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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (53711)	6/5/2000 4:27:00 PM
From: Hawkmoon	Read Replies (2) \| Respond to of 116764

The purpose of the post was to provide an additional argument against your mistaken belief that the economy needs any particular amount of money, of any kind, for support, even though all forms of money are subject to variations in goods exchange rates. Don, will all due respect to the arguments made in that article, were the gold standard able to remain flexible enough to manage the global economy, we would still be on it. Once on a inflexible standard such as a fixed price for gold, should an economic anomaly impact the finanicial system (such as an oil embargo), gold provides little ability to permit govts to compensate for such a sudden increase in their economic "cost of business" as it essentially raises the cost of everything, and additionally creates a relative weakness in a nation's currency. Thus, the traditional rules aimed at maintaining strength in a currency is to raise rates and reduce liquidity, EXACTLY THE OPPOSITE of what would be needed to compensate for an externality such as commodity embargoes motivated by political decisions. That is one of the reasons the gold standard failed, especially as every other nation took advantage of the Bretton Woods arrangement to cash in their gold backed dollars for gold, stressing the entire global financial system. And I believe you are incorrect about companies being unable to lower wage rates. I don't recall in my readings of history that unions became stronger as a result of the depression. Rather they were weakened by the need for jobs of any kind over higher wages that depressed corporate profitability. I think we have only to look at Japan as a current example of EXACTLY WHY incentives must be utilized to force non-efficiently utilized capital into riskier investments in order to simply spur economic growth and consumer confidence. The Japanese have Trillions of Dollars in Yen sitting in JGB and postal savings bonds drawing little to no interest in many accounts. Yet their economy remains in recession, or at best tepid growth. Their government continues to mortgage their future on endless billions spent in fruitless stimulation and pump-priming. This is an inefficient use of "wealth" that must be "forced" (coaxed?) back into their economy, either as consumption or as investment in new technology that creates even greater wealth. Regards, Ron The only 'standard' of the 'gold standard' is that it makes government economic intervention more difficult, but there is no such thing as a fixed objective standard of monetary value.