why do people think Ron Paul is too extreme?

[QUOTE="mrbojangles25"]

as much as I would love to see the two-party system defeated by electing a president from a third party, half of Paul's ideas are just impossible, the other half naive.

He wouldnt be able to deliver on a quarter of what he promised. Hell, Obama cant, and he is way more moderate than Paul.

Also, the last thing we need is lower taxes. Seriously.

HFkami

it wouldnt matter if the us goverment would get more taxes, they would waste the money in just 2 days

not if Ron Paul was president, he'd ensure the money stayed there/went where it needed to go. I know that is counter to his "beliefs", but te simple fact is we need someone that A.) realizes taxes are good, if they are used properly, and B.) c an convince Americans of this.

[QUOTE="HFkami"]

[QUOTE="mrbojangles25"]

as much as I would love to see the two-party system defeated by electing a president from a third party, half of Paul's ideas are just impossible, the other half naive.

He wouldnt be able to deliver on a quarter of what he promised. Hell, Obama cant, and he is way more moderate than Paul.

Also, the last thing we need is lower taxes. Seriously.

mrbojangles25

it wouldnt matter if the us goverment would get more taxes, they would waste the money in just 2 days

not if Ron Paul was president, he'd ensure the money stayed there/went where it needed to go. I know that is counter to his "beliefs", but te simple fact is we need someone that A.) realizes taxes are good, if they are used properly, and B.) c an convince Americans of this.

not if Ron Paul was president, he'd ensure the money stayed there/went where it needed to go. I know that is counter to his "beliefs", but te simple fact is we need someone that A.) realizes taxes are good, if they are used properly, and B.) c an convince Americans of this.

mrbojangles25

It's amazing to me that people think that Ron Paul is going to be this magic fixer, and that he'll be able to get Congress to go along with a single **** thing he proposes. It's like you've never seen a guy promise something and then not deliver before.dsmccracken

It's amazing to me that despite there being real world examples that the suggested system works, both in America's own history; and emerging economies world wide. And that it's obvious to anyone that bothers to look, the existing system isn't working. That people won't even consider trying the Ron Paul economic approach.

What have you got to lose? The US is already trillions in debt; and got its credit rating downgraded. Obviously the existing approach isn't working. It's the definition of insanity to continue doing the same thing and expecting different results.

I don't think extreme is the right word for him. I think he is just overly idealistic. His ideas while good on paper, wouldn't work as planned in the real world. (kinda like socialism)

I don't think extreme is the right word for him. I think he is just overly idealistic. His ideas while good on paper, wouldn't work as planned in the real world. (kinda like socialism)

Guybrush_3

Why do people keep saying this? If it didn't work in the real world, America wouldn't have had the biggest economic boom in any nations history when they implemented it.

These aren't new ideas, they have been proven time and time again to work. It worked for America not one lifetime ago, it worked for China, it has worked for a variety of other emerging economies around the world.

What is it about the current broken system that has people displaying such absolute loyalty towards it, despite it being painfully obvious to everyone that it isn't working?

I've never been a fan of Ron Paul, but after he said that he wouldn't have killed Bin Laden unilaterally, he lost all credibility with me. His views on the Bin Laden raid indicated to me that the man would be dangerously naive.

[QUOTE="Guybrush_3"]

I don't think extreme is the right word for him. I think he is just overly idealistic. His ideas while good on paper, wouldn't work as planned in the real world. (kinda like socialism)

AnnoyedDragon

Why do people keep saying this? If it didn't work in the real world, America wouldn't have had the biggest economic boom in any nations history when they implemented it.

These aren't new ideas, they have been proven time and time again to work. It worked for America not one lifetime ago, it worked for China, it has worked for a variety of other emerging economies around the world.

What is it about the current broken system that has people displaying such absolute loyalty towards it, despite it being painfully obvious to everyone that it isn't working?

Beacuse he about overthrowing the current order.

[QUOTE="HerrJosefK"]

[QUOTE="Vuurk"] Exactly. It was free market capitalism that gave the United States our high standard of living, not government regulation.Vuurk

[QUOTE="HerrJosefK"]

It's pretty well accepted in economics that an inflation rate close to zero would or could result in absolute disaster...just saying. There are positive and negative aspects of an inflation rate below 1.0%, as there are for an inflation rate at our current level, which is about 3.5%. Yes, that's Alan Greenspan in my avatar.

