Welcome guest, is this your first visit? Create Account now to join.
  • Login:

Welcome to the Online Debate Network.

If this is your first visit, be sure to check out the FAQ by clicking the link above. You may have to register before you can post: click the register link above to proceed.

Page 1 of 2 1 2 LastLast
Results 1 to 20 of 26
  1. #1
    Will ADMIN 4 Gas Money

    Join Date
    Apr 2006
    Location
    Rochester, NY, USA
    Posts
    1,501
    Post Thanks / Like

    Is our monetary policy ruining our econimic future?

    I'm no economist--I've only taken basic classes in college concerning economics, and most of that was microeconomics, not macro, so I don't know how much stock to put in this stuff. Anyone around who can tell me how accurate this video is:



    If what Ron Paul is saying is true, and our monetary policy and federal reserve have basically put the dollar into a tail spin it can hardly pull out of, does his policy of going back to a gold standard make sense?

    I'd love to hear from people with solid economics backgrounds on this.
    -= Phrique =-

    I've got mad hits like I was Rod Carew.
    - The Beastie Boys

  2. #2
    ODN Community Regular

    Join Date
    Oct 2007
    Location
    Chicago IL
    Posts
    1,241
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    I am no economist either (Political Science), but I can offer an explanation to the dollars "tail spin".

    Basically, you can trade money, like you trade stocks. There is a global economy where you can "buy the dollar" or the euro, and other forms of money.

    This has its ups and downs, its down is that the country cannot control its own currency directly. This is a huge strong point, but can also a be HUGE weak point.

    I cannot fully explain this, because I only understand the political end of it. But a country, at certain times, actually WANTS to devalue its currency. America must do this through other means than saying "The dollar is worth X", since the dollar can be bought or sold around the world, America does not really directly control its currency, the global economy does, but it can do so indirectly.

    Exactly what this benefit is I cannot remember, I apologize for that.
    Witty puns...

  3. #3
    ODN Community Regular

    Join Date
    Apr 2004
    Location
    Michigan
    Posts
    7,671
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Quote Originally Posted by DevilPup John View Post
    I cannot fully explain this, because I only understand the political end of it. But a country, at certain times, actually WANTS to devalue its currency.
    The lower the value of currency, the more you can export. I think that's why the Chinese yen is so low.

    I'm also a novice in economics, but as a businessman I can tell you that interest costs will eat you up if you constantly borrow money. As a nation we should live within our means and start saving a little for the future - our savings levels are too low. A sound monetary policy will include incentives for savings and not just retirement funds. A guaranteed living pension for everyone who retires would be nice. You either save for it or you have to depend on meager Social Security payments.
    While laughing at others stupidity, you may want to contemplate your own comedic talents. (link)
    Disclaimer: This information is being provided for informational, educational, and entertainment purposes only.

  4. #4
    ODN Community Regular

    Join Date
    Mar 2004
    Location
    Sheffield, S.Yorks., UK
    Posts
    8,862
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    phirique - To go back to the Gold Standard would require a neat trick. Firstly a heck of a lot of gold in the ground would now have to be extracted and stuck into national repositories. One problem with this scenario is that huge amounts of gold tends to make it's value compromised - also there are other countries better placed fiscally than the US to buy any new gold that is extracted. Oil rich countries in the Middle East spring to mind as an example. If gold supply becomes too readily available that will tend to depress it's value, which has the effect of being counterproductive to the idea of using it as a standard.
    "We don't see things as they are, we see them as we are." - Anais Nin.
    Emitte lucem et veritatem - Send out light and truth.
    'Fere libenter homines id quod volunt credunt' - Julius Caesar (rough translation, 'Men will think what they want to think')
    Kill my boss? Do I dare live out the American dream? - Homer Simpson.

  5. #5
    I've been given a "timeout"

    Join Date
    Oct 2007
    Location
    centered and balanced in all things... except a minor compulsion to have the last word.
    Posts
    540
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Quote Originally Posted by Snoop View Post
    The lower the value of currency, the more you can export. I think that's why the Chinese yen is so low.

    I'm also a novice in economics, but as a businessman I can tell you that interest costs will eat you up if you constantly borrow money. As a nation we should live within our means and start saving a little for the future - our savings levels are too low. A sound monetary policy will include incentives for savings and not just retirement funds. A guaranteed living pension for everyone who retires would be nice. You either save for it or you have to depend on meager Social Security payments.

