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View Full Version : Ron Paul vs Bernanke: Is Gold Money?



MR2-Sooner86
7/14/2011, 04:14 PM
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Ron Paul Attacks Bernanke on Gold (http://www.thestreet.com/_yahoo/story/11184107/1/ron-paul-attacks-bernanke-on-gold.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA#disqus_thread)


NEW YORK -- Congressman Ron Paul's commitment to the gold standard was on display today as he challenged Federal Reserve Chairman Ben Bernanke on whether the precious metal is considered a form of currency.

During his testimony to the House Financial Services Committee, Bernanke was hardly allowed to speak as Paul grilled the head of the Fed.

Paul: The price of gold today is $1,580 the dollar during these last few years the dollar was devalued almost 50%. When you wake up in the morning, do you care about the price of gold?

Bernanke: Well, I pay attention to the price of gold but I think it reflects a lot of things. It reflects global uncertainties. The reason people hold gold is its protection against what we call tail risk ... they have gold as a protection.

Paul: Do you think gold is money?

Bernanke: [Long pause] No.

Bernanke went on to acknowledge that gold is an asset and that central banks hold it as reserves. Paul demanded to know why the Fed didn't hold diamonds as an asset instead of gold if it wasn't really money and Bernanke, who seemed stumped, said it was a "long term tradition."

Paul has denounced the Federal Reserve for his entire 35 year tenure in Congress and has been the gold standard's biggest advocate, something he danced around with Bernanke. Getting the Fed chairman to admit that gold was a form of money would underscore Paul's belief that gold is a more valuable form of money than paper currencies. Since the Fed started pumping money into the system in November of 2008, gold prices have climbed 113% while the U.S. dollar index has sunk 13%. Gold hit an intra-day record Wednesday of $1,588.90 an ounce.

Many experts think that high gold prices are actually a reflection on the lack of faith in the U.S. dollar. With real interest rates negative -- interest rate minus the inflation rate -- gold has made an attractive alternative to paper money. The real interest in the U.S., at the top end, is negative 1.05% which means that each dollar is worth around 90 cents whereas each ounce of gold is worth more than $1,580.

In a recent interview with TheStreet, Paul said, "At one time the ratio of dollars to gold was $20 to 1 ounce, now it's over $1,500. They'll lose control, people will panic out of the dollar, then you'll see gold at maybe $5,000 to $10,000 ... But now we're losing the trust and we're only waiting on that day, so when that happens there will be a restoration of sound money to some degree."

Paul thinks that Washington will come to its senses before gold hits $10,000 an ounce and crack its fiscal whip, "we're going to quit spending, quit printing money and then restore confidence, but it's up for grabs because the bubble is bigger than ever before."

Paul advocates returning to the Constitutional mandate of using gold and silver as legal tender and then letting the people chose which they would rather trade in gold or paper. "I want to legalize the trading in gold and silver, no taxes, no sales taxes, no capital gains taxes. " Paul hopes if given this option that individuals would opt for gold and silver, making the U.S. dollar more obsolete.

"Gold, if you pick up a coin minted 6,000 years ago, you'd still have your money. If you pick up a piece of paper printed a year ago, it might be worth half its value. So history is on my side of the argument," says Paul.

If a true gold standard were to go into effect, meaning that every dollar was replaced with gold, then the gold price would have to skyrocket to $5,000 or the government would have to extract $9 trillion out of the system. Paul concedes that might happen but that it would be worth the pain.

Jon Nadler, senior analyst at Kitco.com says that Bernanke will be crucified by Paul and his followers for not saying gold is money but that Bernanke was not wrong. "We all know the date and the time when gold stopped being money. This is all about perception, sentimentalism, and reality being at odds with each other ... Anyone who acknowledges that inescapable reality will promptly be dismissed by the gold bugs as a heretic."

With Paul announcing that he will no longer seek re-election to Congress but is instead putting all his eggs in the Presidential basket, he is no doubt hoping other people see his side of the gold coin.

tommieharris91
7/14/2011, 04:16 PM
Your answer is simple: no.

