On Donald Trump's "Madness" & A New Gold Standard

[Swordsmyth]

What that great world monetary system based on the paper dollar has done to the US, was quite unexpected: it consists in obtaining foreign goods by tendering paper money in payment, something that is fundamentally fraudulent. And that fraud has come back to haunt the US, quite unexpectedly.
The unexpected result of Triffin's (or "Hugo's") Dilemma, has been the de-industrialization of the US, as the world geared up to undersell all US producers wherever they could do so, in order to obtain the indispensable US Dollars.


There is one way, and only one way, to do away with the Trade Deficit and renew the productivity of the US: abandon the present International Monetary System (derived from the original Bretton Woods Agreements of 1944) and return to the gold standard.

There are no "Trade Deficits" under the Gold Standard, because all countries have to pay Cash Gold for their imports, and collect Cash Gold for their exports. Result: Balanced Trade. No Trade Deficits.
A question in the back of my mind: Is Mr. Trump's "madness" really leading to the Gold Standard? Is that what he really wants? Because if he continues to undermine the present US Dollar as the World's Reserve Currency, by making it impossible for CBs to obtain Dollars through the US Trade Deficit, that would appear to be the likely final outcome.


More at: https://www.zerohedge.com/news/2018-...-gold-standard

[TheCount]

Nope.

[Brian4Liberty]

The plan is crypto, not gold.

[Zippyjuan]

You can still run trade deficits on a gold standard. And if you do, you run the risk of losing all of your gold which is why Nixon closed the gold window in 1972. And if gold is your money and you run out of it- what do you do then? The US will not return to a gold standard.

There are no "Trade Deficits" under the Gold Standard, because all countries have to pay Cash Gold for their imports, and collect Cash Gold for their exports. Result: Balanced Trade. No Trade Deficits.

At market value, based on the price of September 2017, our gold reserves are worth $335 billion. https://www.fiscal.treasury.gov/fsre...ent_report.htm

Our trade deficit? $566 billion in 2017. We could give it all away in just one year if our trading partners demanded gold payments for our trade deficit. Then we are right back where we started with zero gold reserves. And still have the same trade deficit.

[Swordsmyth]

You can still run trade deficits on a gold standard. And if you do, you run the risk of losing all of your gold which is why Nixon closed the gold window in 1972. And if gold is your money and you run out of it- what do you do then? The US will not return to a gold standard.



At market value, based on the price of September 2017, our gold reserves are worth $335 billion. https://www.fiscal.treasury.gov/fsre...ent_report.htm

Our trade deficit? $566 billion in 2017. We could give it all away in just one year if our trading partners demanded gold payments for our trade deficit. Then we are right back where we started with zero gold reserves. And still have the same trade deficit.

If you start to run low on gold you can't afford to import as much and are incentivized to produce more for your consumption and export, the US was allowing gold redemption in a fiat system so the mechanism didn't work right and Nixon reacted by going full fiat instead of full gold standard.

[TheCount]

If you start to run low on gold you can't afford to import

Wat

[Swordsmyth]

Wat

Under a gold standard if you don't have gold you don't have money, if you don't have money you can't afford to buy things.

[TheCount]

Under a gold standard if you don't have gold you don't have money, if you don't have money you can't afford to buy things.

Who is you?

The government does not import things. People import things. This is not your ideal planned economy yet.

[NorthCarolinaLiberty]

The government does not import things. People import things.

Tell that to all your tax scheming progressive friends. The ones who act like companies aren't made up of people.

[Swordsmyth]

Who is you?

The government does not import things. People import things. This is not your ideal planned economy yet.

If you have lots of desperate people who have little money then labor becomes cheap and domestic production becomes cheaper so people buy more domestic things, even if they don't they simply buy less things and so imports go down, exports stay the same or go up.

You don't need a planned economy since an organic one will take care of itself.

[TheCount]

If you have lots of desperate people who have little money then labor becomes cheap and domestic production becomes cheaper so people buy more domestic things, even if they don't they simply buy less things and so imports go down, exports stay the same or go up.

You don't need a planned economy since an organic one will take care of itself.

What does anything that you said have to do with a gold standard?

[Swordsmyth]

What does anything that you said have to do with a gold standard?

Under a gold standard mining and minting of gold is limited and zippy tried to claim that there would be a problem with running out of gold, there won't be, the market will govern itself and slow or even reverse the flow of gold.

[TheCount]

Under a gold standard mining and minting of gold is limited and zippy tried to claim that there would be a problem with running out of gold, there won't be, the market will govern itself and slow or even reverse the flow of gold.

