You, sir, are spot-on! My late father was an economist. He held a PhD in economics from the University of Oklahoma and he would rail against people arguing for the Gold Standard. People just don't know what they're asking for when they demand we go back to the Gold Standard. Imagine the U.S. being on the Gold Standard and then there's a run on the banks. OMG -- What a nightmare!
Fiat currency whether debt base base or not has ALWAYS failed dating back to the Chinese who invented it. IT HAS NEVER WORKED, PERIOD!!!! Gold and silver is being stored and accumulated by Central Banks around the world this very moment because they know the paper charade is going to end and end quite badly.
Gold is a foundation to a monetary system as cement is to the foundation to a house. It is used as a store of value, because it is a rare commodity that is not consumed a lot (other than jewelry) therefore it gives base to ALL other commodities .Silver which would be the second man on the totem pole of has been around for 6000 years in the form of real money would also be in that foundation, then comes nickel, copper, and zinc, ect. The only part that I can agree on is the problem of debt.
@MillionthUsername Gold is neither good nor bad, the issue is debt money vs wealthmoney. Government ran fiat money would be the best kind if it was put into circulation as a payment, just like the government ran fiat gold and silver money under the 1792 coinage act. Today we have a private credit money system, whereby all money is put into circulation as interest bearing debt.
"the actual creation of money always involves the extention of credit by private commerical banks
@TheByronDaleChannel Gold is classified as commodity money, fiat money is unbacked by anything of value. The two items are completely different. The coinage act established the mint.
@TheByronDaleChannel No body has to pass a law to make gold money. No body has to make gold money. Gold has been money for thousands of years. The people ultimately decide what is money, and they accept gold as money naturally.
@Gregsok The I suggest you try to buy and sell using gold and you'll find out really quick that gold is not money. You can only buy and sell with something that has been monetized, and gold has not been monetized in this country for a very long time.
@Gregsok I enjoy the conversation, but I would like you to clarify this comment. If we were on a gold standard until 1970, then why was it illegal for Americans to own gold after 1933/34?
I've read the constitution and nowhere could I find it to define gold as lawful money, nor bills of credit as unlawful money. Article 1 Section 10 I believe restricts states from issuing bills of credit, or making any Thing but gold and silver in payment of a debt but....
@TheByronDaleChannel Foreign creditors were able to redeem U.S. dollars for gold until 1971 when Richard Nixon put an end to the convertibility of dollars into gold.
5) Fed Banknotes returning to banks are required to be retired by the banks, by redemption at the Fed. Banks receive full rights to issue banknotes. After a period, it is declared that the Fed will be permanently dismantled (legally and physically) at a certain date, and thus all Fed notes still in use should be redeemed (else they become worthless). It is made illegal for the government to bail out banks, and banks that cannot meet their dues are bankrupted. We are then back to normal.
5) The correct procedure for returning to a gold standard is to reverse all previous steps taken away from it. This entails determining a new fixed dollar gold weight, based on market and or Fed gold reserves (the hardest part). This is then made the legal definition of 'dollar'. The Fed then begins to disgorge its gold holdings in a steady manner, by requiring commercial banks to withdraw their balances at a certain rate.
1) The quantity of gold is irrelevant. In a normal economy where gold is the monetary base, people use banking (notes, deposits etc), and not gold in the course of commerce. 2) Banking is not unlimited in the creation of deposits (obscurely referred to as 'money'), due to competition and the adverse clearing mechanism. 3) In this system, asking for the price of gold is the same of asking for the price of a dollar.
The whole idea of "wealth" is something that cannot be created or destroyed. You can't create gold or silver, and if you melt it, it still is gold and silver. Jefferson went to great lengths in his writings to explain why paper money (NOT backed by real wealth) is elastic and therefore manipulable for the sake of those who manipulate it - and that's exactly the problem today.
I'm either not following this guy properly or he is nonsensical. If gold and silver were backing the dollar (which is the world's standard currency) then there would be a finite amount of value to the money and it would not incur inflation. His point about trade deficits is interesting. But to stave that off then the US would simply manufacture and employ people here, with products that are exported. It would not only be a matter of the US only buying imports and then there is nothing exchanged.
@CohibaSkeeza There is no reason to debate him. He is bringing-up very poor arguments. It would be a complete waste of time to schedule a real debate. It could be handled easily in a couple of blog posts. I watched the first part and could refute the claims myself and I have only an amateur interest in Austrian economics.
His claim about the gold vs population shows he has no concept of how the pricing structure works and how that would function with competing currencies or a commodity standard
The worst mistake in human history was to go to OPEC and demand the price of gas be only in dollars. Oil produced in America should not be the same as OPEC prices.
The gold standard is far from perfect, but unfortunately our fiat money system will soon be worthless and there will be no confidence in money not backed by something. And that is hardly the fault of the Mises Institute.
@cheeseburger12 I used to be a supporter of the gold standard, but not since Bill Still set me straight in his classic film THE MONEY MASTERS. Paper fiat money can work, and has worked many times before. What matters is WHO creates it, and if the QUANTITY is controlled.
We should not let a private debt racket called the Federal Reserve create it. We (via our government) should create it DEBT FREE, and we the people need to make sure the quantity is strictly controlled, to prevent inflation.
@cheeseburger12 Well yeah, it's a monumental task to keep the crooks out of the monetary system, but it's a task we must accomplish. Look at the monetary system now. It's utterly infested with crooks, because it was created, and is run, by crooks!
@BRYAN351 : Bill Still is wrong. No body should create money and no body should control money. You simply let the free market work to determine the value of money as a store of value and what is determined to be money. If you have fiat money, you still have the temptation of easily debasing it. Just changing who controls how much of it there is does not change this... You MUST have something of value backing it so it can not be expanded exponentially which completely distorts the market.
@acjitsu Money doesn't grow on trees, so it must be created, whether it's gold coins or paper dollars. Backing dollars with gold won't rule out over-printing. Government could lie about the amount of gold in the vault so they can print more dollars. It all boils down to Bill Still's main point, which is having honest monetary oversight in our government.
@BRYAN351: Government would not be involved in the amount of Gold in their vaults. They won't need any vaults. Gold would be stored in banks and they could only lend out money in relation to the amount of Gold stored in their vault. Each bank would be responsible for the amount of money printed. No central banks are needed. You need a natural control on the amount of money to be lent out. It has to be on both ends, the physical supply of gold and as Still points out, the rule of law.
@acjitsu Well hold on, you're saying that private banks would all print their own gold backed paper money? That's how is was before the Civil War, and things got pretty confusing with the scores of different notes loating around. If a bank goes bankrupt and their paper money becomes worthless, what then?
If we wanted one uniform currency for the entire country, whether backed by gold or not, the government has to print it.
I agree with most of what he said, but not the last part. The gold standard wouldn't be the problem, the trade deficit is the problem. The gold standard would simply expose a problem that already exists. We are trading IOUs for real good and racking up 40 billion dollars a month in debt, regardless of if it's in FRN or gold dollars. Sure, our current racket wouldn't be feasible under the gold standard. But that isn't gold's fault.
A gold standard means that your money will appreciate which will dissincentivise spending or investing especially in recession because holding on to your money makes you money automatically while investing it is a risk. The gold standard FUCKS A COUNTRY OVER IN RECESSION THAT IS WHY WE DROPPED IT AFTER THE GREAT DEPRESSION WHICH WAS LARGELY MADE "GREAT" BY THE GOLD STANDARD! Read a fucking history book you Austrian wannabees and you will see why we switched in the first place!!!!!
@durhamdf I honestly don't see how you can fault the gold standard for the great depression when we had a central bank before, during and after the great depression. There was no great depression before the central bank. Also, there has been a major recession in every single decade since the creation of the federal reserve, plus a great depression and now the great recession. I am not a fan of the gold standard, largely for the reasons expanded on in this video.
@christo930 Simple, with the gold standard it was impossible for the central bank to excercise any expansionary monetary policy. That is why we suffered MASSIVE deflation. And we suffered plenty of depressions before the fed was created in 1913. We had depressions in 1807, 1837, 1873, and 1893 ranging from 5 to 7 years in length. Since its creation we have had 1. And since dropping the gold standard we have had none.
@durhamdf The fed could have expanded the money supply in the 30s because there was an influx of gold in the 30's, not to mention a devaluation. Things have been much worse under a central bank. Recessions in every single decade, the great depression, the stagflation of the 70's and now the great recession. Things were more stable in the 19th century than the 20th. Then there is the constant inflation and constant rising prices which forces you into the market to save for retirement.
@christo930 It doesn't matter if their was an "influx of gold", the U.S. was restricted on how much they could increase the money supply because this influx was nowhere near the rate of deflation we experienced in the great recession. Since we Keynesian economics was adopted after the great depression our recessions have been mild, not turning into the many recessions of the 19th century I listed earlier. We didn't have panicks or bank runs, and we became the greatest economy on the planet...
@durhamdf MILD?The stagflation of the 70's was mild? The great depression was mild? The great recession(which is far from over) is mild? The recession of 80-82 was really bad, the 90-94 recession was bad, the 2001-2002 recession was mild. FYI.. We don't follow Keynes. Keynes was against inflation, and he wanted surpluses during the good years to actually pay for gov spending in the bad ones.
@christo930 Read my comment, I said since the adoption of Keynesian economics (after the great derpession) WE HAVEN'T HAD A SINGLE DEPRESSION. In the 19th century we had 4. And yes, compared to the massive panics and bank runs of the 19th century, the staglation of the 70's and early 80's was mild. And yes buddy we do follow keynes, every central bank on the planet excercises keynesian policies. Keynes wasn't against inflation, he was for stable growth (3% inflation) and full employment.
@durhamdf Yes he was against inflation. "By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens" Does that sound like the words of a man who supported inflation? 3% inflation isn't growth, it's inflation. Keynes wanted surpluses during the good years so the gov had money to lift aggregate demand during the bad years. Keynes NEVER wanted deficit spending in perpetuity and exponentially larger deficits.
@christo930 (contd) exactly, we should have been excercising contractionary policy under Bush but unfortunately the conservatives were retarded and thought it better to give trillions of dollars in tax cuts to the wealthy instead of acting responsibly. Clinton set us on the right path, leaving Bush with a budget that would have created a 300 billion dollar surplus in Bush's first year. (contd)...
@durhamdf There were no budget surpluses during the Clinton years. The gov was a net borrower during every single year of the Clinton administration. I am not a republican and I am certainly not a fan of bush and I agree that he was an ass-clown as were his first 3 congresses.
@christo930 in order to have growth you have to have mild inflation. Keynes knew that hyperinflation wasn't a good thing, no shit. But he understood that during a recession the worst case scenario is massive deflation caused by bank failures. Remember Keynesian economics was born out of the massive deflation we experienced in the great depression. And compared to the bank runs of the 19th century, the 80's was a picnic.And yes, surpluses during good times is correct policy, nobody told bush...
@durhamdf That statement doesn't say anything about hyperinflation, it is about inflation in general. You don't need inflation for growth. There was virtually no inflation during the 19th century and there was great growth during that period. Deflation happens as a result of inflation, it's the middle of the story. It wasn't just bush. Every president in my lifetime (since 69) has run perpetual deficits.
@christo930 you are just plain wronng on both assertions. We did have inflation during the 19th century. And it is the major tenet of Keynesian economics that the number one goal of government is to keep the economy at full employment and full output and that mild amounts of inflation roughly matching the rate of growth are necessary to do this. The monetarists even understand this, they believe that the money supply should be pegged to the natural rate of growth (3%). (contd)...
@durhamdf Inflating the money supply at the same % that the economy is growing is normal and not inflation. That type of money supply growth doesn't cause rising prices because the new products and services suck up the new money. The only inflation during the 19th century was during the wars which are always inflationary. There is no "natural rate of growth" in an economy, let alone being pegged at 3%
@christo930 (contd)... and deflation occurs as a result of inflation??? That is pure nonsense. Deflation occurs when banks fail and money is in effect destroyed. Deflation is the worst case scenario, it is what happened in the great depression. It forces people to hoard cash as opposed to spending it because that money will be worth more later. This destroys demand and digs the depression even deeper.