The
7/14/2011, 04:19 PM
Letting old people handle economic policy is like letting Ethiopians run your restaurant's kitchen.

tommieharris91
7/14/2011, 04:20 PM
Letting Austrians handle economic policy is like letting Ethiopians run your restaurant's kitchen.

fixed

My Opinion Matters
7/14/2011, 04:22 PM
I think we should move to the cattle standard. Cattle is valuable.

tommieharris91
7/14/2011, 04:37 PM
I think we should move to the cattle standard. Cattle is valuable.

I hear corn is doing well. We need to be on the corn standard.

mgsooner
7/14/2011, 04:39 PM
I've got news for Ron and everyone else that has been snapping up gold...if the system fails then gold ain't gonna be worth sh*t either. You're better off buying huge quantities of guns and ammunition. If the system fails then THAT will be worth something.

tommieharris91
7/14/2011, 04:39 PM
Actually, STEP's ****s have value. We should base our money on that.

En_Fuego
7/14/2011, 05:16 PM
Labor isn't money but can be exchanged for goods and services.

badger
7/14/2011, 05:22 PM
Labor isn't money but can be exchanged for goods and services.

Labor is subject to taxation :mad:

yermom
7/14/2011, 05:39 PM
I've got news for Ron and everyone else that has been snapping up gold...if the system fails then gold ain't gonna be worth sh*t either. You're better off buying huge quantities of guns and ammunition. If the system fails then THAT will be worth something.

at least you can take your gold to Europe or Canada :D

En_Fuego
7/14/2011, 05:56 PM
Look for Gold to be around $2,200.00 per oz within a year.

I bought a Gold Pimp Necklace back in 2003 for around $500 and it's now worth about $2,500.......:cool:

winout
7/14/2011, 06:13 PM
I've got news for Ron and everyone else that has been snapping up gold...if the system fails then gold measured in u.s. dollars ain't gonna be worth sh*t either.

Fixed it for you.

There are two reasons to own gold, insurance and investment. Gold as insurance if the u.s. defaults makes a good barter medium. Investment: you ride the price up and sell at or near the top and then transfer to another asset that is at the bottom of it's cycle (I don't know say, real estate or stocks).

MR2-Sooner86
7/14/2011, 06:19 PM
Your answer is simple: no.

How? Isn't money a, 1) medium of exchange; 2) store of value; and 3) unit of account? If it's not then why is it specifically mentioned in the Constitution?

Is gold not an accepted medium of exchange between central banks? Yes? (http://www.zerohedge.com/article/morning-gold-fixing-jp-morgan-accepts-gold-bullion-collateral-%E2%80%93-silver-backwardation-lead-sh)

I mean really when you get down to it, a piece of paper or gold, what has monetary value? If the United States was gone tomorrow, what would you rather have, $1,000,000 in $100 bills or $1,000,000 in gold coins? Both will have been approved by the United States Government "This note is legal tender for all debts public and private." I'm sure if you went to the EU they'd still gladly take your coins, the bills, they'd laugh you out of the building.


fixed

Yeah, because Keynasian economics has got us into a great position.

landrun
7/14/2011, 06:34 PM
I've got news for Ron and everyone else that has been snapping up gold...if the system fails then gold ain't gonna be worth sh*t either. You're better off buying huge quantities of guns and ammunition. If the system fails then THAT will be worth something.

That's true. For the day after the system fails. A few years later, the more gold you have the more wealth you will have.

tommieharris91
7/14/2011, 09:56 PM
How? Isn't money a, 1) medium of exchange; 2) store of value; and 3) unit of account?
Gold can be a form of money, but it currently does not pass the store of value test. As a commodity (especially one that has uses in industry) gold fails this test.


Da gubmint cna make it a "store of value".
Not quite. Even if the price of gold is fixed, supply and demand (especially the latter) will still move, constantly taking the price of gold out of equilibrium. Swings like this can break a gold standard system. So I have to ask: Since when did so many small government advocates want government to meddle in the price of a good?

If it's not then why is it specifically mentioned in the Constitution?
Because it used to be, and it was pretty good as a medium of exchange between states and the federal government as prescribed in Art. I Sec. 10 . The problem with it now, as I said earlier, is that gold is used in dentistry and electronics, and gold in those industries are considered consumed once used for those applications.

