saying there’s been 3500% percent inflation since that time
NO NO NO In terms of the COST of Gold,the PRICE increased from 115$ OZ to 1200$ OZ/PRICE INCREASE. INFLATION is more like 10% year average, I earned 35K in 1973,to equal that buying power today,I would need to earn 140K in 2010,I didn't make that much. Remember Inflation isn't about increased prices which could be due to a # of factors,but it is about the devaluation of the currency due to Government/Central Bank policies. Deflation is about the increase in buying power of Currency due to Government/Central Bank Policies.
You miss that the decision on the gold standard in ’33 and ’71 was driven by deficit spending issues, not the other way around.
JHC, TRUISM,The reason we abanded the Gold Standard in 1971 was a default on our Gold Obligations BECAUSE OF DEBT ie THE UNFUNDED COSTS OF VIETNAM AND THE WAR ON POVERTY. Gold was set at 35$ OZ,but the "MARKET" valued the Gold at $115 OZ. IOUs all over the financial world were flying in because IOU holders could turn their received Gold over to the Market and profit was 80$ OZ. So we defaulted,and set up the Fiat,Floating,Derivative weighted system that we so love,and will do anything to continue. To understand the implications,you only have to know two facts:
(1)What happened to our money supply from 1971-2010 in terms of growth
(2)What happened to our currency since 1971 in terms of its purchasing power.
Hint:In 1965 Gold Traded at 35$ OZ
In 2010 Gold Trades at 1200$ Oz
That's it,but that's too easy for most intellectuals to grasp.
PS:Law of Unintended Consequences:Directly because of our default on Gold,in 1973 Oil quadrupled 4x per barrel,our doing,and we've never figured that out,never having looked back,never being able to incorporate the simplest facts from the past into our current opinions.
miguel cervantes wrote:
(1)Well take that point up with Matt Taibbi,
#1 I hope Matt reads Human Action one of these days,or at least the Earthly Philosophers. Your choice for Economic Guru tells us a lot
(2)the historical reference is a cycle has in never collapsed in this way before.
#2 Burst Credit Bubbles like this have occured throughout recorded Economic History
(3)It’s like we’re living in
a Michael Thomas novel, who gave up fiction sometime in the early 00s
I read his novels back when,they're a lot more fun than reading about Macro-Economics
Had you taken my advice,and started reading Real Clear Markets daily,you would have found this insight today which is a Comment on the Referenced article below.
"Struggling economies progressively left the Gold Standard to prevent a costly loss of international competitiveness,"
"That's not how the gold standard worked. If you had a trade deficit with another country gold would leave your country for the trade surplus country. With less gold, the money supply would shrink, causing prices to fall and your good would become cheaper. Eventually cheaper products would beat out more expensive ones in international trade and your trade deficit would turn into a surplus."
"But that's not how the gold standard worked in practice. Gold only limits the volume of paper dollars that the central bank can print. It doesn't limit credit expansion at all; never did and never will. Massive credit expansion is just as easy with a gold standard as it is with fiat money. The booms and busts of the past were caused by such credit expansion. So gold never limited the ability of central banks to expand the money supply via credit expansion. Countries left the gold standard because they didn't want gold leaving their country. It made them feel poorer.
"..but while it wasn't possible for every country to benefit from the devaluation associated with departure from gold, the end of the Gold Standard meant a freeing of monetary policy, which allowed economies to reflate and recover."
"Strange, but for centuries before the Great D nations had no problems recovering from CREDIT INDUCED DEPRESSIONS while on a gold standard. Central bankers must have suddenly become very stupid during the Great D because they couldn't do the same"
(1)The Crisis was certainly looming at that time, but it took the collapse of first Bear Stearns and then Lehman Brothers, six months apart, under a wave of phony(They were Real) contracts.
#1 shows a Confusion of cause and effect,the disruption of the Jap Carry Trade put the users of the CT in neck high dodo.
(2)and one has to wonder how did this
end up happening with 60 days of an election, all economic crisis I can recall, notably 1837, 1873, 1893, happened after an election
#2 assumes that The Laws of Economics are Controlled by the vagaries of politics/vice-versa on that one
(3)Now it can be argued that the solution posited from the last crisis, the tech and derivative bubble, Sarbanes/Oxley really facilitated this last crisis
#3/SO is a minor footnote,SO did almost nothing to force anyone to Disclose their Shadow Accounting,the Derivative Bubble has never stopped growing,the Tech Bubble was an Asset Bubble,not a Debt Bubble that Burst Summer 2007
(4)What happened in 1993, with the CRA revisions most directly had an impact with 2008, so did the first lawsuit Obama won against Citibank,for ‘redlining.
#4,very minor footnotes
(5)How 1971, which was due to the overspending on both
guns and butter, relate to today is a little more murky.
#5,Please look at the growth of the money Supply(M3)/Inflation since 1971.
