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Old    SamIngram            12-14-2010, 7:47 AM Reply   
At this point in the discussion I may I suggest

The Mises Academy

as a place to learn basic to advanced economic theory and history. Since it opened earlier this year I have taken 6 classes and found them all very, very education.
Old    Jo Shmoe (joeshmoe)      Join Date: Jan 2003       12-14-2010, 3:29 PM Reply   
A cash only society? why don't we just go back to a barter system.
Sam, that academy does not offer a degree or even credits? forget it.
Old    SamIngram            12-14-2010, 3:34 PM Reply   
Quote:
Originally Posted by joeshmoe View Post
A cash only society? why don't we just go back to a barter system.
Sam, that academy does not offer a degree or even credits? forget it.
Only knowledge... sorry...
Old    John Anderson (fly135)      Join Date: Jun 2004       12-14-2010, 5:38 PM Reply   
Well, I'm not going to pay to take their courses, but I'm curious if they discuss the flaws of the fiat money system. The fiat money system gave us lots of leverage as consumers and turned money into a catalyst for productivity. However, if you don't know what you are doing and start exporting your money faster than you can create we end up in the situation we are in now. It allowed us to over indulge ourselves.

The total US gold reserves are only about 1/15 of our economy. Going back to a gold standard would instantly make us all poor.
Old    Jeremy (wake77)      Join Date: Jan 2009       12-15-2010, 5:31 AM Reply   
"Sam, that academy does not offer a degree or even credits? forget it."

Yeah, but they send you a "printer-friendly certificate of completion" after successfully finishing a course.
Old    SamIngram            12-15-2010, 7:54 AM Reply   
Who gives a CRAP what they send you? What is a degree worth? I have four and none of them have ever paid the mortgage.

It's the freaking knowledge that you learn.... and clearly some of you are lacking in basic economic theory and US/World History...
Old    John Anderson (fly135)      Join Date: Jun 2004       12-15-2010, 8:07 AM Reply   
I'm curious... where in history do we have a fiat money system, an economy so influential with the world market, and exporting 4% of it's value each year?
Old    SamIngram            12-15-2010, 8:32 AM Reply   
Quote:
Originally Posted by fly135 View Post
I'm curious... where in history do we have a fiat money system, an economy so influential with the world market, and exporting 4% of it's value each year?
There are several examples that we can learn from...

Fiat Money -Rome — The Denarius

Although Rome didn’t actually have paper money, it provided one of the first examples of true debasement of a currency. The denarius, Rome’s coinage of the time, was, essentially, pure silver at the beginning of the first century A.D. By A.D. 54, Emperor Nero had entered the scene, and the denarius was approximately 94% silver. By around A.D.100, the denarius’ silver content was down to 85%.

Emperors that succeeded Nero liked the idea of devaluing their currency in order to pay the bills and increase their own wealth. By 218, the denarius was down to 43% silver, and in 244, Emperor Philip the Arab had the silver content dropped to 0.05%. Around the time of Rome’s collapse, the denarius contained only 0.02% silver and virtually nobody accepted it as a medium of exchange or a store of value.

Read more: Fiat Currency many of their articles can be found on Mises.org
Old    John Anderson (fly135)      Join Date: Jun 2004       12-15-2010, 8:57 AM Reply   
So what affect did the pseudo-fiat money have on the Roman economy? Your article says that fiat money led to the fall of Rome. But stress on the economy by imperialistic expansion isn't in the picture? Seems like a stretch to blame fiat money without an analysis as to why.

But by all appearances US fiat money has resulted in the enrichment of the public at large for many years. But why is fiat money bad is the real question. What problems does it cause? Inflation seems to be a inevitable result. But hasn't it allowed us to dominate the world market by addicting the world to our consumption? Hasn't it given us an abundance of cheaply produced goods filling our stores with every possible product our hearts desire?

So what's so bad about fiat money? From my perspective it's that all good things must come to an end. We export our fiat money enriching other nations. But at some point our ability to rule to world marketplace is going to come to an end. An inability to see the writing on the wall and the desire to push it as far as possible is going to result in a nation of poor people who can't find work. It's changed our culture from a society of producers to a society of domestic service. You can't export service, so our labor becomes worthless to the rest of the world. Next will be our money.