    Well snoop you're a businessman, tell us what percentage of our income is being confiscated from our working class income for our retirement and old age health expenses? Close to 16% isn't it?

    Let's get serious; we're sending 3 TRILLION DOLLARS to DC and the left is STILL crying for MORE.

  6. #6
    ODN Community Regular

    Join Date
    Apr 2004
    Location
    Michigan
    Posts
    7,671
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Quote Originally Posted by Publius Infini View Post
    Well snoop you're a businessman, tell us what percentage of our income is being confiscated from our working class income for our retirement and old age health expenses? Close to 16% isn't it?

    Let's get serious; we're sending 3 TRILLION DOLLARS to DC and the left is STILL crying for MORE.
    The spending has gotten out of control. When Citigroup has to borrow money ($7.5 billion) from Abu Dabi at 11% interest - something is wrong. Actually, they gave away a bunch of stock as part of the deal. America is being sold to the highest bidder.
    While laughing at others stupidity, you may want to contemplate your own comedic talents. (link)
    Disclaimer: This information is being provided for informational, educational, and entertainment purposes only.

  7. #7
    ODN Community Regular

    Join Date
    Dec 2005
    Posts
    1,547
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    For those interested in monetary policy and the Federal Reserve, the following video is a MUST watch. While there do exist gold bugs, conspiracy theorists, and other cranks who support Paul, there is a solid economic foundation for what he is talking about. The tradition is rooted in the works of Ludwig von Mises and his student, noble prize winner, F.A. Hayek. Paul makes an appearance at 31:40:




    _________________________________ Post Merged _________________________________


    I also HIGHLY recommend Ludwig von Mises Institute Home if you are truly interested in the issue and want to read more.

    If you are an audio/visual learner...here is the media section, just find things that interest you:

    Mises Audio/Video

    Or here is the full archive...you cannot imagine how much material they have available for free:

    Mises Institute :: Austrian Economics Literature
    Last edited by Dr. Gonzo; November 27th, 2007 at 03:49 PM. Reason: Automerged Doublepost
    "If you wish to know how libertarians regard the State and any of its acts, simply think of the State as a criminal band, and all of the libertarian attitudes will logically fall into place." -Murray Rothbard

    "There are a thousand hacking at the branches of evil to one who is striking at the root." -Henry David Thoreau

  8. #8
    Will ADMIN 4 Gas Money

    Join Date
    Apr 2006
    Location
    Rochester, NY, USA
    Posts
    1,501
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Interesting video gonzo, thanks for posting it.
    -= Phrique =-

    I've got mad hits like I was Rod Carew.
    - The Beastie Boys

  9. #9
    ODN Community Regular

    Join Date
    Aug 2005
    Location
    Canada
    Posts
    4,156
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Granted, I'm encountering this thread many months after it was created, but I came across it and felt a need to respond.

    I'm a mere student of economics, but I have seen no compelling empirical evidence to demonstrate that the devaluation of the dollar is emanating from the practising of monetary policy. Granted, the lowering of interest rates necessitates dilution of the money supply by the central bank, but the lowering of interest rates usually corroborates with an increase in production, which instigates growth, which stimulates inflation, which in turn provokes the central bank to reduce the money supply and pursue a contractionary policy. Thus, in a normal economy, on average, actions taken by the Federal Reserve will be a wash.

    However, external factors directly impede this cycle. Because of the War on Iraq (to which I think most economists would attribute this breakdown of the cycle, but it is possible that there are other external factors stifling the economy), the central bank's increases to the money supply are not yielding the anticipated high rates of growth that would subsequently require the government to pull money out of the economy. Thus, the government keeps augmenting the money supply to lower interest rates and stimulate growth, and the economy does not respond (at least, not to an extent that would allow the government to end its expansionary policy and pursue a tightening one). Thus, we see a sustained period of increases in the money supply without growth - the decline of the dollar.

    That is the preliminary analysis I would offer, though someone better schooled in economics could probably defeat those theories. I await a better explanation. I apologize as well if my terminology is not accurate, as I learned these concepts in French originally.
    [CENTER]-=] Starcreator [=-

  10. #10
    ODN Community Regular

    Join Date
    Aug 2004
    Location
    Wheaton, IL
    Posts
    13,847
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    I'm a mere student of economics, but I have seen no compelling empirical evidence to demonstrate that the devaluation of the dollar is emanating from the practising of monetary policy. Granted, the lowering of interest rates necessitates dilution of the money supply by the central bank, but the lowering of interest rates usually corroborates with an increase in production, which instigates growth, which stimulates inflation, which in turn provokes the central bank to reduce the money supply and pursue a contractionary policy. Thus, in a normal economy, on average, actions taken by the Federal Reserve will be a wash.