(6)Now business cycles run 8-10 years, so it begs to reason that sometime around 2009-10, would have run out of steam, but that did
not turn out that way
#6 Prey tell, WHY? Also do Business cycles run in predictable 8-10 year cycles, how about 7 years fat/seven years lean?
"tech and derivative bubble, Sarbanes/Oxley really facilitated this last crisis/miguel cervantes wrote:
What happened in 1993, with the CRA revisions most directly had an impact with 2008, so did the first lawsuit Obama won against Citibank,
for ‘redlining. How 1971, which was due to the overspending on both
guns and butter, relate to today is a little more murky.
Now business cycles run 8-10 years, so it begs to reason that sometime around 2009-10, would have run out of steam, but that did
not turn out that way"
It's like trying to raise the dead. You are confusing Apples and Orange/Causes and Effects in a hilarious stew of disfunctional concepts. I'll just quote something on 1971 to help out.
"Stage 1. Nixon irresponsible, dumps gold, U.S starts spending binge,
Richard Nixon's gold policies get Stockman's first assault, for defaulting "on American obligations under the 1944 Bretton Woods agreement to balance our accounts with the world." So for the past 40 years, America's been living "beyond our means as a nation" on "borrowed prosperity on an epic scale ... an outcome that Milton Friedman said could never happen when, in 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold or other fixed monetary reserves."
Remember Friedman: "Just let the free market set currency exchange rates, he said, and trade deficits will self-correct." Friedman was wrong by trillions. And unfortunately "once relieved of the discipline of defending a fixed value for their currencies, politicians the world over were free to cheapen their money and disregard their neighbors."
And without discipline America was also encouraging "global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve." Yes, the road to the coming apocalypse began with a Republican president listening to a misguided Nobel economist's advice"
Try concentrating on these few lines Think about LBJ and the Unfunded Vietnam War&War on Poverty,think about Nixon,Milton Friedman,Gold,Fiat money,Derivatives invented to Balance the distortions created by the "FLOATING" Currencies,The Bankruptcy Of Orange County California,Enron,Japanese Carry Trade,development of a 600 Trillion $ market in a variety of Derivatives etc etc etc,none of this was possible without the conversion to Fiat Currency. Now you need to hit the books,try Human Action by Von Mises,read the sections on Inflation and Currency Manipulation. Mises was the founder of the Austrian School/Hayek,Schumpeter. Please slow down,stop opining, stop spewing out your fragmented fiscal ideas, and start studying,and opine after you have read a lot. And you could read every article in REAL CLEAR MARKETS everyday,I have been doing that for years. If you're thinking what got up his ass,I'm the Kraken of ZC. I would enjoy discussing Economics with you,but your misinformation makes it a law of diminishing returns issue. Everytime,I point out something,rather than deal with that,you come back at me with a new bizarre grouping of "Explanations" I feel like Mickey Mouse in the Sorceer's Apprentice.
Now it can be argued that the solution posited from the last crisis, the tech and derivative bubble, Sarbanes/Oxley really facilitated this last crisis
My advise,stick to political,historical comments,you're too smart to understand Macro Economics. In other words,you cannot believe that policy from 1971 had an effect in 2007,but what happened in 1837,73,93 is timely and relevant.LOL Think about simple explanation,you'll do better.
But to demonstrate how stupid,out of touch,I was,I believed the Crisis (THat began in Summer 2007)would scare the Hybris out of the Treasury,the Fed,and Wall Street,but as smarter people like CK,JEM,and JED tried to explain to me,back then,Nothing is going to change,the Status Quo will intensify. The reason, I'm looking smarter today is that I stuck to my guns in asserting that unstable,Fiat,Floating Currency is the CORE problem,because if it wasn't,we be out of the WOODS.
He's irrelevant except as a participant in the Reagan economic miracle. Who are relevant are a handful of Contrarian Economists who will never be involved in Government Policy. Peter Morici&Mike Hudson are examples.
And there is only one Economic strategy that will work,and that is to "Stabilize" the Currency so that its purchasing power is the same a century from now as it was in 1970. How many people would buy real estate if the measurement of a Square foot is based on a Floating measurement system "corrected" daily,so I lease a 100000
square foot facility,and take possession of 50000 sq feet,and am told that there was a devaluation of the Japaneese sq foot,and that's the adjustment. And don't bother arguing that currency is different,it's not,and we're reeling from our errors.
