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Alarm bells ring at Fed (deflation alert)
Financial Review ^
Posted on 12/10/2002 3:28:25 AM PST by freeper12
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To: freeper12
The problem with your scenario is that you presume that people will continue to trade a commodity that has more use value than exchange value. What do we do when everyone has enough guns and bullets? Or they can't store them? transport them? divide them? Or even better: what happens when I learn to produce them myself, thus basically being able to counterfeit? The fact is that the MARKET determines what is and what is not money. It does this by determining which good is the most marketable over the others. Historically, its been a metal: gold or silver.
To: AdamSelene235
If fiat is destroyed you won't be dancing in the streets but you may very well be running for your life.
To: Southack
I agree with most of what you said but one point is not right. In a deflation the velocity of circulation does not increase, it falls, and in an inflation the velocity increases. When inflation is in swing you want to hold money as short a time as possible. With deflation you want to hold it as long as possible since it is becoming more valuable.
To: joanie-f
Why do you think the Gold Standard has been rejected by every advanced nation? Why do you think it was NEVER truly in operation for more than a few yrs. at a time? Hint: because there never was enough money when a country adopts it since the supply of gold cannot grow fast enough to allow economic growth. It is a mere supersition and does not prevent inflation in any case.
The Fed is perfectly constitutional Article I Section 8 gives Congress the authority to control the money supply. Hamilton (as much responsible for the Constitution as any man and as knowledgable about it) destroyed the unconstitutionality argument with his essay on the National Bank. You should read it before declaring such things.
To: justshutupandtakeit
If fiat is destroyed you won't be dancing in the streets but you may very well be running for your life. Yawn. I live in a cabin in the Rockies. Its about 200 feet up a cliff face. I can put holes in anything or anyone within 1000 meters.
Fiat is evil and needs to die for the good of the country.
To: AdamSelene235
That was tried early in the 1800s. It produced massive fraud and economic disaster. The greatest depression in U.S. history until the 30s resulted from destroying the National Bank II.
Fiat is a misnomer in any case. Look at Germany in 1923. The government said "fiat" the people said "phooey."
To: justshutupandtakeit
Now if you live in the gun free utopia of Chicago, I wouldn't hang around the day the welfare checks start bouncing.
To: justshutupandtakeit
That was tried early in the 1800s. It produced massive fraud and economic disaster. The greatest depression in U.S. history until the 30s resulted from destroying the National Bank II. What was tried?
To: austrianecon
The reason those interventions occured was because of chronic shortage of money outside of the money centers. This is endemic to the "gold standard." All are ditched as soon as war erupts. Gold supplies are too limited to allow prosperity on a worldwide scale. A money supply dependent upon luck for sufficient quantities is not rational.
To: AdamSelene235
Private banks creating their own money supplies. Wildcat banks they were called. Some were credible but most just printed as much money as they wanted. When the bills came back the bank owners had amscrayed with the gold allegedly backing them.
To: AdamSelene235
"Gun free" LoL. Guess you don't know much about Chicago. Have no fear my neighborhood is perfectly safe and will remain so.
To: justshutupandtakeit
Private banks creating their own money supplies. Wildcat banks they were called. Some were credible but most just printed as much money as they wanted. When the bills came back the bank owners had amscrayed with the gold allegedly backing them. Much harder to amscray these days and its much easier to maintain transparency. Our current system privatizes profit while socializing risk. A receipe for disaster. ANY system will work so long as responsibility and power are in proportion. Alternatives to dollars are and should be emerging. The more alternatives, the better in my mind. Rather than offering an example of a system that failed in the past (true of democracy,flight,heart surgery,etc,etc) a more powerful argument would be based on an analysis of the failure mechanism, in your example simple theft and rampant inflation. This is NOT an strong argument to nationalize theft and inflation.
To: justshutupandtakeit
"Gun free" LoL. Guess you don't know much about Chicago. Have no fear my neighborhood is perfectly safe and will remain so. Good to hear...but it seems the city has almost purposely built in a self destruct device...I prefer the woods.
To: AdamSelene235
There is nothing which maximized private profit while socializing risk any more than the Wildcatters. They helped write the book.
There are and always have been alternatives to dollars. And always will be.
To: AdamSelene235
Cities have always been the engine of civilization. In fact, the words are etimologically related.
Having lived in the southern pines until finishing high school, I am very familiar with the woods. Nothing would convince me to go back.
To: justshutupandtakeit
There is nothing which maximized private profit while socializing risk any more than the Wildcatters. They helped write the book. Really, when they failed were innocent uninvolved bystanders forced to bail them out?
There are and always have been alternatives to dollars. And always will be.
Well, I wish they would stop taxing wealth preservation. Wealth preservation is not a "capital gain".
To: imawit
New cars, new or better computers are not. It's not TV's or DVD's. It's not more vacations.
I agree. I think 911 still has a lot to do with it. I know that I personally think it is more important than ever to pay down my debt and get financially secure, to the extent that that's possible. And I HAVE a new car, my old computer still surfs the net just fine, and I moved to a less expensive (and smaller) apartment to help pay down debt. I could care less about cable TV, broadband internet access, making long distance calls. I will probably cancel my cell phone soon because I don't really need it. I take short vacations by car since I don't wish to be strip-searched at the airport, and I visit and stay with family.
I am becoming a cloth-coat republican and I'd venture a guess that there are a lot of us on this site. I voted a straight republican ticket for the first time this time and helped the Republicans make their unprecedented gains.
I sense that in many ways I am everyman.
To: justshutupandtakeit
Cities have always been the engine of civilization. In fact, the words are etimologically related. True but the reasons for that are becoming increasingly obselete. The idea, of course, is to create crown fires of capital and intellect while enjoying the benefits of shared resources.
Today, I design anti-missle laser systems on my laptop in the woods. Almost any publication is available at the click of a mouse, and I can chat with colleagues anywhere in the world from my deck.
Having lived in the southern pines until finishing high school, I am very familiar with the woods. Nothing would convince me to go back.
Having lived with the stench of used wine in downtown Atlanta for many years, I have no desire to go back either.
To: justshutupandtakeit
"In a deflation the velocity of circulation does not increase, it falls, and in an inflation the velocity increases."
So when a store lowers its prices (i.e. localized deflation) sales decrease? And when a store increases prices (localized inflation) sales speed up?!
I don't think so.
To: AdamSelene235
"Alternatives to dollars are and should be emerging."The great thing about the Dollar is that you can buy anything with it.
If you want to store your wealth in gold, then you can use Dollars to purchase gold.
If you want land, then the Dollar already buys that, too.
So I don't see the reason to clamor for a mandatory currency replacement. Why force everyone to change to a "new" form of currency away from the Dollar? People can already get whatever they want, so where is the big advantage to compelling everyone to undergo an expensive change? What would we gain?
Is there any possible currency that will be MORE flexible than the Dollar? Is there any possible currency than can insure that EVERY conceivable liquidity demand in our entire economy is always met? Are there any limitations to what the Dollar can currently buy that another currency would remedy?
If so, I certainly don't see it.
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