Free market money

SLUSK

Why should governments have monopoly on money? Why should they have the right to issue legal tender? Government has always and will always debase the currency they have.

Why not try free market money?

Time Magazine

Print them out, give them to your friends. Right?

Flamed Diving

Strictly speaking, it's not the government that issues legal tender these days. The whole point of central bank independence is to avoid the problem of:

Government has always and will always debase the currency they have.

So, I'm not sure what you are arguing against here.

silverharp

how about the Fed depreciating the value of the dollar by 95% over the last 100 odd years?

Flamed Diving

silverharp wrote: »

how about the Fed depreciating the value of the dollar by 95% over the last 100 odd years?

Then his beef is with central banks, not governments.

SLUSK

The central bank has a legal monopoly granted by the government. Central bankers are government lackeys.

Flamed Diving

SLUSK wrote: »

The central bank has a legal monopoly granted by the government. Central bankers are government lackeys.

Stunning logic. :eek:

silverharp

silverharp wrote: »

how about the Fed depreciating the value of the dollar by 95% over the last 100 odd years?

Compared to any other other country, at any time, the US economy has done pretty decently over the last 100 years.

silverharp

Deleted User wrote: »

Compared to any other other country, at any time, the US economy has done pretty decently over the last 100 years.

it depends how you want to argue the point, it could be inspite of , hardly because of.

Anonymous1987

SLUSK I think YOU want to print the money for YOURSELF :eek:


In fairness though is it really that bad when a government or central bank debases the currency? It helps people pay off their debt and narrows the gap between lenders and borrowers. The US could do with some inflation to cut that enormous public debt and help its citizens shake off personal debt. Maybe they want to debase the currency for legitimate reasons.

Slippers

SLUSK wrote: »

Why should governments have monopoly on money?

They don't.

Only M0 is publicly created. Most money is already privately issued. That's why we have the phrases 'central bank money' and 'commercial bank money'.

SLUSK

If they are allowed to create money out of thin air, backed by nothing, why shouldn't I be allowed to do the same?

Well seriously I want to return to sound money backed up by precious metals or something similar.

Anonymous1987 wrote: »

SLUSK I thinak YOU want to print the money for YOURSELF :eek:


In fairness though is it really that bad when a government or central bank debases the currency? It helps people pay off their debt and narrows the gap between lenders and borrowers. The US could do with some inflation to cut that enormous public debt and help its citizens shake off personal debt. Maybe they want to debase the currency for legitimate reasons.

Time Magazine

SLUSK wrote: »

If they are allowed to create money out of thin air, backed by nothing, why shouldn't I be allowed to do the same?

There's absolutely nothing stopping me and you using paper cups as a medium of exchange. We can let anyone else in on the game, too, if we want.

Well seriously I want to return to sound money backed up by precious metals or something similar.

Really? You mean this thread has an ulterior motive?! Quelle surprise!

There are reasons why the civilised world left the Gold Standard. Brad DeLong and Barry Eichengreen at UC Berkeley will tell you why, if you wish to find out. Look at their websites and you'll find links pretty quickly. I think James Hamilton of UC San Diego also has written about in non-technical language. We've been through this nonsense with Austrians before on this forum and I don't think anyone has any great desire to go telling the story again, particularly if people haven't bothered to read textbooks first.

zenmonk

Time Mag, not everyone that posts here has studied economics, I would love a few textbooks but at the moment I read the business papers and some books in the hope of educating myself.
Now the gold standard eh...

Time Magazine

zenmonk wrote: »

Time Mag, not everyone that posts here has studied economics, I would love a few textbooks but at the moment I read the business papers and some books in the hope of educating myself.

That's grand. You guys are more than welcome . Unfortunately there's a bunch of people who don't know anything about economics and come in and throw a strop now and again about things that they don't really understand. (I'm not accusing Slusk of that, btw.) It'd basically be the equivalent of someone coming into the Computer forum and shouting "But my computer doesn't do what I want it to do!" if you know what I mean.