"The parallel is really closer to Britain if you want to hazard it"
Look MC,let me help you here. You're all over the place and it's a waste of your time/energy. You don't have to revisit England,Russia,Weimar,you don't have to regurg Spenglar,Toynbee,and Gibbon. I have ofttimes mentioned that Economics is too stupid for the kind of intellectuals who are concerned with the Issues at Contentions/Zombie Contentions etc. It is a dismal science,and I have a primitive,dismal brain. So listen up:
(1)America can't survive as "AMERICA" without Middle class jobs EARNING MIDDLE CLASS PAY
(2)The "REAL" unemployment rate is now 22% and rising,but more important than the unemployment rate is the "How much are Americans earning rate" which is plummeting faSTER than the unemployment rate is rising. I can explain why this is happening,but I don't have to now,because I can prove it,just check out the drop in Federal,State,and all government revenues(The true #s,not the Official #s=s 10% annual drop average&greater in some locations)
(3)Now all this could be used to Derail the Administration,but It won't,because as CK pointed out,if the Repubs inherit power,they need the same economic fantasies to survive as do the Obamaites. "EVERYBODY KNOWS"/Leonard Cohen
I'll help that with that:
(1)Currency Quality printing paper
(2)Currency generating Software
The Soviets were overextended
And in what category,are we not overextended?
miguel cervantes wrote:
That’s so blinkered I don’t know where to start
If it's me that's "BLINKERED",that's fine,if its PCR,I need to remind you that he was "there"* you weren't,you are just one of the"Little" people,just like me.
"We had no idea that by bringing down the Soviet Union we would be bringing down America."
In order to "Win" the Cold War,we defaulted on our obligations in 1971,and created a parallel financial system that Bankrupted America. Anyone remotely aware of our current Economic situation(Reality in #s such as GDP,actual Debt,the "REAL"unemployment rate etc etc) knows that we COULD collapse as fast as the USSR did,Niall Ferguson is one of the despised that has discussed the "Instant Collapse" scenario. I'll give you a hint,our "True" GDP is now under 10 Trillion $s,factor that # in the mix,and see what you come up with.
BTW, I have read the two volumes of THE RED WHEEL avaliable in English as well as Bely's novels.
I know that Paul Craig Roberts is an outcast,and I understand that some believe he is an anti-semite,a "Truther" etc etc. But,he does give us a window into the Reagan White House, where he served as Asst. Secy of the Treasury,and to the RIGHT,the Reagan White House is hallowed Ground,so,in that narrow sense,Conservatives should be allowed to read his opinions.
(1)"Secretary Regan reminded me of my memo to him detailing that Treasury was going to have a hard time getting President Reagan’s economic program, directed at curing the stagflation that had wrecked President Carter’s presidency, out of the Reagan administration. The budget director, David Stockman, and his chief economist, Larry Kudlow, had lined up against it following the wishes of Wall Street, and the White House Chief of Staff James Baker and his deputy Richard Darman were representatives of VP George H.W. Bush and did not want substantial Reagan success that would again threaten the Republican Establishment’s hold over the party. Baker and Darman wanted to be sure that George H. W. Bush, and not Jack Kemp, succeeded Ronald Reagan, and that required a muted Reagan success that they could claim as theirs for moderating an “extremist” program."
(2)"Curing stagflation gave America twenty more years. Ironically, the good times started to erode when Reagan’s other goal was accomplished and the Soviet Union dissolved in 1990. “The end of history” resulted in India and China opening their labor markets to American capitalists, who began producing offshore with foreign labor the products that they sold to Americans. The labor costs savings pushed up corporate profits, shareholders’ returns, and managerial bonuses. But it deprived Americans of middle class incomes and wrecked the balance of trade. The US income distribution and the trade deficit worsened.
Many progressives blame the worsening income distribution on the Reagan tax rate reductions, but the real cause is the offshoring of manufacturing, industrial, and professional service jobs, such as software engineering.
None of us in the Reagan administration foresaw jobs offshoring as the consequence of Soviet collapse. We had no idea that by bringing down the Soviet Union we would be bringing down America. During the Reagan years India was socialist and would not allow foreign corporations, had they been interested, to touch their labor force. China was communist and no foreign capital could enter the country.
However, once the Soviet Union was gone from the earth, the remaining socialist and communist regimes decided to go with the winners. They opened to Western corporations and sucked jobs out of the developed West."
If the above isn't of Interest to those that call themselves Conservatives,something has changed.
Yours Truly,50% of me is a WFB Conservative,the other 50%,a mutt mix of all kinds of thinking.
miguel cervantes wrote:
That ‘post hoc prompto ergo hoc,’ the mosque was built 30 years before the WTC attack, right around the time the towers went up.
Therfore the replacement tower will become hallowed ground around 2045.
Fuster, BTW,there's a Mosque 2 Blocks from the hallowed ground,been there for 40 years.
@ miguel cervantes:
what lies are laid on the tea party table?
It's not their lies,it's the "FACTS" that they "BELIEVE" are "FACTS".
Quote of the Day,Jennifer Rubin at Contentions,
After 8 years of War,
"The American people have figured out who we are fighting and what they are up to."
CK,I don't think it's a stretch to believe that BHO will either win a 2nd term,or having lost in 2012,could win in 2016. That being said,I have many bones to pick with him about his economic policies,anyone that has Blogged with me for a while knows my complaints with Obamonomics. In a nutshell,here are two articles that detail the Factual problems with American fiscal/monetary policy. Every point in these has been detailed by yours truly over the last decade in various forums. I'd love to discuss any aspects of these Opinion Pieces with our Zombies.