Also, it should be noted that the intent of that clause in Art. I Sec. 10 was meant to stop states from creating their own currencies.

Is gold not an accepted medium of exchange between central banks? Yes? (http://www.zerohedge.com/article/morning-gold-fixing-jp-morgan-accepts-gold-bullion-collateral-%E2%80%93-silver-backwardation-lead-sh)
It can be, but using it only as a medium of exchange makes the transactions bartering, not buying or selling.

Now, before someone goes off and says something like "WE'RE NOW ZIMBABWE!!1!!" I will attempt to explain 1) how the Fed is not the Zimbabwean central bank and 2) how it would be much more beneficial for Zimbabwe to move to a fixed monetary system than if the US moved there.
The Fed has shown over the years that it can keep a healthy, steady 3% inflation rate. Yea, I know about how the dollar has lost 98% of its value since 1913, and I don't care about that because wages have mostly moved with the inflation. The Zimbabwean central bank has not kept a steady inflation rate, often showing inflation rates above 1000% (don't hold me to that, but you get the point.) Since that bank has historically shown that it cannot keep control of its money supply, they would do very well to pin their money to something else. They can pin to a commodity such as gold, or to a steadier currency, such as the USD or the EUR.


I mean really when you get down to it, a piece of paper or gold, what has monetary value? If the United States was gone tomorrow, what would you rather have, $1,000,000 in $100 bills or $1,000,000 in gold coins? Both will have been approved by the United States Government "This note is legal tender for all debts public and private." I'm sure if you went to the EU they'd still gladly take your coins, the bills, they'd laugh you out of the building.

This is an appeal to emotion. The USA isn't leaving any time soon. Anyway, if the US government magically disappeared, I want guns, ammo, rice, and beans.


Yeah, because Keynasian economics has got us into a great position.
You must like depressions. I do not doubt that, had the US been on the gold standard in 2008-2009, the US might still be fighting against ongoing GDP decay and rising unemployment into 2011. Yes, this was that bad. This isn't the only time a flexible, floating money supply has averted a depression. The stock market crash of 1987 did not even have a recession associated with it because of very sharp action by Alan Greenspan's Fed. There would have been a lot of trouble that would have lingered from that recession had the Fed been unable to act because of fixed liquidity. Imagine how Ronald Reagan would have been remembered if the stock market crash of 1987 turned into a recession or even a depression.

When you understand the criticisms against the Austrian school and the main reason about why Austrian economics was never accepted by the faculty of all but about 10 universities despite more than a few chances and reviews by those people, you will understand why I ditched Austrian economics.

tl;dr Ron Paul is Hitler and MR2 is a Nazi.

winout
7/15/2011, 01:12 AM
The original US dollar was based off the Spanish Dollar which was defined by a certain weight of silver. The Spanish Dollar was the reserved currency at our country's beginning as was the official currency until the coinage act created ours.

Our problems started in 1913 when the Congress outsourced our monetary policy to the Federal Reserve and the beginning of the end was Nixon taking us off the gold standard as he said "temporarily."

The US money used to look like this:
http://upload.wikimedia.org/wikipedia/en/f/f2/Series1934_100gold_obverse.jpg

Note that it was redeemable for gold on demand and was not a "Federal Reserve" Note. Now, cotton FRN's can be easily be reproduced (or simply zeroes added on a spreadsheet) at the whim of the banking/Fed cartel. Hence the too big too fail banks get bailouts and their officers become Treasury secretaries.

Mostly likely the system will collapse, there will be pain "temporarily" until we get back on a fixed monetary system. Until then expect bubbles and wars like we have had since the Fed was created.

Blue
7/15/2011, 01:34 AM
Gold can be a form of money, but it currently does not pass the store of value test. As a commodity (especially one that has uses in industry) gold fails this test.


Not quite. Even if the price of gold is fixed, supply and demand (especially the latter) will still move, constantly taking the price of gold out of equilibrium. Swings like this can break a gold standard system. So I have to ask: Since when did so many small government advocates want government to meddle in the price of a good?

