|
EricSmyth14 (November 30, 1999 at 12:00 am)
@TheBalancedAmerican In the Gold Standard, the money supply stays the same, unless more Physical Gold is acquired. This would be a great thing for the economy.
TheBalancedAmerican (November 30, 1999 at 12:00 am)
Advocates for the Gold standard clearly understand that increasing the money supply (inflation) causes an artificial manipulation of the market. But somehow, the side effects of contraction(deflation) totally elude them. All of it is simply controlling the quantity of money in circulation. We do not need a Gold Standard, we do not need a Keynesian model. We need money to be an accurate representation of a productive unit. The value of the dollar should not increase or decrease, imo.
TheBalancedAmerican (November 30, 1999 at 12:00 am)
@tjtomkins You're right. Booms and Busts are about the inflation of debt-based currency (loans, mortgages, etc.). Not really about gold. We defiantly need to change the rules for reserve lending. Placing a 100% reserve limit on all checking and savings accounts would be a great place to start. Only money market and investment accounts could be leveraged. However, in a "bust" cycle, pumping money into the system seems to soften the recession. The price we pay is our savings. =(
TheBalancedAmerican (November 30, 1999 at 12:00 am)
@TheBalancedAmerican The balance is achieved by having the growth of money match the growth of the economy. This means the value of the dollar doesn't change from year to year. Risk and Savings are equally beneficial. Milton Friedman proposed a "rules-based" monetary framework that was based on his "k-percent" inflation model. This system is a balance between Austrians and Keynesians, which, in my opinion, is the most reasonable conclusion. =)
TheBalancedAmerican (November 30, 1999 at 12:00 am)
@tjtomkins Increasing scarcity in the money supply causes deflation. Prices & Wages fall in relation to productive output. This stifles economic growth because it makes risk and debt more expensive. If you buy a home in a deflating economy, the home becomes more expensive every year. The home value and your wages decline, making the original mortgage cost more. The same is true for investment.Deflation favors savers, Inflation favors risk. We need a balance between them. =)
tjtomkins (November 30, 1999 at 12:00 am)
@TheBalancedAmerican"If you believe the former, reviewing the severe recessions caused by a gold standard is prudent"The recessions were caused by excess of money/credit caused by central &/or fractional-banking, excess of credit causes excess capacity which leads to an inflationary boom, which MUST necessarily come down & it does by way of recession If banks & govts hadn't increased moneysupply than they'd gold then there would've been no booms nor busts
tjtomkins (November 30, 1999 at 12:00 am)
@TheBalancedAmerican"The real debate is weather you believe that a growing economy needs a growing money supply"NO Let's say we FREEZE moneysupply at 1 trillion (just saying), will the economy stop growing? NO, because the money will still circulate thru the economy for trade & production of goods/services & economy will growWhat does "growing economy" mean?1) increase in supply of money2) increase in supply of goods/services (REAL WEALTH)I believe it's 2)
JudithCorey (November 30, 1999 at 12:00 am)
The FED must go. Ron Paul 2012.
jneil2007 (November 30, 1999 at 12:00 am)
@TheBalancedAmerican Yea and we also have to remember that all the regional Fed banks are just owned by member banks of that district. Whether it's the south, midwest, northeast, ect. It is a disgrace though and in no way a free market. I talk to people about this isssue all the time and they think we should just restrict their power. That's like us getting rid of the congress and having a king. Then when he abuses power we say, "Oh well we need to just reform the role of the king!!!" Lol
TheBalancedAmerican (November 30, 1999 at 12:00 am)
@jneil2007 I do agree with you that a private central bank, backed by the US government, encourages financial gambling. Bailouts encourage bad behavior. The Fed system is like an insurance system. All banks give 10% of their cash to the regional reserve banks. If a bank fails, the others are suppose to bail it out. If they all fail, the Central Bank lends cheap money to the regional reserve. If the Fed doesn't have enough cash, it can print money, or buy government bonds =( |
