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The idea is to back it with something of value that does not allow you to
print money out of thin air... Whether it be gold or something else valued.
-----Original Message-----
From: Kent Rollins <kentr@xxxxxxxxxxxxxx>
To: omega-list@xxxxxxxxxx <omega-list@xxxxxxxxxx>
Date: Tuesday, August 11, 1998 7:07 PM
Subject: Re: DEFLATION MYTH
>Okay, but what about 30 years from now when gold will be a by-product of
our
>fusion reactors?
>
>Kent
>
>
>At 08:56 PM 8/11/98 -0400, you wrote:
>>Simple each serialized bill/digital credit is tracked with a certain
amount
>>of gold backing it. When you deposit the money in the bank they pay you a
>>certain amount to use it.
>>
>>If you are intrested in this subject you can study Austrian Economics or
>>check out the Von Mises Institute.
>>
>>Simple supply and demand.. If gold is scarce, your gold backed bills will
>>be able to buy many loaves of bread.
>>
>>It goes back to the first existance of money. They didn't want to drag
all
>>this gold around.
>>People appeared that were willing to store it for a fee and write a
receipt
>>for it. You could then trade the receipt (a paper note) for goods and
>>services. The person receiving the note knew that he could at any time go
>>and redeem it for gold at the storage facility. The fraud started coming
>>into the picture when they had thousands of notes out backed by gold in
the
>>storage faciltiy. Knowing that not all the people are going to redeem
their
>>notes, they started printing up more than one note for each unit of gold
in
>>storage (fraudulently).
>>
>>Worse case scenario -- A run on the banks occurs, this is fine as long as
>>the banks are held accountable to repay depositors.
>>
>>FDR relieved the banks of ever having to repay depositors (the so called
>>banking holiday). This was the worst thing he could do. In the free
market
>>he should have let the banks that were going fail do just that. And the
>>ones that made it financially by the the skin of their teeth or better
would
>>be the banks that would be the stronger and more fiscally sound.
>>
>>And for a side note.... The Roaring Twenties was built on a credit
bubble.
>>When you can borrow money cheaply people are willing to expand their
>>businesses (get loans for new equipment, buildings, employees ect.) This
>>creates a look of prosperity on the surface. New houses and pizza
>>franchises going up everywhere. But it is built on credit that must be
>>repaid. If there is a slump you can't make the payments etc...
>>
>>Under the gold standard there are not extreem fluctuations in business
>>cycles and interest rates..
>>
>>La Gonzo
>>
>>
>>-----Original Message-----
>>From: Kent Rollins <kentr@xxxxxxxxxxxxxx>
>>To: Gonzo <gonzo@xxxxxx>
>>Date: Tuesday, August 11, 1998 5:30 PM
>>Subject: Re: DEFLATION CRISIS... myth exposed <----Actually Stagflation.
>>
>>
>>>Is there enough gold in existence for us to back our money with it? What
>>>about all the currencies around the world? Also, if I deposit $100,000
in
>>>the bank and the bank lends it out for someone to pay a home builder,
does
>>>the reserve need $200,000 or $100,000 in gold to back it up?
>>>
>>>Kent
>>>
>>>
>>>At 10:59 AM 8/11/98 -0600, you wrote:
>>>>The answer is simple get away from fractional reserve banking and return
>>to
>>>>a full gold standard (not the brenton-woods semi gold standard). The
>>>>problem is that it is to late for the US because you can not run
deficits
>>on
>>>>a gold standard. They wanted powerful money overseas so they allowed
>>>>foreigners to exchange their money for gold bullion, but wanted
>>inflationary
>>>>money at home. This infationary money cheats the people. Why? because
>>when
>>>>you first print the money at the top it has a set value that is greater
>>than
>>>>when it trickels down through the economy (a lag time effect). Also
they
>>>>can take this money that they just printed and buy real assests such as
>>land
>>>>and buildings. This is why they wanted to dual standard money.
>>>>
>>>>Nixon took us off the Semi-gold standard (Brenton-Woods) because
>>foreigners
>>>>became scared about the US economy and decided to exchange their dollars
>>for
>>>>the gold. The government got worried when the gold reserves became low.
