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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: paul ross who wrote (3607)	2/21/1999 5:14:00 AM
From: IngotWeTrust	Read Replies (2) \| Respond to of 81840

Don't bother to try to educate, Reece, Paul Ross. I can furnish you about 8 instances where the us not only cancelled currency from being legal tender, I can provide at least 2 instances of US repudiating circulating coinage, regardless of what it has stamped on its reverse side, and 2 instances of...oh, well...

To: paul ross who wrote (3607)	2/21/1999 11:13:00 AM
From: Hawkmoon	Respond to of 81840

If you plug in 1997 in "From" slot and plug in 1971 in "To" slot (when Nixon fully abandoned the gold standard), you get a value of 25.2 cents. Wouldn't that be sort of a devaluation? So the oil embargo and the drastic climb in energy prices had little inflationary impact or influence on those figures? Paul, There is inflation where too many dollars are printed and chasing too few goods, ie: where demand outstrips supply, and there is inflation. However, there is also inflation when a major commodity used throughout the economy, like oil, suffers sudden and severe price increases by producers of it. It causes the price of manufactured and agricultural goods to increase as well. All of that also has a depreciating impact on the dollar. Had money supply and debt NOT increased during that period, the economy would still have suffered inflation due to increasing commodity prices. Paul, one of the things about inflation statistics, if not any statistic, is that it is basically just a number. It is only the most cursory of analytical tools since it avoids a discussion of the "why" and "how" behind those statistical results. But while inflation may be bad for those living on fixed incomes, DEFLATION is terrible on those living on almost ANY earned income or wages. Inflation does not normally signify large numbers of people being unemployed. In fact, it would be just the opposite where too many people are employed and prices are increasing, and manufacturing capacity is becoming strained. Deflation causes a drastic contraction of the economy. It causes enmasse unemployment. It drastically reduces demand as people no longer have the financial means or confidence to consume goods. With no demand, less production occurs, with more unemployment from layoffs, which lessen demand even more in a vicious cycle until ALL excesses are wrung from the economy. And let's face it, if you take human life down to its basics, anything other than food, shelter, and clothing is an excess in our economy. With no money you are reduced to spending only on the essentials necessary in your life. And with this deflation, the only people who make money are the people who already have it. Under a gold backed currency, deflation causes an appreciation of cash and gold through an increase in purchasing power. When prices decrease, purchasing power increases. Hard assets are sold at fire-sale prices in order to raise cash or to liquidate inventory/property before prices decrease more. And what is most important about the above deflationary scenario is that gold backed currency does not provide the appropriate incentives to generate the neccessary credit needed to reinflate the economy. In fact, as evidenced in past deflations here in the US, banker would tack on a risk premium to any loans they made. They did this in way of high interest rates, since they knew that the risks were greater for business failure when in a deflationary environment where there is little pricing power. So even though there was more money available to lend, interest rates stay high as risk premiums. Basically, whether you have a GS or Fiat system, you still have human beings in control making mistakes that impact a nation of innocent bystanders. There mistakes can range from being too loose with credit, to being a tightwad. Economic growth required risk-taking. Without it you would not be enjoying the fruits of that risk-taking, the internet being one of the most visible examples of that fruit. Regards, Ron