To: mission9
Your money is backed by the GDP of the United States of America.
Then why is the value falling?
Our money is backed by the promises of politicians regarding a part of the future GDP of the USA. That's what is happening when the government goes to the fed and sells them T-bills and the fed prints money to buy them.
As long as everyone believes the politicians will have the future tax money to pay off the bills, the value of the dollar is stable. But when people start to think that the politicians might just be overly optimistic, the value of the dollar falls.
To: publiusF27
We are in agreement that monetary policy is the result of inflation. Returning to the gold standard would throw the baby out with the bathwater. Economic dislocation is occurring because of unrealistic pricing of the Chinese yuan, which China is orchestrating; we are now seeing markets restore a more correct relationship, relative to the products of our different economies. It ain’t pretty.
Foreign manufactuers will continue to locate plants in the U.S. If for no other reason than shipping costs.
75 posted on
01/19/2008 5:13:23 AM PST by
mission9
(It ain't bragging if you can do it.)
To: publiusF27
Just to be clear- bad monetary policy is the cause of inflation. Monetary policy based on the gold standard is not necessarily good monetary policy. Countries that operate on the gold standard, such as Switzerland, do not compete with the United States in growth rate or innovation. This is not an accident.
76 posted on
01/19/2008 5:25:30 AM PST by
mission9
(It ain't bragging if you can do it.)
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