    However, external factors directly impede this cycle. Because of the War on Iraq (to which I think most economists would attribute this breakdown of the cycle, but it is possible that there are other external factors stifling the economy), the central bank's increases to the money supply are not yielding the anticipated high rates of growth that would subsequently require the government to pull money out of the economy. Thus, the government keeps augmenting the money supply to lower interest rates and stimulate growth, and the economy does not respond (at least, not to an extent that would allow the government to end its expansionary policy and pursue a tightening one). Thus, we see a sustained period of increases in the money supply without growth - the decline of the dollar.

    That is the preliminary analysis I would offer, though someone better schooled in economics could probably defeat those theories. I await a better explanation. I apologize as well if my terminology is not accurate, as I learned these concepts in French originally.
    You've got that the wrong way around. They decrease interest rates to spur on borrowing, which is how they create a lot of money.

    From what I can tell, you're basically saying that the Iraq War is a money sink, and that the increase in money supply is having no appreciable economic impact--except that the dollar is falling in value? That's self-contradicting.
    If I am capable of grasping God objectively, I do not believe, but precisely because I cannot do this I must believe. - Soren Kierkegaard
    **** you, I won't do what you tell me

    HOLY CRAP MY BLOG IS AWESOME

  11. #11
    ODN Community Regular

    Join Date
    Feb 2005
    Location
    Cleveland, or parts thereof
    Posts
    831
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Quote Originally Posted by phrique
    does his policy of going back to a gold standard make sense?
    In some ways yes, other ways no.

    One 'yes' is pretty obvious - inflation would only be measured by the amount of gold currently in the monetary system.

    If ODN had an economy, and Apok had, say 100lbs of gold to pass around, then each pound of gold has a set value, regardless of the state of our economy. Let's say the 'standard of living' on ODN is 1lb of gold; you need 1lb of gold in order to be able to pay for what you need on ODN. If there are 100 people on ODN, then that means that each person has enough gold to be able to maintain the standard of living.

    However, with each new person brought into the system, our economy slows down (more people, less money to go around). Basically now the spread of gold can't meet the demand, so people have to save gold until they have enough to meet that 1lb standard of living. When saving, they're not spending, money isn't transferring hands as quickly, and therefore the economy is slowing down - less transactions per day, which mean it's harder to accrue more gold, which means it slows down more, and the cycle repeats. Inflation is still curbed; a pound of gold is still worth a pound of gold, but now there is more demand for the money and less supply. So if Apok goes out and finds more gold, then there is more gold to go around, but the value of that gold goes down; if he found another 50 lbs of gold to go around, the economy could pick up, but now each pound of gold would have less purchasing power. If there are 150 lbs of gold in circulation (and say, 110 people), and each person still requires 1 pound to maintain a standard of living, then now there is a surplus of supply, so the worth of gold goes down a bit. But that's only because of the amount of gold in circulation.

    The important part is this: If the amount of gold stays the same, then it's still worth whatever it's worth, regardless of what our economy is doing. That means your purchasing power (assuming that income and standard of living remain constant) will never change, regardless of other economic shortcomings that affect fiat money (current housing situation, for example).

    So the big 'yes' in regards to the gold standard is that inflation is directly tied to supply, and not demand.

    Now, the main 'No' against the gold standard is that we've gotten a little to 'big for our britches' so to say. I could spend a long time explaining it, but wikipedia does a pretty good job:

    Quote Originally Posted by Wikipedia
    The total amount of gold that has ever been mined has been estimated at around 142,000 tons. Assuming a gold price of US$1000 per ounce, or $32,500 per kilogram, the total value of all the gold ever mined would be around $4 trillion. This is less than the value of circulating money in the U.S. alone, where more than $7.6 trillion is in circulation or in deposit (although international banking currently practices fractional reserves). Therefore, a return to the gold standard would result in a significant increase in the current value of gold, which may limit its use in current applications.
    So our economy needs $7.6 trillion 'dollars' to meet the demand of all the transactions that occur currently. But, with it hovering at about $900 an ounce, there just isn't enough gold in the world to supplement what's needed in our economy. So we need to somehow either increase the value of gold, while not destroying supply (then there'd be not enough to go around), or devalue our economy by about 4 trillion dollars. Both of which I have no idea how to do.