AnnoyedDragon

I'm afraid you're going to have to explain that statement, as I don't see anything about inflation that its lack of presense would lead to "absolute disaster".

Inflation is simply a loss of buying power, and retaining buying power is one of the fundemental traits of anything that claims to be money.

On that note, beyond what others have mentioned about Ron Paul's often absurd rhetoric (about abortion and public education, for example, among other things), I'm confounded by some of his ideas. At one point, he seems to understand the inefficiencies of a public health care system, social security, and a bloated welfare system that most certainly need to be dismantled, drastically reduced, or overhauled, and then at another point, he misrepresents The Fed, argues against fiat currency, and supports a return to the gold standard. So how do I interpret his ideas about economic policies? One day he talks about things that theoretically make sense in terms of microeconomics, and the next day he makes statements that make it all too obvious that he's delusional about what the results of his macroeconomic policies would be.

HerrJosefK

There is nothing delusional about those statements, I can only assume you just don't understand them.

What's delusional is thinking a private for profit organization loaning your countries money into existence is in the interests of that country, and that a fiat currency backed by nothing is a good idea; when historically it has ALWAYS ended in disaster. Every fiat currency throughout history has ALWAYS ended in disaster, they ALWAYS fail. We have only been on a fiat currency for 40 years, and we have already seen a 90%+ devaluation of the currencies buying power, making it useless as a long term storage of value.

The fiat currency standard has already failed the basic requirements of money, yet you call arguing against it is delusional? Explain yourself.

In response to your second statement, to assume that I don't understand them undermines my education. The Fed is both private and public, the notion that it is a "private for profit organization" is political rhetoric, and I care little for political rhetoric or, for that matter, political theory in general. Historically it [fiat currency systems] has ended in disaster...when there weren't currencies used as reserve currencies (such as ours currently is today), when international trade in goods, services, and labor were at a minimum, and when foreign direct investment from one country to another was, again, at a minimum. To compare the adoption of fiat currency as it developed from the 17th century up to the present to China's adoption of fiat currency over 1000 years ago is rather delusional, yes. And that's what you just did. And here's the real zinger...with fiat currency, the federal reserve and other central banks have more power in controlling inflation than would be possible in a commodities-backed currency system (provided there hadn't been 10 years of consistent economic decline in the Western world.) Anyone who espoused his ideas in the 80's or 90's would have been lampooned in the media; his ideas and rhetoric have only gained traction to any degree because people are grasping at straws trying to find a solution. And guess what? Some of his solutions (like drastically reducing our welfare state) are sound, and I agree on his positions there. But when he talks about the fed I can't help but shake my head in disbelief.

http://www.economist.com/blogs/freeexchange/2011/07/money

^ Just for the fun if it.

Less big governmental control over our lives, while maintaining a good way to reduce the deficit sounds like a great deal to me. Some people would just rather keep the status quo that got us to this point. And yes it was Bush (W) just as much as Obama.

I've never been a fan of Ron Paul, but after he said that he wouldn't have killed Bin Laden unilaterally, he lost all credibility with me. His views on the Bin Laden raid indicated to me that the man would be dangerously naive.

GreySeal9

so you think its good that a person gets killed? Have you ever seen were osama lived, his crib didnt look like he wasnt more involved into organised terrorism.Ron Paul is a true christian who respects every life and every ones freedom. In the bible it says clearly you shall not kill in the Ten Commandments and jesus says so. Its the neo cons and right wing fundamentalist in america who pretend to be christians. Even the popecondemned that people shouldnt celebrate someones death even if its osama binladen.

[QUOTE="AnnoyedDragon"]

[QUOTE="HerrJosefK"]

On that note, beyond what others have mentioned about Ron Paul's often absurd rhetoric (about abortion and public education, for example, among other things), I'm confounded by some of his ideas. At one point, he seems to understand the inefficiencies of a public health care system, social security, and a bloated welfare system that most certainly need to be dismantled, drastically reduced, or overhauled, and then at another point, he misrepresents The Fed, argues against fiat currency, and supports a return to the gold standard. So how do I interpret his ideas about economic policies? One day he talks about things that theoretically make sense in terms of microeconomics, and the next day he makes statements that make it all too obvious that he's delusional about what the results of his macroeconomic policies would be.

HerrJosefK

There is nothing delusional about those statements, I can only assume you just don't understand them.