Now the gold standard eh...

Gold Standard = the old way of doing things. Have a look at British notes, specifically the "I promise to pay the bearer..." line. Basically you could bring your £5 to the bank and be given five gold coins. The thought at the time was that these five gold coins held more value than the £5 itself. That's alright, until you realise that gold itself changes in value all the time:

So these five gold coins, themselves, are subject to ups and downs in value, a bit like anything else like labour or paper cups or houses. When you stick the pound to gold if the price of gold changes (because of industrial use, or hoarding, or whatever) the value of your pound changes. So everything is a bit all over the place. So you have to keep the price of gold constant at a specific rate set by the government. That's okay, once your government is credible to not just drop the value. Do you trust the government?

That's not even the big problem with a gold standard. When a recession hits (e.g. now) it helps to lower interest rates. We can argue exactly why this happens, but it's definitely true that lowering the interest rate will boost the economy, at least in the short run. With a Gold Standard, you can't change interest rates unless you block off international trade. Nobody wants to block international trade (I dunno about you, but I like coffee and pizza) so if you have a gold standard, you can't change interest rates. Slusk and silverharp have complained (with some merit) that the changing of interest rates have contributed to the dollar devaluing (albeit very slowly). But that's a little bit stupid imho because that $100 saved in a bank a century ago would be worth $2400 now and $100 invested in the stock market would be worth $450,000! The advantage of that devaluation is the ability to change interest rates, and no risk in the government pulling a quick one and devaluing sharply to avoid paying its debts.

Basically, there are a load of complications with a gold standard. Out of the best 500 economists in the world, you might find 10 that think we should go back to the gold standard. That's why I list people like James Hamilton and Barry Eichengreen who argue the case pretty well.

SLUSK

I guess Time Mag advocates a system of debasing the currency because he likes to see his purchasing power steadily deteriorate. Long live Keanes and long live the oppresive government and their central banking monopoly!

Gold is just a barbaric relic after all... Paper money is our god!

zenmonk

SLUSK wrote: »

I guess Time Mag advocates a system of debasing the currency because he likes to see his purchasing power steadily deteriorate. Long live Keanes and long live the oppresive government and their central banking monopoly!

Gold is just a barbaric relic after all... Paper money is our god!

Do you mean Keynes?

But what are your arguments for returning to the gold standard? I am a little confused. Gold is worth now what it was 30 years ago, surely the note isn't?

Time Magazine

SLUSK wrote: »

I guess Time Mag advocates a system of debasing the currency because he likes to see his purchasing power steadily deteriorate.

No, I advocate a system that provides flexibility with regards to combatting recessions. You think this recession is bad? I agree. I'd rather not imagine what it would be like had the Fed, Bank of England and ECB not had any means to try to counter-act the problem.

Long live Keanes

In the long-run, Keynes died. But, seriously, lol: you know Keynes was probably the single most important economist at Bretton Woods, right?

and long live the oppresive government

I did not and will not vote for this government, but I wouldn't call them oppressive.

and their central banking monopoly!

So you're not taking me up on my paper cup offer?

Gold is just a barbaric relic after all... Paper money is our god!

Are you going to address any of the points I made in the previous posts, or are you just going to continue yelling slogans from the rooftops?

Flamed Diving

Time Magazine wrote: »

Are you going to address any of the points I made in the previous posts, or are you just going to continue yelling slogans from the rooftops?

What he said. Slusk, you are resorting to the kind of "last resort" tactics I find in the conspiracy theories forum. I'm surprised you didn't slam the door.

Wsup

The gold standard do not mean "no inflation". Every gold mining company in the world would generate inflation. And imagine the devestating effect of a bonanza.

Anonymous1987

SLUSK wrote: »

If they are allowed to create money out of thin air, backed by nothing, why shouldn't I be allowed to do the same?