@durhamdf Yes, inflation eventually ends in deflation and the housing bubble is a perfect real world example of that. That cash hoarding theory is shit. People still need to live, eat, transport themselves etc. Even if they did hoard it, it would provide capital for expansion because it would drive down interest rates. Look at China, they have one of the highest savings rate in the world and a currency that is gaining value and they have 10% growth.
@christo930 You don't understand what inflation is. The price level of one product or industry rising IS NOT INFLATION. Inflation is the entire aggregate price level increasing. There is a tradeoff between employment and inflation. If everyone is working, then there will be increased demand as people have more money to spend and this causes demand pull inflation (too many dollars chasing too few goods) But in order to achieve stable growth and full output some inflation is inevitable. (contd)...
@durhamdf NO, YOU don't understand what inflation is. Inflation is an over expansion of the money supply, the result of which is rising prices across the economy. Inflation does sometimes go into a single sector of the economy like what we saw with the housing bubble. If everyone is working there is increased demand, but there is also increased supply! Where do you think all this worker productivity is going? That is the difference between true economic expansion and inflation.
@christo930 (contd)... And comparing a modern lead economy to China that has a currency that is starting out at a very devalued level is meaningless. And China's currency really isn't gaining much value because they pag the yuan to the dollar. Savings is good during times of economic expansion, it allows companies to invest in capital which is an investment in future growth. But in a massive recession, stimulating consumption is goal number 1
@durhamdf China has stated that they are going to let the yuan rise against the dollar, just not as fast as some people would like. But you can also look back in history in the US and find high savings rate during economic expansion. During the 50's, for example, there was a great economic boom and high savings rate. In my lifetime, recessions have largely come after consumption binges and high debt. During the recession, debt is paid down and/or liquidated. After that, consumption rates rise.
@christo930 Trying to raise consumption rates when consumers have cut back because they are broke is just plain stupid. Americans simply can't consume at their old levels. For decades rising real-estate prices allowed consumers to refinance their debt that they racked up during the booms. That mechanism is gone in this recession. People need to either go bankrupt or pay down their debt and they can't consume like they used to while doing this. Growth will not resume until the debt is liquidated.
@christo930 That is exctly what I said, during economic expansion, savings is good, and government should encourage it. It means banks have more money to loan to corporations who can then invest in capital (i.e. future growth). But during deep recessions, government should incentivize consumption. Trying to pay down debt during a recession when tax revenues are much lower is absolutely moronic and counter to the mainstream economic thought of both Keynesians and Monetarists
@durhamdf So you think the best thing to do when people are loaded up with debt is to take on more debt? Since there are no savings the only place the new credit could come from is inflation. Debt must be liquidated and unsustainable projects need to be stopped and that is what happens during a recession. NOW, if the gov wasn't running perpetual deficit, it would make sense to have the gov take up the slack in demand, but since that isn't the case,the gov doesn't have the money to spend.
@christo930 Paying off debt IS consumption my friend. So is investing your money. Savings are a small category of money held in non-checkable deposits. I agree that the government has failed to pay down the debt in times of economic expansion, Clinton moved us in the right direction (too late) leaving Bush with a budget with a 300 billion dollar surplus and Bush decided to continue to spend on deficit so he could give the wealthy another tax break. Still you must spend on deficit in a recession
@durhamdf According to the BLS, paying down debt is saving, If you want to define savings as money stuffed in a mattress, then yes, saving money is bad for the economy. There can be no doubt that Bush overspent and promised gov goodies to be paid for by deficit spending. But do you think the federal reserve should be printing all this money? Do you think it's a good thing that inflation pushes everyday citizens into the stock market, exposing their savings to risk?
@christo930 I would like to see a cite to the BLS page that says paying down debt is savings because that is compleytely contradicting mainstream economic theory which says that savings are a narrow category of money held in non-checkable deposits. But the federal reserve isn't printing any money, they can't, they don't have a printing press :). And according to the CPI which is the most comprehensive analysis of inflation, we are experiencing very mild inflation right now. (contd)...
@durhamdf The CPI is meaningless. The inflation numbers are deliberately understated and the GDP deliberately over stated. The BLS has published substitution of beef for hot dogs! Hedonic adjustments, substitution and geometric weighting all work together to push the CPI down so the gov can hide inflation and keep inflation expectations low. It also benefits them because SS increases are based on the CPI, so people on SS get poorer every single year.
@christo930 (contd)... You need to understand that ordinary citizens don't have any money to save in a recession. All of their money or nearly all oftheir money gets spent immediately on groceries, rent, gas etc... That is why the lower and middle class have a much lower Marginal Propensity to Save then the wealthy. (which is also BTW why from an economic standpoint trickle down economics is moronic)
@durhamdf Savings finance expansion and people don't save largely because of inflation. What is the point of saving if your money is going to purchase less in the future? People who are still working during a recession still have the same amount of disposable income, sometimes more if prices drop.
@christo930 THe difference is, that people in a recession have less wealth, because their portfolios have shrunken, their homes have lost value etc.. and cannot continue to take out lines of credit to pay for things like mortgage and car payments and instead have to pay directly from their income. But even in good times the savings of the poor and middle class is on average about 5%. These are not the people that the government is incentivising to consume. It is the wealthy (contd)...
@durhamdf The paper wealth of your house is kind of pointless since you can't easily extract it. As a mater of fact, the only real way to access this wealth is to downsize or move to a poorer neighborhood with lower RE values. Your house doesn't go up in a vacuum, similar houses of similar size and areas go up with yours. The paper values of your retirement plan really isn't very important to someone younger than 55 or so. Inflation is a major reason for the low savings rate.
@christo930 (contd)...and corporations (who are currently sitting on record holdings in their treasuries )that the government needs to incentivise to consume more and to hoard cash less. The poor and middle class spend nearly 100% of their income anyways. If we allowed massive deflation to occur like during the great depression, they would sit on these record holdings even longer which would drag the recession on MUCH longer untill potential gains outway gains from deflation by hoarding cash
@durhamdf Yeah, courtesy of the government and the federal reserve. They are borrowing money from the fed and lending it to the government at a higher rate and extracting the wealth of the middle class in the process. I agree that we don't want a massive contraction of the money supply, but falling prices isn't the end of the world as long as they aren't falling because of a contraction of the money supply.
@christo930 Well actually the middle class and lower class benefits from inflation caused by expantionary monetary policy because the middle and lower classes are debtors. Inflation means that their debt is worth less which is why lenders are screaming their heads off to end expansionary policy. Also this makes our national debt worth less which is why China is bitching too. But any valuation of the dollar is going to mean that companies are going to hold on to record holdings even longer.
@durhamdf Inflation benefits the wealthy, gov and corporations because they get the money first while it still has the full value. Furthermore, they are paid in profits, shares, dividends etc which are always in current dollars. The poor and middle class work for wages which are always old because they are the most sticky. In addition, inflation puts people in higher tax brackets without a corresponding lift in real income. While it may help slightly with their debt, it kills their income.
@christo930 that is absolutely backwards. The wealthy have a much larger marginal propensity to save. Which means they have more actual dollars at any given point as a percentage of their wealth then the lower and middle class. This savings becomes worth less. And it doesn't matter when they get paid their money will be worth less once inflation takes hold. The lower and middle class are debtors, they have more debt than savings and inflation means this debt is worth less.
@durhamdf The wealthy don't save in cash, so you're wrong. The decade of the 0s were highly inflationary and the poor and middle class got wiped out, while the rich got richer. The wealthy put their money in investment vehicles, not savings deposits. Even when they lose value on share price, they still make the same dividends and use the dividends to buy even more stocks at the depressed prices.
@christo930 There is no point arguing with you if you will deny the most basic realities of modern economies. Look it up my friend, the wealthy have a much larger marginal propensity to save then the poor. The poor and middle class spend virtually every dollar they earn immediately, the wealthy throw it in savings accounts and CDs untill they can think of a way to spend/invest it. There was pretty mild inflation througth the 0', inflation was high in the 90's and the middle class got wealthier.
@durhamdf I didn't say they don't save, I said they don't save in cash or in basic savings accounts. The wealthy save by investing. The wealthy might, for a very short time, put a small % of their savings in a bank account or 1 month cd, but they don't have the bulk of their savings in this form. This might also be affected by who you consider wealthy. I don't consider anyone who has to work as wealthy.
@christo930 I agree, most wealthy individuals aren't affected much either by mild inflation, but much more so than the lower and middle class whose debt becomes worth less. It is the creditors who get screwed by mild inflation. But the fact that the wealthy don't immediately spend their money like the poor and middle class is the reason that trickle down economics is based on flawed economics. The multiplier effect is much greater if you give tax cuts to the poor who have a smaller MPS
@durhamdf Creditors take inflation into account when they determine interest rates. Furthermore, inflation isn't mild. During most of the last 40 years the average inflation rate has been between 3 and 5% which is exponential growth, leading to a doubling of the cost of living in 14 years to just a little over 20 years (range). When you already spending most of your income and the cost of living goes up, you are getting poorer and have to forgo things just to eat.
@christo930 Yeah 3% inflation is the natural rate... It matches the growth in a modern stable economy. 3% inflation per year does mean a doubling of prices in 23 years but this is necessary in order to maintain full employment and full output. If we went back to the gold standard and allowed our money to appreciate, we would see an equillibrium unemployment rate much higher (probably around 10-15%). Every 1% of unemployment above the natural rate of about 5% means a 2% gap in GDP the next year..
@durhamdf I don't advocate the gold standard and I have no problem expanding the money supply at the same rate the economy is growing But expanding the money supply beyond the rate at which there is real GDP growth results in higher prices and changes the savings/spending habits of lay people. It also pushes people into the stock market to try and beat the inflation rate and puts people in higher tax brackets. The tax brackets were never designed for the working poor who now pay higher taxes.
@christo930 Well then I agree with you completely :) But in this recession the Fed has had to expand the money supply somewhat in order to avoid massive deflation that often occurs in these deep recessions as banks hold on to larger reserves then are required and money is in effect destroyed. Although I don't think that inflation will bump anyone into a higher tax bracket since wages adjust fairly slowly and at about the same rate that the tax brackets adjust at. But right now inflation is low
@durhamdf During the 70's many people were pushed into the 28k/yr tax bracket without a corresponding increase in spending power, but there are still people who are near that number and will be pushed into it because of inflation. I disagree and reject the idea the inflation is low right now, especially food and energy. Food is up and gas prices are up and this really eats into a working poor person's disposable income.
@christo930 Food prices are largely increasing due to higher energy costs. And it is ridiculous to point to oil prices as proof of inflation as oil prices are determined on the international market and are up everywhere. You can't measure inflation by looking at one industry, oil prices recently dropped significantly, does that mean we experienced deflation? No, of course not. THe CPI is the most comprehensive analysis of inflation we have and it shows very mild inflation.
@durhamdf Commodities started their run right when the fed announced QE2. The CPI is near meaningless, do you at least admit that? Between hedonics, substitution and geometric weighting, the numbers can say anything the gov wants them to say and they have a bias to make things look better than they are. From reelection of politicians to anchored expectations to SS adjustments to bond rates.What do you think of the substitution of steak for hot-dogs? THe BLS has made that very substitution!
@christo930 First of all comodities starting their rise in 2007 immediately after the housing creash and took off after the market crash a year later. This makes sense, when an economy nearly falls into a depression and there is massive uncertainty, people will always seek safe haven in commodities especially gold and silver. At least the CPI is comprehensive and nonpartisan your estimates are based on two industries that you can point to where prices are up. That is not inflation just hysteria
@durhamdf No they didn't. Commodities got killed in late 08 early 09 and went to multi-year lows. Gold went down by hundreds of dollars. oil dropped by over $100 a barrel, copper, silver, cotton etc all went down in late 08/early 09.. The current bull run in commodity prices started just as QE2 was announced. The CPI is heavily flawed and you didn't answer my question. I think a multi-month month rolling average is a much better smoothing technique and is used in other sciences.