What's delusional is thinking a private for profit organization loaning your countries money into existence is in the interests of that country, and that a fiat currency backed by nothing is a good idea; when historically it has ALWAYS ended in disaster. Every fiat currency throughout history has ALWAYS ended in disaster, they ALWAYS fail. We have only been on a fiat currency for 40 years, and we have already seen a 90%+ devaluation of the currencies buying power, making it useless as a long term storage of value.

The fiat currency standard has already failed the basic requirements of money, yet you call arguing against it is delusional? Explain yourself.

In response to your second statement, to assume that I don't understand them undermines my education. The Fed is both private and public, the notion that it is a "private for profit organization" is political rhetoric, and I care little for political rhetoric or, for that matter, political theory in general. Historically it [fiat currency systems] has ended in disaster...when there weren't currencies used as reserve currencies (such as ours currently is today), when international trade in goods, services, and labor were at a minimum, and when foreign direct investment from one country to another was, again, at a minimum. To compare the adoption of fiat currency as it developed from the 17th century up to the present to China's adoption of fiat currency over 1000 years ago is rather delusional, yes. And that's what you just did. And here's the real zinger...with fiat currency, the federal reserve and other central banks have more power in controlling inflation than would be possible in a commodities-backed currency system (provided there hadn't been 10 years of consistent economic decline in the Western world.) Anyone who espoused his ideas in the 80's or 90's would have been lampooned in the media; his ideas and rhetoric have only gained traction to any degree because people are grasping at straws trying to find a solution. And guess what? Some of his solutions (like drastically reducing our welfare state) are sound, and I agree on his positions there. But when he talks about the fed I can't help but shake my head in disbelief.

http://www.economist.com/blogs/freeexchange/2011/07/money

^ Just for the fun if it.

You should post more often.

In response to your first question: The opposite of inflation is deflation. While some economists argue that a target of 0% inflation is ideal, such a target assures a low interest rate on investments, and necessarily increases the risk of deflation. It could be argued, and I certainly won't ramble about it here (the research is out there) that a low but steady inflation rate is typically beneficial, though 3.5% is rather high year-over-year. Inflation is, in effect, the product of economic activity. Be it on fiat currency or commodities-backed currency. Going back to the gold standard will not alleviate inflation, nor bring the inflation rate to 0%.

HerrJosefK

Inflation isn't beneficial in the least, the fact that you think inflation benefits investments; suggests to me that you have misunderstood something. If you devalue the currency by 5%, and your stock values itself against the currency, you haven't gained anything. Your stock may be worth around 5% more, but the price to buy real goods and services will have also gone up. Inflation makes the stock market go up, but it hasn't gained any real value.

Inflation is simply a devaluation of the currency, most likely caused by a increase in the money supply; independant from an increase in goods and services. The currency is worth less, and while there are some people who will argue exports benefit from of a weaker currency; these arguments are not in favour of a continuously devaluing currency.

The only people who arguably benefit from inflation are debtors, as the value of their debts in real terms is being reduced. But this isn't a free gift, as they are essentially stealing buying power from anyone holding the currency. Everyone has their buying power devalued, which is hardly beneficial.

As for deflation, the only reason deflation is a bad thing; is because we are on a debt backed currency. Deflation on a gold standard is a great thing, as it increases the buying power of everyone holding the currency. On a debt currency, it creates a economic death spiral. One more reason to end the Fed.

In response to your second statement, to assume that I don't understand them undermines my education. The Fed is both private and public, the notion that it is a "private for profit organization" is political rhetoric, and I care little for political rhetoric or, for that matter, political theory in general. Historically it [fiat currency systems] has ended in disaster...when there weren't currencies used as reserve currencies (such as ours currently is today), when international trade in goods, services, and labor were at a minimum, and when foreign direct investment from one country to another was, again, at a minimum. To compare the adoption of fiat currency as it developed from the 17th century up to the present to China's adoption of fiat currency over 1000 years ago is rather delusional, yes. And that's what you just did. And here's the real zinger...with fiat currency, the federal reserve and other central banks have more power in controlling inflation than would be possible in a commodities-backed currency system (provided there hadn't been 10 years of consistent economic decline in the Western world.) Anyone who espoused his ideas in the 80's or 90's would have been lampooned in the media; his ideas and rhetoric have only gained traction to any degree because people are grasping at straws trying to find a solution. And guess what? Some of his solutions (like drastically reducing our welfare state) are sound, and I agree on his positions there. But when he talks about the fed I can't help but shake my head in disbelief.HerrJosefK

It is quite frankly arrogant to suggest that of all the times fiat currency has failed; we're going to get it right "this time". Well, we have only been on a fiat currency for 40 years, and we have already seen a 90%+ devaluation of the currency; when compared to when we were on a gold standard. To suggest we can manage it correctly is absolutely absurd, given the widespread and in clear sight evidence that we cannot.