Because it used to be, and it was pretty good as a medium of exchange between states and the federal government as prescribed in Art. I Sec. 10 . The problem with it now, as I said earlier, is that gold is used in dentistry and electronics, and gold in those industries are considered consumed once used for those applications.

Also, it should be noted that the intent of that clause in Art. I Sec. 10 was meant to stop states from creating their own currencies.

It can be, but using it only as a medium of exchange makes the transactions bartering, not buying or selling.

Now, before someone goes off and says something like "WE'RE NOW ZIMBABWE!!1!!" I will attempt to explain 1) how the Fed is not the Zimbabwean central bank and 2) how it would be much more beneficial for Zimbabwe to move to a fixed monetary system than if the US moved there.
The Fed has shown over the years that it can keep a healthy, steady 3% inflation rate. Yea, I know about how the dollar has lost 98% of its value since 1913, and I don't care about that because wages have mostly moved with the inflation. The Zimbabwean central bank has not kept a steady inflation rate, often showing inflation rates above 1000% (don't hold me to that, but you get the point.) Since that bank has historically shown that it cannot keep control of its money supply, they would do very well to pin their money to something else. They can pin to a commodity such as gold, or to a steadier currency, such as the USD or the EUR.


This is an appeal to emotion. The USA isn't leaving any time soon. Anyway, if the US government magically disappeared, I want guns, ammo, rice, and beans.

You must like depressions. I do not doubt that, had the US been on the gold standard in 2008-2009, the US might still be fighting against ongoing GDP decay and rising unemployment into 2011. Yes, this was that bad. This isn't the only time a flexible, floating money supply has averted a depression. The stock market crash of 1987 did not even have a recession associated with it because of very sharp action by Alan Greenspan's Fed. There would have been a lot of trouble that would have lingered from that recession had the Fed been unable to act because of fixed liquidity. Imagine how Ronald Reagan would have been remembered if the stock market crash of 1987 turned into a recession or even a depression.

When you understand the criticisms against the Austrian school and the main reason about why Austrian economics was never accepted by the faculty of all but about 10 universities despite more than a few chances and reviews by those people, you will understand why I ditched Austrian economics.

tl;dr Ron Paul is Hitler and MR2 is a Nazi.

Love ya man but your whole school of thought is teetering on the precipice. I guess we will see.

Blue
7/15/2011, 01:35 AM
Oh and ZIMBAABWEE!1! INFLATION!1

Gandalf_The_Grey
7/15/2011, 02:36 AM
You know what will be a lot more valuable than gold and money in a post apocalyptic hell-scape....GUNS...big GUNS..small GUNS..medium sized GUNS...

Curly Bill
7/15/2011, 03:07 AM
You know what will be a lot more valuable than gold and money in a post apocalyptic hell-scape....GUNS...big GUNS..small GUNS..medium sized GUNS...

Sweet! I'm gonna take you at your word and use it as an excuse to go buy some more guns! :D

...and ammo, lots of ammo, cause I bet that'll be valuable too.

SoonerBorn68
7/15/2011, 03:25 AM
...again -- Bullets, bread, booze. If the world goes crazy paper money or gold won't be worth ****.

SoonerBorn68
7/15/2011, 03:27 AM
If it gets right down to it gold won't be worth anything because you'd have to trade it for goods. Sorry sir, I'm not trading all my food for your sliver of gold.

SoonerBorn68
7/15/2011, 03:28 AM
...but I might trade you a loaf of bread for that gold coin.

StoopTroup
7/15/2011, 03:31 AM
How can you put a dollar value on Gold if the dollar means nothing?

Gandalf_The_Grey
7/15/2011, 03:37 AM
The truth about gold is that you can melt it down and make golden bullets...nothing says War Lord like Golden Bullets.

My Opinion Matters
7/15/2011, 06:35 AM
How can you put a dollar value on Gold if the dollar means nothing?

This...actually makes sense.

winout
7/15/2011, 07:52 AM
Excellent series on the money by Niall Furgeson (no relation to Turd)... The Ascent of Money. Here is the first one:

http://video.pbs.org/video/1170821435

StoopTroup
7/15/2011, 08:53 AM
The truth about gold is that you can melt it down and make golden bullets...nothing says War Lord like Golden Bullets.

