Question for those who know finance

[Scipio]

Ron Paul has said we should go back to the gold standard. The free banking era we went through had a lot of panics, but the depression and latest recession have been under the watch of the fed.

What is the upside of going back to the gold standard and abolishing the fed?

What is the downside?

thanks for any info.

 

[droski]

gsvol in 5. . .4. . .3. . .2. . .1

upside none.

downside next time the **** hits the fan we won't be able to do anything about it except obamamonics.

 

[Scipio]

downside next time the **** hits the fan we won't be able to do anything about it except obamamonics.

why cant we abolish the fed, go back to the gold standard, and refuse bailouts and stimulus packages?

again, im not advocating it, but just wondering.

 

[MG1968]

I'm no expert, but I think one reason the US left the gold standard is because gold is a limited resource.

btw, the gold standard persisted through the Nixon administration, so it's not like we went from the gold standard to the Fed.

 

[droski]

so how do we stimulate the economy when we are in a recession?

 

[MG1968]

so how do we stimulate the economy when we are in a recession?

one thing is for sure, you don't accomplish that by printing and dumping 600 billion into it.

 

[droski]

one thing is for sure, you don't accomplish that by printing and dumping 600 billion into it.

normally that would work, but not after you've already put a couple of trillion into it.

 

[Scipio]

so how do we stimulate the economy when we are in a recession?

business cycle. there are peaks and valleys. who said we need to stimulate anything. let it go its natural course. as long as we keep taxes low, tariffs low, (incentives for new businesses to sprout up), etc., the natural cycle will succeed, no?

 

[droski]

business cycle. there are peaks and valleys. who said we need to stimulate anything. let it go its natural course. as long as we keep taxes low, tariffs low, (incentives for new businesses to sprout up), etc., the natural cycle will succeed, no?

yes but the valleys will be much greater. as far as i'm concerned the fed's ability to manipulate interest rates and do it well is one of the primary reasons we still ahve teh #1 economy in the world. i know others disagree.

 

[MSCE09]

Gold like other commodities (oil) is susceptible to more volatile changes in value.

 

[Scipio]

normally that would work, but not after you've already put a couple of trillion into it.

nvm.

 

[MG1968]

how would that normally work? why should the fed be dumping 600 billion tax payer dollars into the economy? i believe the fed tax money should go to national defense and infrastructure.

they didn't dump taxpayer dollars, they printed the money and dumped it.

 

[Scipio]

as far as i'm concerned the fed's ability to manipulate interest rates and do it well is one of the primary reasons we still ahve teh #1 economy in the world. i know others disagree.

Care to elaborate? I think we have the largest economy in the world because we are so far ahead of the others in terms of the amount of companies/businesses that started here while we were the sole superpower. We still are the sole superpower, but the other countries are beginning to catch up in terms of business-friendly/entrepreneur-incentivizing policies. i think theres a reason youll find a mcdonalds, coke, and some young kid wearing a nike t-shirt in practically every country.

 

[JTrainDavis]

so how do we stimulate the economy when we are in a recession?

Declare war and liberate gold from other people.

 

[droski]

the more you minimize the valleys the faster your economy grows. the US has generally recovered more quickly during recessions than other major powers. europe and england for instance aren't nearly as aggressive with their central banks. of course some of this does have to do with other factors.

 

[Scipio]

Gold like other commodities (oil) is susceptible to more volatile changes in value.

so, we have pieces of paper that are printed at random- backed by nothing. Doesn't that just sound bad and like a disaster?

 

[BigPapaVol]

so instead of any commodity backing them at all, we have pieces of paper that are printed at random- backed by nothing. Doesn't that just sound bad and like a disaster?

why? If the world places relative value on the pieces of paper, then their value is no more arbitrary than the imagined value of a hunk of metal.

You're arguing for a fixed money supply, which is great in theory, but removes another tool from the economy management toolbox that we have to try and temper economic growth curves.

 

[droski]

going back to the gold standard would also futher inflate the gold price. not even sure how we'd buy taht much gold without printing a bunch of money anyway.

 

[Scipio]

the more you minimize the valleys the faster your economy grows. the US has generally recovered more quickly during recessions than other major powers. europe and england for instance aren't nearly as aggressive with their central banks. of course some of this does have to do with other factors.

