Gold standard proposals are hogswash says CPM Group

[delta]

Here's a link to their analysis published yesterday:

CPM

 

 

[BillJones]

The whole gold standard proposal is hogwash. All the gold standard would do would be to place limits upon the amount of money in circulation. It says nothing about what the optimal money supply should be. The gold standard is as old fashioned as horses and buggies and buggy wipes. There is not enough gold in the world to make the system viable, and if it were to be adapted it would result in a deep depression and financial collapse.

 

This whole silly argument has been made on behalf of a far out political candidate who failed at the polls. His supporters continue to agitate for solutions that would be disastrous to this country and the world in general. This whole debate is an effort to get them "in the tent."

 

Am I happy with the massive increases in the money supply and the national debt that we have seen over the past few years? NO. But going back to an 19th system that didn't even work that well when it was in its "golden age" is no solution.

 

[Mr.Mcknowitall]

The whole gold standard proposal is hogwash. All the gold standard would do would be to place limits upon the amount of money in circulation. It says nothing about what the optimal money supply should be. The gold standard is as old fashioned as horses and buggies and buggy wipes. There is not enough gold in the world to make the system viable, and if it were to be adapted it would result in a deep depression and financial collapse.

 

This whole silly argument has been made on behalf of a far out political candidate who failed at the polls. His supporters continue to agitate for solutions that would be disastrous to this country and the world in general. This whole debate is an effort to get them "in the tent."

 

Am I happy with the massive increases in the money supply and the national debt that we have seen over the past few years? NO. But going back to an 19th system that didn't even work that well when it was in its "golden age" is no solution.

 

My goodness, Mr. Jones.

Can you try to take a position on a subject, instead of being middle of the road and making us guess how you feel?

 

I do have a question, though certainly not directed at your position.

 

Can we eat gold, when all other choices of barter and commerce tender are gone?

[BillJones]

The whole gold standard proposal is hogwash. All the gold standard would do would be to place limits upon the amount of money in circulation. It says nothing about what the optimal money supply should be. The gold standard is as old fashioned as horses and buggies and buggy wipes. There is not enough gold in the world to make the system viable, and if it were to be adapted it would result in a deep depression and financial collapse.

 

This whole silly argument has been made on behalf of a far out political candidate who failed at the polls. His supporters continue to agitate for solutions that would be disastrous to this country and the world in general. This whole debate is an effort to get them "in the tent."

 

Am I happy with the massive increases in the money supply and the national debt that we have seen over the past few years? NO. But going back to an 19th system that didn't even work that well when it was in its "golden age" is no solution.

 

My goodness, Mr. Jones.

Can you try to take a position on a subject, instead of being middle of the road and making us guess how you feel?

 

I do have a question, though certainly not directed at your position.

 

Can we eat gold, when all other choices of barter and commerce tender are gone?

 

I call them as I see them. If you don't care for my position, too bad. I make an effort to be honest as possible.

 

As for my position on the gold standard, it's obvious that the issue is not settled, at least among conservatives. It seems to crop up every four years at the Elephant Party platform debates.

 

[Mr.Mcknowitall]

The whole gold standard proposal is hogwash. All the gold standard would do would be to place limits upon the amount of money in circulation. It says nothing about what the optimal money supply should be. The gold standard is as old fashioned as horses and buggies and buggy wipes. There is not enough gold in the world to make the system viable, and if it were to be adapted it would result in a deep depression and financial collapse.

 

This whole silly argument has been made on behalf of a far out political candidate who failed at the polls. His supporters continue to agitate for solutions that would be disastrous to this country and the world in general. This whole debate is an effort to get them "in the tent."

 

Am I happy with the massive increases in the money supply and the national debt that we have seen over the past few years? NO. But going back to an 19th system that didn't even work that well when it was in its "golden age" is no solution.

 

My goodness, Mr. Jones.

Can you try to take a position on a subject, instead of being middle of the road and making us guess how you feel?

 

I do have a question, though certainly not directed at your position.

 

Can we eat gold, when all other choices of barter and commerce tender are gone?

 

I call them as I see them. If you don't care for my position, too bad. I make an effort to be honest as possible.

 

As for my position on the gold standard, it's obvious that the issue is not settled, at least among conservatives. It seems to crop up every four years at the Elephant Party platform debates.

 

In the future I will refrain from good natured satire in responding to a comment.

 

I actually do not have any opinion about any position you may or may not take.

 

I don't even question comments that refer to people negatively based on political choice. That is for others to do.

 

I did not question your position on the gold standard. In fact, I don't even know if you have one. I only question if a person can eat it.

 

The point of my Post was that you made your position clear, when many other Posts don't. Missed the mark, won't try again.

[delta]

Hi BillJones and JohnCurliss, Both of your comments are highly appreciated, and please don't allow any misunderstanding to disrupt the discussion. Bill, John was only kidding when he wrote your position wasn't strongly taken and decisive enough, and John, don't let that bother you at all, because when Bill seemed not to realize your remark was tongue-in-cheek, we can easily forgive him for that because this issue is often taken so deadly seriously. My best wishes to you both!