    Granted, I'm just an armchair quarterback when it comes to this stuff, and once you get past Econ 101 stuff, I'm in over my head. But the benefits of a gold standard cannot be ignored.

    And no, we won't be carrying around gold pieces in our pockets. We'd still have paper money, probably like we have now, only with a gold standard, each dollar would have a 'hard value', ($5 in gold) and not a perceived one.
    What is it like to be Libertarian and an Atheist? Imagine having the freedom to believe whatever you want, without the responsibility of it ever becoming accepted in the majority.

    It's a truly magical feeling. Equal parts happiness and depression.

  12. #12
    Banned Indefinitely
    Join Date
    Mar 2008
    Location
    Jacksonville, Florida
    Posts
    603
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Quote Originally Posted by phrique;
    I'm no economist--I've only taken basic classes in college concerning economics, and most of that was microeconomics, not macro, so I don't know how much stock to put in this stuff. Anyone around who can tell me how accurate this video is:

    If what Ron Paul is saying is true, and our monetary policy and federal reserve have basically put the dollar into a tail spin it can hardly pull out of, does his policy of going back to a gold standard make sense?

    I'd love to hear from people with solid economics backgrounds on this.
    Well, it is true that we are not doing ourselves a lot of good with our spending policies that we have in place.

    But, the reality is, and I touched on this earlier in another thread....America is really the lone economic power house in the world....and by an incredible margin....

    Did you guys know that you would have to take the GDP of China, UK, Japan, and Germany to equal our own?

    Our GDP is over 13 trillion dollars a year....and despite everything in the world that is going on, our economy is still growing. Look at things logically for a moment.

    If Americas GDP grows by .5%
    That is a growth in the GDP by over 300 billion dollars.

    If China has a GDP growth of 10%
    That is a growth of 300 billion dollars.

    The overall GDP growth in China for 2007 was somewhere around 13-15%

    Overall American GDP growth for 2007 was anywhere, depending on the source, from about 4 to 7%

    We are talking about a huge amount of difference between China or anyone and ourselves.

    Our national debt is not that bad in comparison to the GDP

    we have a GDP of 13.5 trillion

    we have a debt of 9.5 trillion

    4 trillion dollar difference.

    End point being, I do not think that America has much to worry about long term in terms of overall financial and economic strengthen.

    As long as we keep growing....lol

  13. #13
    ODN Community Regular

    Join Date
    Mar 2008
    Location
    Seattle, Washington USA
    Posts
    7,249
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    I have a bachelors degree in economics but am not a professional economist.

    Personaly I think the gold standard stuff is lunacy for two main reasons.
    1. It is impractical in an economy the size of the one we have, as the economy expands we need the currency to expand and vice versa.
    2. It is redicuious to value a lump of metal as the true value of all the goods and services produced in an economy.

    Currency is a means to fascilitate trade and nothing more. Gold is a poor currency because it is inflexible and finite.

    Gold is a good investment comodity because it retains its real value over time (it doesn't corrode, decay or evaporate). This is why you buy gold against economic downturns or inflation.

    There are folks obsessed with gold and who own a lot of it. They would love to see a gold standard because they would become instant billionairs as the price of gold would skyrocket astronimicaly under a gold standard.

    ----------

    The federal reserve is not as scary as folks make it out to be, but it is somewhat autonomous and possibly a bit corrupt in some ways. Still that lack of oversight/control by the govenemrent is there specificaly to shield it from political manipulation not to keep it out of control.

    Pretty much everyone who is anyone has a vested interest in it not doing anything rash or stupid so it behaves in a very conservative fashion most of the time.

    -------------

    Our economy in general. The danger is we are built on a system that is ever growing. It does badly when standing still or sliding backwards. But the question is... can we go on expanding forever and not suffer a cataclysmic collapse of natural resources?

    When the dollar goes down it means that we can buy less foreign goods with out money and others can buy more of our goods with thier money. We get poorer at first, but them buying more of our stuff means we have more of thier money which we can then use to buy thier stuff etc..... We traid wealth today for more income tomorrow and it kind of seasaws back and forth in an ideal world.

    What would really suck is if the dollar was weak, and no one wanted to buy anything from us. Then we would be screwed and spiral down the drain of less wealth and no way to make it back.


    _________________________________ Post Merged _________________________________


    Bounus economics tip...