@christo930 Gold went from 800 an ounce in jan. 2008 to 1100 in december 2009. I have no idea what charts you are looking at but you are absolutely wrong. And yes it makes sense that after QE and QE2 commodity prices shot up because alarmists like yourself were preaching to the ignorant masses that the dollar was going to collapse and they sought out safe haven in gold and silver. Again, at least the CPI is an overall market assessment as opposed to your pick and choose bullshit assessment.
@durhamdf Gold went from $1000 in spring of 08 to just above 700/oz in nov 08. Other commodities suffered similar losses or greater.% wise. Gold mining stocks got KILLED as did oil. I do agree that announcements of money printing is going to, by itself, drive up commodities. Do you disagree that a rolling average is a better method of smoothing market noise? Did you know that same methods are used in climate science (thought they use longer averages) to smooth our the ups and downs of weather?
@christo930 The price of gold fluctuates month to month, no shit, but from 08 to 09 gold went from 800 an ounce to 1100 an ounce. From 2006-2011 it went from 550 an ounce to 1500 an ounce. You can't pick and choose a few months to show that gold dropped when the overall trend for the year was a massive inflation of the price. That is moronic at best, dishonest at worst. And again, the Fed does not "print" money. Printing money is more permanent, open market opperations run both ways
@durhamdf I was only trying to show that during the deflationary period of fall 2008 the price of gold dropped precipitously. I don't deny that gold has been on a bull run since the early 2ks when Bush started his damn deficit spending programs and as oil rising due to lack of production growth while demand was swelling. Keep in mind that I an not a fan of the gold standard. According to Bernanke during his 60 minutes interview, he was printing money and I think he would know given his position
@christo930 I am not busting your balls or being a troll, but I would really like to know if you think rolling averages is the more appropriate way of smoothing out market noise when calculating the CPI, rather than substitution, hedonics and geometric weighting. If not, why? It is the chosen method of nearly every other science when dealing with these types of statistics (that is with short term volatility). As I mentioned before, climate scientists do it, so why can't economists do it?
@christo930 I doubt bernanke would say that because the Fed doesn't print money. It doesn't have a printing press. But the Fed can increase/decrease the money supply through open market opperations (buying/selling U.S. bonds) But gold steadily rose through the early 2000's and then went through the roof, trippling in price after the market crash. The point is, this rise in Gold wasn't because of inflation (the money supply surely hasn't trippled) it is just a natural product of uncertainty
@durhamdf Watch the first Bernanke interview with 60 minutes he explained that he was printing money, which is what he is doing. When the treasury offers bonds on the market and the fed prints money to buy them, that is printing money. It's anticipation of the increase of the money supply. And I ask you again, is a rolling average a better way to smooth the ups and downs of the commodities market than the BS methodology of the BLS?
@christo930 The fed can't print money my friend, look it up. It isn't a power that the fed posses. They can create money just like every bank on the planet can create money through the fractional reserve system. They also create money through open market opperations. But the treasury is the only institution that can print money. The point of the Fed is to smooth out the ups and downs through expansionary/contractionary monetary policy. THis should make the highs lower and the lows higher
@durhamdf The term "printing money" doesn't mean literally printing money, it means creating new money, it's a euphemism. We both know that most of the US dollars out there aren't physical dollars, but digits on a computer. The fed is buying treasuries with newly created dollars and that can't be described as anything but printing money. Like I say, watch the first Bernanke interview and he says he's printing money, the interviewer asks him to clarify and he said again, he's printing money.
@christo930 THen don't call it printing money, it isn't. THey are completely different things with completely different consequences. Nobody says that the banks are printing money when they create money through the fractional reserve system... I'd like to see a link to this interview to get some context b/c there is no way he said that. But really who cares, the point is that the Fed has been trying to avoid massive deflation like we saw in the great depression. Expansionary policy is correct.
@durhamdf We are not talking about check money, we are talking about fed money and much of this money is making it into circulation through the QE program which I think is scheduled to end this month. I have told you where to find Ben bernanke saying he is printing money, it's right here on youtube. It's the first interview he did. Then in the second interview, he said he wasn't printing money, but in the first one he said it and then confirmed it and expanded on it with follow up questions.
@christo930 When a bank, ANY bank, loans money money out, it is creating money as this dollar is still owned by one person who can remove it at any time, while simultaneosly being spent by a company that borrowed this money from the bank. Nobody accuses bank of America of "printing money". Give me a name of the video, all I can find is the 60 minutes interview where he says they aren't printing money and expalins the powers of the Fed briefly. This isn't up for debate, THE FED CAN'T PRINT MONEY!
@durhamdf Do you understand how the fed tries to approach their "target rate"? You know that it isn't set by FIAT, right? They do it by flooding the banks with reserves. Checking account money is different than fed money. Checking account money can be loaned out at 90% The fed created reserves can be loaned out multiple times, not fractionally. Furthermore, the fed is purchasing treasuries with newly created reserve notes. Where do you think the fed gets the money to buy treasuries for QE?
@christo930 THe fed gets money to buy treasuries from its own reserves, The fed targets its target rate through open market opperations, buying and selling bonds on the open market to increase the money supply to drive rates down, or selling bonds to decrease the money supply and drive rates up. Yes, low rates are what largely helped cause the financial collapse, but raising rates during a massive recession that has the possiblility of turining into a double dip is a terrible idea. (contd)...
@durhamdf Double dip? That implies that the recession ended. Did you see the jobs report Friday, not to mention May's numbers were revised way down. The recession started in Dec 07 and nobody even declared it to late 08. The "growth" that has occurred since then is gov spending and inflation. When you understate inflation, you make growth look better than it is. The same thing happened in 08. The BLS was claiming such low inflation numbers to make it look like we were growing.
@christo930 (contd)... I do agree, that this is risky. The Fed needs to be careful that it slows down expansionary policy when the economy begins to turn around, or we could see higher inflation and potentially more bubble building. Right now, QE hasn't had much of an inflationary effect because much of this additional currency is just sitting in the reserves of banks across the country and not getting loaned out. But at present, we are at no risk of overheating this stagnated economy.
@durhamdf Shadowstats, who use the same methodology of calculating inflation as they used before the Boskin commission says inflation is running around 10% annually. If nothing else, please tell me you understand the the BLS manipulates it's statistics. Please tell me you don't think owners rent is a valid measure of GDP and that Hedonics, geometric weighting and substitution are valid tools for measuring inflation.
@christo930 Shadow stats? hahahah. You think you could cite that source in a scholarly journal or paper? 10% inflation a year is ridiculously high, that means that the prices would double in 7 years!!!! The CPI may not be perfect, but at least it is transparent (you can look exactly at the index they use) and is comprehensive (It encompases many different goods and services across the economy). The vast majority of experts agree inflation is currently below the natural rate, around 2% annually.
@durhamdf There is no "natural" rate of inflation. All through the 18 and 19th centuries, cost of living were dropping, not rising while standards of living were going through the roof. It really wasn't until WW2 and the permanent expansion of the federal gov that inflation became a permanent part of our lives. You certainly can't empirically prove that there is a natural rate of inflation. Why should the money supply naturally grow faster than the economy, especially with cap investment?
@durhamdf I have read that many large corporations and other businesses use his data. The gov data sucks. Real price inflation has been way over 2%, especially for items directly linked to commodities, like food, clothing and energy, things we need everyday. AGAIN, I ask you, why not do it the way every other science smooths data with rolling averages? Look at how climate data is gathered. Now if ANY data has ups and downs, it's climate. So it's smoothed with 5 year averages.
@christo930 HAHAH you have "read" that corporations go to "shadowstats" for information on the economy?!!? Good one kid. The CPI isn't perfect, but it is BY FAR the most comprehensive index of products in the U.S. economy in various industries and spread out geographically. No other index comes close to being as comprehensive. And the average prices of the market basket of all products in our economy have only gone up by roughly 2% per year. And have you been living under a rock (contd)...
@durhamdf The fact that there has been inflation for the past 70 years or so doesn't prove it's natural. We have had central banks expanding the money supply the entire time. Once again you fail to address that the CPI would be better smoothed through averages, which other sciences that don't have an agenda use. Inflation is running higher than 2% per year, much higher. I don't know why you call me a "kid" as if being young would be an insult.
@christo930 (contd)... commodities began their climb immediately after the housing crash and took off after the market collaps. IN EVERY SINGLE RECESSION the price of gold increases as people seek safe haven from the uncertainty in the market in silver ang gold. And oil prices are being pushed up by an booming increase in demand from China and a speculated smaller supply as unrest spreads in the middle east. You idiots call the CPI shit and then base your inflation estimates on (contd)...
@durhamdf You're wrong. Gold dropped precipitously during the 80-82 depression, it went from an all time high in 1980. The price of gold should go down in a recession because the money supply shrinks. The main thing supporting the high prices is the expansionary monetary policies being pursued all over the western world and now is Asia besides.
@christo930 (contd)...a couple industries that are greatly affected by outside variables. The reason inflation is low now kid, is that banks are not loaning out money (much of which is newly created from the fed) so this money doesn't go through the money multiplier effect and does not get a chance to push prices up. THIS IS BASIC STUFF, Macroecon101. When the economy DOES recover, THEN we need to be careful not to continue to expand the money supply which CAN lead to substantial inflation
@durhamdf I KNOW it doesn't match the theory. But see, I go to the supermarket, I have utility bills and a car to gas up, I buy clothes, I watch the commodities market. In short, I live in the real world where 7 billion actors, all acting on their own with different interests, have proved the theory wrong. You are pointing to a theory and gov provided data and ignoring what everyone can see. The fed is trying to inflate the housing market to keep the banks solvent and it isn't working.
@christo930 You're getting frustrated because you can't provide any evidence for your theory, so you start calling me a kid, as if that were an insult, when if you looked at my page you would see I am 41 going to be 42 in 6 days.
@durhamdf Gov spending is helping to drive prices up, but most of it is inflation expectations which are high because of the expansionary monetary policies, kid. There is also a lot of money being speculated with in the market, again driving up prices. Inflation is nowhere near 2%.
@christo930 This would all be good except prices are NOT RISING (with the exception of commodities and oil and items directly linked to the price of oil). You kids are a joke, you can't pick and chose one industry to show inflation. INFLATION IS THE RISING OF THE PRICE LEVEL AS A WHOLE! Consumer electronics have not gone up in price. Neither have cars, houses, furniture, clothing, etc... Gas prices recently dropped by 30 cents per gallon. Does that mean we suffered deflation? hahaha get a clue.
@durhamdf I agree with you that falling prices isn't deflation, nor is rising prices inflation, but inflation is the term that people use to describe rising prices. Big ticket items are the only things not rising. Furniture and clothing have gone up, I know I buy them and recently bought some new furniture.
I agree with you that a large contraction of the money supply would be devastating to the US economy. There are deflationary pressures, but right now, prices for common goods are rising.
@christo930 You can say it all you want, but look at the CPI. It includes the widest market basket of products of any index we have. It lists a wide veriety of products from a range of industries sold in a range of places. As a whole, this index has only raised by about 2% per year for the last 2 years which is about 0.8% above our current slow rate of growth and the average rate of inflation in the U.S. is about 3%. All of the expansionary monetary policy has been to avoid a deflationary spiral
@durhamdf The CPI is flawed. They use hedonic adjustments to lower prices, substitution to hide rising prices and geometric weighting is also used to hide rising prices. Rolling averages smooth out data and is more realistic. Imagine if they tracked climate and used PA data when Florida data rose too quickly! It's getting hotter, but people are moving to the mid Atlantic, so now it's not as hot for them! It's not valid.
@christo930 lol what did you google search problems with the CPI? hahah. Seriously though, look at the rollling average estimates, go to inflation data (dot) com and compare the CPI to the 12 month rolling average. They are pretty much the same right now. The reason inflation is low right now buddy is that banks aren't loaning out money and there isn't a demand for loans in the first place so this money isn't reaching the economy pushing up prices and going through the money multiplier.
