AlexMerced
01-15-2011, 11:58 AM
This was the First Monethly Newsletter from TheLibertyEffort.com
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The Liberty Effort
(TheLibertyEffort.com)
January 2011 Newsletter
Contents
- The Discussion about Money and the Gold Standard
The Discussion about Money and the Gold Standard
----------------------------------------------------------------------
After an appearance on the Stephen Colbert show by Ron Paul, the gold standard has once again become the topic of debate in the media with the media being on the side of hard money being a relic of the past. The irony is that if you pitch ideas shown to work to an extent in the past such as the gold standard they accuse the idea of being antiquated but if you suggest a new ideas such repealing legal tender laws and breaking the money monopoly they say the ideas are untested and risky. If you can’t use old ideas or new ideas then you’re just stuck with the status quo.
On top of the quick dismissal is the infusion of disinformation about what gold standard advocates are advocating and why they are advocating it so I thought I’d take a moment to discuss the mainly misconception so that way liberty advocates can educate that much better. Below are a list of common questions and statements and responses for them to further educate yourself on Gold and Monetary Policy I have created a video playlist you can check out at http://Gold.IntrotoLiberty.com
Didn’t the Gold Standard cause the depression?
What happened is that there were large gold outflows not only from the US but from many countries to France because the French central bank did not print new money as more gold entered their coffers to prevent the inflation from the incoming gold. Although, because of this central bank intervention the balance of payments adjustments never occurred exacerbating the outflow of gold. This was not caused by the gold standard but by the actions of central banks and if anything this makes the case for abolishing central banks not the gold standard because at the same time in the mid twenties the federal reserve had kept interest rates very low fueling the stock market bubble that triggered the recession that paired with balance of payment problems made for tough economic times.
Even without the gold standard we see that central banks fuel similar stock market bubbles as we see the tech stock bust back in 2000 or how central banks cause balance of payments problems when we see the interaction of the Chinese central bank pegging their currency to the US dollar causing inflation in China and moral hazard in the US as people don’t feel the inflation since china is voluntarily taking the hit allowing them to believe that inflation is not down the road. No matter how you look at it, major economic events such as the great depression are much more related to central banking that to any hard money standard.
Is there enough Gold?
There is no ideal amount of gold, this assumes that you must have enough gold to price everything at their current prices. There is no reason this is necessary, prices would adjust to the supply of gold that is available so instead a good suit costing a high dollar amount it’d cost maybe 3-5 dollars depending on how much gold is represented by each dollar. This is no different now to how stuff gets more expensive when there is more money because the supply/demand relationship has changed.
Gold won’t fix the economy
The Intention of a gold standard is not to fix the economy but to restrain intervention so the economy can fix itself. If money is going to be a monopoly good supplied by governments than there must be mechanism to restrain monopoly behavior such as increasing the cost (Taxes) while decreasing the quality (inflation) of the good, and a hard money standard is that mechanism.
In an ideal world we’d abolish the monopoly altogether and having competing forms of legal tender which can be issued by governments and privately issued. While some currencies may be hard money some may be fiat, in a competitive market the incentive for monopoly behavior would not exist and it would allow individuals to diversify their monetary portfolio.
It’s inconvenient to carry gold
No one would actually carry gold coins these days, and neither did people back in the day. People used money substitutes (dollars) to purchase goods and today we use plastic cards which are even more convenient and in a world of competing currencies converting the appropriate amount would be as simple as swiping a card similar to when you vacation in foreign countries.
VIDEO OF THE MONTH:
Financial Regulations - Economic Mobility, Too Big to Fail, and Competing Regulators - http://www.youtube.com/watch?v=HlcMqRtToFk
Subscribe to get future Newsletters
The Liberty Effort
(TheLibertyEffort.com)
January 2011 Newsletter
Contents
- The Discussion about Money and the Gold Standard
The Discussion about Money and the Gold Standard
----------------------------------------------------------------------
After an appearance on the Stephen Colbert show by Ron Paul, the gold standard has once again become the topic of debate in the media with the media being on the side of hard money being a relic of the past. The irony is that if you pitch ideas shown to work to an extent in the past such as the gold standard they accuse the idea of being antiquated but if you suggest a new ideas such repealing legal tender laws and breaking the money monopoly they say the ideas are untested and risky. If you can’t use old ideas or new ideas then you’re just stuck with the status quo.
On top of the quick dismissal is the infusion of disinformation about what gold standard advocates are advocating and why they are advocating it so I thought I’d take a moment to discuss the mainly misconception so that way liberty advocates can educate that much better. Below are a list of common questions and statements and responses for them to further educate yourself on Gold and Monetary Policy I have created a video playlist you can check out at http://Gold.IntrotoLiberty.com
Didn’t the Gold Standard cause the depression?
What happened is that there were large gold outflows not only from the US but from many countries to France because the French central bank did not print new money as more gold entered their coffers to prevent the inflation from the incoming gold. Although, because of this central bank intervention the balance of payments adjustments never occurred exacerbating the outflow of gold. This was not caused by the gold standard but by the actions of central banks and if anything this makes the case for abolishing central banks not the gold standard because at the same time in the mid twenties the federal reserve had kept interest rates very low fueling the stock market bubble that triggered the recession that paired with balance of payment problems made for tough economic times.
Even without the gold standard we see that central banks fuel similar stock market bubbles as we see the tech stock bust back in 2000 or how central banks cause balance of payments problems when we see the interaction of the Chinese central bank pegging their currency to the US dollar causing inflation in China and moral hazard in the US as people don’t feel the inflation since china is voluntarily taking the hit allowing them to believe that inflation is not down the road. No matter how you look at it, major economic events such as the great depression are much more related to central banking that to any hard money standard.
Is there enough Gold?
There is no ideal amount of gold, this assumes that you must have enough gold to price everything at their current prices. There is no reason this is necessary, prices would adjust to the supply of gold that is available so instead a good suit costing a high dollar amount it’d cost maybe 3-5 dollars depending on how much gold is represented by each dollar. This is no different now to how stuff gets more expensive when there is more money because the supply/demand relationship has changed.
Gold won’t fix the economy
The Intention of a gold standard is not to fix the economy but to restrain intervention so the economy can fix itself. If money is going to be a monopoly good supplied by governments than there must be mechanism to restrain monopoly behavior such as increasing the cost (Taxes) while decreasing the quality (inflation) of the good, and a hard money standard is that mechanism.
In an ideal world we’d abolish the monopoly altogether and having competing forms of legal tender which can be issued by governments and privately issued. While some currencies may be hard money some may be fiat, in a competitive market the incentive for monopoly behavior would not exist and it would allow individuals to diversify their monetary portfolio.
It’s inconvenient to carry gold
No one would actually carry gold coins these days, and neither did people back in the day. People used money substitutes (dollars) to purchase goods and today we use plastic cards which are even more convenient and in a world of competing currencies converting the appropriate amount would be as simple as swiping a card similar to when you vacation in foreign countries.
VIDEO OF THE MONTH:
Financial Regulations - Economic Mobility, Too Big to Fail, and Competing Regulators - http://www.youtube.com/watch?v=HlcMqRtToFk