One of the essential roles of money is to be a store of value. The fiat standard we are on today has failed, it has failed by any measurement; and it is only a matter of time until it collapses like the rest. When there is nothing restricting the creation of money, it always gets printed into oblivion, being able to create money out of thin air is too great a power for anyone to use responsibly; it always gets abused. And when it does fail, everyone always runs back to the tride and tested gold standard. Time and time again.

http://www.youtube.com/watch?v=7ubJp6rmUYM

Tell me, how many government organisations are you aware of that have stock? That are a publicly traded company? Only private organisations sell shares, and the federal reserve has shares.

Look. I am asking you to watch these two videos. (glitchspot won't let me link)

http://www.youtube.com/watch?v=MIFYl9i41Dg

http://www.youtube.com/watch?v=Dc3sKwwAaCU

Because the impression I keep getting from you is you aren't aware of how our modern money system works, and the role central banks play in them. Central banks create money from debt, and this is a inherently inflationary and unstable system.

http://www.economist.com/blogs/freeexchange/2011/07/money

^ Just for the fun if it.

HerrJosefK

Gold standard advocates make fun of that video, because his comments are absurd. I sincerely hope you don't actually believe central banks are hoarding gold, and just gold, out of "tradition". That said, I recommend you read the comments; and the objections to that article.

[QUOTE="AnnoyedDragon"]

[QUOTE="HerrJosefK"]

I'm afraid you're going to have to explain that statement, as I don't see anything about inflation that its lack of presense would lead to "absolute disaster".

Inflation is simply a loss of buying power, and retaining buying power is one of the fundemental traits of anything that claims to be money.

[QUOTE="HerrJosefK"]

On that note, beyond what others have mentioned about Ron Paul's often absurd rhetoric (about abortion and public education, for example, among other things), I'm confounded by some of his ideas. At one point, he seems to understand the inefficiencies of a public health care system, social security, and a bloated welfare system that most certainly need to be dismantled, drastically reduced, or overhauled, and then at another point, he misrepresents The Fed, argues against fiat currency, and supports a return to the gold standard. So how do I interpret his ideas about economic policies? One day he talks about things that theoretically make sense in terms of microeconomics, and the next day he makes statements that make it all too obvious that he's delusional about what the results of his macroeconomic policies would be.

HerrJosefK

There is nothing delusional about those statements, I can only assume you just don't understand them.

What's delusional is thinking a private for profit organization loaning your countries money into existence is in the interests of that country, and that a fiat currency backed by nothing is a good idea; when historically it has ALWAYS ended in disaster. Every fiat currency throughout history has ALWAYS ended in disaster, they ALWAYS fail. We have only been on a fiat currency for 40 years, and we have already seen a 90%+ devaluation of the currencies buying power, making it useless as a long term storage of value.

The fiat currency standard has already failed the basic requirements of money, yet you call arguing against it is delusional? Explain yourself.

In response to your second statement, to assume that I don't understand them undermines my education. The Fed is both private and public, the notion that it is a "private for profit organization" is political rhetoric, and I care little for political rhetoric or, for that matter, political theory in general. Historically it [fiat currency systems] has ended in disaster...when there weren't currencies used as reserve currencies (such as ours currently is today), when international trade in goods, services, and labor were at a minimum, and when foreign direct investment from one country to another was, again, at a minimum. To compare the adoption of fiat currency as it developed from the 17th century up to the present to China's adoption of fiat currency over 1000 years ago is rather delusional, yes. And that's what you just did. And here's the real zinger...with fiat currency, the federal reserve and other central banks have more power in controlling inflation than would be possible in a commodities-backed currency system (provided there hadn't been 10 years of consistent economic decline in the Western world.) Anyone who espoused his ideas in the 80's or 90's would have been lampooned in the media; his ideas and rhetoric have only gained traction to any degree because people are grasping at straws trying to find a solution. And guess what? Some of his solutions (like drastically reducing our welfare state) are sound, and I agree on his positions there. But when he talks about the fed I can't help but shake my head in disbelief.

http://www.economist.com/blogs/freeexchange/2011/07/money

^ Just for the fun if it.

