Republican Debate in Iowa. What'd ya think?

Brass Magnet said:

Printing money is wise? I suppose if you have a completely benevolent printer who is an economic genius and also a psychic. Saying that when money is locked to any commodity it will "fluctuate wildly" is complete hyperbole. Sure, if you linked it to something stupid it would. Market-driven inflation and deflation is much more preferable than Fed-driven booms, busts, and artificially propped up bubbles that burst. Since the Fed's aren't completely benevolant econ-genius-psychics they really can only make educated guesses at what the market is going to do. Have you ever watched the various chairmen on C-Span admitting they don't know what to do?

I agree that one of the biggest problems is unproductive spending; like the stimulus package, bailouts, handouts and 5 WARS. All made possible by your friendly Federal Reserve.

We are better off taking away the power of the government to print money so we can force them to limit non-productive and uncontrolled spending. This way we don't have to just trust that they'll do the right thing. I know some people around here are prepared to trust the government with just about anything but I'm not.

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No one needs to be psychic. When inflation increases above 2 or 3 percent, slow the growth in money supply. When deflation sets in, speed the growth. It really is simple.

Again, in case the point was missed, the problem is spending. The excess printing of money is in response to wild spending that cannot possibly be covered by revenue and borrowing. The problem is not the printing of money. The problem is imprudent printing of money that is only occurring because of even more imprudent spending.

Printing money is wise. It can be used to prevent the wild economic swings that would be brought on by an inflexible standard whose supply is totally uncontrollable and cannot be adjusted to match the production of goods and services. Such a fixed commodity will cause inflation in a growing economy, thereby stifling that growth. In a shrinking economy, it would cause deflation, stunting capital investment. Inserting another commodity, currency, between any two others blunts swings between them. Instead of one increasing wildly against the other, one grows to a lesser extent against the currency, while the other shrinks to a lesser extent against the currency, causing a damping effect.

Trying to apply a gold (or silver or any other concrete commodity) standard is like trying to apply a grid to space-time. Using a currency is like recognizing the relativity of all the components of an economy. However, grasping such does require disposing of a Newtonian mindset when it comes to economics in favor of an Einsteinian one.

Brass Magnet said:

I've never understood the claim that there isn't enough gold in the world.

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The entire world, throughout all time ---> "At the end of 2009, it was estimated that all the gold ever mined totaled 165,000 tonnes[1] This can be represented by a cube with an edge length of about 20.28 meters. At $1,600 per ounce, 165,000 tons of gold would have a value of $8.8 trillion." - Source

The U.S. alone, and just for one year ---> "GDP $14.772 trillion (2011)" - Source

I repeat: There isn't enough gold in all the world for the U.S. to return to it as a monetary standard. In fact, it would take all the gold in the world to represent the U.S. GDP for just 7 months of this year alone. Problem is, we're already in the 8th month, and the U.S. only owns a fraction of the gold to begin with.

since9 said:

The entire world, throughout all time ---> "At the end of 2009, it was estimated that all the gold ever mined totaled 165,000 tonnes[1] This can be represented by a cube with an edge length of about 20.28 meters. At $1,600 per ounce, 165,000 tons of gold would have a value of $8.8 trillion." - Source

The U.S. alone, and just for one year ---> "GDP $14.772 trillion (2011)" - Source

I repeat: There isn't enough gold in all the world for the U.S. to return to it as a monetary standard. In fact, it would take all the gold in the world to represent the U.S. GDP for just 7 months of this year alone. Problem is, we're already in the 8th month, and the U.S. only owns a fraction of the gold to begin with.

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I'm on my phone so this will be short.

In my post I described why there is enough. There surely won't be enough if you value it at 1,800 when we continue to print more money.

Brass Magnet said:

In my post I described why there is enough.

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What you describe will never trump the fact that $14.8 Trillion is greater than $8.8 Trillion. Furthermore, no nation can value gold at a fixed price. Like a boulder in a river, it would make a dent in the markets, yet. However, like the river, the markets would flow right around it, and eventually wear it down to sand. I cannot provide more details without sharing with you what I learned in my college and graduate courses in International Finance.

Put simply: It doesn't work.

Getting back to the Iowa debate...

I'm still an undecided voter... mostly. I've been a registered Republican for a long time, and I'm liking a lot of the Tea Party ideas (not all the way, but a lot of it is appealing to me). None of the candidates who debated impressed me totally. I have relatives in Texas who think Rick Perry has been a great governor, and I'd like to hear more from him. Romney, Bachmann and Newt impressed me the most. My wife and I both thought Ron Paul was a total flake.

Perry's a joke. Gotta love the magical thinking. Why take steps to make things better, when you can just pray and cross your fingers and hope for the best?

Tawnos said:

Perry's a joke. Gotta love the magical thinking. Why take steps to make things better, when you can just pray and cross your fingers and hope for the best?

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Perry wasn't at the debate, so I really have no idea what his policies/plans are.

I don't make much of the above article. Drouts happen. We can't make it rain. The best we can do is pipe water in from someplace else, and that only gets you so far. You can't pipe in a whole resovoir without bleeding someone else dry, and when the whole state is dry really rain is the only thing that can help. It's Texas. It's hot and dry.

In similar circumstances I'd have been praying for rain too.

since9 said:

What you describe will never trump the fact that $14.8 Trillion is greater than $8.8 Trillion. Furthermore, no nation can value gold at a fixed price. Like a boulder in a river, it would make a dent in the markets, yet. However, like the river, the markets would flow right around it, and eventually wear it down to sand. I cannot provide more details without sharing with you what I learned in my college and graduate courses in International Finance.

Put simply: It doesn't work.

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Ah! I see where you are comming from. I'm not sure why I didn't see it after your second post.

This depends a great deal on if you believe gold is currently undervalued but I can see that if your numbers are accurate (and I'd really like your cite so I can do more research), it would have to be undervalued by a lot! Also, for clarification, I'm not talking about setting the value of gold and pinning it. I'm talking about deciding how much current fiat money it would take to buy an ounce of the stuff at a point in time and then letting it float from there. Since gold has little industrial value the price shouldn't fluctuate too much. Anyway, this week gold will be a $1900 which in total (by your numbers) would be $12.2 trillion. Most experts believe it will probably see $2500 which will add up to $13.2 trillion; however, there are a great few out there that are thinking more like $5000 or $26.4 trillion. In any case, I see no reason why you need to convert all wealth to gold if you are using it as a commodity to guide value. Why would you need to have enough gold to make coins out of it for everyone? Even if gold ends up not working for some reason we can still take a "basket of commodities approach" which I'm beginning to favor more and more.

Whatever we use to set the standard, I see a currency backed by something tangible as a way to limit the government as much as I beleive it will help the economy. Without the power of the printing press, they can't give trillions away to their cronys, nor can they start undeclared wars.