Federal Reserve

[barfbag]

Should we eliminate the federal reserve and go back to the gold standard so that our currency is backed up in gold and has value? I was going to make it a poll question, but I want dialogue and discussion too.

[bedstuy]

The Federal Reserve is necessary to having a functional financial system.  It would be ridiculous to get rid of it.  That's not a serious question in my opinion.

On the second question, the gold standard is vastly inferior to floating currency.  While in theory a gold standard is a constraint on policy and a stabilizing force, it doesn't work in practice.  You only have to look at the great depression to see that.  And even if we wanted to return to the gold standard, it would be impossible.  Even if all the gold in the planet was in the reserves of the US,  it wouldn't be nearly enough. 

[True Federalist (진정한 연방 주의자)]

What the advocates of the gold standard fail to grasp is they we never were on such a pure gold standard as they advocate.  Unless one eliminates fractional reserve banking altogether the idea that each unit of currency has a fixed amount of gold (or other precious material) always available to back it is at best a polite fiction.

[barfbag]

The Federal Reserve is necessary to having a functional financial system.  It would be ridiculous to get rid of it.  That's not a serious question in my opinion.

On the second question, the gold standard is vastly inferior to floating currency.  While in theory a gold standard is a constraint on policy and a stabilizing force, it doesn't work in practice.  You only have to look at the great depression to see that.  And even if we wanted to return to the gold standard, it would be impossible.  Even if all the gold in the planet was in the reserves of the US,  it wouldn't be nearly enough. 

The part about the amount of gold we have not going enough to match the amount of dollars is relative. The point of having less value in gold than we do in money would be so that our dollar would be worth more altogether.

[bedstuy]

The Federal Reserve is necessary to having a functional financial system.  It would be ridiculous to get rid of it.  That's not a serious question in my opinion.

On the second question, the gold standard is vastly inferior to floating currency.  While in theory a gold standard is a constraint on policy and a stabilizing force, it doesn't work in practice.  You only have to look at the great depression to see that.  And even if we wanted to return to the gold standard, it would be impossible.  Even if all the gold in the planet was in the reserves of the US,  it wouldn't be nearly enough. 

The part about the amount of gold we have not going enough to match the amount of dollars is relative. The point of having less value in gold than we do in money would be so that our dollar would be worth more altogether.

I don't follow what you're saying. 

[barfbag]

The Federal Reserve is necessary to having a functional financial system.  It would be ridiculous to get rid of it.  That's not a serious question in my opinion.

On the second question, the gold standard is vastly inferior to floating currency.  While in theory a gold standard is a constraint on policy and a stabilizing force, it doesn't work in practice.  You only have to look at the great depression to see that.  And even if we wanted to return to the gold standard, it would be impossible.  Even if all the gold in the planet was in the reserves of the US,  it wouldn't be nearly enough. 

The part about the amount of gold we have not going enough to match the amount of dollars is relative. The point of having less value in gold than we do in money would be so that our dollar would be worth more altogether.

I don't follow what you're saying. 

We would only have enough dollars in circulation to buy the amount of gold in the U.S. This would drop prices, wages, everything and a dollar would buy more and be worth more. The only concern I have would be how we'd pay off our deficit which has been run up in times where there is no gold standard and therefore exists in very large numbers.

[bedstuy]

The Federal Reserve is necessary to having a functional financial system.  It would be ridiculous to get rid of it.  That's not a serious question in my opinion.

On the second question, the gold standard is vastly inferior to floating currency.  While in theory a gold standard is a constraint on policy and a stabilizing force, it doesn't work in practice.  You only have to look at the great depression to see that.  And even if we wanted to return to the gold standard, it would be impossible.  Even if all the gold in the planet was in the reserves of the US,  it wouldn't be nearly enough. 

The part about the amount of gold we have not going enough to match the amount of dollars is relative. The point of having less value in gold than we do in money would be so that our dollar would be worth more altogether.

I don't follow what you're saying. 

We would only have enough dollars in circulation to buy the amount of gold in the U.S. This would drop prices, wages, everything and a dollar would buy more and be worth more. The only concern I have would be how we'd pay off our deficit which has been run up in times where there is no gold standard and therefore exists in very large numbers.

