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US Gold Reserve Act

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Re: US Gold Reserve Act

#11

Post by david927 »

randomopining wrote: post #8
david927 wrote: post #2

I used to be Keynesian and thought that inflation was a free tax that was also good for investment and growth. Now I understand that it leads inexorably to ruin. It creates a situation where you have to invest in markets, which removes the link to value, e.g. "the market always goes up." Growth investing is an oxymoron and just a variation of a Ponzi Scheme. We're at a watershed moment in modern history. In the comin…

Bitcoin. You think people want to deal with the transfer of physical gold etc in this modern age?

The same rules would apply to any competing currency, such as Bitcoin.

Re: US Gold Reserve Act

#12

Post by AnimalMuppet »

david927 wrote: post #10
keneda7 wrote: post #6

Earlier quoted context omitted.

I agree. There is no way any major economy will switch back to the gold standard unless there is some highly unlikely earth shattering event.

Like a major economy defaulting

A major economy defaulting is possible (I put no limits on the ability of Congress to bungle things). But why do you think that the response would be going back to the gold standard? (Even if you think that's the answer, why do you think Congress will think it's the answer?)

Re: US Gold Reserve Act

#13

Post by mywittyname »

I'd be interested to read what op-eds in contemporary news papers said about this subject.

My initial thought is that this move would be seen as deeply unpopular, but clearly it wasn't. This seems to be the first step in moving from gold-backed currency, and that process took about 40 years. Which means that this policy was not only popular, but broadly seen as necessary by five subsequent presidential administrations.

I cannot imagine any sort of project taking 40 years of bipartisan collaboration succeeding in today's climate.

Re: US Gold Reserve Act

#14

Post by dragonwriter »

david927 wrote: post #2

I used to be Keynesian and thought that inflation was a free tax that was also good for investment and growth. Now I understand that it leads inexorably to ruin. It creates a situation where you have to invest in markets, which removes the link to value, e.g. "the market always goes up." Growth investing is an oxymoron and just a variation of a Ponzi Scheme. We're at a watershed moment in modern history. In the comin…

> In the coming months and years, countries will have to return to a gold standard and when they do, they will have to either limit gold sales, deeply penalize it, or just like in 1934, confiscate it.

All of those things happened as the gold standard was breaking down to and countries were trying to escape its constraints, as part of the process of getting to fiat and the control of money supply it allows.

> This has all happened before.

No, a return to the gold standard after its general global rejection has not happened before.

Re: US Gold Reserve Act

#15

Post by david927 »

dragonwriter wrote: post #14
david927 wrote: post #2

I used to be Keynesian and thought that inflation was a free tax that was also good for investment and growth. Now I understand that it leads inexorably to ruin. It creates a situation where you have to invest in markets, which removes the link to value, e.g. "the market always goes up." Growth investing is an oxymoron and just a variation of a Ponzi Scheme. We're at a watershed moment in modern history. In the comin…

> In the coming months and years, countries will have to return to a gold standard and when they do, they will have to either limit gold sales, deeply penalize it, or just like in 1934, confiscate it. All of those things happened as the gold standard was breaking down to and countries were trying to escape its constraints, as part of the process of getting to fiat and the control of money supply it allows. > This has…

> a return to the gold standard after its general global rejection has not happened before

But only because a general global rejection didn't happen before. Remember that the "general global rejection" only started with the Nixon Shock in the US in 1971.

Re: US Gold Reserve Act

#16

Post by david927 »

AnimalMuppet wrote: post #12
david927 wrote: post #10

Earlier quoted context omitted.

Like a major economy defaulting

A major economy defaulting is possible (I put no limits on the ability of Congress to bungle things). But why do you think that the response would be going back to the gold standard? (Even if you think that's the answer, why do you think Congress will think it's the answer?)