Are there economists who (outside of a theoretical framework) want to target 0% inflation (I'm aware of the Friedman Rule)? To my knowledge, moderate inflation is generally considered the best target because (1) moderate inflation is preferable to deflation; (2) the short-run tradeoff between inflation and unemployment causes CBs to target non-zero inflation to balance both inflation and unemployment (usually expressed in terms of minimizing a loss function).

AnnoyedDragon

I'll watch and respond later tonight.

@Chessmaster

No, I honestly don't know of any prominent economists, regardless of school or perspective, nor read any research articles that advocate actually pursuing a 0% inflation rate, only that, as you said, it has been discussed theoretically. (Though I did once have a professor that argued for the benefits of a "near zero" inflation rate, and I'm sure there's an economist somewhere that firmly believes in pursuing a 0% interest rate contrary to all available information.) And yes, it probably would have been prudent of me to include a statement concerning the balance between inflation and unemployment in addition to my statements about avoiding deflation and maintaining interest rates. I just didn't expect anyone to respond with real econ, nor did that thought occur to me. ;)

[QUOTE="mrbojangles25"]

not if Ron Paul was president, he'd ensure the money stayed there/went where it needed to go. I know that is counter to his "beliefs", but te simple fact is we need someone that A.) realizes taxes are good, if they are used properly, and B.) c an convince Americans of this.

AnnoyedDragon

It's amazing to me that people think that Ron Paul is going to be this magic fixer, and that he'll be able to get Congress to go along with a single **** thing he proposes. It's like you've never seen a guy promise something and then not deliver before.dsmccracken

It's amazing to me that despite there being real world examples that the suggested system works, both in America's own history; and emerging economies world wide. And that it's obvious to anyone that bothers to look, the existing system isn't working. That people won't even consider trying the Ron Paul economic approach.

What have you got to lose? The US is already trillions in debt; and got its credit rating downgraded. Obviously the existing approach isn't working. It's the definition of insanity to continue doing the same thing and expecting different results.

As for deflation, the only reason deflation is a bad thing; is because we are on a debt backed currency. Deflation on a gold standard is a great thing, as it increases the buying power of everyone holding the currency. On a debt currency, it creates a economic death spiral. One more reason to end the Fed.

AnnoyedDragon

That's not true at all. Pretty much every country was on the gold standard during the onset of the Great depression, there was massive deflation as a result, and a lot of people suffered. The sooner a country left the gold standard, the sooner their economy recovered.

It really doesn't make sense to have a currency pegged to a commodity that has no relevance to GDP growth.

@Chessmaster

No, I honestly don't know of any prominent economists, regardless of school or perspective, nor read any research articles that advocate actually pursuing a 0% inflation rate, only that, as you said, it has been discussed theoretically. (Though I did once have a professor that argued for the benefits of a "near zero" inflation rate, and I'm sure there's an economist somewhere that firmly believes in pursuing a 0% interest rate contrary to all available information.) And yes, it probably would have been prudent of me to include a statement concerning the balance between inflation and unemployment in addition to my statements about avoiding deflation and maintaining interest rates. I just didn't expect anyone to respond with real econ, nor did that thought occur to me. ;)

HerrJosefK

Well I have seen people argue to target very low inflation rates, that much is true. And as you say, I'm sure there are at least a few economists who want to target 0% inflation (and who, I'd argue, probably need to go back to college/graduate school :P).

I took a course on central banking which formalized the CB's problem mathematically as a loss minimization between unemployment and inflation, which is probably the only reason I really think about inflation targeting in terms of unemployment as well. :P

[QUOTE="HerrJosefK"]

@Chessmaster

No, I honestly don't know of any prominent economists, regardless of school or perspective, nor read any research articles that advocate actually pursuing a 0% inflation rate, only that, as you said, it has been discussed theoretically. (Though I did once have a professor that argued for the benefits of a "near zero" inflation rate, and I'm sure there's an economist somewhere that firmly believes in pursuing a 0% interest rate contrary to all available information.) And yes, it probably would have been prudent of me to include a statement concerning the balance between inflation and unemployment in addition to my statements about avoiding deflation and maintaining interest rates. I just didn't expect anyone to respond with real econ, nor did that thought occur to me. ;)

chessmaster1989

Well I have seen people argue to target very low inflation rates, that much is true. And as you say, I'm sure there are at least a few economists who want to target 0% inflation (and who, I'd argue, probably need to go back to college/graduate school :P).