How is that remotely feasible? And even if it was, it would create massive deflation and a corresponding economic depression.  I don't see any benefit in that.

[barfbag]

The Federal Reserve is necessary to having a functional financial system.  It would be ridiculous to get rid of it.  That's not a serious question in my opinion.

On the second question, the gold standard is vastly inferior to floating currency.  While in theory a gold standard is a constraint on policy and a stabilizing force, it doesn't work in practice.  You only have to look at the great depression to see that.  And even if we wanted to return to the gold standard, it would be impossible.  Even if all the gold in the planet was in the reserves of the US,  it wouldn't be nearly enough. 

The part about the amount of gold we have not going enough to match the amount of dollars is relative. The point of having less value in gold than we do in money would be so that our dollar would be worth more altogether.

I don't follow what you're saying. 

We would only have enough dollars in circulation to buy the amount of gold in the U.S. This would drop prices, wages, everything and a dollar would buy more and be worth more. The only concern I have would be how we'd pay off our deficit which has been run up in times where there is no gold standard and therefore exists in very large numbers.

How is that remotely feasible? And even if it was, it would create massive deflation and a corresponding economic depression.  I don't see any benefit in that.

It would have the exact opposite effect you stated. A dollar would be worth far more and be at the top of world currencies. There is benefit to that. When there's less money, prices have to drop. It's not like anyone would be able to afford anything anymore at current prices so the prices of goods would have to drop. And no not even the demonized 1% would be able to afford things. Our economy would have about $40 billion in our money and our dollars would be worth more.

[bedstuy]

You are saying that massive deflation would be good for the economy.  You have got to be kidding.  And please, the gold standard would be impossible to maintain.  That's just a fact.  You either are being facetious or don't know anything about this subject.

[barfbag]

You are saying that massive deflation would be good for the economy.  You have got to be kidding.  And please, the gold standard would be impossible to maintain.  That's just a fact.  You either are being facetious or don't know anything about this subject.

Notice how I never stated directly how I feel about the issue. The gold standard worked fine until it was abolished and now the value of the dollar has been plummeting ever since. The only deflation would be the deflation of prices. There would be inflation in terms of the value of the dollar.

[bedstuy]

You are saying that massive deflation would be good for the economy.  You have got to be kidding.  And please, the gold standard would be impossible to maintain.  That's just a fact.  You either are being facetious or don't know anything about this subject.

Notice how I never stated directly how I feel about the issue. The gold standard worked fine until it was abolished and now the value of the dollar has been plummeting ever since. The only deflation would be the deflation of prices. There would be inflation in terms of the value of the dollar.

The gold standard didn't work fine.  It was one of the major contributors to the Great Depression.  Central banks weren't able to use monetary policy to respond appropriately.  It also created price instability and doesn't allow for capital to keep pace with the economy.

On your second point, a steady low rate of inflation is a good thing.  The steady decline in the  "value of the dollar" doesn't really matter.  Prices for consumers steadily rise but so do wages so there's no problem.  On the other hand, deflation is actually a problem.  So, you propose to fix a non-existent problem at the expense of creating a serious real problem. 

[barfbag]

You are saying that massive deflation would be good for the economy.  You have got to be kidding.  And please, the gold standard would be impossible to maintain.  That's just a fact.  You either are being facetious or don't know anything about this subject.

Notice how I never stated directly how I feel about the issue. The gold standard worked fine until it was abolished and now the value of the dollar has been plummeting ever since. The only deflation would be the deflation of prices. There would be inflation in terms of the value of the dollar.

The gold standard didn't work fine.  It was one of the major contributors to the Great Depression.  Central banks weren't able to use monetary policy to respond appropriately.  It also created price instability and doesn't allow for capital to keep pace with the economy.

On your second point, a steady low rate of inflation is a good thing.  The steady decline in the  "value of the dollar" doesn't really matter.  Prices for consumers steadily rise but so do wages so there's no problem.  On the other hand, deflation is actually a problem.  So, you propose to fix a non-existent problem at the expense of creating a serious real problem. 