>>>>Why was the government worried? Because we were using a fractional
>>reserve
>>>>system (a fraction of the dollars out there have gold backing them). If
>>we
>>>>had money fully backed by gold whether paper, coin, or digital credit
you
>>>>would experience new parallels or prosperity.
>>>>
>>>>Why is this gold backed money better? When you print a bill backed by
>>gold
>>>>you have to spend time/energy to get the gold. This time/energy/gold
has
>>>>greater value. Slapping a bill on a legalized counterfeiting machine
does
>>>>not create value.
>>>>
>>>>
>>>>-----Original Message-----
>>>>From: Timothy Morge <tmorge@xxxxxxxxxxxxxxx>
>>>>To: bruceb@xxxxxxxxxxxxx <bruceb@xxxxxxxxxxxxx>
>>>>Cc: Omega List <omega-list@xxxxxxxxxx>
>>>>Date: Tuesday, August 11, 1998 9:43 AM
>>>>Subject: Re: DEFLATION CRISIS... myth exposed
>>>>
>>>>
>>>>>bruceb@xxxxxxxxxxxxx wrote:
>>>>>>Why, because of all the potential threats to the US economy, this is
by
>>>>far the easiest >problemto fix.
>>>>>
>>>>>> What got us into the deflationary cycle of the 1930's? The
government
>>>>>> contracted the money supply at the very time they should have been
>>>>expanding
>>>>>> it. What got us out of it? A massive expansion of the money supply
to
>>>>pay
>>>>>> for World War II (some things you learn by trial and error...).
>>>>>>
>>>>>> Bruce
>>>>>
>>>>>
>>>>>Bruce:
>>>>>
>>>>>Personally, I'm not particularly interested in forecasting where the
>>>>markets are
>>>>>going--I'll trade them if they go up or if they go down. And until now,
>>>>I've
>>>>>read your personal opinions of how the world works and found them
>>>>interesting. I
>>>>>don't agree with all of what you've written, but that's what makes the
>>>>world go
>>>>>round.
>>>>>
>>>>>Now, your statement about deflation being simple to end...I was trained
>>as
>>>>an
>>>>>economist at the University of Chicago. In fact, while there in their
>>joint
>>>>>degree program in the late 1970's, I paid for my schooling by doing
>>>>research for
>>>>>the BLS. In theory, deflation can indeed be cured simply by printing
lots
>>>>of
>>>>>extra money. But you speak about it as if the economy will react and
turn
>>>>on a
>>>>>dime. It isn't that simple and it doesn't work that way. No matter what
>>you
>>>>>read.
>>>>>
>>>>>I gave a speech at a dinner in Princeton, NJ about seven years ago, and
>>Dr
>>>>Paul
>>>>>Samuelson was also speaking. And during his speech, he described the
>>great
>>>>>difficulty they had trying to get the economy to respond to ANY type of
>>>>fiscal
>>>>>stimulus, as well as the printing of huge amounts of 'dollars.' His
>>>>statements
>>>>>boil down to one phrase: At some point, deflation is almost impossible
to
>>>>>turn--It's like pushing on a piece of limp string. The economy just
>>doesn't
>>>>>respond. He was on the shadow open market committee during the
1930's...
>>>>>
>>>>>I've had my stint as an economist and I'll leave that job to someone
>>else.
>>>>But I
>>>>>hope people that are reading your series take the time to think for
>>>>themselves.
>>>>>You've presented some interesting views, but unfortunately, you've
>>>>presented
>>>>>them as if they are fact and written in stone. They may be your views.
>>They
>>>>may
>>>>>be right or wrong. But in many of the things you have written about
here,
>>>>the
>>>>>way things unfold will not be dictated by anyone's opinion. And that's
>>why
>>>>there
>>>>>is a market place.
>>>>>
>>>>>Best,
>>>>>
>>>>>Tim Morge
>>>>>
>>>>
>>>>
>>>
>>
>>
>>
>
>
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