IMO it's not the fiat money that's inherently bad, but the trap that we inevitiable fall into to as the result of where it leads us.
Old    SamIngram            12-15-2010, 9:02 AM Reply   
I'm very glad you asked... it does appear that you may be on the right path, at least according to the Austrian School...

The Curse of Fiat Money
Old    John Anderson (fly135)      Join Date: Jun 2004       12-15-2010, 9:34 AM Reply   
This quote in your link is the heart of the matter...

Quote:
As soon as credit expansion stops, the piper must be paid, and the inevitable readjustments must liquidate the unsound over-investments of the boom and redirect the economy more toward consumer goods production.
This is why I keep harping on the trade deficit. IMO it is the bellwether of our economic problems. Our monetary policy is guiding us in the wrong direction. It's not that fiat money is inherently bad. It's our choice to overindulge in the easy excesses it provides if not used properly. If we were redirecting our economy to production of consumer goods then the trade deficit would reflect that redirection.

Of course eliminating "easy excesses" is painful. Nobody advocates a more painful present for a more prosperous future. For one, it's a restriction on our right to indulge without govt intervention. So instead we govt intervention (print more money and keep interest rates artificially low) to eliminate a painful present to get an even more (IMO) painful future.
Old    Jeremy (wake77)      Join Date: Jan 2009       12-15-2010, 11:13 AM Reply   
"Who gives a CRAP what they send you? What is a degree worth? I have four and none of them have ever paid the mortgage.

It's the freaking knowledge that you learn.... and clearly some of you are lacking in basic economic theory and US/World History..."

So what, you dropped a few hundred on a few online courses and now you are smarter than everyone? I had two semesters of US History in college, but since the school wasn't of the same caliber as say...Mises Academy, I guess I missed out on something.
Old    John Anderson (fly135)      Join Date: Jun 2004       12-15-2010, 3:29 PM Reply   
Just heard on NPR Marketplace that the iPhone contributes $2B to the annual trade deficit.
Old    SamIngram            12-23-2010, 7:27 AM Reply   
Quote:
Originally Posted by fly135 View Post
Just heard on NPR Marketplace that the iPhone contributes $2B to the annual trade deficit.
Hey John,
I know it's off topic, but today's Mises.org article is The Faults of Fractional-Reserve Banking, I thought you might be interested.
Old    John Anderson (fly135)      Join Date: Jun 2004       12-23-2010, 8:43 AM Reply   
Interesting article. But as I posted above...

Quote:
The total US gold reserves are only about 1/15 of our economy. Going back to a gold standard would instantly make us all poor
Old    SamIngram            12-23-2010, 8:57 AM Reply   
Quote:
Originally Posted by fly135 View Post
Interesting article. But as I posted above...
I don't think that you understand...

However, Austrian economists wouldn't call for establishing a gold standard, let alone a gold standard with (government-sponsored) central banking: they would argue for free-market money, under which, presumably, gold would become the freely chosen money.[2]

[2] Murray N. Rothbard called for a return to a 100% gold dollar. However, this doesn't contradict the statement given above, as Rothbard's recommendation rests on the precondition that "if people love and will cling to their dollars or francs, then there is only one way to separate money from the state, to truly denationalize a nation's money. And that is to denationalize the dollar (or the mark or franc) itself. Only privatization of the dollar can end the government's inflationary dominance of the nation's money supply." See Murray N. Rothbard, "The Case for a Genuine Gold Dollar," in The Gold Standard: Perspectives in the Austrian School, Llewellyn H. Rockwell, Jr., ed. (Auburn, Alabama: Ludwig von Mises Institute, 1992), p. 5. Rothbard's recommendation for defining the dollar once again as a weight of a market commodity, namely gold, rests (i) on the suitability of using precious metals, especially gold, as money and, even more important, (ii) the fact that the US government confiscated gold in 1933 — so that a re-defining of the dollar in gold would be the natural choice.