I've heard that only a golden bullet can stop Ron Paul and Chuck Norris as they both have bathed together in the Rio Grande under a full moon and became Alamo Blood Brothers.

Gandalf_The_Grey
7/15/2011, 09:24 AM
You are actually showing your ignorance there...not just any golden bullet..it has to be forged in Hephaestus' forge as well

SouthCarolinaSooner
7/15/2011, 09:45 AM
If it gets right down to it gold won't be worth anything because you'd have to trade it for goods. Sorry sir, I'm not trading all my food for your sliver of gold.
Nothing is "worth" anything except what you can trade for it, I don't see the point you're making.

Interesting people mention ammo as a currency, I can see it now... "Winchester Arms Exchange Fund", notes backed by .308 Winchester. Each note can be exchanged for a single Winchester round.

Curly Bill
7/15/2011, 09:48 AM
Nothing is "worth" anything except what you can trade for it, I don't see the point you're making.

Interesting people mention ammo as a currency, I can see it now... "Winchester Arms Exchange Fund", notes backed by .308 Winchester. Each note can be exchanged for a single Winchester round.

So, you're sayin I need a .308? Guess that's a good reason for a new rifle. :D

SouthCarolinaSooner
7/15/2011, 09:52 AM
So, you're sayin I need a .308? Guess that's a good reason for a new rifle. :D
Gotta stay NATO compatible ya know

Curly Bill
7/15/2011, 09:57 AM
Gotta stay NATO compatible ya know

I gotta .223 or as Nato calls it: a 5.56. :D

Chuck Bao
7/15/2011, 03:26 PM
I would vote for Ron Paul because I like most of his ideas. But, I still think he is a nutcase for his views on the gold standard and the Federal Reserve. The shock to the economic system would be so severe that the whole gun and ammo scenario would not only be possible but probable.

soonerchk
7/15/2011, 03:28 PM
If I can buy things at the mall with it, it's not money. Therefore cash and credit cards = money, and gold = bullets.

yermom
7/15/2011, 03:35 PM
just like Euros, you can't take gold to the mall, but that doesn't mean they aren't theoretically easy to turn into Dollars

tommieharris91
7/15/2011, 03:37 PM
If I can buy things at the mall with it, it's not money. Therefore cash and credit cards = money, and gold = bullets.

:confused:

My Opinion Matters
7/15/2011, 03:39 PM
:confused:

I think she must have gotten into the maple syrup again.

soonerchk
7/15/2011, 03:39 PM
just like Euros, you can't take gold to the mall, but that doesn't mean they aren't theoretically easy to turn into Dollars

I should probably add the phrase "in my head" to my post. In everyone else's head gold and euros are obviously money. To me, they are not money until I have converted them to cash.

87sooner
7/15/2011, 03:44 PM
gold is better than money...
2 1/2 years ago...if you had bought an ounce of gold for under $800......you could sell it today for almost double...
otoh...you could have put that $800 in the bank and today you would have about $810...

My Opinion Matters
7/15/2011, 03:46 PM
You know what else increases in value? HOUSES! Let's all invest in mortgages!!

Sooner5030
7/15/2011, 03:47 PM
gold is better than money...
2 1/2 years ago...if you had bought an ounce of gold for under $800......you could sell it today for almost double...
otoh...you could have put that $800 in the bank and today you would have about $810...

not only that but the $800 2 1/2 years earlier purchased x wheat/cotton will now only purchase .7x.

Sooner5030
7/15/2011, 03:49 PM
by the way....if I pay an employee with a $50 1 OZ gold eagle will he/she be taxed for $50 or $1590?

tommieharris91
7/15/2011, 04:03 PM
by the way....if I pay an employee with a $50 1 OZ gold eagle will he/she be taxed for $50 or $1590?

Depends on when they sell it. I'm pretty sure you have to pay payroll taxes and the other stuff though.

JohnnyMack
7/15/2011, 04:09 PM
If the world goes to ****, gold won't be the commodity of choice. It'll be silver. There simply isn't enough physical gold to meet the post-apocalyptic demand. Silver on the other hand is much more plentiful.

sappstuf
7/15/2011, 04:34 PM
If the world goes to ****, gold won't be the commodity of choice. It'll be silver. There simply isn't enough physical gold to meet the post-apocalyptic demand. Silver on the other hand is much more plentiful.