If there's not a problem and it can't happen, why did you just talk about desperate, poor people working for less and buying domestically?


Alright, so here's the problem that zippy mentioned: people want to import stuff. They buy that stuff, not with gold but with dollars. The foreigners decide that they'd rather have gold than dollars, and use the trade window to do exactly that.

Result: there is no gold and no dollars.

[Swordsmyth]

If there's not a problem and it can't happen, why did you just talk about desperate, poor people working for less and buying domestically?


Alright, so here's the problem that zippy mentioned: people want to import stuff. They buy that stuff, not with gold but with dollars. The foreigners decide that they'd rather have gold than dollars, and use the trade window to do exactly that.

Result: there is no gold and no dollars.

You can run low but you can't run out, as dollars become scarcer domestic production and exports rise and consumption and imports drop, people then can use the foreign currency they receive for the exports to buy gold in foreign markets and turn it in to create more dollars.
Mining will also increase in response to the rising value of each dollar as the number of dollars drops.

[TheCount]

Mining will also increase in response to the rising value of each dollar as the number of dollars drops.

How is the value of the dollar rising? Aren't you proposing a gold standard here?

The dollar has not become worth more or less gold. There is still exactly the same proportion of gold to dollars; there's just less of each.

You can run low but you can't run out, as dollars become scarcer domestic production and exports rise

Why would domestic production rise? How would people buy the domestic production? Dollars? You just said that they became scarcer and worth more. That means that domestic purchases and imports have exactly the same problem.

people then can use the foreign currency they receive for the exports to buy gold in foreign markets and turn it in to create more dollars.

But why would they do that? They could just use the non-scarce foreign currency instead.

[Swordsmyth]

How is the value of the dollar rising? Aren't you proposing a gold standard here?

The dollar has not become worth more or less gold. There is still exactly the same proportion of gold to dollars; there's just less of each.

Why would domestic production rise? How would people buy the domestic production? Dollars? You just said that they became scarcer and worth more. That means that domestic purchases and imports have exactly the same problem.

Dollars and gold become worth more on the domestic market because that is where they are scarce, the foreigners have more gold sitting around so it becomes less valuable to them, this creates an incentive for Americans to produce things for export and for the foreigners to buy American products.

But why would they do that? They could just use the non-scarce foreign currency instead.

Because our economy is based on dollars and we prefer to use them, if the foreign currency is not backed by gold then the incentive would be to convert it into gold to avoid inflation of the fiat currency, if the foreign currency is gold backed then it might be possible that it would be used like Spanish Pieces of Eight were used in early America but eventually the economy would end up converting them into dollars for convenience.

[TheCount]

Dollars and gold become worth more on the domestic market because that is where they are scarce

In this situation, gold isn't more scarce; gold in government vaults is scarce.

Because our economy is based on dollars and we prefer to use them,

Because they are convenient. An inconvenient currency is less liquid and therefore less useful.

if the foreign currency is not backed by gold then the incentive would be to convert it into gold to avoid inflation of the fiat currency

If that were an incentive, people would already be doing it. By and large, they are not.

[Swordsmyth]

In this situation, gold isn't more scarce; gold in government vaults is scarce.

The gold in the government vaults is owned by the paper dollars that represent it, it is gold that people are using as money under a gold standard whether they ever redeem it or not, the gold and the paper dollars attached to it become scarce domestically as I said.

Because they are convenient. An inconvenient currency is less liquid and therefore less useful.

Dollars would still be convenient because you will never reach the point that all of the gold leaves the country, they are also convenient because that is what everyone in America prices things in, a foreign currency would be inconvenient because you would never have more of it than dollars and Americans don't price thing in it.

If that were an incentive, people would already be doing it. By and large, they are not.

Gold isn't currently used as money and therefore the incentive is less because it isn't convenient, under a gold standard the incentive to turn foreign money into gold and then turn the gold in to be minted is much greater.

[NorthCarolinaLiberty]

Because they [dollars] are convenient.

Convenience often comes with a cost. 7-11 is convenient, but the goods are pricier.

Credit cards are convenient, but they have a cost. Credit card companies would like to sell us a "cashless" society, because it means more money for them.

[NorthCarolinaLiberty]

Alright, so here's the problem that zippy mentioned:...

It's funny how you and Zip are almost always in lockstep on these issues, going against the grain of most of the liberty minded people here. It's not a coincidence. This is just another indicator of your financial incentive here.

And, your group shuns discussing what should be, in favor of your seemingly practical analysis. So, you make these arguments against gold. Do you also lean toward a so-called cashless society?