@durhamdf Inflation expectations are driving up commodity prices and that is where most of the inflation is. Housing prices are stable or falling depending on location, except places like DC (ironically). I haven't checked in about a month or so, but last I checked just about every commodity was at multi-year or all time highs. Food prices are rising most with clothing behind that. The further the product is from the commodity that is used for it the less inflation on that product.
@christo930 listen to yourself, "Inflation expectations are driving up commodity prices ". That is exactly what I have been saying! That isn't inflation. it is a natural increase in price in one industry or category caused by uncertainty which is natural a couple years after the worst financial dissaster since the great depression. Inflation IS AN AVERAGE, you can't point to one item going up in price, like oil affected by a million things, like increased Chinese demand, and call it inflation.
@durhamdf That is because inflation expectations are being driven by fed policy. If the fed wasn't pursuing an expansionary policy, there would be no inflation expectation for the market to act upon. There is NOTHING natural about a policy being driven by a single entity. If the market were doing it, then you could call it natural. I understand that, but you don't need to have every single item go up to have inflation. The only prices not rising are prices that are already high, like housing.
@durhamdf The rolling averages they are using are the adjusted ones. They aren't just taking a basket of goods and tracking their price over time. My education in this area was before the Boskin commission. I went to college in the late 80's and early 90's.
@christo930 Lol the only statistics you could find to support your irrational belief that we a currently experiencing massive inflation are from a website known as SHADOW GOVERNMENT STATISTICS! hahhaha give me a break man, the CPI is 10 thousand times more accurate than that bullshit, and at least the CPI is transparent, you can see exactly how they got that number. ShadowStats just provides a bullshit number with no real explanation how they got this. I can do it to, inflation is 2%, there fact
@durhamdf When you can't argue with what I am saying you start with the name calling and sarcasm. Shadowstats does release it's numbers and methodology to subscribers (to the best of my knowledge).
Tell me, what is your objection to tracking a fixed basket of goods over time to measure price inflation, especially if you use rolling averages to smooth out abnormalities like riots in the middle east?
@christo930 nope, just responding to your citing of bullshit statistics from a site with a clear and stated bias and bullshit methodology that you couldn't even cite in a 3rd grade term paper! And I have no objection over tracking a fix market basket of goods over time, THAT IS WHAT THE CPI DOES, and it is the most comprehensive analysis of a the most inclusive market basket available! And besides, the PPI and the ECI (both independent) show nearly the same figure as the CPI...
@durhamdf NO THEY DON'T. They adjust the prices down if they think it has improved in some way, they use substitution to keep the items rising the most out of the cpi and all kinds of other statistical tricks. shadowstats uses the same methodology the gov used to use and they publish their raw data and sources to subscribers, so it's not like it's not transparent. Are you saying the BLS did it wrong BEFORE the Boskin commission?
@christo930 It gets adjusted to make the market basket more comprehensive of items that are in demand at the time. Of course they need to remove items like Playstation1 from the basket when new technology comes out and demand for those items falls etc..But all of this can be seen on the BLS website, exactly what got changed and why. And why is it that these estimates match closely with the independent PPI and ECI. Inflation isn't normal 2 years after a massive recession, deflation was the worry.
@durhamdf There are some reasonable substitutions like a PS1 when the PS2 comes out or ice cream and frozen yogurt, but they also substitute steak for hotdogs (an actual 2005 substitution)! Say the PS2 comes out and it's more than the PS1, they hedonically adjust the price downward because the new one is so much more powerful and this is not legitimate. That's for the CPI, for the GDP they hedonically adjust the price higher again because it's more powerful. Deflation is a danger,I concede that
@christo930 Lol the substitutions have to do with what is a comprehensive basket of items for the average american. It actually makes much more sense to have hot dogs in amarket basket then steaks as this is more likely to be purchased by the average american and represents a better average of the increase in cost the average american would experience. You have yet to explain why the CPI tracks very closely to the PPI and ECI... And BTW theCPI includes gas which is inflated on the intl. level
@durhamdf So you think hot dogs are equivalent to steak? If you usually eat steak but have to substitute by eating hot dogs when steak becomes too expensive, you may be avoiding the higher price, but you are living a lower standard of living. The difference between you and I is that you are driven by ideology and I am driven by reality. You will make any excuse for all the stupid things the gov does because you want to protect the ideology.
@christo930 Lol you miss the point entirely, the CPI is supposed to be a measure of an average market basket of goods. Not an all inclusive market basket of goods. But anyways, why does this matter? You think the price of steak has skyrocketed so much compared to hot dogs that this will effect the measure of inflation or something? HAHAH you are the one living in fairyland, for the 20th time kid, why is it that the CPI tracks with the independent PPI and ECI? All you have is shadowstats! hahahha
@christo930 lol ok bye, guess you realized that there is a limited amount of diarrheah that can spew out of your mouth at least before your breath starts smelling like shit.
@durhamdf I have been respectful to you in every single comment in this exchange. We have a difference in opinion and that's cool. But you have ignored nearly every point I made and responded to it with condescension, disrespect, name calling and so on. I went to college before the Boskin commission and didn't major in economics, but had some economics classes. You could easily have explained why you feel I am wrong in respectful terms, instead you have to be a jerk. Then you insult me again.
@christo930 And the most ironic part is that you repeatedly referred to me as "kid", while simultaneously acting like a child. What could have been an interesting and though provoking exchange was reduced to hostility, condescension and flat out disrespect. I hope you don't behave that way in real life. If you feel you can stop being a jerk and nasty, I'll continue, otherwise, good day sir.
@christo930 (contd)..That is Keynesian economics101 spend on deficit during recession to make the lows higher and pay it off during times of runaway growth to prevent excessive inflation and bubble creation
@durhamdf And the recessions weren't mild, at least not all of them. All the recessions in my lifetime were deep except the 2001-2002 recession. Look at the fucking mess we are in now. The great recession is now 3.5 years on and getting worse, while prices are rising. Saving isn't even possible anymore since you are just giving your money away. So just to break even you need to expose your savings to risk because of the inflationary world we live in. Things suck.
This guy knows absolutely nothing. Everything he said was wrong or twisted. When the government sells treasuries, it creates money. If he can't even figure that out for starters, he is too incompetent to render an opinion on anything financial. I can't even listen to this whole thing. The guy is so idiotic.
@bahhumbucker thank god you Austrian Economic rejects are a tiny minority and the theory is only taught at a handful of clown colleges because you guys are fucking retards. Take at least ONE economics class before you spew diarrhea out of your mouth.
Von Mises advocated freedom to use whatever we want as money. Yes, he believed in gold, but he opposed government interference with money (legal tender laws).
I disagree with some of Byron Dale, but much of his analysis and data is excellent! The best are the letters he received from the U.S. Treasury that state "ALL MONEY is created by commercial banks." The shocking truth Dale proves is that banks create credit (money) out of thin air each time a debt slave signs a "loan" agreement!
This dude really hasn't bothered to really read any Misesian material. They have already addressed frac-banking (Rothbard), and determining the dollar gold weight (Mises). Your understanding of gold and trade deficits is nil. God, I would need 5 pages to rebut pretty much every sentence you have uttered, there is just so much wrong in this video. And there is another 2 videos! Fck that.
"The only way to do that is with a public fiat strictly managed to be inflation and deflation neutral"
Yeah, right, that's what Keynesians have tried for ages & made rich richer & destroyed poor & middle-class, there's no way of "managing inflation & deflation on fiat" because fiat itself creates inflation & deflation. Gold standard with 100% reserve-banking would be soundest form of money.
Byron is confused. Rothbard advocated for a 100% gold backed money. If you went to a bank and they couldn't give you gold on demand, there would be a run on that bank and it would close its doors. That would keep them honest not to lend more than their actual reserves. There wouldn't be much money to be made in lending, but neither is their in running a convenience store, so that's ok.
@ItsFazsha "there would be a run on that bank and it would close its doors. That would keep them honest not to lend more than their actual reserves."
We already have that situation with fiat currency, they haven't got enough paper to redeem what they have on their accounts. Yet, that hasn't stopped the fractional reserve system from being widespread.
What about the recent economic disaster suggests these people consider risk before profit?
@AnnoyedDragon I would dispute that we "already have had a run on the banks". Sure, small banks were folded up, but the big ones did not close their doors, they were bailed out as they knew they would be. My contention holds - as long as we have a central bank, and as long as the central banks will bail out the biggest banks, those big banks will take incredible risks. They do not consider risk, because they know there is no risk.
This is just not making any sense at all... So gold is not a good money because it doesn't allow an indefinite unbalanced trade? The only thing that does allow an indefinite trade is violence or deceit. Permanent unbalanced trade is called slavery. This is precisely why gold would be a good money... because it cannot allow indefinite trade deficits.
You, sir, are spot-on! My late father was an economist. He held a PhD in economics from the University of Oklahoma and he would rail against people arguing for the Gold Standard. People just don't know what they're asking for when they demand we go back to the Gold Standard. Imagine the U.S. being on the Gold Standard and then there's a run on the banks. OMG -- What a nightmare!
baphomet257 1 month ago
Fiat currency whether debt base base or not has ALWAYS failed dating back to the Chinese who invented it. IT HAS NEVER WORKED, PERIOD!!!! Gold and silver is being stored and accumulated by Central Banks around the world this very moment because they know the paper charade is going to end and end quite badly.
MrMaineack 2 months ago
Gold is a foundation to a monetary system as cement is to the foundation to a house. It is used as a store of value, because it is a rare commodity that is not consumed a lot (other than jewelry) therefore it gives base to ALL other commodities .Silver which would be the second man on the totem pole of has been around for 6000 years in the form of real money would also be in that foundation, then comes nickel, copper, and zinc, ect. The only part that I can agree on is the problem of debt.
MrMaineack 2 months ago
Oh, I get it. Gold is evil. Government run fiat money is wonderful.
Thanks for sharing.
MillionthUsername 2 months ago
@MillionthUsername Gold is neither good nor bad, the issue is debt money vs wealthmoney. Government ran fiat money would be the best kind if it was put into circulation as a payment, just like the government ran fiat gold and silver money under the 1792 coinage act. Today we have a private credit money system, whereby all money is put into circulation as interest bearing debt.
"the actual creation of money always involves the extention of credit by private commerical banks
TheByronDaleChannel 2 months ago
@TheByronDaleChannel There is no such thing as fiat gold and silver. That makes no sense.
Gregsok 2 months ago
@Gregsok Then what was Gold and Silver monetized under the 1792 coinage act? -Tom
TheByronDaleChannel 2 months ago
@TheByronDaleChannel Gold is classified as commodity money, fiat money is unbacked by anything of value. The two items are completely different. The coinage act established the mint.
Gregsok 2 months ago
@Gregsok Then why did they have to pass a law to make gold money?
TheByronDaleChannel 2 months ago 2
@TheByronDaleChannel No body has to pass a law to make gold money. No body has to make gold money. Gold has been money for thousands of years. The people ultimately decide what is money, and they accept gold as money naturally.
Gregsok 2 months ago
@Gregsok The I suggest you try to buy and sell using gold and you'll find out really quick that gold is not money. You can only buy and sell with something that has been monetized, and gold has not been monetized in this country for a very long time.
Gold is no longer money.
-Tom
TheByronDaleChannel 2 months ago
@TheByronDaleChannel A very long time? We were on a gold standard up until 1970. The
Constitution defines gold as lawful money and defines bills of credit as unlawful money.
J.P. Morgan: "Gold is money. Everything else is credit."
Gregsok 2 months ago
@Gregsok I enjoy the conversation, but I would like you to clarify this comment. If we were on a gold standard until 1970, then why was it illegal for Americans to own gold after 1933/34?
I've read the constitution and nowhere could I find it to define gold as lawful money, nor bills of credit as unlawful money. Article 1 Section 10 I believe restricts states from issuing bills of credit, or making any Thing but gold and silver in payment of a debt but....
TheByronDaleChannel 2 months ago
@TheByronDaleChannel but....this does not define gold and silver as lawful money.
Maybe we can have a phone conversation sometime? I'll message you my phone number.