I took a course on central banking which formalized the CB's problem mathematically as a loss minimization between unemployment and inflation, which is probably the only reason I really think about inflation targeting in terms of unemployment as well. :P

[QUOTE="AnnoyedDragon"]

As for deflation, the only reason deflation is a bad thing; is because we are on a debt backed currency. Deflation on a gold standard is a great thing, as it increases the buying power of everyone holding the currency. On a debt currency, it creates a economic death spiral. One more reason to end the Fed.

-Sun_Tzu-

That's not true at all. Pretty much every country was on the gold standard during the onset of the Great depression, there was massive deflation as a result, and a lot of people suffered. The sooner a country left the gold standard, the sooner their economy recovered.

It really doesn't make sense to have a currency pegged to a commodity that has no relevance to GDP growth.

[QUOTE="chessmaster1989"]

[QUOTE="HerrJosefK"]

@Chessmaster

No, I honestly don't know of any prominent economists, regardless of school or perspective, nor read any research articles that advocate actually pursuing a 0% inflation rate, only that, as you said, it has been discussed theoretically. (Though I did once have a professor that argued for the benefits of a "near zero" inflation rate, and I'm sure there's an economist somewhere that firmly believes in pursuing a 0% interest rate contrary to all available information.) And yes, it probably would have been prudent of me to include a statement concerning the balance between inflation and unemployment in addition to my statements about avoiding deflation and maintaining interest rates. I just didn't expect anyone to respond with real econ, nor did that thought occur to me. ;)

HerrJosefK

Well I have seen people argue to target very low inflation rates, that much is true. And as you say, I'm sure there are at least a few economists who want to target 0% inflation (and who, I'd argue, probably need to go back to college/graduate school :P).

I took a course on central banking which formalized the CB's problem mathematically as a loss minimization between unemployment and inflation, which is probably the only reason I really think about inflation targeting in terms of unemployment as well. :P

Yeah the CB course (like most econ courses at my college) was extremely math-centric, focused heavily on theoretical models and only a little on 'reality.'

I took a public finance course, but we focused more on issues like optimal taxation, the effects of entitlement programs (SS, unemployment insurance, etc.), etc. Very interesting and informative course (and taught in a fairly unbiased manner).

That's not true at all. Pretty much every country was on the gold standard during the onset of the Great depression, there was massive deflation as a result, and a lot of people suffered. The sooner a country left the gold standard, the sooner their economy recovered.

It really doesn't make sense to have a currency pegged to a commodity that has no relevance to GDP growth.

-Sun_Tzu-

The deflation from the great depression was not caused by the gold standard, it was caused by creating money from debt.

When you loan money into existence, the money is owed back plus interest. But if money is created from debt, then the interest doesn't exist. After the stock market crash, people became worried about risk, so they avoided debt. This led to old debts being repaid but few new ones being created. In essence, the supply of money shrank by nearly a third. It also didn't help that the idiot president in government at the time was using price controls to keep prices from deflating, which made necessary goods inaccessible to many.

This caused the great depression, not the gold standard. If anything the gold standard prevented the depression from getting worse, because there was debt free money in circulation. Today, all money in circulation has been created from debt. Which means in a deflationary scenario, the entire currency supply would disappear; and a lot of people would lose their property as a result.

The great depression also did not force economies off the gold standard. You're just making stuff up now. The great depression occurred in the 1930s, the world left the gold standard in 1971. They were in no way related.

People keep painting the decision to leave the gold standard as being rooted in some flaw that forced us off of it. Do you want to know why the world left the gold standard?

The US committed fraud against the rest of the world. They spent dollars that didn't have any gold backing it up, essentially printing money to pay for things; instead of living within their means. The Vietnam war was largely funded by simply printing dollars to spend. Inevitably, when countries started exchanging their dollars for gold at the US central bank, America didn't have enough gold to redeem all the dollars they had printed. News spread, and there was a run on the dollar. speculators started shorting the dollar, because it was clear that the currency was in trouble. With gold quickly leaving their vaults, the US announced it would be temporally ceasing the redeemability of the dollar, until things calmed down.