Salt.

Gandalf_The_Grey
7/16/2011, 01:07 AM
If the world goes to ****, gold won't be the commodity of choice. It'll be silver. There simply isn't enough physical gold to meet the post-apocalyptic demand. Silver on the other hand is much more plentiful.

The tears of Virgins shall be the new currency...OUDavid will be loaded!!

Breadburner
7/16/2011, 02:52 AM
I got a hard-on can you beat that.....!!!!

soonerscuba
7/17/2011, 11:12 AM
gold is better than money...
2 1/2 years ago...if you had bought an ounce of gold for under $800......you could sell it today for almost double...
otoh...you could have put that $800 in the bank and today you would have about $810...If you bought SPY it would also almost double as well, and pay a dividend, what's your point?

Currency is a shared delusion, whether it be shells, neat shaped rocks, gold or greenbacks. It by nature doesn't have intrinsic utility, but simply allows for a faster means of barter. I cringe at the thought of the gold standard, if you had to physically back money, I could understand tying it to a basket of commodities, but from my very limited knowledge of the subject, I am led to believe there is a reason we abandoned it.

Breadburner
7/17/2011, 12:22 PM
Gold is to heavy folks...duh...!

87sooner
7/17/2011, 02:22 PM
If you bought SPY it would also almost double as well, and pay a dividend, what's your point?

Currency is a shared delusion, whether it be shells, neat shaped rocks, gold or greenbacks. It by nature doesn't have intrinsic utility, but simply allows for a faster means of barter. I cringe at the thought of the gold standard, if you had to physically back money, I could understand tying it to a basket of commodities, but from my very limited knowledge of the subject, I am led to believe there is a reason we abandoned it.

the point is..the dollar is becoming more worthless each day...
if you have any in the bank.....you're nuts....

jkjsooner
7/17/2011, 03:54 PM
gold is better than money...
2 1/2 years ago...if you had bought an ounce of gold for under $800......you could sell it today for almost double...
otoh...you could have put that $800 in the bank and today you would have about $810...

Yep, and if you bought gold in 1980 it took you like 25 years to get back to even. Just sayin'.

Breadburner
7/17/2011, 04:06 PM
Yep, and if you bought gold in 1980 it took you like 25 years to get back to even. Just sayin'.

This is the truth....Maybe 30....If...You hung on to it......

87sooner
7/17/2011, 06:30 PM
what was the interest rate in 1980....
just wondering...

pphilfran
7/17/2011, 07:08 PM
what was the interest rate in 1980....
just wondering...

The highest prime rate eva...21.5% in Dec 1980...

Canyonero
7/18/2011, 12:28 PM
Above $1,600
http://www.cnbc.com/id/43788734

Mississippi Sooner
7/18/2011, 12:35 PM
Back in 1980 I made an investment in Colombian Gold that paid huge dividends.

sappstuf
7/19/2011, 06:17 AM
Yep, and if you bought gold in 1980 it took you like 25 years to get back to even. Just sayin'.

And if you bought gold in 1979 you could have almost quadrupled your money in 12 months.. Just sayin'.

Hindsight is awesome!

tommieharris91
7/19/2011, 07:41 AM
All these posts about gold's volatility are telling me that gold isn't a very good store of value.

bigfatjerk
7/19/2011, 08:08 AM
All these posts about dollar's volatility are telling me that dollar isn't a very good store of value.
FIFY

87sooner
7/19/2011, 08:09 AM
All these posts about gold's volatility are telling me that gold isn't a very good store of value.

tell me what has been a better "store of value" over the past 10 years....

87sooner
7/19/2011, 08:13 AM
And if you bought gold in 1979 you could have almost quadrupled your money in 12 months.. Just sayin'.

Hindsight is awesome!

it is awesome...
but gold is one thing where you don't need much foresight at all...
when the govt printing press runs overtime....the value of the dollar goes down and gold goes up....pretty simple...
carter printed money....reagan shut the presses down....
bush/obama printed money...
gold will continue to climb until someone shuts off the presses...

tommieharris91
7/19/2011, 08:18 AM
I don't think either of you realize that the "store of value" concept of money means that the value of that money should stay somewhat stable. An asset doubling in value in 2 years isn't anything close to stable. You have been talking about gold as an investment, not as a stable currency.