Well seriously I want to return to sound money backed up by precious metals or something similar.

As far as I am aware inflation has been kept mostly under control for quite some time now whereas gold is skyrocketing. Peter Schiff and Ron Paul have being rallying anti-Fed support since the Fed failed to burst the bubble unfortunately neither are qualified to make statements about the economy and seem to draw their knowledge from Hayek's Road to Serfdom which is essentially political philosophy rather than economics.

SLUSK

Anonymous1987 wrote: »

As far as I am aware inflation has been kept mostly under control for quite some time now whereas gold is skyrocketing. Peter Schiff and Ron Paul have being rallying anti-Fed support since the Fed failed to burst the bubble unfortunately neither are qualified to make statements about the economy and seem to draw their knowledge from Hayek's Road to Serfdom which is essentially political philosophy rather than economics.

Peter Schiff knew the collapse was coming while others laughed at him and you're telling me he is not qualified to make statements about the economy?

I'd rather listen to people who made it in the real world than some nutty professor who does not dare venture outside of campus.

nesf

SLUSK wrote: »

Peter Schiff knew the collapse was coming while others laughed at him and you're telling me he is not qualified to make statements about the economy?

Everyone and their dog knew a collapse was coming at some point, just like I know there will be rain sometime next month. Doesn't mean I know anything about predicting weather if it rains in December though.

silverharp

nesf wrote: »

Everyone and their dog knew a collapse was coming at some point, just like I know there will be rain sometime next month. Doesn't mean I know anything about predicting weather if it rains in December though.

To be fair though the gov. and many people were not operating as if the economy was cyclical. His basic point was that bubbles burst and dont sit around and wait for it to happen.

nesf

silverharp wrote: »

To be fair though the gov. and many people were not operating as if the economy was cyclical. His basic point was that bubbles burst and dont sit around and wait for it to happen.

Well, by definition bubbles are driven by public sentiment, so if public sentiment was that a bubble was forming then a bubble wouldn't form.

silverharp

nesf wrote: »

Well, by definition bubbles are driven by public sentiment, so if public sentiment was that a bubble was forming then a bubble wouldn't form.

indeed but one would expect the governments or financial regulators to be aware of this and structure the rules with a counter cyclical bias. There was no shortage of data suggesting that leverage etc was at the extreme end of the scale

nesf

silverharp wrote: »

indeed but one would expect the governments or financial regulators to be aware of this and structure the rules with a counter cyclical bias. There was no shortage of data suggesting that leverage etc was at the extreme end of the scale

Financial regulators and the central bank yes. Governments, well the problem is the people who are in such a good mood because the tide is rising will probably vote them back in so there's no electoral pressure on Governments to play down the bubble, in fact almost the opposite is the case unfortunately.

I don't really see a way around this electorally though unless we split the Dáil into multiple elections like the US system or something similar.

silverharp

I expanded my definition of the tragedy of the commons to include the workings of government:D

nesf

silverharp wrote: »

I expanded my definition of the tragedy of the commons to include the workings of government:D

The workings of democracy in any form really. Dictatorship, sure it can't be that bad can it? :pac:

Flamed Diving

SLUSK wrote: »

Peter Schiff knew the collapse was coming while others laughed at him and you're telling me he is not qualified to make statements about the economy?

I'd rather listen to people who made it in the real world than some nutty professor who does not dare venture outside of campus.

"others" You mean those wrestlers, film makers and "get rich quick" authors?*

You have to stop using that Youtube example, Slusk. It's an embarrassing failure, on your part.






*Apart from Art Laffer.

Time Magazine

SLUSK wrote: »

I'd rather listen to people who made it in the real world than some nutty professor who does not dare venture outside of campus.

There's a name for that. It's usually called anti-intellectualism.

Being rich doesn't mean you're right. The overwhelming consensus of the academic community may be wrong, of course, but I don't think they're wrong simply because they're not multi-billionaires.