As we know, they never went back. A government addicted to over spending suddenly found they no longer had any restrictions on how many dollars they could create, and they have been over spending ever since. The problem however is the dollar was the world reserve currency, all other currencies were backed by gold; but through the dollar. So when the dollar left the gold standard, the US took the world off the gold standard with them. No one wanted to go back onto the gold standard, because everyone else was off it. They would be trading a currency backed by gold and getting a piece of paper backed by nothing in exchange. The bretton woods agreement that made the dollar necessary for international trade was still in effect, so people just continued as usual, minus gold.

So there you have it. The decision to go off the gold standard wasn't a educated one, it wasn't a agreed upon decision; or a recommendation by world leading economists. It was fraud that went wrong. The world didn't leave the gold standard, they were taken off it by one country with too much power and only thinking of themselves.

Thanks for stealing my thunder. That was going to be one thing that I mentioned in my next response....AND I WILL STILL MAKE IT...even if I'm just repeating you.

HerrJosefK

Which means you have watched neither of my recommended videos. As they both explain how a debt backed currency causes a deflationary depression. The moment people start being responsible and pay off their debts, rather than going into more debt, the whole system collapses.

[QUOTE="-Sun_Tzu-"]

That's not true at all. Pretty much every country was on the gold standard during the onset of the Great depression, there was massive deflation as a result, and a lot of people suffered. The sooner a country left the gold standard, the sooner their economy recovered.

It really doesn't make sense to have a currency pegged to a commodity that has no relevance to GDP growth.

AnnoyedDragon

The deflation from the great depression was not caused by the gold standard, it was caused by creating money from debt.

When you loan money into existence, the money is owed back plus interest. But if money is created from debt, then the interest doesn't exist. After the stock market crash, people became worried about risk, so they avoided debt. This led to old debts being repaid but few new ones being created. In essence, the supply of money shrank by nearly a third. It also didn't help that the idiot president in government at the time was using price controls to keep prices from deflating, which made necessary goods inaccessible to many.

This caused the great depression, not the gold standard. If anything the gold standard prevented the depression from getting worse, because there was debt free money in circulation. Today, all money in circulation has been created from debt. Which means in a deflationary scenario, the entire currency supply would disappear; and a lot of people would lose their property as a result.

The great depression also did not force economies off the gold standard. You're just making stuff up now. The great depression occurred in the 1930s, the world left the gold standard in 1971. They were in no way related.

People keep painting the decision to leave the gold standard as being rooted in some flaw that forced us off of it. Do you want to know why the world left the gold standard?

The US committed fraud against the rest of the world. They spent dollars that didn't have any gold backing it up, essentially printing money to pay for things; instead of living within their means. The Vietnam war was largely funded by simply printing dollars to spend. Inevitably, when countries started exchanging their dollars for gold at the US central bank, America didn't have enough gold to redeem all the dollars they had printed. News spread, and there was a run on the dollar. speculators started shorting the dollar, because it was clear that the currency was in trouble. With gold quickly leaving their vaults, the US announced it would be temporally ceasing the redeemability of the dollar, until things calmed down.

As we know, they never went back. A government addicted to over spending suddenly found they no longer had any restrictions on how many dollars they could create, and they have been over spending ever since. The problem however is the dollar was the world reserve currency, all other currencies were backed by gold; but through the dollar. So when the dollar left the gold standard, the US took the world off the gold standard with them. No one wanted to go back onto the gold standard, because everyone else was off it. They would be trading a currency backed by gold and getting a piece of paper backed by nothing in exchange. The bretton woods agreement that made the dollar necessary for international trade was still in effect, so people just continued as usual, minus gold.

So there you have it. The decision to go off the gold standard wasn't a educated one, it wasn't a agreed upon decision; or a recommendation by world leading economists. It was fraud that went wrong. The world didn't leave the gold standard, they were taken off it by one country with too much power and only thinking of themselves.

Um, no, pretty much every major currency got off the gold standard during the great depression, and the sooner a country got off of the gold standard the sooner their economy recovered, because of the huge amount of deflation the gold standard was causing. Then after the war the world went back on to a quasi-gold standard with Bretton-Woods, but obviously that didn't last. Which highlights the greatest flaw with the gold standard; if governments are so irresponsible that they can't keep inflation low on their own, how can they be trusted to stay on the gold standard?