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[Zippyjuan]

There are a lot of reasons for trade deficits to occur. What you uses for money is not one of them. One is relative wealth. As a more extreme example consider one country has $100 and the other country has $1. The poorer country could not possibly be able to afford to purchase as many goods as the rich country can afford to buy from them.

One is resources. One country may have resources which the other country needs but the other one has little the other country needs. Less an issue today with fracking but consider a country like Saudi Arabia or Bahrain. They have lots of oil which we want lots of but because of their tiny (relative) populations, we don't have much they need to buy from us.

[TheCount]

The gold in the government vaults is owned by the paper dollars that represent it, it is gold that people are using as money under a gold standard whether they ever redeem it or not, the gold and the paper dollars attached to it become scarce domestically as I said.

As I said, in this situation the dollars are being redeemed. Thus, less gold and fewer dollars. But the value of each is not changed.

Dollars would still be convenient because you will never reach the point that all of the gold leaves the country, they are also convenient because that is what everyone in America prices things in, a foreign currency would be inconvenient because you would never have more of it than dollars and Americans don't price thing in it.

Why do you think that retailers choose to price in dollars?

the incentive to turn foreign money into gold and then turn the gold in to be minted is much greater.

Why? That sounds incredibly inconvenient.

[TheCount]

Convenience often comes with a cost. 7-11 is convenient, but the goods are pricier.

Credit cards are convenient, but they have a cost. Credit card companies would like to sell us a "cashless" society, because it means more money for them.

Therefore, the fact that 7-11s and credit cards exist should be an indicator to you that many people prioritize convenience over cost.

[Swordsmyth]

As I said, in this situation the dollars are being redeemed. Thus, less gold and fewer dollars. But the value of each is not changed.



Why do you think that retailers choose to price in dollars?



Why? That sounds incredibly inconvenient.

Now you are just playing stupid.

[TheCount]

Now you are just playing stupid.

No u.

You're acting as if it's inconcievable that retailers might price products in currencies other than dollars. What would @oyarde say? I've read posts where he says that he gives people different prices depending on how they're paying.

[Swordsmyth]

No u.

You're acting as if it's inconcievable that retailers might price products in currencies other than dollars. What would @oyarde say? I've read posts where he says that he gives people different prices depending on how they're paying.

I didn't say nobody would, most would not because they wouldn't want the hassle of converting the money they received into dollars.

[oyarde]

No u.

You're acting as if it's inconcievable that retailers might price products in currencies other than dollars. What would @oyarde say? I've read posts where he says that he gives people different prices depending on how they're paying.

I do accept different forms of payment . At one time I accepted Bitcoin , silver , gold , FRN's or checks . I prefer silver or gold and that gets a more favorable conversion. I still take silver , Gold , FRN's and checks . I do not accept EBT , Credit Cards or Debit Cards. I do not accept credit or debit cards due to my inconvenience and fees . The Chinese Take out place I use also accepts only cash . I can sell a dozen free range , organic , cage free eggs for 3.00 or 4.00 FRN's or just accept 3 silver dimes . I also believe FRN's should be backed by some metal . Silver , copper , gold etc Until then I just view them with disdain and convert them to land , guns , ammo , silver , gold , nickel , copper , tools etc . If silver is 16.50 and I take the three silver dimes it is a cheaper price ( around 3.00 - 3.60 ) than the 4 FRN's for the dozen of eggs . So I give a discount for customers paying with real money versus paper money

[TheCount]

I didn't say nobody would, most would not because they wouldn't want the hassle of converting the money they received into dollars.

1) Why would they convert to dollars if dollars are scarce?

2) Converting foreign currency to dollars is a hassle but in your previous post you said that people would convert foreign currency to gold, then exchange that gold for dollars. Isn't that twice the hassle?

[Swordsmyth]

1) Why would they convert to dollars if dollars are scarce?

I already explained that, dollars are easier to spend in America.

2) Converting foreign currency to dollars is a hassle but in your previous post you said that people would convert foreign currency to gold, then exchange that gold for dollars. Isn't that twice the hassle?

They would do so in order to obtain dollars that are the easiest thing to spend in America.

You are playing dumb on purpose and I won't respond any further on this topic.

[Pauls' Revere]

[QUOTE=Zippyjuan;6642004]You can still run trade deficits on a gold standard. And if you do, you run the risk of losing all of your gold which is why Nixon closed the gold window in 1972. And if gold is your money and you run out of it- what do you do then? The US will not return to a gold standard.

True, the Gold Standard restricts spending and the US didn't want that. Especially to fund Vietnam and the war on poverty and other social programs.