    Any economic argument that requires an ominous soundtrack... probably ********.
    Last edited by Sigfried; April 2nd, 2008 at 11:06 AM. Reason: Automerged Doublepost

  14. #14
    Banned Indefinitely
    Join Date
    Mar 2008
    Location
    Jacksonville, Florida
    Posts
    603
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Quote Originally Posted by Sigfried View Post
    Bounus economics tip...

    Any economic argument that requires an ominous soundtrack... probably ********.
    Are you suggesting that Ron Paul is wrong in what he is championing?

    If so, then offer a counter claim to the facts he is supporting

  15. #15
    ODN Community Regular

    Join Date
    Feb 2005
    Location
    Cleveland, or parts thereof
    Posts
    831
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Quote Originally Posted by Siegfried
    Currency is a means to fascilitate trade and nothing more. Gold is a poor currency because it is inflexible and finite.
    I would actually argue that this very point is a good reason why gold is a good currency.

    The value of gold will always be X in relation to the supply of gold in the world. So regardless of debt, loans, economic status, the value of gold will remain constant. So inflation is non-existent (unless more gold increases the supply), and the purchasing power of my labor remains constant.

    If I need to buy 3 sheep, I don't need to make sure I offer something of value that's equivalent to those 3 sheep; say, 1 cow. If next week I want 4 sheep, I have to somehow come up with 1.5 cows (mmmm cheeseburgers). With gold as a central currency - with a set value - my purchasing power will always be the same - only the supply of what I want will affect how much I can get; which will be affected by the market (positively or negatively).

    The federal reserve is not as scary as folks make it out to be, but it is somewhat autonomous and possibly a bit corrupt in some ways. Still that lack of oversight/control by the govenemrent is there specificaly to shield it from political manipulation not to keep it out of control.
    Well, there is a sense of oversight since the government can put pressure on the Federal Reserve to act in times of crisis (such as now). And since the Fed's board of governors is presidentially appointed, it can never truly call itself independent.

    My main beef with the Fed - and here's the lunatic point of view - is basically Ben Bernanke is deciding how much my labor is worth. By cutting rates given to banks and increasing monetary supply, the value of my labor goes down - independent of the actions taken in the market by competitors.

    If my bank saw a time of crisis and decreased the rate of my return on my IRA's, it's understandable. I can withdraw my money and go to another bank - thusly fostering competition to seek a solution. But the Fed is just putting one band-aid after another on the state of the market. It cuts rates to foster growth, but then that devalues the dollar. So the market slows down. It then has to cut rates again, only to devalue the dollar, and the vicious cycle returns.

    Pretty much everyone who is anyone has a vested interest in it not doing anything rash or stupid so it behaves in a very conservative fashion most of the time.
    So you're willing to put the value of your labor in the trust of another person when you had no choice of putting them in that position?

    If that's true, what an interesting point of view. I honestly mean that without sarcasm. People who disagree with my views on a very basic level interest me; maybe it's out of fear that I really am slightly crazy...
    What is it like to be Libertarian and an Atheist? Imagine having the freedom to believe whatever you want, without the responsibility of it ever becoming accepted in the majority.

    It's a truly magical feeling. Equal parts happiness and depression.

  16. #16
    ODN Community Regular

    Join Date
    Mar 2008
    Location
    Seattle, Washington USA
    Posts
    7,249
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Quote Originally Posted by princefigs View Post
    Are you suggesting that Ron Paul is wrong in what he is championing?
    I am commenting that using ominous music to make a point about economics is a rhetorical trick that has nothing to do with the facts at hand and that I am suspect of those who would use cheap tactics to make their point.

  17. #17
    Banned Indefinitely
    Join Date
    Mar 2008
    Location
    Jacksonville, Florida
    Posts
    603
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Quote Originally Posted by Sigfried View Post
    I am commenting that using ominous music to make a point about economics is a rhetorical trick that has nothing to do with the facts at hand and that I am suspect of those who would use cheap tactics to make their point.
    Ok, but still, that does not make the point itself false..or misleading...if anything, it simply adds to the theme. I do not think that high tempo upbeat music would be appropriate.

    Do you disagree with Representative Pauls position or not?

  18. #18
    ODN Community Regular

    Join Date
    Mar 2008
    Location
    Seattle, Washington USA
    Posts
    7,249
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Quote Originally Posted by Harrison383 View Post
    The value of gold will always be X in relation to the supply of gold in the world. So regardless of debt, loans, economic status, the value of gold will remain constant. So inflation is non-existent (unless more gold increases the supply), and the purchasing power of my labor remains constant.
    Deflation is what you end up with. Today your ounce of gold buys one cow. But in ten years the same farm can make 10 times as many cows and now your gold is worth 10 cows. Whomever holds the gold wins and there is no insentive for increased productivity of anything but gold. All goods have intrinsic value and productivity increases create an effective increase in wealth. Each person makes more goods of fixed value. But if the money supply can not expand to match, then you get deflation and it distorts behavior into an ineficient model because ultimatly we need cows more than gold.