Because the economies are interlinked and so a major economy defaulting starts a domino process where almost all debt goes into default. The currency of any country is legal note that says that country will pay that. What happens when the country can't? And other countries are in a similar situation?

Let's say that you're wealthy and bought three houses for three families and they all owe you that money. You don't want a bunch of paper in return, you want to get the value back that you invested. How? If all currencies have lost their value, where will you turn? You'll want something that can't be printed.

This essay talks about it in more detail: https://blankpoole.com

Re: US Gold Reserve Act

#17

Post by dragonwriter »

AnimalMuppet wrote: post #12
david927 wrote: post #10

Earlier quoted context omitted.

Like a major economy defaulting

A major economy defaulting is possible (I put no limits on the ability of Congress to bungle things). But why do you think that the response would be going back to the gold standard? (Even if you think that's the answer, why do you think Congress will think it's the answer?)

> A major economy defaulting is possible (I put no limits on the ability of Congress to bungle things)

Arguably, even maximal Congressional bungling (at least, absent positive action to force a default, which doesn't seem politically possible) won't make a default necessary, as there are several no-default courses possible without Cobgressional action (“mint the coin”, ignore debt limit due to conflict with mandated fiscal actions, ignore debt limit as unconstitutional)

Re: US Gold Reserve Act

#18

Post by ChrisLomont »

david927 wrote: post #2

I used to be Keynesian and thought that inflation was a free tax that was also good for investment and growth. Now I understand that it leads inexorably to ruin. It creates a situation where you have to invest in markets, which removes the link to value, e.g. "the market always goes up." Growth investing is an oxymoron and just a variation of a Ponzi Scheme. We're at a watershed moment in modern history. In the comin…

>countries will have to return to a gold standard and when they do

Every single one of the 200+ countries left the gold standard since the evidence on how bad economies fared tied to the rate you can dig up gold became irrefutable. Hopefully no major countries get dumb enough to revisit that fiasco.

For example, read the academic work showing that trying to stay on the gold gold standard during the great depression lengthened and deepened the depression with solid data across over 100 countries.

There is no question now that tying your economy to digging up rocks is a bad idea.

Re: US Gold Reserve Act

#19

Post by dragonwriter »

david927 wrote: post #15
dragonwriter wrote: post #14

Earlier quoted context omitted.

> In the coming months and years, countries will have to return to a gold standard and when they do, they will have to either limit gold sales, deeply penalize it, or just like in 1934, confiscate it. All of those things happened as the gold standard was breaking down to and countries were trying to escape its constraints, as part of the process of getting to fiat and the control of money supply it allows. > This has…

> a return to the gold standard after its general global rejection has not happened before But only because a general global rejection didn't happen before. Remember that the "general global rejection" only started with the Nixon Shock in the US in 1971.

> But only because a general global rejection didn't happen before.

The “only” part is speculative, but even if that is entirely true, it is still sufficient to show that “this has all happened before” is false.

Re: US Gold Reserve Act

#20

Post by ChrisLomont »

david927 wrote: post #15
dragonwriter wrote: post #14

Earlier quoted context omitted.

> In the coming months and years, countries will have to return to a gold standard and when they do, they will have to either limit gold sales, deeply penalize it, or just like in 1934, confiscate it. All of those things happened as the gold standard was breaking down to and countries were trying to escape its constraints, as part of the process of getting to fiat and the control of money supply it allows. > This has…

> a return to the gold standard after its general global rejection has not happened before But only because a general global rejection didn't happen before. Remember that the "general global rejection" only started with the Nixon Shock in the US in 1971.

>Remember that the "general global rejection" only started with the Nixon Shock in the US in 1971

Nope - most countries already rejected it. The mismatch allowed them to extract gold at under market prices from the US, since we tried to claim we were on it, and when it became clear that the US was being taken advantage of, we dropped the pretense.

The US has not held enough gold to back it's money for well over 100 years. Holding the pretense till 1971 was to lessen gold bugs from freaking out.

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