66 Greenspan article supports gold standard

[sarsipias1234]

First published in Ayn Rand's "Objectivist" newsletter in 1966

Gold and Economic Freedom by Alan Greenspan

Quote: "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

IN THE ABSENCE OF THE GOLD STANDARD, THERE IS NO WAY TO PROTECT SAVINGS FROM CONFISCATION THROUGH INFLATION.

DEFICIT SPENDING IS SIMPLY A SCHEME FOR THE CONFISCATION OF WEALTH.

http://www.constitution.org/mon/greenspan_gold.htm

"Gold is money, everything else is credit"- J.P. Morgan 1912 to Congress.

 

[Double Trouble]

Yawn... gold bug fever again?

 

[ayabe]

Ron Fucking Paul!

 

[Doppel]

Did he even write that? There are so many sites on the internet promoting simple lies.

But even if he did who cares, he invalidated his expertise DECADES later when he headed the reserve as the economy created the greatest bubble in generations. So in short who gives a F what he said back in the day and in later years had a different opinion anyway.

Oh also, there's not enough gold in the US to have a gold standard ever again. These gold standard posts I don't think will ever die will they?

 

[sarsipias1234]

I'm just pointing out the hypocrisy.

Not enough gold? The devaluation of the dollar will compensate for lack of gold on hand.

I think the Fed has this all planned out for the next two years.

Steady devaluation of the dollar to export our debt to other countries.

 

[Doppel]

I'm just pointing out the hypocrisy.

Not enough gold? The devaluation of the dollar will compensate for lack of gold on hand.

I think the Fed has this all planned out for the next two years.

Steady devaluation of the dollar to export our debt to other countries.

The proportion of actual wealth and productive capacity of the US to that of the rest of the world is magnitudes more than the percentage of gold that it owns compared to the rest of the world.

 

[sarsipias1234]

Where is this actual wealth and prosperity?

Most of the actual wealth and prosperity is the hands of only 2% of the population.

And this 2% of the population is exporting wealth out of the country at a rapid pace.

I think most Americans do not have any wealth or prosperity at this point.

50% of Americans only account for 1.4 trillion of wealth in this country.

At this point I think most people believe tomorrow will worse than today.

 

[zinfamous]

"Gold is money, everything else is credit"- J.P. Morgan 1912 to Congress.

looks like Mr Morgan died in 1913.

had he lived through 1929-1933 or so, do you think he would be singing the same tune?

roflsocks at the ron paul idiots.

 

[Doppel]

Where is this actual wealth and prosperity?

Most of the actual wealth and prosperity is the hands of only 2% of the population.

And this 2% of the population is exporting wealth out of the country at a rapid pace.

I think most Americans do not have any wealth or prosperity at this point.

50% of Americans only account for 1.4 trillion of wealth in this country.

At this point I think most people believe tomorrow will worse than today.

Top 2%? If you go by the value of Fiat money, which you are contending isn't worth much

Evaporate every USD in existence. The country still has extensive, first-world architecture throughout the entire country, millions of homes, cars, educated populous. The wealth in any currency is vast.

If China or somewhere else had more gold because it happened to out-stock fort knox would you think it more wealthy simply because of that? Gold is an arbitrary measure of wealth.

 

[Zorkorist]

Alan Greenspan and Ayn Rand, were collaborators, if not lovers for many years.

https://secure.wikimedia.org/wikipedia/en/wiki/Alan_Greenspan

-John

 

[First]

We've been successfully off the gold standard for many, many decades. Get used to the idea that gold is a long-gone past-time fit only for ancient countries and economies.

 

[LegendKiller]

Young, dumb, and full of...

 

[Jhhnn]

Young, dumb, and full of...

Well, yeh, of course. Ayn Rand had a way of enrapturing her young male proteges, and it wasn't all just philosophical, either. They went to great lengths to gain and keep her favor...

 

[sarsipias1234]

Top 2%? If you go by the value of Fiat money, which you are contending isn't worth much

Evaporate every USD in existence. The country still has extensive, first-world architecture throughout the entire country, millions of homes, cars, educated populous. The wealth in any currency is vast.

If China or somewhere else had more gold because it happened to out-stock fort knox would you think it more wealthy simply because of that? Gold is an arbitrary measure of wealth.