Um, no, pretty much every major currency got off the gold standard during the great depression, and the sooner a country got off of the gold standard the sooner their economy recovered, because of the huge amount of deflation the gold standard was causing. Then after the war the world went back on to a quasi-gold standard with Bretton-Woods, but obviously that didn't last. Which highlights the greatest flaw with the gold standard; if governments are so irresponsible that they can't keep inflation low on their own, how can they be trusted to stay on the gold standard?

-Sun_Tzu-

The economies "recovered" because of world war two, as war brought a need for unprecedented spending. Historically, governments switch to a fiat currency during wars (and back after) as the spending requirements of war tend to struggle under strict spending limits. The inflation created by fiat currency is endured, because it's a matter of survival. Dropping the gold standard didn't end the great depression, the war did, as it pumped enough debt money into the economy to bring currency supply back up to the required levels.

Which is why we get maniacs today who think we need another world war to get us out of this slump. One even recommend faking an alien invasion, whatever excuse would justify the spending and indebtedness needed to grow.

All of which wouldn't be necessary if we didn't create money from debt. It is debt based currency that creates destructive deflationary spirals, not the gold standard.

-edit

As for trust, actually having a standard is better than no standard at all. There was a run on the dollar because the US failed to keep to the gold standard, they broke the rules; and they suffered for it. The US alone would have suffered the consequences for their actions, but the Bretton Woods punished everyone for America's actions. That wasn't golds fault, it was the systems fault for giving one country such power. If it wasn't for Bretton Woods, America would have served as a example of why you shouldn't cheat the gold standard.

The economies "recovered" because of world war two, as war brought a need for unprecedented spending. Historically, governments switch to a fiat currency during wars (and back after) as the spending requirements of war tend to struggle under strict spending limits. The inflation created by fiat currency is endured, because it's a matter of survival. Dropping the gold standard didn't end the great depression, the war did, as it pumped enough debt money into the economy to bring currency supply back up to the required levels.

Which is why we get maniacs today who think we need another world war to get us out of this slump. One even recommend faking an alien invasion, whatever excuse would justify the spending and indebtedness needed to growth.

All of which wouldn't be necessary if we didn't create money from debt. It is debt based currency that creates destructive deflationary spirals, not the gold standard.

AnnoyedDragon

As for trust, actually having a standard is better than no standard at all. There was a run on the dollar because the US failed to keep to the gold standard, they broke the rules; and they suffered for it. The US alone would have suffered the consequences for their actions, but the Bretton Woods punished everyone for America's actions. That wasn't golds fault, it was the systems fault for giving one country such power.AnnoyedDragon

That doesn't answer my question though.

WWII ultimately ended the great depression. But the sooner a country left the gold standard the sooner said country's economy began to recover (and the later a country left the gold standard the later said country's economy began to recover). That is one of the main reasons for why there was such an uneven global recovery. -Sun_Tzu-

They recovered faster because they could simply create money in unlimited amounts to sort out their economic problems. But the point is, they wouldn't have had the problems posed by the great depression; if they stuck to the gold standard in the first place.

How many times do I have to reemphasize this?

The great depression was caused by deflation, and it was the stock market crash that kick started the deflation. The amount of gold in existence wasn't slowly evaporating, so how was the currency supply shrinking? How can the currency supply shrink by nearly a third, when your currency is supposed to be physical assets like gold?

The currency supply was shrinking because ever since the Federal Reserve was established, it created money from debt. Debt that demands interest, which can only be paid for by going further into debt. A ponzy scheme, paying off old debts with new debts. So when people stopped going into debt, old debts were being repaid; but too few new ones were being created.

That was why there was deflation, that is why the currency supply shrank by nearly a third. It was because the supply of loans dried up, not because of gold. If it wasn't for debt free money being in circulation like gold certificates, the currency supply would have probably shrank considerably more.

That doesn't answer my question though.

-Sun_Tzu-

Your question is if we cannot trust governments to use fiat currency responsibly, how can we trust them to use a gold standard responsibly. My response was having financial controls in place that punish them for abusing money, is better than having no financial controls at all. It's like saying you cannot trust the child to stay away from the cookie jar, so let him keep it in his room.

why would americans want to get rid of government care. America needs a government health system like the rest of the western world.