Besides, pretty much everyone knows that idle cash loses value. It's been that way by design since 1913.

tommieharris91
7/19/2011, 08:21 AM
carter printed money....reagan shut the presses down....


Uhhh... You might want to learn how the Fed works before you make another uninformed statement like this.

JohnnyMack
7/19/2011, 09:02 AM
Gold is a good hedge against a weak dollar. Gold is a place you can make a lot of money if you're paying attention.

soonerscuba
7/19/2011, 09:45 AM
Gold is a good hedge against a weak dollar. Gold is a place you can make a lot of money if you're paying attention.Nope, you buy gold and IT NEVER BUBBLES, EVAR!!!!!!1111!!!!!

87sooner
7/19/2011, 10:39 AM
Uhhh... You might want to learn how the Fed works before you make another uninformed statement like this.

i would suggest you do the same..

tommieharris91
7/19/2011, 11:19 AM
i would suggest you do the same..

LOL. Can you please tell me what the Fed prime interest rates were in 1979 and 1987? After that, can you tell me what the Fed does when they change interest rates?

87sooner
7/19/2011, 12:01 PM
LOL. Can you please tell me what the Fed prime interest rates were in 1979 and 1987? After that, can you tell me what the Fed does when they change interest rates?

you said my statement was "uninformed" ...
refute it or sthu

tommieharris91
7/19/2011, 12:30 PM
you said my statement was "uninformed" ...
refute it or sthu
OK.

Fed funds rate (http://en.wikipedia.org/wiki/File:Federal_Funds_Rate_1954_thru_2009_effective.s vg) Specifically, note the trend from about 1981 on into 1988.

Here's what happens when the Fed lowers interest rates. The Fed uses dollars to buy US bonds. This money released into the public lowers the value of the dollar. Since new money is released when the Fed does this, and more US bonds are bought when interest rates are low than when they are high, it is fair to say that Carter kept a tighter leash on the Fed than Reagan. (I won't even mention handling of defecit/debt.) Also, the Fed chair under Carter and first 6 years of Reagan was the same guy.

That said, Carter's foreign policy sucked.

Sooner5030
7/19/2011, 05:18 PM
I don't think either of you realize that the "store of value" concept of money means that the value of that money should stay somewhat stable. An asset doubling in value in 2 years isn't anything close to stable. You have been talking about gold as an investment, not as a stable currency.

Besides, pretty much everyone knows that idle cash loses value. It's been that way by design since 1913.

that's because you're comparing gold to FRNs. It's actually been pretty stable as far as how much corn/wheat/oil/cotton/land it will purchase. It's the FRN that has been unstable.....at least in the last three years.

Besides.......it's not currency if the seller will not accept it........I tried to pay using Silver Eagles and the gas station wouldn't accept them for their face value(less than the value of silver at the time). And the gubmint claimed they were legal tender.

tommieharris91
7/19/2011, 06:28 PM
that's because you're comparing gold to FRNs. It's actually been pretty stable as far as how much corn/wheat/oil/cotton/land it will purchase. It's the FRN that has been unstable.....at least in the last three years.
Something losing 5% of its value in 3 years makes it completely unstable...OK. I wonder what silver's 2% loss today made you do.

Also, a quick check of charts on oil and corn prices over the past 3 years disproves your statement about gold's buying power. It's been losing value against other those other commodities since the beginning of the year.

Sooner5030
7/19/2011, 06:37 PM
why do maynards get their feelings hurt so easily? You're debating a f'ing social science and you follow a theory that's been around since the early 20th century.....a very small period compared to historic economic activity.

do you consider the german mark circa 1920-1923 as money? gold has been around longer than fiat for a reason.

tommieharris91
7/19/2011, 08:01 PM
why do maynards get their feelings hurt so easily? You're debating a f'ing social science and you follow a theory that's been around since the early 20th century.....a very small period compared to historic economic activity.

do you consider the german mark circa 1920-1923 as money? gold has been around longer than fiat for a reason.

