-term. Many projects defaulted and were acquired by other investors or the gov't itself.
It may have not been pretty, but it eased the life of the common man and led to even greater economic prosperity. >>
*** Jacksonian loans were defaulted on because of rampant fiat creation and speculation borne over the canal land craze. The two interacted in a synergistic and too often repeated manner, just like they did in 1929, and just like they do today.
There was no true gold standard in 1836 or in 1929. It was circumvented; they cheated.
You have to distinguish between cause and effect. Gold is merely an enforcer of good accounting - nothing more. It's fiat creation and the inevitable bust that is at the root of most if not all economic contractions. Blaming gold on a bust only works for those contractions as in 1836-37 when specie (gold and silver)was brought in to curb speculation on fiat already created. That contraction and/or the default on English loans can hardly be blamed on a gold standard.
I admit it's very difficult to find a stable gold standard period in history. Only the British hegemony of the 1700-1900 period comes to mind, but then again, even that period was wrought with cheaters the world over, who thought fiat creation would solve what ailed them, only to discover the painful lessons of gravity.
On the other hand, history is replete with fiscal wrongdoing and speculation. And the case against fiat is overwhelming because the data is unequivocal - all fiat dies, not in a trivial sense that all governments die (and some have before their currency disintegrated), but in the majority of cases, BECAUSE of government financial misdeeds.
***
<< Brazil will likely default on its debt to the US and Europe sometime in the next 12-24 months. Will economic infrastructure and manufacturing gains that resulted from that expansion disappear as well? Clearly No.
Will some people lose money? Yes. And others wiped out.
But that has been the boom/bust cycle that has existed just as BLATANTLY under a gold standard as it has under Fiat. >>
***
I challenge you to name a period in which there was a true gold standard, not a pseudo-one.
I can only reiterate: This next bust, in a purely fiat world, may be the last one, because debt levels the world over are astronomical.
***
<< And there is nothing that is solidly credible about gold if the popular perception of its value isn't realized.
Those who bought gold at $850/ounce were still buying at a fair value under your rules of the gold standard (dividing total total gold supplies into available money supply would have far exceeded a value of $1000/ounce, IMO). But those people have lost some $550/ounce in value since then. Some storehouse of value. >>
*** You're using one extreme valuation to make a bogus comparison. Compare that with the US dollar from 1970 to the present! Has gold done worst? No, actually it's done better - far better! 75% depreciation of the dollar vs 100% appreciation of gold in real terms. Some storehouse of value the US dollar! ***
<< Had they sold and waited for weakness in the dollar to exhibit itself, they could buy gold back at a cheaper price and held more of it to boot. >>
*** Unfortunately you're forced to make this point - that to preserve wealth (= buying power) under a fiat system, you have to know when to buy and sell gold and/or stocks, otherwise in the long run you're screwed. Under a gold standard, value hinges upon a quantity which has had FAR MORE STABLE VALUE over 6 thousand years. In a fiat system, YOU ARE FORCED TO BE A SPECULATOR JUST TO PRESERVE WEALTH. HOW ARE WIDOWS AND ORPHANS SUPPOSED TO DO ALL THIS? ***
Bob |