TheByronDaleChannel 2 months ago
@TheByronDaleChannel Foreign creditors were able to redeem U.S. dollars for gold until 1971 when Richard Nixon put an end to the convertibility of dollars into gold.
Gregsok 2 months ago
@MillionthUsername Actually it is true because money is only a means to exchange any given good. It is not a good in of itself.
AdversusHaereses 1 month ago 2
@AdversusHaereses That is an extremely ironic statement coming from someone who calls himself "against heresies."
MillionthUsername 1 month ago
@MillionthUsername How is it an irony?
AdversusHaereses 1 month ago
@AdversusHaereses You simply made up your own definition of the word.
MillionthUsername 1 month ago
5) Fed Banknotes returning to banks are required to be retired by the banks, by redemption at the Fed. Banks receive full rights to issue banknotes. After a period, it is declared that the Fed will be permanently dismantled (legally and physically) at a certain date, and thus all Fed notes still in use should be redeemed (else they become worthless). It is made illegal for the government to bail out banks, and banks that cannot meet their dues are bankrupted. We are then back to normal.
tothemax01 2 months ago
5) The correct procedure for returning to a gold standard is to reverse all previous steps taken away from it. This entails determining a new fixed dollar gold weight, based on market and or Fed gold reserves (the hardest part). This is then made the legal definition of 'dollar'. The Fed then begins to disgorge its gold holdings in a steady manner, by requiring commercial banks to withdraw their balances at a certain rate.
tothemax01 2 months ago
4) The term 'dollar' was a unit of weight of gold. If no one can agree on a new weight, people will simply use ounce and milliounce etc.
tothemax01 2 months ago
1) The quantity of gold is irrelevant. In a normal economy where gold is the monetary base, people use banking (notes, deposits etc), and not gold in the course of commerce. 2) Banking is not unlimited in the creation of deposits (obscurely referred to as 'money'), due to competition and the adverse clearing mechanism. 3) In this system, asking for the price of gold is the same of asking for the price of a dollar.
tothemax01 2 months ago
The whole idea of "wealth" is something that cannot be created or destroyed. You can't create gold or silver, and if you melt it, it still is gold and silver. Jefferson went to great lengths in his writings to explain why paper money (NOT backed by real wealth) is elastic and therefore manipulable for the sake of those who manipulate it - and that's exactly the problem today.
DaveBassDotCom 3 months ago
@DaveBassDotCom This is why we need to switch our medium of exchange to something that represents wealth. -Tom
TheByronDaleChannel 3 months ago
@TheByronDaleChannel you clearly didn't understand the comment.
msa1985 3 months ago
I'm either not following this guy properly or he is nonsensical. If gold and silver were backing the dollar (which is the world's standard currency) then there would be a finite amount of value to the money and it would not incur inflation. His point about trade deficits is interesting. But to stave that off then the US would simply manufacture and employ people here, with products that are exported. It would not only be a matter of the US only buying imports and then there is nothing exchanged.
bonzelite 4 months ago
These arguments are complete nonsense... Any Austrian economist could demonstrate that.
CohibaSkeeza 4 months ago
@CohibaSkeeza Then please provide one that will have a debate with Byron.
TheByronDaleChannel 4 months ago 2
@CohibaSkeeza There is no reason to debate him. He is bringing-up very poor arguments. It would be a complete waste of time to schedule a real debate. It could be handled easily in a couple of blog posts. I watched the first part and could refute the claims myself and I have only an amateur interest in Austrian economics.
His claim about the gold vs population shows he has no concept of how the pricing structure works and how that would function with competing currencies or a commodity standard
CohibaSkeeza 4 months ago
@CohibaSkeeza Austrian economics is stupid
TheJamesvanmiert 4 months ago in playlist Can we go to gold?
The worst mistake in human history was to go to OPEC and demand the price of gas be only in dollars. Oil produced in America should not be the same as OPEC prices.
v19d 6 months ago
The gold standard is far from perfect, but unfortunately our fiat money system will soon be worthless and there will be no confidence in money not backed by something. And that is hardly the fault of the Mises Institute.
cheeseburger12 6 months ago
@cheeseburger12 I used to be a supporter of the gold standard, but not since Bill Still set me straight in his classic film THE MONEY MASTERS. Paper fiat money can work, and has worked many times before. What matters is WHO creates it, and if the QUANTITY is controlled.
We should not let a private debt racket called the Federal Reserve create it. We (via our government) should create it DEBT FREE, and we the people need to make sure the quantity is strictly controlled, to prevent inflation.
BRYAN351 4 months ago
@BRYAN351 "What matters is WHO creates it" Good luck keeping the wrong people away from the job.
cheeseburger12 4 months ago
@cheeseburger12 Well yeah, it's a monumental task to keep the crooks out of the monetary system, but it's a task we must accomplish. Look at the monetary system now. It's utterly infested with crooks, because it was created, and is run, by crooks!
BRYAN351 4 months ago
@BRYAN351 : Bill Still is wrong. No body should create money and no body should control money. You simply let the free market work to determine the value of money as a store of value and what is determined to be money. If you have fiat money, you still have the temptation of easily debasing it. Just changing who controls how much of it there is does not change this... You MUST have something of value backing it so it can not be expanded exponentially which completely distorts the market.
acjitsu 4 months ago
@acjitsu Money doesn't grow on trees, so it must be created, whether it's gold coins or paper dollars. Backing dollars with gold won't rule out over-printing. Government could lie about the amount of gold in the vault so they can print more dollars. It all boils down to Bill Still's main point, which is having honest monetary oversight in our government.
BRYAN351 2 months ago
@BRYAN351: Government would not be involved in the amount of Gold in their vaults. They won't need any vaults. Gold would be stored in banks and they could only lend out money in relation to the amount of Gold stored in their vault. Each bank would be responsible for the amount of money printed. No central banks are needed. You need a natural control on the amount of money to be lent out. It has to be on both ends, the physical supply of gold and as Still points out, the rule of law.
acjitsu 2 months ago
@acjitsu Well hold on, you're saying that private banks would all print their own gold backed paper money? That's how is was before the Civil War, and things got pretty confusing with the scores of different notes loating around. If a bank goes bankrupt and their paper money becomes worthless, what then?
If we wanted one uniform currency for the entire country, whether backed by gold or not, the government has to print it.
BRYAN351 2 months ago
I agree with most of what he said, but not the last part. The gold standard wouldn't be the problem, the trade deficit is the problem. The gold standard would simply expose a problem that already exists. We are trading IOUs for real good and racking up 40 billion dollars a month in debt, regardless of if it's in FRN or gold dollars. Sure, our current racket wouldn't be feasible under the gold standard. But that isn't gold's fault.
christo930 8 months ago
A gold standard means that your money will appreciate which will dissincentivise spending or investing especially in recession because holding on to your money makes you money automatically while investing it is a risk. The gold standard FUCKS A COUNTRY OVER IN RECESSION THAT IS WHY WE DROPPED IT AFTER THE GREAT DEPRESSION WHICH WAS LARGELY MADE "GREAT" BY THE GOLD STANDARD! Read a fucking history book you Austrian wannabees and you will see why we switched in the first place!!!!!
durhamdf 9 months ago
@durhamdf Only a fool would argue with an idiot. And I'm no fool.
bahhumbucker 9 months ago
@durhamdf I honestly don't see how you can fault the gold standard for the great depression when we had a central bank before, during and after the great depression. There was no great depression before the central bank. Also, there has been a major recession in every single decade since the creation of the federal reserve, plus a great depression and now the great recession. I am not a fan of the gold standard, largely for the reasons expanded on in this video.
christo930 8 months ago
@christo930 Simple, with the gold standard it was impossible for the central bank to excercise any expansionary monetary policy. That is why we suffered MASSIVE deflation. And we suffered plenty of depressions before the fed was created in 1913. We had depressions in 1807, 1837, 1873, and 1893 ranging from 5 to 7 years in length. Since its creation we have had 1. And since dropping the gold standard we have had none.
durhamdf 8 months ago
@durhamdf The fed could have expanded the money supply in the 30s because there was an influx of gold in the 30's, not to mention a devaluation. Things have been much worse under a central bank. Recessions in every single decade, the great depression, the stagflation of the 70's and now the great recession. Things were more stable in the 19th century than the 20th. Then there is the constant inflation and constant rising prices which forces you into the market to save for retirement.
christo930 8 months ago
@christo930 It doesn't matter if their was an "influx of gold", the U.S. was restricted on how much they could increase the money supply because this influx was nowhere near the rate of deflation we experienced in the great recession. Since we Keynesian economics was adopted after the great depression our recessions have been mild, not turning into the many recessions of the 19th century I listed earlier. We didn't have panicks or bank runs, and we became the greatest economy on the planet...
durhamdf 8 months ago
@durhamdf MILD?The stagflation of the 70's was mild? The great depression was mild? The great recession(which is far from over) is mild? The recession of 80-82 was really bad, the 90-94 recession was bad, the 2001-2002 recession was mild. FYI.. We don't follow Keynes. Keynes was against inflation, and he wanted surpluses during the good years to actually pay for gov spending in the bad ones.
christo930 8 months ago
@christo930 Read my comment, I said since the adoption of Keynesian economics (after the great derpession) WE HAVEN'T HAD A SINGLE DEPRESSION. In the 19th century we had 4. And yes, compared to the massive panics and bank runs of the 19th century, the staglation of the 70's and early 80's was mild. And yes buddy we do follow keynes, every central bank on the planet excercises keynesian policies. Keynes wasn't against inflation, he was for stable growth (3% inflation) and full employment.
durhamdf 8 months ago
@durhamdf Yes he was against inflation. "By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens" Does that sound like the words of a man who supported inflation? 3% inflation isn't growth, it's inflation. Keynes wanted surpluses during the good years so the gov had money to lift aggregate demand during the bad years. Keynes NEVER wanted deficit spending in perpetuity and exponentially larger deficits.
christo930 8 months ago
@christo930 (contd) exactly, we should have been excercising contractionary policy under Bush but unfortunately the conservatives were retarded and thought it better to give trillions of dollars in tax cuts to the wealthy instead of acting responsibly. Clinton set us on the right path, leaving Bush with a budget that would have created a 300 billion dollar surplus in Bush's first year. (contd)...
durhamdf 8 months ago
@durhamdf There were no budget surpluses during the Clinton years. The gov was a net borrower during every single year of the Clinton administration. I am not a republican and I am certainly not a fan of bush and I agree that he was an ass-clown as were his first 3 congresses.
christo930 8 months ago
@christo930 in order to have growth you have to have mild inflation. Keynes knew that hyperinflation wasn't a good thing, no shit. But he understood that during a recession the worst case scenario is massive deflation caused by bank failures. Remember Keynesian economics was born out of the massive deflation we experienced in the great depression. And compared to the bank runs of the 19th century, the 80's was a picnic.And yes, surpluses during good times is correct policy, nobody told bush...
durhamdf 8 months ago
@durhamdf That statement doesn't say anything about hyperinflation, it is about inflation in general. You don't need inflation for growth. There was virtually no inflation during the 19th century and there was great growth during that period. Deflation happens as a result of inflation, it's the middle of the story. It wasn't just bush. Every president in my lifetime (since 69) has run perpetual deficits.
christo930 8 months ago
@christo930 you are just plain wronng on both assertions. We did have inflation during the 19th century. And it is the major tenet of Keynesian economics that the number one goal of government is to keep the economy at full employment and full output and that mild amounts of inflation roughly matching the rate of growth are necessary to do this. The monetarists even understand this, they believe that the money supply should be pegged to the natural rate of growth (3%). (contd)...
durhamdf 8 months ago
@durhamdf Inflating the money supply at the same % that the economy is growing is normal and not inflation. That type of money supply growth doesn't cause rising prices because the new products and services suck up the new money. The only inflation during the 19th century was during the wars which are always inflationary. There is no "natural rate of growth" in an economy, let alone being pegged at 3%
christo930 8 months ago
@christo930 (contd)... and deflation occurs as a result of inflation??? That is pure nonsense. Deflation occurs when banks fail and money is in effect destroyed. Deflation is the worst case scenario, it is what happened in the great depression. It forces people to hoard cash as opposed to spending it because that money will be worth more later. This destroys demand and digs the depression even deeper.