    A non material but controlled monitary suply makes for a much more flexible and less distorting trade system yet maintains efficiency over pure barter.

    Quote Originally Posted by Harrison383 View Post
    My main beef with the Fed - and here's the lunatic point of view - is basically Ben Bernanke is deciding how much my labor is worth. By cutting rates given to banks and increasing monetary supply, the value of my labor goes down - independent of the actions taken in the market by competitors..
    Somewhat yes. Although not if it doesn't impact inflation all that much. The ideal is generaly to keep money suplies more or less in pace with actual economic output. We do tinker with the system to try and incluence investment and growth though, but usualy with the conciet that after the nudge we will re-adjust.

    I can't say I'm an expert on monitary policy but in general that is the ideal. No system is perfect of course and it pays to always be evaluating what could be better so I'd never want to just flatly defend fed policy. Sadly almost every action has an up and down side depending on what your interests are.

    Quote Originally Posted by Harrison383 View Post
    It then has to cut rates again, only to devalue the dollar, and the vicious cycle returns.
    We have had low interest rates for quite a while and I don't personaly see the weak dollar as being mostly a result of interest rate policy. It isn't like british banks have massive interest rates and thus the pound is strong. I think it has a lot mroe to do wtih growth of our economy in respect to the growth rate in developing countries which is quite a bit more substantial than ours these days. This makes their currencies much more valuable for international trade.

    Quote Originally Posted by Harrison383 View Post
    So you're willing to put the value of your labor in the trust of another person when you had no choice of putting them in that position?.
    No. But as you say the fed is not totaly beyond control, nor do I feel qualified to run it myself. I supose I trust that if they did something really stupid then action would be taken to correct it.

    Quote Originally Posted by Harrison383 View Post
    If that's true, what an interesting point of view. I honestly mean that without sarcasm. People who disagree with my views on a very basic level interest me; maybe it's out of fear that I really am slightly crazy...
    I don't see my own interests a lot differently than the people in charge of the country. They are human just like me. They are interested in their own prosperity and in many ways it is linked to my own via the overall productivity of the economy.

    Even something pretty monumental like the Iraq war actualy has very little impact on my own life or the lives of most americans. Certainly it has a tremendous impact on some. But I trust that in america if you do something really stupid or utterly corrupt, the people won't stand for it and you will get booted and another group will get to try to do better.

    The moment some yahoo tries to take my basic liberties for real, or someoen I care about (and I care abotu lots of folks), I'll be in the streats trying to stop it. I'm pretty fed up with the curent administration so this year I'm trying to be a delegate to the national democratic convention in order to have a louder voice on matters.

  19. #19
    ODN Community Regular

    Join Date
    Feb 2005
    Location
    Cleveland, or parts thereof
    Posts
    831
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Quote Originally Posted by Siggy
    Deflation is what you end up with. Today your ounce of gold buys one cow. But in ten years the same farm can make 10 times as many cows and now your gold is worth 10 cows. Whomever holds the gold wins and there is no insentive for increased productivity of anything but gold.
    I would argue that the same farm wouldn't produce more cows if there wasn't a demand for more. If the farmer is capable of increasing supply to meet a rising demand, then the value of gold will remain constant, due to the supply being equated to demand.

    So if I require 10 cows to meet my demand 10 years from now (mmm lots of steak), then the value of my gold remains constant. That same ounce of gold still gives me enough of the goods I need, and is most likely still worth the same to the farmer (assuming he's producing 10 cows for the price of 1 ten years earlier).

    Yes, the cows have an intrinsic value, but that value is given due to the amount of supply in relation to the demand. If the farm makes 10 times as many cows to meet the same demand, then of course the value of each cow goes down - there's a ton of them. But if the demand rises with the supply of cows, then the ratio remains constant, and while my gold will buy more cows, the farmer can produce more cows for less gold. So they are making the same amount of gold, just less per transaction - but there's more transactions, or the same per transaction - I demand more goods.