A lot of Europe uses the same currency, so they couldn't manipulate their interest rates by themselves, even if they wanted to, correct?

The Fed is the central bank of the USA. We manipulate our interest rates in recessions and booms to minimize and maximize the economic effect. That sounds good, so I have no idea why Ron Paul and others want to eliminate the Fed. Maybe it has to do with the gold standard, because I'm still lost on that. Why should we even worry about debt and taxes if the fed can just print more money?

 

[MG1968]

A lot of Europe uses the same currency, so they couldn't manipulate their interest rates by themselves, even if they wanted to, correct?

The Fed is the central bank of the USA. We manipulate our interest rates in recessions and booms to minimize and maximize the economic effect. That sounds good, so I have no idea why Ron Paul and others want to eliminate the Fed. Maybe it has to do with the gold standard, because I'm still lost on that. Why should we even worry about debt and taxes if the fed can just print more money?

ever heard of the Weimar Republic? Seen a picture of a Zimbabwean trillion dollar bill?

 

[BigPapaVol]

going back to the gold standard would also futher inflate the gold price. not even sure how we'd buy taht much gold without printing a bunch of money anyway.

snafu over. He's arguing that gold has a base value from which we can operate, which is simply wrong. Gold has the value that moves just like all other commodities. As long as we can ascribe relative value to gold or a dollar, why does it matter which is the standard?

 

[Scipio]

You're arguing for a fixed money supply, which is great in theory, but removes another tool from the economy management toolbox that we have to try and temper economic growth curves.

haha, no, im not arguing for it. Im just trying to learn about it. Is it the government's job to tamper with the economy? I know Andrew Jackson hated the bank and let its charter expire. I've always believed the gov't should be there for national defense and infrastructure, but not much more. Tampering with interest rates and such seems interventionalist.

 

[BigPapaVol]

haha, no, im not arguing for it. Im just trying to learn about it. Is it the government's job to tamper with the economy? I know Andrew Jackson hated the bank and let its charter expire. I've always believed the gov't should be there for national defense and infrastructure, but not much more. Tampering with interest rates and such seems interventionalist.

the government is a part of the economy and makes all the laws / rules governing our economy. Our dollars are drawn on our treasury. How do we remove the government from our financial system? You want to kill the FDIC / SIPC? Our government is interwoven into our entire financial system, top to bottom. You mentioned our economic environment being conducive to entrepreneurialism and it is, but much of that is government involvement and oversight. Our bankruptcy laws and risk capital system make this the best place ever to invest. Others are copying it because it works.

 

[droski]

A lot of Europe uses the same currency, so they couldn't manipulate their interest rates by themselves, even if they wanted to, correct?

The Fed is the central bank of the USA. We manipulate our interest rates in recessions and booms to minimize and maximize the economic effect. That sounds good, so I have no idea why Ron Paul and others want to eliminate the Fed. Maybe it has to do with the gold standard, because I'm still lost on that. Why should we even worry about debt and taxes if the fed can just print more money?

they absolutely rise and lower their interest rates. as an example we've lowered our discount rate to basically zero, the euro union is somewhere around 1.5%. another example of us being more agressive.

they see the fed as raping our childrens future because of their ability to print money with no repercusions. i have yet to have heard why this is a valid concern when inflation is at 60 year lows. unless i'm a foreign national and i'm pissed about the dollar dropping like a rock i'm not sure why i would give a crap. obviously you can't print money forever without serious problems, but i still think the fed is filled with a bunch of badasses and trust them over other options (see obama).

 

[Scipio]

the government is a part of the economy and makes all the laws / rules governing our economy. Our dollars are drawn on our treasury. How do we remove the government from our financial system? You want to kill the FDIC / SIPC? Our government is interwoven into our entire financial system, top to bottom. You mentioned our economic environment being conducive to entrepreneurialism and it is, but much of that is government involvement and oversight. Our bankruptcy laws and risk capital system make this the best place ever to invest. Others are copying it because it works.

What about the special interests/lobbyers who get things passed that make it difficult for competitors to sprout up or compete? Corporatism, I believe is what Ive heard peopl erefer to it as.