Gold Standard

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If anyone calls me stupid I'll report you. Well, don't call me stupid. I'm not. Neither have I ever personally reflected on anyone on this site. It's strange how twenty-percent of the responses to what I write are personal. I should report you. Again, you know who you are...

Anyway, is it any coincidence that the US economy has been stuck in stagflation at best since its disconnect from the Gold Standard? Much as the Brits might think it otherwise, the world takes its currency, and therefore monetary settings, from the US Dollar. With the US no longer having a standard upon which to base its currency, and therefore monetary policy, I wonder if it is a coincidence or whether the calls from BOTH - sorry about the caps for those it offends - sides of politics to move back to the Gold Standard have any merits?

Please. I'm asking here. Informed commentary. You're all meant to be smarter than the rest of the world. Smart people, me and 91 and Vigilans to name a few, don't insult people.

I'm genuinely asking here. So, please, is it a coincidence? If not, then what is the solution for the most innovative, well-endowed by IP country in the world to once more become the economic powerhouse it should still be? Could it be as simple as stopping payment of welfare to people who already have incomes?

The last question, yes, is my personal opinion. Anyone?

That question is beyond my ability to answer, but you can find some gold-related facts and thoughts beyond the first couple of pages here:

http://library.georgegordon.com/audio

Plenty of smart people insult other people. In fact, there is an entire narrative trope of a smart person who is insulting. http://tvtropes.org/pmwiki/pmwiki.php/M ... ableGenius

That being said... given all of the other things going on economically over time, is it really reasonable to just randomly pick out the gold standard? I don't really think so. Another note: Stagflation was a 70s-80s phenomena, and partially just due to monetary policy, and our lack of knowledge of long-run aggregate supply. I don't think that it would meaningfully impact economic growth. In fact, a lot of people think that it would undermine economic growth, because the Gold standard is incredibly volatile, in that the price of gold is more prone to swing than that of money, so while there may be less inflation, there is more variation in prices, which is damaging. Even further, gold does not grow with the economy, which means that a gold standard could easily involve the supply of gold not growing with the rest of the economy, causing a deflationary spiral, and those can be considered really really really bad, as people stop investing money, and just start hoarding it, seeing hoarding as the most effective way to make more money.

I think other issues are probably a lot more reasonable to look at, such as the end of the industrial revolution, declining returns to scale on capital investments, etc, rather than the gold standard.

That being said, there isn't a clear way to make any economy have the highest GDP. Even further, most economies losing their relative dominance is really to be expected anyway, because newly developing nations grow much quicker due to all of the underutilized resources to be exploited, and there are more people in newly developing economies than in the first world, meaning that the US and other nations will have their GDP as a percentage of world GDP decline just for that reason alone.

Mr Bryan! Paging William Jennings Bryan! Call for Mr. Bryan on Line 1

Bryant was not arguing about paper money versus metal. He was arguing about the ration of gold value to silver value. By giving silver more buying power 16:1 ratio to gold, it would expand the money supply and make it easier for debtors to pay off creditors.

ruveyn

It hasn't been? And even if it had, AG already pointed out that there is absolutely no way ceteris paribus holds, so there is very little compelling case to make for gold vs fiat being the cause of any problems.

The standard during which the US was on the gold standard was also the period of least economic stability- we had wild swings, with out-of-control booms and severe depressionary busts.


Both sides? I know of Ron Paul on the right. Who on the left is calling for a renewed gold standard?


Is the thing which has not happened connected to a factor that would not reasonably be expected to cause such a shift?

I'm gonna say "no."

Is it coincidence that this statement is kept getting made without really showing any link between both events?

Both policies have strong propents and differing economic objectives. I do not know enough about these issues to decide which method is best. However a good comparison could be made it would just be a matter of comparing the scholarly objectives with the economic need. If they match then a comparison could be made.

there is more money in the market than there is gold to back it up is one problem.

gold standard is/was a more reliable means of basing an economy in... but the banking industry could not keep its unlimited growth if it was limited by the amount of gold the nation had to back it up.

Remember, for every dollar in a bank vault the bank can create 9 dollars out of thin air to lend at interest..and create more 'ghost' money. Gold cannot be found and stored at such speed to keep up. That's primarily why the gold standard was abandoned.

Okay.

So, upon what then does the US base its monetary policy and Dollar without anything objective upon which to continue to direct even its own destiny, let alone the destiny of the world? Where is the base large enough, that's now in any way skewed by central government controls, as in the case of both China, and here's the controversy, Europe?

US bonds bolster the rest of the world, the US Dollar is everyone's benchmark, the US directs monetary policy worldwide. What's to stop the US economy becoming a mirror of the Japanese economy, the economy I think the world is resigned will never pay nor service its debts, neither will it ever boom again in either population or innovation and manufacturing?

Anyone?

This sort of logic is actually pretty common in economics. While I am somewhat a fan of it; a good deal of Keynesian economics makes these sorts of arguments.

Trying to explain variations by past changes through trying to find causal links is common everywhere. Economics usually tends to rely on econometric analysis though, and econometric analysis is statistical, not exactly the same as what is being put forward here. Even further, most economists try to create a theory linking both events, and without a theory of some form or fashion, they don't have anything.

Look, I am not going to defend economics too strongly on this, as it has junk science elements to it, BUT, Vexcalibur really has a very strong point, regardless of what you claim economics says. (Frankly, I don't think you know basic economics period, thus I don't regard you as a reliable source of information on the topic. Instead, I think of you as someone who will pretend a high level of knowledge on anything. Data-mine studies to try to get your fore-ordained conclusion. And... that's that.)

I already stated.



What you have just stated is blatant mud slinging.

This isn't about your knowledge on the gold standard, this is about your claims on economic methodology.

^^^^

What part of my comment did you disagree with (you mentioned junk science elements also)? Its pretty basic econ and though I have not studied it in a good while I am familiar with it enough to make that statement.

i say we need a new monitary system...but like someone said there isn't enough gold for that to work. so...what would be some new alternatives besides the fed or gold standard? (real or made up)