Now I know what silver's 2% loss today made you do. ;)

Anyway, why do Austrians never take a look at economic history? Von Mises (I think) was proven quite wrong after saying something like the British pound would be worthless a week after it was taken off the gold standard. Others followed suit (and quickly ended their depressions in the process) until Bretton Woods. Your German Mark example is an outlier when trying to show that hyperinflation is normal after leaving the gold standard.

As for that social science comment, you do know that Austrian economics tends to reject the scientific method and rarely goes through mathematical verification of its theories, while other schools like the neoclassical school, the monetarist school, and both Keynesian schools will accept or reject theories based on available data, right? You also know that Austrian economics has had multiple chances (most recently in 2009) to gain acceptance among academics and never has caught on outside of maybe 10 universities, right?

tommieharris91
7/19/2011, 08:05 PM
Here's Wikipedia's article on the history of macroeconomic thought. (http://en.wikipedia.org/wiki/History_of_macroeconomic_thought) Down at the bottom, in the heterodox theories section, is your school of thought. I think it's pretty well shows how little Austrian school economics has contributed to the field overall.

Sooner5030
7/19/2011, 08:19 PM
I think it's pretty well shows how little Austrian school economics has contributed to the field overall.

yes but that field is not concerned with something as widely accepted as calculating ph balance. It's about theories regarding human behavior, decision making and effects on economic activity. Even the maynard herd has to adjust their models over time.....which evidences that they have been wrong.

tommieharris91
7/19/2011, 09:02 PM
yes but that field is not concerned with something as widely accepted as calculating ph balance. It's about theories regarding human behavior, decision making and effects on economic activity. Even the maynard herd has to adjust their models over time.....which evidences that they have been wrong.

I mentioned that when I said other schools accept or reject theories based on available data because part of prudent use of the scientific method is knowing that models and conclusions based on data are not always correct. The Austrians are the ones that don't seem to do this. It's quite troubling that many Austrian theories have not changed for many years, while other schools change theirs based on new data. What's even worse about the Austrian school is that they usually don't put out models to predict... ohhh, right, something about "human action" cannot be predicted. We should just not invest in anything at all because there is no way of predicting whether it will ever become fruitful, how fruitful that investment will become, or when it will stop bearing fruit. If only there was a way of predicting that...

Sooner5030
7/19/2011, 09:10 PM
tommie,

set your mind free here (http://mises.org)

stop listening to the maynard herd (http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html).


To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Krugman 2002

the benefit of spending money you don't have does not justify inflation.

tommieharris91
7/19/2011, 10:37 PM
So, you're not going to refute my main criticism of the Austrian school being paralyzed by its conclusion that predictions of macroeconomics cannot be made?

Ohh, and here's that whole paragraph:


The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
Rut roh, Hayek. After reading that entire column, you took him wayyyyy out of context. The blog post was actually pretty prescient, considering it took him only 7 years or so to finally be right about it.


the benefit of spending money you don't have does not justify inflation.
I'm sorry. I have no clue where this fits in our discussion. It seems like it's just some statement trying to prove or refute some point, but the point it was meant for was never made. But... when the benefit clearly beats the costs, I believe it does. Man, if businesses never leveraged to take on projects...

Sooner5030
7/20/2011, 05:59 AM
tommie,

I'll agree to disagree with you. There is no point in debating.

Maynards simply believe they are right.....when proven wrong they just change their model and then add a qualifier or caveat such as 'post' or 'neo' to their maynard subculture and continue to claim they are now right.

That's not to say maynards are not value added.

soonerscuba
7/20/2011, 11:09 AM
tommie,

I'll agree to disagree with you. There is no point in debating.

Maynards simply believe they are right.....when proven wrong they just change their model and then add a qualifier or caveat such as 'post' or 'neo' to their maynard subculture and continue to claim they are now right.

That's not to say maynards are not value added.Yeah tommie, quit dicking around and create a unified general economic theory so airtight it accounts for every possible data set. What are you, a socialist?

Gandalf_The_Grey
7/20/2011, 11:14 AM
But you have to admit that Maynard is awesome in Tool!