Great point and you got me thinking even deeper.

Even gold has no intrinsic value. Gold only has value because people, collectively, believe that gold has value.

So, therefore, no material object has intrinsic value. Assets only have value when people believe the assets have value.

The entire American valuation is based purely on the collective belief that tomorrow will better than today.

Our entire economy is a confidence game or a Ponzi scheme.

Even though gold has no intrinsic value gold still remains one of the best currency standards because more people collectively believe gold has more believed value than most other assets/materials.

$1900.00 an ounce at current prices.

Ever wonder why certain aspects of our financial system are illogical or counter-intuitive?

That is because the financial system is based on the illusion that material/physical objects have intrinsic value.

Ever listen to a finance person try to explain what exactly is a derivative?

The base of Buddhist philosophy is the idea that material objects have no intrinsic value.

 

[Zorkorist]

You are very smart.

Ayn Rand would tell you that the most valuable thing, that thing that cannot be bought or sold, is yourself.

-John

 

[sarsipias1234]

You are very smart.

Ayn Rand would tell you that the most valuable thing, that thing that cannot be bought or sold, is yourself.

-John

Ayn Rand's novels had a huge impact on my mom's life when she was younger.

I found her books too depressing when I was younger.

I understood the philosophy behind the books at a very young age because of my mom.

Maybe i will read Atlas Shrugged or Fountainhead someday.

 

[Zorkorist]

It's OK..

If you already understand that you are Superman, then you don't need to read her novels (read her short stories: "We the living" and "Anthem.")

If you read only one Novel, read "Atlas Shrugged."

-John

 

[momeNt]

looks like Mr Morgan died in 1913.

had he lived through 1929-1933 or so, do you think he would be singing the same tune?

roflsocks at the ron paul idiots.

Had Morgan been around in 1929-1933, there would not have been a great depression because the Federal Reserve was only created after he died because our government no longer trusted relatively (in comparison to today) free markets to deal with the issues like the panic of 1907, so the FRB was created to deal with issues of bank failures and panics and carefully fine-tune our economy.

 

[Siddhartha]

If the US could go back to the gold standard, would it not cause catastrophic deflation because of a major decrease in money supply? Which would lead to a global economic depression that would make what happen back in 1929 look like a mild recession.

How would money supply grow with a gold base currency? Would the US have to invade gold producing countries to obtain more gold to support a growing economy?

What is the real appeal for gold besides it being shiny?

 

[momeNt]

If the US could go back to the gold standard, would it not cause catastrophic deflation because of a major decrease in money supply? Which would lead to a global economic depression that would make what happen back in 1929 look like a mild recession.

How would money supply grow with a gold base currency? Would the US have to invade gold producing countries to obtain more gold to support a growing economy?

What is the real appeal for gold besides it being shiny?

The only appeal for gold is that through the centuries of market psychology people decided that it was a good store of wealth due to the fact that it is homogenous, the inability to counterfeit, not very much of it so the value/oz is higher than say... oil. resistant to degradation via oxidization.

Money was developed due to the complicated transactions that needed to take place if a person had chickens to sell for cattle, and the person who wanted to sell cattle only wanted goats, so the chicken holder had to find someone to trade their chickens for goats in order to get cattle. Eventually this created the idea of money as the intermediary for all transactions because everybody was willing to accept it.

How would money supply grow with a gold base currency? Would the US have to invade gold producing countries to obtain more gold to support a growing economy?

You are linking money supply growth to economic growth. That sort of thinking is not how it would work in a proper gold standard, in paper fiat currency the federal reserve inflates the amount of money and credit in circulation to encourage lending and economic growth, these bubbles that are created are not really economic growth, just growth in the money and credit, which then contracts when it becomes unsustainable.

A growing economy in relation to others would require more gold, so you are correct in that one sense. But gold would be transferred from one country to another due to what is called the balance of trade. When a country imports more than they export, gold flows out of the country causing, and the opposite is true for a country that exports more than they import. In a fiat currency system, deficits are just printed and debt grows, especially if the currency is not weakened by the central bank to allow for the balance of payments to be brought back into equilibrium.