[delta]

Just received this new article by Peter Schiff arguing in favor of returning to the gold standard:

 

24hgold

[Raisethis2]

Bill is correct. There simply is not enough gold on earth to properly represent the money supply. This is one area where the interconnected world economy just complicates the possibilities.

 

Ron Paul and his supporters talk a good game but most would completely give up the cause if they could just get pot legalized.

 

In any event, this has about the same chances of happening in my lifetime as paying down the debt. It's never going to happen.

 

 

 

[Raisethis2]

Oh, and Peter Schiff has been predicting a bear market for 15 years. When you're wrong as often as he is he shouldn't even have a voice in the media.

[World Colonial]

I read an abbreviated version of the article included in the link on Marketwatch.com a few days ago. Based upon my understanding of what I read, whether it "works" isa matter of what someone is trying to accomplish.

 

Since the sympathies of most people today are undeniably in favor of a big government entitlement welfare state, no, a gold standard will not accomodate that because it imposes limits on government spending and debt which most people do not want. Those are political constraints and not economic.

 

Otherwise, there is no reason why a gold standard cannot function. There is no optimal money supply just as their is no optimal interest rate (despite what supporters of central banking may claim) and no one can define what it "should be". In a real free market for money, prices would be free to adjust up or down to the level of economic activity just as occurs for everything else when the government (or private monopoly) does not prevent it.

 

The actual problem today is with excessive debt that cannot possibly be repaid and unsustainable entitlement promises that the government cannot possibly keep, with or without a gold standard. Society today in both the United States and elsewhere is in denial and the assertion of reality is going to be painful.

 

This reassertion of reality is occuring today in countries like Greece and Spain. Some have claimed that a defacto gold standard exists with the Euro. Do not believe it. The only difference is on the timing of the entirely predictable end result. If the Euro did not exist, then the old Peseta and Drachma would simply crash in value. If the ECB does "QE" like the FRB, everntually, there will be a run on the Euro just like there is going to a run on the USD at some future date if the current US policy does not change. Thye unpredictability is in the timing as Japan demonstrates for the last 22 years. (Japan's day of reckoning is not going to be avoided either.)

 

Regardless of what path is chosen, there is no free lunch in life. The standard of living for the typical American (and many others) is going to decline and for some, crash. The difference between fiat currency and a gold standard under this scenario is that fiat currency is used to STEAL from savers, creditors and producers for the benefit of consumers, spenders and debtors. It is a colossal fraud. So yes, if someone is in favor of that, it is a great "success".

[newprepper]

Here is what I see happening if we go to the gold standard. The U S has to buy tons of gold to back our dollars, all the countries that are sitting on tons of paper U S dollars ( like drug money for instance, columbia, south american countries) decide they have no confidence in U S dollars anymore and cash it in for gold thereby draining our gold reserves forcing us to do something drastic again.

 

I wonder if it would force a stable (manipulated) price on gold like before when it stayed around 35 dollars an ounce before we came off the gold standard

[Hard Times]

Seriously considering going back to the Gold Standard clearly shows without a doubt how out of touch the GOP is with reality. Hey but anyone that does not make over $250K per year already new that right?

 

And yes this is an opinion and a strong one friend John Curlis and I will take full responsibility for its content and strength and it is strongly political

 

Best, HT

[Mr.Mcknowitall]

Seriously considering going back to the Gold Standard clearly shows without a doubt how out of touch the GOP is with reality. Hey but anyone that does not make over $250K per year already new that right?

 

And yes this is an opinion and a strong one friend John Curlis and I will take full responsibility for its content and strength and it is strongly political

 

Best, HT

 

I think I also missed the mark with my comments, as you interpret them.

Again, I really don't care about the politics of a board member. I really don't care about gold. I really don't care about the content of a fellow board member's Posts, except when they are ill mannered. I do enjoy interesting Posts of all types. The satire of my Post in question was that I admire those that voice their opinion in a clear manner. That is all, nothing else hidden in my words. It may be helpful if you re-read my Posts. It is really a waste of your time to take my words personally, when there is no animosity contained in my Posts, toward you or anyone else. Misinterpreting is fine, and my Posts are misinterpreted all the time. I am sure it is my fault. However, when another Post clarifies my intention, and it is still misinterpreted, then it is not on me, it is on the interpreter.

[MJ]

Peter Schiff is a friend but I side with the CPM diatribe on this one just on the basis that it's is impractical.

 

I like gold. MJ

[RWB]

The gold exchange standard was an understanding between the leading economic nations that they would define their currency units in terms of a specific weight of pure gold. This was a very short list of countries: Britain, France, Belgium, Italy, Austria-Hungary, and later the USA. Other countries were minor players. Some countries, notably Spain and China maintained a silver standard.

 

Each participating country also defined certain currency products as fully exchangeable into gold metal, while other instruments were not convertible. The characteristic of convertibility was central to the standard’s operation.