I don't think that $1 of the new currency would equal $1 worth of todays currancy in the value of the gold weight, if that makes sense...
Old    John Anderson (fly135)      Join Date: Jun 2004       12-23-2010, 9:48 AM Reply   
Quote:
Originally Posted by SamIngram View Post
I don't think that you understand...
...
I don't think that $1 of the new currency would equal $1 worth of todays currancy in the value of the gold weight, if that makes sense...
Yeah, it makes perfect sense because that's what I said.... A USD would be worth about 1/15 or what it is now. What I don't understand is how we get from here to there without that happening.

But really how do you move to the gold standard without some relationship to the value of the dollar to gold now? Presumably if that relationship was ignored then people with gold would acquire a lot of instant wealth.

Last edited by fly135; 12-23-2010 at 9:50 AM.
Old    Jason G (jason_ssr)      Join Date: Apr 2001       12-23-2010, 1:19 PM Reply   
Freedom did not create the economic crisis. You cant cite the government easing regulation in an attempt to manipulate the rest of the market as "freedom\free market is not always good." The government ENCOURAGED financial institutions to give loans to those who statistically wouldnt pay them back. More social engineering on the idea that once a homeowner, an individual would have more incentive to work to keep it. The crisis took form when the market created MBS and rated them high when they were backed by mortgages that were destine to fail.

A bank is generally a conservative business, and left to itself would have pretty strong lending practices. You cant let the govt manipulate the playing field in the free market, and then blame the banks for playing haphazardly, nor blame the free market as a whole.

Markets are supposed to be created, and businesses are supposed to assess the playing field they are given. BUsinesses should be allowed to succeed, and also allowed to fail. With the government heavily weighing both sides of the scale, you cant claim that the removing of an ounce from one side and the scales tipping violently is an indicator that the scales werent calibrated to begin with.
Old    SamIngram            01-27-2011, 6:56 AM Reply   
I read this article this morning and thought it applied to this discussion... I have no idea who the author is, but I found the article interesting...

How to Abolish the Fed and Convert to Gold as Money
Old    Paul (psudy)      Join Date: Dec 2003       01-27-2011, 8:11 AM Reply   
"MBS and rated them high "

That was also part of the problem. Rating agencies were never designed to rate multiple debtor obligations. There is always default in MBS. Thats why you buy diversified issues. Once the rating agencies got involved(they could apply a rating and make more money after all) and the MBS/CDOs took a little more default than underwritten, the agencies dumped their ratings, essentially turning issues to junk bond status. Once they were downgraded(keep in mind most were still paying) They lost a ton of value(on paper) so mark to market mandates(if held as available for sale) that you write them down(even if they are still paying as scheduled). This hit banks hard and used up a ton of liquidity. A few years ago, the fed stepped in and started buying defaults out of the pools, which actually shot values of well diversivied issues well above par. The only problem is getting a handle on the CPR.
Old    John Anderson (fly135)      Join Date: Jun 2004       01-27-2011, 8:36 AM Reply   
That article is nothing but fluff and opinion.

Quote:
The sound money approach produces more personal responsibility by depositors to keep an eye on their bank and move their deposits to another one if they don’t like its policies.
They are suggesting that everyone become an expert at banking now? This is ridiculous. And where are the govt regulations that force banks to be open and honest to their depositors? Oh wait, this change is recommended by the same people who dislike regulation and govt to keep their hands off.

Quote:
Of course, most of them are ‘true believers’ in the need for their control of ‘monetary policy’, despite the horrible record of the Fed, which has caused the US Dollar to lose over 95% of its value (purchasing power) causing prices to rise (price inflation)
If you think the average American's purchasing power has declined by 95% then you are totally unaware of reality. The quoted statement is designed to deceive. It may be true that costs have risen, but so has income. If anything the fiat dollar has enriched the average American in the ability to purchase.

Quote:
The Fed should be abolished and Fed Notes replaced by gold as money. This will....
How convenient in their list of things it would do, it doesn't include... 1) devalue all our savings, 2) put us all out of work, 3) destroy the economy, 4)create an instant depression.

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