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To: Hawkmoon who wrote (26625)	1/21/1999 9:15:00 AM
From: lorne	Read Replies (2) \| Respond to of 116764

Hello Ron, I do enjoy your posts, really, and I got to tell you IMO. compared to Hutch, man you are really smooth. Good luck Lorne

To: Hawkmoon who wrote (26625)	1/21/1999 12:00:00 PM
From: Bob Dobbs	Read Replies (1) \| Respond to of 116764

Ron: I strongly disagree with the notion of inhibited economic growth as a result of a gold standard: <<"pegging paper currency to gold means that the global economy grows only has fast as the gold can be mined from the ground">> This is a mistaken notion, propagated by Monetarist theory. Relating economic growth with the growth of money supply as this empirical theory does is false in the causal sense. True economic growth (not fiat money measured GDP etc.) takes place by way of population growth, gains in organizational and technological efficiency and in the proving of ideas which benefit mankind. That this growth takes place as a result of an exchange of money is only incidental. Funding new endeavors should be the result of the accumulation of profits together with enlightened entreprenural risk taking. Creation of fiat can fund such endeavors, but more often than not, results in a misallocation of capital and inflation with all its consequent ills, as the present day worldwide credit bubble amply demonstrates. A healthy economy, in fact, has falling prices as a result of the above mentioned economic factors, together with a relatively stable money supply. An unhealthy economy is characterized by monetary inflation and/or deflation brought on by a meltdown of debt as a result of a previous inflationary monetary policy. There is some risk in a gold standard, for example, 1) if gold supply grows too fast then monetary inflation can result as Europe in the 1500s found after pillaging New World gold, and 2) gold rich countries have natural political and economic advantages. Moreover, there is risk if the private creation of credit is unrestricted and not tied to gold. Thanks, I enjoy your posts. Bob

To: Hawkmoon who wrote (26625)	1/21/1999 4:04:00 PM
From: Investor-ex!	Read Replies (2) \| Respond to of 116764

Ron, >>Oh, you are most certainly correct!!! Tying your paper currency to Gold is very disciplining. Kinda like disciplining a thief with capital punishment through disembowelment. Hyperbole is a poor substitute for fact. >>Especially, when you try to calculate how high the price of gold would have to be to back ALL of the available reserve currency in existence out there. Again, ALL reserves do not have to be backed. Only in the extreme case where absolutely no one anywhere wished to hold your currency due to horrendous policy would full backing be necessary. Any convertible backing at all would obviate the desire to abandon the currency and greatly reduce the need for full backing. >>But those who think about the '70's when the US went off the gold standard, much of it was due to the US economy growing far in excess of its available gold supply. The US economy would have been SEVERELY hamstrung had it been forced to grow only at the rate comparable to annual production of gold. Growth was awful in the 70's, especially after abandoning the gold standard. In the 70's, gold wasn't the constraint on the economy, the results of Washington's desire for unrestrained fiscal and monetary policy (Greate Society, Vietnam, etc.) was the problem, though gold is often scapegoated in this regard. >>That bears repeating... "pegging paper currency to gold means that the global economy grows only has fast as the gold can be mined from the ground". And if your country doesn't happen to have any gold deposits in its territory, you're screwed!! Nope. Growth is a nation's increase in net productive contribution to the planet. And if you make something or do something of value, you can purchase whatever gold is necessary from the gold producers who are themselves doing something of value. This is not to say the value of gold will not rise or fall. But at least its movements are nothing like we are seeing with the fiat currencies of the present era. >>I don't know about you folks, but I would like progress to move a little faster than that. Growth that is [sic] consists of regulatory discipline that consists of transparency and accountability, of course. With at least partial gold convertibility, you would get all that you've asked for. >>And to think about all the wars that were fought over gold because foolish people considered that "shiny metal" somehow valuable. Isn't being dependent on the the Mid-East for our oil bad enough?? There are fools and then there are fools. It doesn't have to be gold. Any "shiny metal" will do. In fact, anything relatively rare, portable, durable, non-counterfeitable, and agreed upon will do. Oil and gold? A non sequitur, apples and oranges. >>Someone tell me why my analysis is all screwed up. I really want to know. See above. >>Do people think that a collapse of the global financial system "to its goldless ashes" is in anyone's interests?? Specifically, yes, a collapse will always be in "someone's" interest. In general, of course not. However, it is most likely that the collapse will come one way or the other. The absence of gold merely facilitates the process. >>Does anyone on this thread REALLY THINK a global financial collapse will happen without major wars, starvation, and massive unemployment?? Are we invulnerable to depression?? Probably not, and a return to at least partial gold convertibility would very likely prevent the financial collapse you envision, though we very well already may be beyond the point of no return. Depressions are caused by profligate lending practices built upon the notion that there is no problem that further credit cannot cure, so no, we're not invulnerable - far from it. >>Think it through people, for once the genie is out of the bottle, it is very difficult to put him back in. And you may not like what results from having your wish granted to you. OK, everybody out of the think tank! I don't like what I am seeing right now. The workers of entire countries thrown into poverty. People's hard-earned life savings cut in half overnight. A nation's populace saddled with piles of fiat debt for generations. Unneeded capacity built with borrowed money only to be endlessly serviced by exorbitant interest rates. The genie was ripped out of this bottle some 30 years ago. The damage has already been done and the experiment is well under way. The results are now coming in, day by day. Soon, the full fruits will emerge. Blaming the helpful bystander is not the appropriate attitude. THIS IS NOT GOLD'S FAULT. But gold could have helped prevent it, at the very least in terms of the extremes. IMO, it is in the absence of a sensible, stable, consistent, fair, long term monetary system, that the wishes of the vast majority will not be granted.