durhamdf 8 months ago
@durhamdf Yes, inflation eventually ends in deflation and the housing bubble is a perfect real world example of that. That cash hoarding theory is shit. People still need to live, eat, transport themselves etc. Even if they did hoard it, it would provide capital for expansion because it would drive down interest rates. Look at China, they have one of the highest savings rate in the world and a currency that is gaining value and they have 10% growth.
christo930 8 months ago
@christo930 You don't understand what inflation is. The price level of one product or industry rising IS NOT INFLATION. Inflation is the entire aggregate price level increasing. There is a tradeoff between employment and inflation. If everyone is working, then there will be increased demand as people have more money to spend and this causes demand pull inflation (too many dollars chasing too few goods) But in order to achieve stable growth and full output some inflation is inevitable. (contd)...
durhamdf 8 months ago
@durhamdf NO, YOU don't understand what inflation is. Inflation is an over expansion of the money supply, the result of which is rising prices across the economy. Inflation does sometimes go into a single sector of the economy like what we saw with the housing bubble. If everyone is working there is increased demand, but there is also increased supply! Where do you think all this worker productivity is going? That is the difference between true economic expansion and inflation.
christo930 8 months ago
@christo930 (contd)... And comparing a modern lead economy to China that has a currency that is starting out at a very devalued level is meaningless. And China's currency really isn't gaining much value because they pag the yuan to the dollar. Savings is good during times of economic expansion, it allows companies to invest in capital which is an investment in future growth. But in a massive recession, stimulating consumption is goal number 1
durhamdf 8 months ago
@durhamdf China has stated that they are going to let the yuan rise against the dollar, just not as fast as some people would like. But you can also look back in history in the US and find high savings rate during economic expansion. During the 50's, for example, there was a great economic boom and high savings rate. In my lifetime, recessions have largely come after consumption binges and high debt. During the recession, debt is paid down and/or liquidated. After that, consumption rates rise.
christo930 8 months ago
@christo930 Trying to raise consumption rates when consumers have cut back because they are broke is just plain stupid. Americans simply can't consume at their old levels. For decades rising real-estate prices allowed consumers to refinance their debt that they racked up during the booms. That mechanism is gone in this recession. People need to either go bankrupt or pay down their debt and they can't consume like they used to while doing this. Growth will not resume until the debt is liquidated.
christo930 8 months ago
@christo930 That is exctly what I said, during economic expansion, savings is good, and government should encourage it. It means banks have more money to loan to corporations who can then invest in capital (i.e. future growth). But during deep recessions, government should incentivize consumption. Trying to pay down debt during a recession when tax revenues are much lower is absolutely moronic and counter to the mainstream economic thought of both Keynesians and Monetarists
durhamdf 8 months ago
@durhamdf So you think the best thing to do when people are loaded up with debt is to take on more debt? Since there are no savings the only place the new credit could come from is inflation. Debt must be liquidated and unsustainable projects need to be stopped and that is what happens during a recession. NOW, if the gov wasn't running perpetual deficit, it would make sense to have the gov take up the slack in demand, but since that isn't the case,the gov doesn't have the money to spend.
christo930 8 months ago
@christo930 Paying off debt IS consumption my friend. So is investing your money. Savings are a small category of money held in non-checkable deposits. I agree that the government has failed to pay down the debt in times of economic expansion, Clinton moved us in the right direction (too late) leaving Bush with a budget with a 300 billion dollar surplus and Bush decided to continue to spend on deficit so he could give the wealthy another tax break. Still you must spend on deficit in a recession
durhamdf 8 months ago
@durhamdf According to the BLS, paying down debt is saving, If you want to define savings as money stuffed in a mattress, then yes, saving money is bad for the economy. There can be no doubt that Bush overspent and promised gov goodies to be paid for by deficit spending. But do you think the federal reserve should be printing all this money? Do you think it's a good thing that inflation pushes everyday citizens into the stock market, exposing their savings to risk?
christo930 8 months ago
@christo930 I would like to see a cite to the BLS page that says paying down debt is savings because that is compleytely contradicting mainstream economic theory which says that savings are a narrow category of money held in non-checkable deposits. But the federal reserve isn't printing any money, they can't, they don't have a printing press :). And according to the CPI which is the most comprehensive analysis of inflation, we are experiencing very mild inflation right now. (contd)...
durhamdf 8 months ago
@durhamdf The CPI is meaningless. The inflation numbers are deliberately understated and the GDP deliberately over stated. The BLS has published substitution of beef for hot dogs! Hedonic adjustments, substitution and geometric weighting all work together to push the CPI down so the gov can hide inflation and keep inflation expectations low. It also benefits them because SS increases are based on the CPI, so people on SS get poorer every single year.
christo930 8 months ago
@christo930 (contd)... You need to understand that ordinary citizens don't have any money to save in a recession. All of their money or nearly all oftheir money gets spent immediately on groceries, rent, gas etc... That is why the lower and middle class have a much lower Marginal Propensity to Save then the wealthy. (which is also BTW why from an economic standpoint trickle down economics is moronic)
durhamdf 8 months ago
@durhamdf Savings finance expansion and people don't save largely because of inflation. What is the point of saving if your money is going to purchase less in the future? People who are still working during a recession still have the same amount of disposable income, sometimes more if prices drop.
christo930 8 months ago
@christo930 THe difference is, that people in a recession have less wealth, because their portfolios have shrunken, their homes have lost value etc.. and cannot continue to take out lines of credit to pay for things like mortgage and car payments and instead have to pay directly from their income. But even in good times the savings of the poor and middle class is on average about 5%. These are not the people that the government is incentivising to consume. It is the wealthy (contd)...
durhamdf 8 months ago
@durhamdf The paper wealth of your house is kind of pointless since you can't easily extract it. As a mater of fact, the only real way to access this wealth is to downsize or move to a poorer neighborhood with lower RE values. Your house doesn't go up in a vacuum, similar houses of similar size and areas go up with yours. The paper values of your retirement plan really isn't very important to someone younger than 55 or so. Inflation is a major reason for the low savings rate.
christo930 8 months ago
@christo930 (contd)...and corporations (who are currently sitting on record holdings in their treasuries )that the government needs to incentivise to consume more and to hoard cash less. The poor and middle class spend nearly 100% of their income anyways. If we allowed massive deflation to occur like during the great depression, they would sit on these record holdings even longer which would drag the recession on MUCH longer untill potential gains outway gains from deflation by hoarding cash
durhamdf 8 months ago
@durhamdf Yeah, courtesy of the government and the federal reserve. They are borrowing money from the fed and lending it to the government at a higher rate and extracting the wealth of the middle class in the process. I agree that we don't want a massive contraction of the money supply, but falling prices isn't the end of the world as long as they aren't falling because of a contraction of the money supply.
christo930 8 months ago
@christo930 Well actually the middle class and lower class benefits from inflation caused by expantionary monetary policy because the middle and lower classes are debtors. Inflation means that their debt is worth less which is why lenders are screaming their heads off to end expansionary policy. Also this makes our national debt worth less which is why China is bitching too. But any valuation of the dollar is going to mean that companies are going to hold on to record holdings even longer.
durhamdf 8 months ago
@durhamdf Inflation benefits the wealthy, gov and corporations because they get the money first while it still has the full value. Furthermore, they are paid in profits, shares, dividends etc which are always in current dollars. The poor and middle class work for wages which are always old because they are the most sticky. In addition, inflation puts people in higher tax brackets without a corresponding lift in real income. While it may help slightly with their debt, it kills their income.
christo930 8 months ago
@christo930 that is absolutely backwards. The wealthy have a much larger marginal propensity to save. Which means they have more actual dollars at any given point as a percentage of their wealth then the lower and middle class. This savings becomes worth less. And it doesn't matter when they get paid their money will be worth less once inflation takes hold. The lower and middle class are debtors, they have more debt than savings and inflation means this debt is worth less.
durhamdf 8 months ago
@durhamdf The wealthy don't save in cash, so you're wrong. The decade of the 0s were highly inflationary and the poor and middle class got wiped out, while the rich got richer. The wealthy put their money in investment vehicles, not savings deposits. Even when they lose value on share price, they still make the same dividends and use the dividends to buy even more stocks at the depressed prices.
christo930 8 months ago
@christo930 There is no point arguing with you if you will deny the most basic realities of modern economies. Look it up my friend, the wealthy have a much larger marginal propensity to save then the poor. The poor and middle class spend virtually every dollar they earn immediately, the wealthy throw it in savings accounts and CDs untill they can think of a way to spend/invest it. There was pretty mild inflation througth the 0', inflation was high in the 90's and the middle class got wealthier.
durhamdf 8 months ago
@durhamdf I didn't say they don't save, I said they don't save in cash or in basic savings accounts. The wealthy save by investing. The wealthy might, for a very short time, put a small % of their savings in a bank account or 1 month cd, but they don't have the bulk of their savings in this form. This might also be affected by who you consider wealthy. I don't consider anyone who has to work as wealthy.
christo930 8 months ago
@christo930 I agree, most wealthy individuals aren't affected much either by mild inflation, but much more so than the lower and middle class whose debt becomes worth less. It is the creditors who get screwed by mild inflation. But the fact that the wealthy don't immediately spend their money like the poor and middle class is the reason that trickle down economics is based on flawed economics. The multiplier effect is much greater if you give tax cuts to the poor who have a smaller MPS
durhamdf 8 months ago
@durhamdf Creditors take inflation into account when they determine interest rates. Furthermore, inflation isn't mild. During most of the last 40 years the average inflation rate has been between 3 and 5% which is exponential growth, leading to a doubling of the cost of living in 14 years to just a little over 20 years (range). When you already spending most of your income and the cost of living goes up, you are getting poorer and have to forgo things just to eat.
christo930 8 months ago
@christo930 Yeah 3% inflation is the natural rate... It matches the growth in a modern stable economy. 3% inflation per year does mean a doubling of prices in 23 years but this is necessary in order to maintain full employment and full output. If we went back to the gold standard and allowed our money to appreciate, we would see an equillibrium unemployment rate much higher (probably around 10-15%). Every 1% of unemployment above the natural rate of about 5% means a 2% gap in GDP the next year..
durhamdf 8 months ago
@durhamdf I don't advocate the gold standard and I have no problem expanding the money supply at the same rate the economy is growing But expanding the money supply beyond the rate at which there is real GDP growth results in higher prices and changes the savings/spending habits of lay people. It also pushes people into the stock market to try and beat the inflation rate and puts people in higher tax brackets. The tax brackets were never designed for the working poor who now pay higher taxes.
christo930 8 months ago
@christo930 Well then I agree with you completely :) But in this recession the Fed has had to expand the money supply somewhat in order to avoid massive deflation that often occurs in these deep recessions as banks hold on to larger reserves then are required and money is in effect destroyed. Although I don't think that inflation will bump anyone into a higher tax bracket since wages adjust fairly slowly and at about the same rate that the tax brackets adjust at. But right now inflation is low
durhamdf 8 months ago
@durhamdf During the 70's many people were pushed into the 28k/yr tax bracket without a corresponding increase in spending power, but there are still people who are near that number and will be pushed into it because of inflation. I disagree and reject the idea the inflation is low right now, especially food and energy. Food is up and gas prices are up and this really eats into a working poor person's disposable income.
christo930 8 months ago
@christo930 Food prices are largely increasing due to higher energy costs. And it is ridiculous to point to oil prices as proof of inflation as oil prices are determined on the international market and are up everywhere. You can't measure inflation by looking at one industry, oil prices recently dropped significantly, does that mean we experienced deflation? No, of course not. THe CPI is the most comprehensive analysis of inflation we have and it shows very mild inflation.
