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The Smartest Man in Europe Is Very Cautious

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Re: The Smartest Man in Europe Is Very Cautious

#11

Post by zby »

JeffL wrote: post #6

"All the problems really started when the dollar was no longer convertible into gold. That happened in August 1971 and eliminated all currency restraints because money became only paper and not backed by anything real." Interesting to find that in the middle of the article.

That argument that value of gold is 'something real' is getting tired. Value of gold is not baked by anything practical - it's usage for jewelery depends on its high value in a self referencing, half paradoxical feedback loop (see Nick Szabo on origins of money: http://szabo.best.vwh.net/shell.html ). But there is something that indeed makes gold a better standard than the printing press of the government - it is its objectivity. Printing money is just too easily manipulated, mining gold sets more objective rules and clear rules are what makes any decentralized social system work.

Re: The Smartest Man in Europe Is Very Cautious

#13

Post by david927 »

zby wrote: post #11
JeffL wrote: post #6

"All the problems really started when the dollar was no longer convertible into gold. That happened in August 1971 and eliminated all currency restraints because money became only paper and not backed by anything real." Interesting to find that in the middle of the article.

That argument that value of gold is 'something real' is getting tired. Value of gold is not baked by anything practical - it's usage for jewelery depends on its high value in a self referencing, half paradoxical feedback loop (see Nick Szabo on origins of money: http://szabo.best.vwh.net/shell.html ). But there is something that indeed makes gold a better standard than the printing press of the government - it is its…

The "something real" is its objectivity not its practicality.

Re: The Smartest Man in Europe Is Very Cautious

#15

Post by trb »

TheSkeptic wrote: post #10

After pointing out that "The central bankers throughout the world have lost touch with reality" and discussing the messes that have been created in large part by inept bureaucrats, The Smartest Man in Europe dismisses all of the problems brewing in China with a naive "the authorities will figure out solutions to solve them." Anyone who truly believes that the "authorities" in China are any more capable than the "auth…

Maybe not capable, but surely more focused? As far as I know there are no elections that change the top leadership every few years. This way they have a larger interest in planning beyond their political term and the private industry has less influence through campaign contributions.

But I might be wrong, I'm way out of my comfort zone here.

Re: The Smartest Man in Europe Is Very Cautious

#16

Post by wisty »

mmaunder wrote: post #9
JeffL wrote: post #6

"All the problems really started when the dollar was no longer convertible into gold. That happened in August 1971 and eliminated all currency restraints because money became only paper and not backed by anything real." Interesting to find that in the middle of the article.

There's a school of thought that blames the gold standard for the great depression. The French accumulated massive amounts of gold between 1928 and 1932 and some scholars say the global deflationary effects of Bank of France's policy during this time caused the great depression. The gold standard also ties money supply to gold production which is a little like tying fed policy to the quarterly flip of a coin. For exa…

Well, the collapsing credit money couldn't be offset by more printed paper money; so that's what made the Depression cut so deep. But the credit money was only able to collapse because it had gotten so high in the first place.

Whether your money is a bank account, commercial bonds, government bonds, or gold; it doesn't pay to have fluctuations in total volume. Keeping the base (i.e. gold or dollars) fixed won't stop the banks (and governments) from borrowing and loaning more every year, until a crisis shows them that they have gone too far.

Re: The Smartest Man in Europe Is Very Cautious

#18

Post by dualogy »

JeffL wrote: post #6

"All the problems really started when the dollar was no longer convertible into gold. That happened in August 1971 and eliminated all currency restraints because money became only paper and not backed by anything real." Interesting to find that in the middle of the article.

According to some, the dollar is still on a gold standard but a floating one -- backed by oil flows. As soon as oil does not trade for dollars -- poof.

Re: The Smartest Man in Europe Is Very Cautious

#19

Post by buff-a »

dualogy wrote: post #18
JeffL wrote: post #6

"All the problems really started when the dollar was no longer convertible into gold. That happened in August 1971 and eliminated all currency restraints because money became only paper and not backed by anything real." Interesting to find that in the middle of the article.

According to some, the dollar is still on a gold standard but a floating one -- backed by oil flows. As soon as oil does not trade for dollars -- poof.

Cracking good timing too: http://en.wikipedia.org/wiki/Iranian_oil_bourse

Re: The Smartest Man in Europe Is Very Cautious

#20

Post by buff-a »

mmaunder wrote: post #9
JeffL wrote: post #6

"All the problems really started when the dollar was no longer convertible into gold. That happened in August 1971 and eliminated all currency restraints because money became only paper and not backed by anything real." Interesting to find that in the middle of the article.

There's a school of thought that blames the gold standard for the great depression. The French accumulated massive amounts of gold between 1928 and 1932 and some scholars say the global deflationary effects of Bank of France's policy during this time caused the great depression. The gold standard also ties money supply to gold production which is a little like tying fed policy to the quarterly flip of a coin. For exa…

  Many problems were solved with our departure 
  from the gold standard
Such as having to give the Saudis, and now the Chinese, all our gold. Instead we give them paper, and they then reinvest that paper in:

  * internet companies
  * enron
  * property
  * banks
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