Ron, buddy: You're going in circles and stumbling over ground we've already covered. Mine in ***'s again.
**Again, the argument against fiat is that it is too easily abused by governments and vested interests, and that throughout history its value has gone to ZERO. Have we cleared up that point up yet? ***
<< It won't be abused if people stop permitting the gov't to patronize them by trying to buy their votes with pork barrel projects and parochial interest.
That is why the Federal Reserve and its Chairman are not an agency of the gov't, although the Chairman is appointed by the President and approved by the Senate. >>
** They are as much a part of that system as any other government agency. Do you think the US government has a superior system to every other government which printed fiat money since the 6th century? My answer is no, and the evidence is, amongst others, as I stated before, since 1950, the dollar has lost 90% of its value. Do you dispute that fact?
When you say "it won't be abused if..." what makes you think the electorate will ever smarten up to that system? Until it all comes crashing down? What would you propose to replace it if/when it does?
The overwhelming preponderance of evidence over the centuries is this: there is no government that can be trusted with fiat currency. It's just a fact.
Your calling the electorate into question is useless. It's the system that's at fault. So change it. ***
<< What costs more?? Mining for a shiny metal, or printing specialized cloth paper with water marks printed on it? Not who's talking about Chicken feed? And you're not even killing that many trees in the process (just cotton plants which die each year anyway.. ;0) >>
*** That's not the point. Here it is: the US Constitution explicitly states there will be no legal tender other than gold and silver. The founding fathers weren't perfect, but on that matter they were right on the money. Circumventing the potential abuse of money was foremost on their enlightened minds.
Now, how has the US government gotten around this requirement? By creating a quasi-legal FED together with a banking system in NYC, which handles the US funny-money bonds in a sleigh-of-hand about as Constitutionally legal as a three dollar bill. That's right, the US GOVERNMENT SUBVERTS THE CONSTITUTION!
And how do they manage that, practically speaking? By paying off the perpetrators, ie. the govt henchmen, its lap dog bankers, and any other potential detractors of significance, with HUSH MONEY.
How much does this cost? Well what's the revenue to the bankers? It's about $50 Billion dollars US. Are you with me? Do you agree/disagree with this figure? ***
<< And how do you find enough gold to finance the MASSIVE economic expansion that technology is bringing forward?? There are things we cna't afford to do, and things we can't afford NOT to do. Technology is paying massive dividends on the investments in that field. Investments that would not have been as rapid or occurred at all under a restrictive gold standard forbiding deficit spending or borrowing more than exists. >>
*** Let me disabuse you of the Monetary pre-suppositions you are operating under. Fiat money supply expansion does not equal expansion of wealth. There is no causal relationship between the two. There is only a correlation, and a trivial one at that.
Let me use a simple example:
Assume a gold standard, a constant above ground gold supply (no mining allowed) and convertibility between an electronic and paper supply, which acts as a convenient surrogate.
In the economic expansion you stipulate, progress will be made in efficiency realization, in the creation of new technologies, etc. All this is funded by profits generated by the same source, namely entreprenureal initiative in a free capitalist market. That some of this is funded through credit is allowed too, only that the credit has to be backed by some assets of the company, or venture capitalists, or stockholders, bondholders, you name it. Somebody has to assume the risk, but the credit used must be asset backed somewhere down the chain.
There is no inconsistency in this scenario. To create new wealth under this system, there has to be some identifiable asset backing the risk entrepreneurs take. There is no growth restriction either, as profits can theoretically be created without limit through the creation of new technology or through the more efficient use of resources. GROWTH IS THEORETICALLY LIMITLESS!
Under this system, with a constant money supply, prices and wages both fall, although prices fall faster than wages, and the difference is the gained wealth of the wage earners. That's what a healthy economy is all about - growth plus a lack of distortions, malinvestments, or inflation.
To answer your question, YES a gold standard would disallow "borrowing more than exists" just as a fiat system disallows "borrowing more than exists"! At the end of the fiat chain there's just the taxpayers, bondholders, and fiat-denominated account holders that pay in the end! Take your pick!
Wow - preventing deficit spending! How can I do that again?
Credit expansion can occur under gold or fiat systems just as rapidly, in fact, as fast as electrons can be sent over a wire. There's no restriction on waiting for bulky gold bars to be transported. The gold is held in a warehouse, that's all, just like it is now underneath Manhattan or anywhere else.
Again - I can't stress this enough - you don't need to FIND MORE GOLD to INCREASE WEALTH. This notion is a MONETARIST FANTASY! ***
*** Well, I wouldn't necessarily decide silver not be used. It could be silver but I suggest gold because it has, on the whole, more desirable properties, and has been used more widely and successfully as the monetary basis of choice. Again, the argument against fiat is that it is too easily abused by governments and vested interests, and that throughout history its value has gone to ZERO. Have we cleared up that point up yet? ***
<< Nice job of advancing to the rear... Two Points... RON!! >>
*** Whoa - did I miss something there? Have you acknowledged the fact that all fiat currencies degenerate to ZERO VALUE or have you ignored that again? ***
<< But you still haven't answered how you can have confidence in a partial gold standard where the reserves of metals doesn't fully back the outstanding money supply. I mean isn't the who idea that you can exchange gold for dollars 1 to 1.. ??
That's not possible in a partial reserve system and thus your currency is, at its essence, as fraudulent and inflated as any Fiat system.
My point is either you have a currency totally backed by gold...
....or don't even bother. It would be exchanging one confidence game for another in hopes that you wouldn't have a mass withdrawal of gold at the same with the result being a financial game of "hot potato" or "musical chairs" where you hope not to be the last one stuch with the worthless paper. >>
*** I haven't stated it could be partially backed. It must be fully backed. ***
Thanks. Bob |