durhamdf 8 months ago
@durhamdf Commodities started their run right when the fed announced QE2. The CPI is near meaningless, do you at least admit that? Between hedonics, substitution and geometric weighting, the numbers can say anything the gov wants them to say and they have a bias to make things look better than they are. From reelection of politicians to anchored expectations to SS adjustments to bond rates.What do you think of the substitution of steak for hot-dogs? THe BLS has made that very substitution!
christo930 8 months ago
@christo930 First of all comodities starting their rise in 2007 immediately after the housing creash and took off after the market crash a year later. This makes sense, when an economy nearly falls into a depression and there is massive uncertainty, people will always seek safe haven in commodities especially gold and silver. At least the CPI is comprehensive and nonpartisan your estimates are based on two industries that you can point to where prices are up. That is not inflation just hysteria
durhamdf 8 months ago
@durhamdf No they didn't. Commodities got killed in late 08 early 09 and went to multi-year lows. Gold went down by hundreds of dollars. oil dropped by over $100 a barrel, copper, silver, cotton etc all went down in late 08/early 09.. The current bull run in commodity prices started just as QE2 was announced. The CPI is heavily flawed and you didn't answer my question. I think a multi-month month rolling average is a much better smoothing technique and is used in other sciences.
christo930 8 months ago
@christo930 Gold went from 800 an ounce in jan. 2008 to 1100 in december 2009. I have no idea what charts you are looking at but you are absolutely wrong. And yes it makes sense that after QE and QE2 commodity prices shot up because alarmists like yourself were preaching to the ignorant masses that the dollar was going to collapse and they sought out safe haven in gold and silver. Again, at least the CPI is an overall market assessment as opposed to your pick and choose bullshit assessment.
durhamdf 8 months ago
@durhamdf Gold went from $1000 in spring of 08 to just above 700/oz in nov 08. Other commodities suffered similar losses or greater.% wise. Gold mining stocks got KILLED as did oil. I do agree that announcements of money printing is going to, by itself, drive up commodities. Do you disagree that a rolling average is a better method of smoothing market noise? Did you know that same methods are used in climate science (thought they use longer averages) to smooth our the ups and downs of weather?
christo930 8 months ago
@christo930 The price of gold fluctuates month to month, no shit, but from 08 to 09 gold went from 800 an ounce to 1100 an ounce. From 2006-2011 it went from 550 an ounce to 1500 an ounce. You can't pick and choose a few months to show that gold dropped when the overall trend for the year was a massive inflation of the price. That is moronic at best, dishonest at worst. And again, the Fed does not "print" money. Printing money is more permanent, open market opperations run both ways
durhamdf 8 months ago
@durhamdf I was only trying to show that during the deflationary period of fall 2008 the price of gold dropped precipitously. I don't deny that gold has been on a bull run since the early 2ks when Bush started his damn deficit spending programs and as oil rising due to lack of production growth while demand was swelling. Keep in mind that I an not a fan of the gold standard. According to Bernanke during his 60 minutes interview, he was printing money and I think he would know given his position
christo930 8 months ago
@christo930 I am not busting your balls or being a troll, but I would really like to know if you think rolling averages is the more appropriate way of smoothing out market noise when calculating the CPI, rather than substitution, hedonics and geometric weighting. If not, why? It is the chosen method of nearly every other science when dealing with these types of statistics (that is with short term volatility). As I mentioned before, climate scientists do it, so why can't economists do it?
christo930 8 months ago
@christo930 I doubt bernanke would say that because the Fed doesn't print money. It doesn't have a printing press. But the Fed can increase/decrease the money supply through open market opperations (buying/selling U.S. bonds) But gold steadily rose through the early 2000's and then went through the roof, trippling in price after the market crash. The point is, this rise in Gold wasn't because of inflation (the money supply surely hasn't trippled) it is just a natural product of uncertainty
durhamdf 8 months ago
@durhamdf Watch the first Bernanke interview with 60 minutes he explained that he was printing money, which is what he is doing. When the treasury offers bonds on the market and the fed prints money to buy them, that is printing money. It's anticipation of the increase of the money supply. And I ask you again, is a rolling average a better way to smooth the ups and downs of the commodities market than the BS methodology of the BLS?
christo930 8 months ago
@christo930 The fed can't print money my friend, look it up. It isn't a power that the fed posses. They can create money just like every bank on the planet can create money through the fractional reserve system. They also create money through open market opperations. But the treasury is the only institution that can print money. The point of the Fed is to smooth out the ups and downs through expansionary/contractionary monetary policy. THis should make the highs lower and the lows higher
durhamdf 8 months ago
@durhamdf The term "printing money" doesn't mean literally printing money, it means creating new money, it's a euphemism. We both know that most of the US dollars out there aren't physical dollars, but digits on a computer. The fed is buying treasuries with newly created dollars and that can't be described as anything but printing money. Like I say, watch the first Bernanke interview and he says he's printing money, the interviewer asks him to clarify and he said again, he's printing money.
christo930 8 months ago
@christo930 THen don't call it printing money, it isn't. THey are completely different things with completely different consequences. Nobody says that the banks are printing money when they create money through the fractional reserve system... I'd like to see a link to this interview to get some context b/c there is no way he said that. But really who cares, the point is that the Fed has been trying to avoid massive deflation like we saw in the great depression. Expansionary policy is correct.
durhamdf 8 months ago
@durhamdf We are not talking about check money, we are talking about fed money and much of this money is making it into circulation through the QE program which I think is scheduled to end this month. I have told you where to find Ben bernanke saying he is printing money, it's right here on youtube. It's the first interview he did. Then in the second interview, he said he wasn't printing money, but in the first one he said it and then confirmed it and expanded on it with follow up questions.
christo930 8 months ago
@christo930 When a bank, ANY bank, loans money money out, it is creating money as this dollar is still owned by one person who can remove it at any time, while simultaneosly being spent by a company that borrowed this money from the bank. Nobody accuses bank of America of "printing money". Give me a name of the video, all I can find is the 60 minutes interview where he says they aren't printing money and expalins the powers of the Fed briefly. This isn't up for debate, THE FED CAN'T PRINT MONEY!
durhamdf 8 months ago
@durhamdf Do you understand how the fed tries to approach their "target rate"? You know that it isn't set by FIAT, right? They do it by flooding the banks with reserves. Checking account money is different than fed money. Checking account money can be loaned out at 90% The fed created reserves can be loaned out multiple times, not fractionally. Furthermore, the fed is purchasing treasuries with newly created reserve notes. Where do you think the fed gets the money to buy treasuries for QE?
christo930 8 months ago
@christo930 And yes, I am aware of how a bank creates new money by the fractional reserve system.
christo930 8 months ago
@christo930 THe fed gets money to buy treasuries from its own reserves, The fed targets its target rate through open market opperations, buying and selling bonds on the open market to increase the money supply to drive rates down, or selling bonds to decrease the money supply and drive rates up. Yes, low rates are what largely helped cause the financial collapse, but raising rates during a massive recession that has the possiblility of turining into a double dip is a terrible idea. (contd)...
durhamdf 8 months ago
@durhamdf Double dip? That implies that the recession ended. Did you see the jobs report Friday, not to mention May's numbers were revised way down. The recession started in Dec 07 and nobody even declared it to late 08. The "growth" that has occurred since then is gov spending and inflation. When you understate inflation, you make growth look better than it is. The same thing happened in 08. The BLS was claiming such low inflation numbers to make it look like we were growing.
christo930 7 months ago
@christo930 (contd)... I do agree, that this is risky. The Fed needs to be careful that it slows down expansionary policy when the economy begins to turn around, or we could see higher inflation and potentially more bubble building. Right now, QE hasn't had much of an inflationary effect because much of this additional currency is just sitting in the reserves of banks across the country and not getting loaned out. But at present, we are at no risk of overheating this stagnated economy.
durhamdf 8 months ago
@durhamdf Shadowstats, who use the same methodology of calculating inflation as they used before the Boskin commission says inflation is running around 10% annually. If nothing else, please tell me you understand the the BLS manipulates it's statistics. Please tell me you don't think owners rent is a valid measure of GDP and that Hedonics, geometric weighting and substitution are valid tools for measuring inflation.
christo930 7 months ago
@christo930 Shadow stats? hahahah. You think you could cite that source in a scholarly journal or paper? 10% inflation a year is ridiculously high, that means that the prices would double in 7 years!!!! The CPI may not be perfect, but at least it is transparent (you can look exactly at the index they use) and is comprehensive (It encompases many different goods and services across the economy). The vast majority of experts agree inflation is currently below the natural rate, around 2% annually.
durhamdf 7 months ago
@durhamdf There is no "natural" rate of inflation. All through the 18 and 19th centuries, cost of living were dropping, not rising while standards of living were going through the roof. It really wasn't until WW2 and the permanent expansion of the federal gov that inflation became a permanent part of our lives. You certainly can't empirically prove that there is a natural rate of inflation. Why should the money supply naturally grow faster than the economy, especially with cap investment?
christo930 7 months ago
@durhamdf I have read that many large corporations and other businesses use his data. The gov data sucks. Real price inflation has been way over 2%, especially for items directly linked to commodities, like food, clothing and energy, things we need everyday. AGAIN, I ask you, why not do it the way every other science smooths data with rolling averages? Look at how climate data is gathered. Now if ANY data has ups and downs, it's climate. So it's smoothed with 5 year averages.
christo930 7 months ago
@christo930 HAHAH you have "read" that corporations go to "shadowstats" for information on the economy?!!? Good one kid. The CPI isn't perfect, but it is BY FAR the most comprehensive index of products in the U.S. economy in various industries and spread out geographically. No other index comes close to being as comprehensive. And the average prices of the market basket of all products in our economy have only gone up by roughly 2% per year. And have you been living under a rock (contd)...
durhamdf 7 months ago
@durhamdf The fact that there has been inflation for the past 70 years or so doesn't prove it's natural. We have had central banks expanding the money supply the entire time. Once again you fail to address that the CPI would be better smoothed through averages, which other sciences that don't have an agenda use. Inflation is running higher than 2% per year, much higher. I don't know why you call me a "kid" as if being young would be an insult.
christo930 7 months ago
@christo930 (contd)... commodities began their climb immediately after the housing crash and took off after the market collaps. IN EVERY SINGLE RECESSION the price of gold increases as people seek safe haven from the uncertainty in the market in silver ang gold. And oil prices are being pushed up by an booming increase in demand from China and a speculated smaller supply as unrest spreads in the middle east. You idiots call the CPI shit and then base your inflation estimates on (contd)...
durhamdf 7 months ago
@durhamdf You're wrong. Gold dropped precipitously during the 80-82 depression, it went from an all time high in 1980. The price of gold should go down in a recession because the money supply shrinks. The main thing supporting the high prices is the expansionary monetary policies being pursued all over the western world and now is Asia besides.
christo930 7 months ago
@christo930 (contd)...a couple industries that are greatly affected by outside variables. The reason inflation is low now kid, is that banks are not loaning out money (much of which is newly created from the fed) so this money doesn't go through the money multiplier effect and does not get a chance to push prices up. THIS IS BASIC STUFF, Macroecon101. When the economy DOES recover, THEN we need to be careful not to continue to expand the money supply which CAN lead to substantial inflation
durhamdf 7 months ago
@durhamdf I KNOW it doesn't match the theory. But see, I go to the supermarket, I have utility bills and a car to gas up, I buy clothes, I watch the commodities market. In short, I live in the real world where 7 billion actors, all acting on their own with different interests, have proved the theory wrong. You are pointing to a theory and gov provided data and ignoring what everyone can see. The fed is trying to inflate the housing market to keep the banks solvent and it isn't working.
christo930 7 months ago
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@christo930 You're getting frustrated because you can't provide any evidence for your theory, so you start calling me a kid, as if that were an insult, when if you looked at my page you would see I am 41 going to be 42 in 6 days.
christo930 7 months ago
@durhamdf Gov spending is helping to drive prices up, but most of it is inflation expectations which are high because of the expansionary monetary policies, kid. There is also a lot of money being speculated with in the market, again driving up prices. Inflation is nowhere near 2%.
christo930 7 months ago
@christo930 This would all be good except prices are NOT RISING (with the exception of commodities and oil and items directly linked to the price of oil). You kids are a joke, you can't pick and chose one industry to show inflation. INFLATION IS THE RISING OF THE PRICE LEVEL AS A WHOLE! Consumer electronics have not gone up in price. Neither have cars, houses, furniture, clothing, etc... Gas prices recently dropped by 30 cents per gallon. Does that mean we suffered deflation? hahaha get a clue.
durhamdf 7 months ago
@durhamdf I agree with you that falling prices isn't deflation, nor is rising prices inflation, but inflation is the term that people use to describe rising prices. Big ticket items are the only things not rising. Furniture and clothing have gone up, I know I buy them and recently bought some new furniture.