In theory fiat currency could work, but it would require very diligent control by the fed and treasury for it not to interfere with our economy. Governments that are in control of the currency will want to inflate and erode the purchasing power of the currency. Inflation encourages investment over savings because savings' purchasing power devalues when the currency is inflated, this brings a disconnect to what people actually want to do and what the government is essentially forcing them to do.

Inflation is the hidden tax on wealth that nobody cares about and everybody is letting happen every day you keep allowing the government to control the money.

Ron Paul 2012!

 

[sm625]

The proportion of actual wealth and productive capacity of the US to that of the rest of the world is magnitudes more than the percentage of gold that it owns compared to the rest of the world.

Do you have numbers to back that up? There is a lot of gold in the US. And when you take all our supposed wealth and subtract out the debt, it turns out we collectively are not nearly as rich as you might think.

 

[momeNt]

We've been successfully off the gold standard for many, many decades. Get used to the idea that gold is a long-gone past-time fit only for ancient countries and economies.

Consider that the price of gold vs the dollar is sort of like a vote of confidence on the psyche of any USD holder as to which they believe more in.

Now there are periods in here where the USD surged against the dollar and it proved in those times to be a store of wealth greater than gold. Since 2000 though when the 18 year market bull run ended, gold has held the confidence of the world.

 

[First]

Consider that the price of gold vs the dollar is sort of like a vote of confidence on the psyche of any USD holder as to which they believe more in.

Now there are periods in here where the USD surged against the dollar and it proved in those times to be a store of wealth greater than gold. Since 2000 though when the 18 year market bull run ended, gold has held the confidence of the world.

Gold is the worst long-term store of value in U.S. history compared to any other asset, even bonds and especially stocks. This is well known fact: http://en.wikipedia.org/wiki/Stocks_for_the_Long_Run

So yes, gold has had a good 10 year run. Meanwhile, even with the current downturn in stocks, real returns on equity still far outstrips gold's 10 year run over any 30 year period in U.S. history.

 

[momeNt]

Gold is the worst long-term store of value in U.S. history compared to any other asset, even bonds and especially stocks. This is well known fact: http://en.wikipedia.org/wiki/Stocks_for_the_Long_Run

So yes, gold has had a good 10 year run. Meanwhile, even with the current downturn in stocks, real returns on equity still far outstrips gold's 10 year run over any 30 year period in U.S. history.

First of all you switched the topic from comparing gold vs the USD as a store of wealth to then gold vs stocks as a store of wealth. Perhaps that means you conceded that gold performs better than the dollar as a store of wealth. After all the dollar has lost about 98% of its purchasing power since the federal reserve.

As for comparing stocks to gold. As you can see it's been a pretty wild ride. The run from 1982-2000 absolutely crushed gold I will agree, but it's correcting remarkably quick wouldn't you say?

 

[Doppel]

Great point and you got me thinking even deeper.

Even gold has no intrinsic value. Gold only has value because people, collectively, believe that gold has value.

So, therefore, no material object has intrinsic value. Assets only have value when people believe the assets have value.

The entire American valuation is based purely on the collective belief that tomorrow will better than today.

Our entire economy is a confidence game or a Ponzi scheme.

Even though gold has no intrinsic value gold still remains one of the best currency standards because more people collectively believe gold has more believed value than most other assets/materials.

$1900.00 an ounce at current prices.

Ever wonder why certain aspects of our financial system are illogical or counter-intuitive?

That is because the financial system is based on the illusion that material/physical objects have intrinsic value.

Ever listen to a finance person try to explain what exactly is a derivative?

The base of Buddhist philosophy is the idea that material objects have no intrinsic value.

A material object that can be eaten has intrinsic value. In a completely unpredictable world would you rather $1900 in gold or spend that money instead on cans of food?

Do you have numbers to back that up?

No, but I know it to be so much like I know a tree falling on my head hurts. Actually, I think I've read that the US has a fairly small amount of gold (huge, but relative to its wealth it's not big). I'm sure you could google "gold reserves by country" and you'd see that the US doesn't really have very much compared to its actual productive capacity.

And when you take all our supposed wealth and subtract out the debt, it turns out we collectively are not nearly as rich as you might think.

Staying in line with this thread if the US's fiat money is a poor indication of its wealth its fiat-based debt is also a poor indication.