It had been around for a very long time before the depression. You make a point about the value of the dollar because money does go in both directions, but we want our dollar to be stronger instead of printing more and more money because it leads to more and more debt. While we do have appropriate responses for banks today, it's created an astronomical debt along with several other non-related factors of our deficits.

[bedstuy]

You are saying that massive deflation would be good for the economy.  You have got to be kidding.  And please, the gold standard would be impossible to maintain.  That's just a fact.  You either are being facetious or don't know anything about this subject.

Notice how I never stated directly how I feel about the issue. The gold standard worked fine until it was abolished and now the value of the dollar has been plummeting ever since. The only deflation would be the deflation of prices. There would be inflation in terms of the value of the dollar.

The gold standard didn't work fine.  It was one of the major contributors to the Great Depression.  Central banks weren't able to use monetary policy to respond appropriately.  It also created price instability and doesn't allow for capital to keep pace with the economy.

On your second point, a steady low rate of inflation is a good thing.  The steady decline in the  "value of the dollar" doesn't really matter.  Prices for consumers steadily rise but so do wages so there's no problem.  On the other hand, deflation is actually a problem.  So, you propose to fix a non-existent problem at the expense of creating a serious real problem. 

It had been around for a very long time before the depression. You make a point about the value of the dollar because money does go in both directions, but we want our dollar to be stronger instead of printing more and more money because it leads to more and more debt. While we do have appropriate responses for banks today, it's created an astronomical debt along with several other non-related factors of our deficits.

The gold standard and the lack of central banking created periodic financial panics before the Great Depression.  So, that's hardly an argument.

Actually, we want there to be a substantial amount of US debt.  Not necessarily the current debt to GDP ratio we have, but a certain amount of debt is beneficial to the economy.  US Gov't backed securities are the basis for a lot of the efficiency of our capital markets.  We might sometimes accumulate too much debt, but the better answer is not shackling ourselves to the gold standard but to have smart monetary and fiscal policy.

But, whatever, I don't know if you're being facetious or just ignorant.  Take a macro-economics class or read a book about this stuff that wasn't written by a Ron Paulite.   

[barfbag]

You are saying that massive deflation would be good for the economy.  You have got to be kidding.  And please, the gold standard would be impossible to maintain.  That's just a fact.  You either are being facetious or don't know anything about this subject.

Notice how I never stated directly how I feel about the issue. The gold standard worked fine until it was abolished and now the value of the dollar has been plummeting ever since. The only deflation would be the deflation of prices. There would be inflation in terms of the value of the dollar.

The gold standard didn't work fine.  It was one of the major contributors to the Great Depression.  Central banks weren't able to use monetary policy to respond appropriately.  It also created price instability and doesn't allow for capital to keep pace with the economy.

On your second point, a steady low rate of inflation is a good thing.  The steady decline in the  "value of the dollar" doesn't really matter.  Prices for consumers steadily rise but so do wages so there's no problem.  On the other hand, deflation is actually a problem.  So, you propose to fix a non-existent problem at the expense of creating a serious real problem. 

It had been around for a very long time before the depression. You make a point about the value of the dollar because money does go in both directions, but we want our dollar to be stronger instead of printing more and more money because it leads to more and more debt. While we do have appropriate responses for banks today, it's created an astronomical debt along with several other non-related factors of our deficits.

The gold standard and the lack of central banking created periodic financial panics before the Great Depression.  So, that's hardly an argument.

Actually, we want there to be a substantial amount of US debt.  Not necessarily the current debt to GDP ratio we have, but a certain amount of debt is beneficial to the economy.  US Gov't backed securities are the basis for a lot of the efficiency of our capital markets.  We might sometimes accumulate too much debt, but the better answer is not shackling ourselves to the gold standard but to have smart monetary and fiscal policy.

But, whatever, I don't know if you're being facetious or just ignorant.  Take a macro-economics class or read a book about this stuff that wasn't written by a Ron Paulite.   

I agree with you we accumulate too much debt due to congressional spending and ear marks. Smart fiscal policy is the key but will we ever have that? I think because I raised a question about the federal reserve, everyone assumes I want to go back to the gold standard and takes cheap shots at me. Something needs to be done about ear marks and politicians with their bribery and I think I know just the cure. Follow me on my next thread.