I agree with you that a large contraction of the money supply would be devastating to the US economy. There are deflationary pressures, but right now, prices for common goods are rising.
christo930 7 months ago
@christo930 BTW... I wasn't trying to imply that falling gas prices was "deflationary pressures", I know the difference.
christo930 7 months ago
@christo930 You can say it all you want, but look at the CPI. It includes the widest market basket of products of any index we have. It lists a wide veriety of products from a range of industries sold in a range of places. As a whole, this index has only raised by about 2% per year for the last 2 years which is about 0.8% above our current slow rate of growth and the average rate of inflation in the U.S. is about 3%. All of the expansionary monetary policy has been to avoid a deflationary spiral
durhamdf 7 months ago
@durhamdf The CPI is flawed. They use hedonic adjustments to lower prices, substitution to hide rising prices and geometric weighting is also used to hide rising prices. Rolling averages smooth out data and is more realistic. Imagine if they tracked climate and used PA data when Florida data rose too quickly! It's getting hotter, but people are moving to the mid Atlantic, so now it's not as hot for them! It's not valid.
christo930 7 months ago
@christo930 lol what did you google search problems with the CPI? hahah. Seriously though, look at the rollling average estimates, go to inflation data (dot) com and compare the CPI to the 12 month rolling average. They are pretty much the same right now. The reason inflation is low right now buddy is that banks aren't loaning out money and there isn't a demand for loans in the first place so this money isn't reaching the economy pushing up prices and going through the money multiplier.
durhamdf 7 months ago
@durhamdf Inflation expectations are driving up commodity prices and that is where most of the inflation is. Housing prices are stable or falling depending on location, except places like DC (ironically). I haven't checked in about a month or so, but last I checked just about every commodity was at multi-year or all time highs. Food prices are rising most with clothing behind that. The further the product is from the commodity that is used for it the less inflation on that product.
christo930 7 months ago
@christo930 listen to yourself, "Inflation expectations are driving up commodity prices ". That is exactly what I have been saying! That isn't inflation. it is a natural increase in price in one industry or category caused by uncertainty which is natural a couple years after the worst financial dissaster since the great depression. Inflation IS AN AVERAGE, you can't point to one item going up in price, like oil affected by a million things, like increased Chinese demand, and call it inflation.
durhamdf 7 months ago
@durhamdf That is because inflation expectations are being driven by fed policy. If the fed wasn't pursuing an expansionary policy, there would be no inflation expectation for the market to act upon. There is NOTHING natural about a policy being driven by a single entity. If the market were doing it, then you could call it natural. I understand that, but you don't need to have every single item go up to have inflation. The only prices not rising are prices that are already high, like housing.
christo930 7 months ago
@durhamdf The rolling averages they are using are the adjusted ones. They aren't just taking a basket of goods and tracking their price over time. My education in this area was before the Boskin commission. I went to college in the late 80's and early 90's.
christo930 7 months ago
@christo930 Lol the only statistics you could find to support your irrational belief that we a currently experiencing massive inflation are from a website known as SHADOW GOVERNMENT STATISTICS! hahhaha give me a break man, the CPI is 10 thousand times more accurate than that bullshit, and at least the CPI is transparent, you can see exactly how they got that number. ShadowStats just provides a bullshit number with no real explanation how they got this. I can do it to, inflation is 2%, there fact
durhamdf 7 months ago
@durhamdf When you can't argue with what I am saying you start with the name calling and sarcasm. Shadowstats does release it's numbers and methodology to subscribers (to the best of my knowledge).
Tell me, what is your objection to tracking a fixed basket of goods over time to measure price inflation, especially if you use rolling averages to smooth out abnormalities like riots in the middle east?
christo930 7 months ago
@christo930 nope, just responding to your citing of bullshit statistics from a site with a clear and stated bias and bullshit methodology that you couldn't even cite in a 3rd grade term paper! And I have no objection over tracking a fix market basket of goods over time, THAT IS WHAT THE CPI DOES, and it is the most comprehensive analysis of a the most inclusive market basket available! And besides, the PPI and the ECI (both independent) show nearly the same figure as the CPI...
durhamdf 7 months ago
@durhamdf NO THEY DON'T. They adjust the prices down if they think it has improved in some way, they use substitution to keep the items rising the most out of the cpi and all kinds of other statistical tricks. shadowstats uses the same methodology the gov used to use and they publish their raw data and sources to subscribers, so it's not like it's not transparent. Are you saying the BLS did it wrong BEFORE the Boskin commission?
christo930 7 months ago
@christo930 It gets adjusted to make the market basket more comprehensive of items that are in demand at the time. Of course they need to remove items like Playstation1 from the basket when new technology comes out and demand for those items falls etc..But all of this can be seen on the BLS website, exactly what got changed and why. And why is it that these estimates match closely with the independent PPI and ECI. Inflation isn't normal 2 years after a massive recession, deflation was the worry.
durhamdf 7 months ago
@durhamdf There are some reasonable substitutions like a PS1 when the PS2 comes out or ice cream and frozen yogurt, but they also substitute steak for hotdogs (an actual 2005 substitution)! Say the PS2 comes out and it's more than the PS1, they hedonically adjust the price downward because the new one is so much more powerful and this is not legitimate. That's for the CPI, for the GDP they hedonically adjust the price higher again because it's more powerful. Deflation is a danger,I concede that
christo930 7 months ago
@christo930 Lol the substitutions have to do with what is a comprehensive basket of items for the average american. It actually makes much more sense to have hot dogs in amarket basket then steaks as this is more likely to be purchased by the average american and represents a better average of the increase in cost the average american would experience. You have yet to explain why the CPI tracks very closely to the PPI and ECI... And BTW theCPI includes gas which is inflated on the intl. level
durhamdf 7 months ago
@durhamdf So you think hot dogs are equivalent to steak? If you usually eat steak but have to substitute by eating hot dogs when steak becomes too expensive, you may be avoiding the higher price, but you are living a lower standard of living. The difference between you and I is that you are driven by ideology and I am driven by reality. You will make any excuse for all the stupid things the gov does because you want to protect the ideology.
christo930 7 months ago
@christo930 Lol you miss the point entirely, the CPI is supposed to be a measure of an average market basket of goods. Not an all inclusive market basket of goods. But anyways, why does this matter? You think the price of steak has skyrocketed so much compared to hot dogs that this will effect the measure of inflation or something? HAHAH you are the one living in fairyland, for the 20th time kid, why is it that the CPI tracks with the independent PPI and ECI? All you have is shadowstats! hahahha
durhamdf 7 months ago
@durhamdf . I'm tired of your attitude, so go fuck yourself.
christo930 7 months ago
@christo930 lol ok bye, guess you realized that there is a limited amount of diarrheah that can spew out of your mouth at least before your breath starts smelling like shit.
durhamdf 7 months ago
@durhamdf I have been respectful to you in every single comment in this exchange. We have a difference in opinion and that's cool. But you have ignored nearly every point I made and responded to it with condescension, disrespect, name calling and so on. I went to college before the Boskin commission and didn't major in economics, but had some economics classes. You could easily have explained why you feel I am wrong in respectful terms, instead you have to be a jerk. Then you insult me again.
christo930 7 months ago
@christo930 And the most ironic part is that you repeatedly referred to me as "kid", while simultaneously acting like a child. What could have been an interesting and though provoking exchange was reduced to hostility, condescension and flat out disrespect. I hope you don't behave that way in real life. If you feel you can stop being a jerk and nasty, I'll continue, otherwise, good day sir.
christo930 7 months ago
@christo930 (contd)..That is Keynesian economics101 spend on deficit during recession to make the lows higher and pay it off during times of runaway growth to prevent excessive inflation and bubble creation
durhamdf 8 months ago
@durhamdf And the recessions weren't mild, at least not all of them. All the recessions in my lifetime were deep except the 2001-2002 recession. Look at the fucking mess we are in now. The great recession is now 3.5 years on and getting worse, while prices are rising. Saving isn't even possible anymore since you are just giving your money away. So just to break even you need to expose your savings to risk because of the inflationary world we live in. Things suck.
christo930 8 months ago
This has got to be the absolute funniest video about money I've ever watched,
HaroldRehling 11 months ago
This guy knows absolutely nothing. Everything he said was wrong or twisted. When the government sells treasuries, it creates money. If he can't even figure that out for starters, he is too incompetent to render an opinion on anything financial. I can't even listen to this whole thing. The guy is so idiotic.
Quinvarius 1 year ago
There is not a single statement this man Byron Dale makes that is correct at any level. Thank God he does not build airliners for a living.
bahhumbucker 1 year ago
@bahhumbucker thank god you Austrian Economic rejects are a tiny minority and the theory is only taught at a handful of clown colleges because you guys are fucking retards. Take at least ONE economics class before you spew diarrhea out of your mouth.
durhamdf 9 months ago
Von Mises advocated freedom to use whatever we want as money. Yes, he believed in gold, but he opposed government interference with money (legal tender laws).
I disagree with some of Byron Dale, but much of his analysis and data is excellent! The best are the letters he received from the U.S. Treasury that state "ALL MONEY is created by commercial banks." The shocking truth Dale proves is that banks create credit (money) out of thin air each time a debt slave signs a "loan" agreement!
powerbunZ 1 year ago
This man is cluesless
gogolando 1 year ago
This dude really hasn't bothered to really read any Misesian material. They have already addressed frac-banking (Rothbard), and determining the dollar gold weight (Mises). Your understanding of gold and trade deficits is nil. God, I would need 5 pages to rebut pretty much every sentence you have uttered, there is just so much wrong in this video. And there is another 2 videos! Fck that.
tothemax01 1 year ago
"The only way to do that is with a public fiat strictly managed to be inflation and deflation neutral"
Yeah, right, that's what Keynesians have tried for ages & made rich richer & destroyed poor & middle-class, there's no way of "managing inflation & deflation on fiat" because fiat itself creates inflation & deflation. Gold standard with 100% reserve-banking would be soundest form of money.
lomocan 1 year ago
Byron is confused. Rothbard advocated for a 100% gold backed money. If you went to a bank and they couldn't give you gold on demand, there would be a run on that bank and it would close its doors. That would keep them honest not to lend more than their actual reserves. There wouldn't be much money to be made in lending, but neither is their in running a convenience store, so that's ok.
ItsFazsha 1 year ago
@ItsFazsha "there would be a run on that bank and it would close its doors. That would keep them honest not to lend more than their actual reserves."
We already have that situation with fiat currency, they haven't got enough paper to redeem what they have on their accounts. Yet, that hasn't stopped the fractional reserve system from being widespread.
What about the recent economic disaster suggests these people consider risk before profit?
AnnoyedDragon 1 year ago
@AnnoyedDragon I would dispute that we "already have had a run on the banks". Sure, small banks were folded up, but the big ones did not close their doors, they were bailed out as they knew they would be. My contention holds - as long as we have a central bank, and as long as the central banks will bail out the biggest banks, those big banks will take incredible risks. They do not consider risk, because they know there is no risk.
ItsFazsha 1 year ago 2
This is just not making any sense at all... So gold is not a good money because it doesn't allow an indefinite unbalanced trade? The only thing that does allow an indefinite trade is violence or deceit. Permanent unbalanced trade is called slavery. This is precisely why gold would be a good money... because it cannot allow indefinite trade deficits.
theoriginalanomaly 1 year ago