 

The use of any material as a fixed-value standard creates stability that discourages inflation of the currency. It also, however, discourages economic expansion since the only ways to put more money into commerce are to get more gold, or issue currency only partially backed by gold, or to redefine the standard. When societies change little or very gradually, this works well at maintaining stable economic conditions. Contracts are very simple to write and enforce, and commercial transactions are usually stable. For the public convenience, paper certificates substituted for physical gold in most business and personal transactions. Thus, central banks and Treasuries hoarded gold metal as backing for their paper currency, but all counties issued much more paper than they had gold to back it.

 

But, this tidy system was easily disrupted by speculation, over supply, and by technological change. More factory workers meant more money was needed to pay them, and more money was in circulation. But with new gold available at only a limited rate, all industrial countries effectively devalued their gold exchange standards by issuing larger unit amounts of paper gold certificates. Thus, the gold dollar of 1840 and the gold dollar of 1890 had the same definition, but the 1890 dollar had been heavily depreciated by issuing dollars backed only by a declining percentage of the standard quantity of gold metal.

 

[delta]

That's a fine discussion from RWB, many thanks. I can't imagine any kind of gold standard nowadays that would allow conversion, exchange or redemption into physical metal from paper currency, unless a way could be found to exclude all foreign debt holders, such as Saudi Arabia and China, with amounts well into the trillions, and also local American creditors.

 

A new gold standard would also entail an enormous devaluation of the US dollar which would virtually wipe out the savings, pensions, and social security of most Americans, and there would be massive social upheaval.

 

But in the meantime, don't we already have a partial gold standard, in that the US government holds almost 9000 tons of gold even though unavailable to creditors, and as individuals we can freely buy and sell convenient units of gold, coins, bars, etc., which float in value, and have a widely recognized monetary equivalence?

[Nutmeg Coin]

The gold exchange standard was an understanding between the leading economic nations that they would define their currency units in terms of a specific weight of pure gold. This was a very short list of countries: Britain, France, Belgium, Italy, Austria-Hungary, and later the USA. Other countries were minor players. Some countries, notably Spain and China maintained a silver standard.

 

Each participating country also defined certain currency products as fully exchangeable into gold metal, while other instruments were not convertible. The characteristic of convertibility was central to the standards operation.

 

The use of any material as a fixed-value standard creates stability that discourages inflation of the currency. It also, however, discourages economic expansion since the only ways to put more money into commerce is to get more gold, or issue currency only partially backed by gold, or to redefine the standard. When societies change little or very gradually, this works well at maintaining stable economic conditions. Contracts are very simple to write and enforce, and commercial transactions are usually stable. For the public convenience, paper certificates substituted for physical gold in most business and personal transactions. Thus, central banks and Treasuries hoarded gold metal as backing for their paper currency, but all counties issued much more paper than they had gold to back it.

 

But, this tidy system was easily disrupted by speculation, over supply, and by technological change. More factory workers meant more money was needed to pay them, and more money was in circulation. But with new gold available at only a limited rate, all industrial countries effectively devalued their gold exchange standards by issuing larger unit amounts of paper gold certificates. Thus, the gold dollar of 1840 and the gold dollar of 1890 had the same definition, but the 1890 dollar had been heavily depreciated by issuing dollars backed only by a declining percentage of the standard quantity of gold metal.

 

On the latter point I think of Jay Gould and his like.

 

The problem with such proposals by Ron Paul, Gary North and the Lew Rockwell crowd are many as you indicate. Too bad this topic has not been vigorously opposed or debated, unanswered proposals sometimes get interpreted as true based on a lack of another side as vigorous as the Austrian school adherants. A silver standard may be more practical.

 

But think of how much actual gold supply there is in the world, around $8 billion total and where it is currently stored and by what nations and individuals. Also think about the total money supply and the credit derivatives and other financial instruments that few but the insiders understand, and how volatile these can be.

 

The impractical and absolutist rhetoric we hear from the Ron Paul crowd and the tax protestors, are reasons that the political establishment gives him so little recognition. If they were willing to compromise on certain issues they might gain more traction with their own party.

[L1ncolnF4n]

The media is playing up this gold standard WAY too much. As a young conservative I see needless government spending left and right, but see no reason to return to the gold standard. It's dated and can't work as people expect it to in our current economic system. The percentage of people who support the gold standard is likely composed of primarily the Ron Paul fan boys, half of which just want pot legalized.

[RWB]

...There are many who believe the first thing they hear in the morning.... They put on their ideological comfort lecture and experience nothing else. Some of them think the "golden dollars" from the mint actually contain gold metal.

 

Politicians know, among other maxims, that 1) nostalgia sells, 2) big lies sell, 3) reasoned solutions do not sell, and 4) media tends to exploit the deviant, not the normal.

 

One could write many volumes on the financial ignorance of Americans...but they wouldn't sell 'cause they would not be sensational. Now...about the end of the world in December --

 

[newprepper]

What do ou mean reasoned solutions don't sell, 30 mil americans don't have healthcare, with a swipe of his pen obamacare was created, now everbody has FREE healthcare

[Nutmeg Coin]

The budget deficit is much worse than admitted:

 

http://www.bloomberg.com/news/2012-08-08/blink-u-s-debt-just-grew-by-11-trillion.html

 

So I'm with them on that angle, but not their solution.