    The ideal is generaly to keep money suplies more or less in pace with actual economic output. We do tinker with the system to try and incluence investment and growth though, but usualy with the conciet that after the nudge we will re-adjust.
    Well yeah, but I think fiat money is a worse system than a gold (or other thing) standard. With fiat money, it's purely dictated by some guy in charge; who's able to tinker with the system as he/she sees fit. But with a gold standard, the market dictates the value of goods.

    Fiat money always strikes me as a guy spinning a plate on top of a stick. He could be really good at spinning that plate and keeping it balanced, but sooner or later he's going to get lax and it's going to crash to the floor.

    I just do not feel comfortable with having a person being able to understand all the market's influences, forsee the right path out of a crisis, and gauge correctly the amount of money that should be in the system. Even if you had 9 guys helping, that's just a really dangerous thing to put in the hands of a few people.

    Whereas if market forces were dictating the value of the trading medium, I think you'd see a more stable environment. There's 'one less person stirring the pot', so to speak.

    We have had low interest rates for quite a while and I don't personaly see the weak dollar as being mostly a result of interest rate policy.
    I wouldn't say it's the majority factor, but I do feel that the Fed's interest rates are a significant factor. By lowering interest rates to banks, they're effectively giving more credit and therefore more money. Although it isn't exactly paper currency, they are using credit as another form of it.

    I have never taken an econ course in my life, so if I'm way off base here, please let me know.

    I don't see my own interests a lot differently than the people in charge of the country. They are human just like me. They are interested in their own prosperity and in many ways it is linked to my own via the overall productivity of the economy.
    True, but you can only voice your opinion once every 4 years. With a market-based economy (minus the Fed), you vote with every dollar you spend.

    So if a bank is offering loans that you don't agree with, can't afford, or another bank offers better rates, then by leaving that bank and going to the competition, you are basically voting for that policy. If enough people agree and leave the current bank for the competitor, then the current bank will adopt the policy - or make a better one - to survive.

    Because the demands change far more frequently than every 4 years, you have a much more efficient system in place.

    And while I do not agree with government intervention on many things, it's not because I don't trust them, it's just because I see having more freedom as a better way of doing things.

    I'm pretty fed up with the curent administration so this year I'm trying to be a delegate to the national democratic convention in order to have a louder voice on matters.
    Jeebus. You must be like wicked-important or something. Is that hard to do?
    What is it like to be Libertarian and an Atheist? Imagine having the freedom to believe whatever you want, without the responsibility of it ever becoming accepted in the majority.

    It's a truly magical feeling. Equal parts happiness and depression.

  20. #20
    ODN Community Regular

    Join Date
    Mar 2008
    Location
    Seattle, Washington USA
    Posts
    7,249
    Post Thanks / Like

    Re: Is our monetary policy ruining our econimic future?

    Quote Originally Posted by princefigs View Post
    Do you disagree with Representative Pauls position or not?
    I didn't watch more than 2 minutes of the video and am not especialy interested in doing so. Sorry. So no comment since I havn't watched it.


    _________________________________ Post Merged _________________________________


    Quote Originally Posted by Harrison383 View Post
    I would argue that the same farm wouldn't produce more cows if there wasn't a demand for more. If the farmer is capable of increasing supply to meet a rising demand, then the value of gold will remain constant, due to the supply being equated to demand.?
    Not quite... The thing is that the human population is always growing, productivity per person is always growing thanks to technology, and the supply of gold is pretty stable. Demand in general is somewhat endless. No matter how rich you get there is something more you can buy. The more you produce the richer you get the more you buy and so on... Productivity = wealth = consumption. A totaly fixed money suply has no way to expand as the whole economy expands due to population, productivity and the whole cyclical nature of the beast. You end up with a fixed pile of gold and a fixed pile of gold backed notes agaisnt an every increasing pile of goods. Thus the gold becomes worth more goods or you just have to abandon it as currency and trade barter style like you see in most hyper inflation/deflation economies.

    Quote Originally Posted by Harrison383 View Post
    But if the demand rises with the supply of cows, then the ratio remains constant, and while my gold will buy more cows, the farmer can produce more cows for less gold. So they are making the same amount of gold, just less per transaction - but there's more transactions, or the same per transaction - I demand more goods..?
    Yes... but the guy who just sits on the gold can suddenly buy way more cows wtihout having produced anything at all. The price of goods is deflating across the economy and thus the smart guy just buys gold and waits until its time to cash them in. And since gold is more or less scarse this just restricts gold more and increases its value and so on. You end up playing a game instead of just making things and trading them for other things which is what economies should really be about.

    Quote Originally Posted by Harrison383 View Post
    Fiat money always strikes me as a guy spinning a plate on top of a stick. He could be really good at spinning that plate and keeping it balanced, but sooner or later he's going to get lax and it's going to crash to the floor.
    Even wtih a gold standard, if you actualy have a currency you still have an issue of trust in whomever is holding the gold to back the currency. It also gives the government very little control over its finances and requires it to go to war to get more gold and the like should it need to expand its currency.

    At some point every economic system has to boil down to some trust that the folks calling the shots arn't running the system for thier own benefit and that the folks you are trading with will honor their obligations.

    Quote Originally Posted by Harrison383 View Post
    I just do not feel comfortable with having a person being able to understand all the market's influences, forsee the right path out of a crisis, and gauge correctly the amount of money that should be in the system. Even if you had 9 guys helping, that's just a really dangerous thing to put in the hands of a few people..
    The thing is, they arn't really controlling it. Mostly the idea is that the free market is going to take care of itself. They are just there to try and keep things from wobbling too much, keep the up down cycle from going too far in a given direction. It depends on how you see it. But I get your concern and its a good concern to have.

    I find it interesting theyve taken interest rates down abotu as far as they can go. I forget the exact but there is a rate at which you kind of bottom out and its essentialy free to borrow money.

    Quote Originally Posted by Harrison383 View Post
    Whereas if market forces were dictating the value of the trading medium, I think you'd see a more stable environment. There's 'one less person stirring the pot', so to speak.
    I'll go so far as to agree that fiat currencies can be dangerous and go horribly wrong (see zimbabway)

    Quote Originally Posted by Harrison383 View Post
    I have never taken an econ course in my life, so if I'm way off base here, please let me know.
    Nope, it seems to me like you have a good handle on the fundamentals.

    Quote Originally Posted by Harrison383 View Post
    So if a bank is offering loans that you don't agree with, can't afford, or another bank offers better rates, then by leaving that bank and going to the competition, you are basically voting for that policy. If enough people agree and leave the current bank for the competitor, then the current bank will adopt the policy - or make a better one - to survive..
    We already have that for the most part. The only reason the fed really sets interest rates is because banks borrow from it and are competative with one another so it ends up setting a kind of floor rate. They know they are in trouble when they lower it and the banks don't respond, something I've seen a bit of already.

    Quote Originally Posted by Harrison383 View Post
    Because the demands change far more frequently than every 4 years, you have a much more efficient system in place.
    I agree, although with the gold standard its worse. No one gets to really change anything because the gold suplly is pretty much fixed. It's lack of flexability is its downside.

    Quote Originally Posted by Harrison383 View Post
    And while I do not agree with government intervention on many things, it's not because I don't trust them, it's just because I see having more freedom as a better way of doing things..
    Generaly I'm very with you on that account. I'd point out though that a gold standard (unless you are just trading gold itself) is still in the hands of the state authorities.

    Quote Originally Posted by Harrison383 View Post
    Jeebus. You must be like wicked-important or something. Is that hard to do?
    Nah. Its easy to try, you just have to show up at caucases and convice the other people to send you to the next stage. I imagine I'll only get as far as the state convention on my charm and williness at which point party insiders will have a lot more say. At the local caucus where I was elected for the district it was pretty much my neighbors that elected me as a delegate. Also since I'm in teh obama camp a lot of his supporters arn't old guard democrats so its easier to get support as a relative nobody.

    I just really like Obama in particular and wanted to see if I can help him get elected.
    Last edited by Sigfried; April 3rd, 2008 at 07:17 PM. Reason: Automerged Doublepost

 

 
Page 1 of 2 1 2 LastLast

Similar Threads

  1. Why I am no longer a Christian
    By Trendem in forum Religion
    Replies: 118
    Last Post: December 3rd, 2007, 04:11 PM
  2. MIXED UP FORIEGN POLICY, hmm
    By cat's meow in forum Politics
    Replies: 4
    Last Post: July 20th, 2006, 08:54 PM
  3. Andes people look back to the future
    By disinterested in forum Science and Technology
    Replies: 9
    Last Post: June 21st, 2006, 05:16 PM
  4. Is There Really Such Thing As A Future?
    By Xanadu Moo in forum Philosophical Debates
    Replies: 34
    Last Post: February 21st, 2006, 01:10 PM
  5. What is a "neo-conservative"?
    By KevinBrowning in forum Politics
    Replies: 17
    Last Post: January 31st, 2005, 08:44 AM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •