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Re: Gold standard

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  • jru486@xxxxx.xxxxxxxxxxxxxxx)
    Does Dr. Paul say there was a depression in America in the 1850s? I would like to see his book. To clarify, I stated that during entire history of the gold
    Message 1 of 16 , Jan 1, 1999
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      Does Dr. Paul say there was a
      depression in America in the 1850s?
      I would like to see his book.
      To clarify, I stated that during
      entire history of the gold standard,
      there were no depressions or hyper-
      inflations. I dated this period from the

      Stone Age to the Civil War.
      First, I admitt that I may have
      overlooked something from the
      Napoleonic Era. I know that during
      those years (approximatly 1790 to
      1815) the British invented income
      tax. I know that Lincoln was guided
      by this when he imposed it for the
      first time here. I could hedge and
      date the period from the Stone Age
      to the French Revolution, but I would
      have to exempt American history
      up to the point of Lincolns green-
      back during the Civil War.
      Now to definations. Keynes defined
      the Great Depression as demand settling
      to 10% less than supply and probably
      staying there indefinatly. Obviously, there
      was a huge imbalance on the supply
      side. There were too many goods and
      services chasing too little money. The
      price of things went down. There was
      major deflation. It did not last indefinatly.
      It lasted from approximatly 1929 to 1939.
      It was a protracted period of major deflation.
      The first time anything like this
      happened in America was 1873. We had
      gone off the gold standard. I do not know
      the extent of the deflation, or the precise
      imbalance on the supply side, but it lasted
      an unheard of five years. Previously, and
      during the gold standard there had been
      panics. They were brief deflationary
      imbalances never lasting more than two
      years.
      I am not aware of any depression
      or panic in America in the 1850s after
      the gold rush. I resubmitt that there may
      have been modest inflation.
      By inflation I mean there was an
      imbalance on the demand side. Prices
      went up. There was too much money
      chasing to few goods and services.
      There was a protracted period (100 years)
      of modest inflation after the looting of
      the Aztecs and Incas. There is no
      evidence of hyper-inflation ever under the
      gold standard. The very weight of the
      stuff might make it impossible. By
      hyper-inflation I mean the doubling of
      prices in a year. I think thats a fair
      minimal defination.
      Alternating maladjustments in
      supply and demand are as inevitable
      as changes in the weather. I am satisfied
      that bussiness cycles are beyond the
      capacity of human prediction and control.
      Gold has provided us with the gentlest
      alternations. Depressions are short.
      Inflation is mild. Often there is neither.
      This is what history shows us.
      I do not advocate the gold standard
      because its fair, or because it spares
      us from political weasels. I advocate
      the gold standard because it keeps
      the alternations of the bussiness cycle
      away from the extremes of protracted
      depression and hyper-inflation which
      only become part of the cycle when
      the king steals the peoples gold.
    • jru486@xxxxx.xxxxxxxxxxxxxxx)
      I would very much like to read Dr. Pauls book. I will try to buy it. I find it difficult to impossible to differentiate between von Mises and Adam Smith. I
      Message 2 of 16 , Jan 1, 1999
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        I would very much like to read Dr.
        Pauls book. I will try to buy it. I find it
        difficult to impossible to differentiate
        between von Mises and Adam Smith.
        I feel the Austrians lack original economic
        thought.
        Always good to see what Dr. Paul
        has to say. Please give me the exact
        title and publisher. I'll amazon.com it,
        or check an LP bookstore in San
        Francisco. I suspect that he is calling
        panics depressions. They either last
        more than two years or they don't. Call
        them what you will.
        We seem to agree that Keysian
        fine tuning of the economy is only
        a recipe for disaster. I attribute the
        depression in Japan to a level of
        corruption that I couldn't imagine if
        I was in Hell.
        Returning to the gold standard
        is very tricky. Say you gained despotic
        power and ordered it. Say the masses
        were behind you 110%. The gold
        reserves cash out at about 85 billion
        dollars. This is at 300 dollars an oz.
        Its easiest to use dollars as
        common units. So lets say there are
        200 billion dollars worth of gold in
        the country. Lets be generous and
        optimistic and make it 300 billion. There

        would be 85 in Fort Knox and various
        banks and 215 elsewhere, like Harry
        Brownes vault for instance.
        Now lets take the GDP at face
        value. The last time I looked it was
        6 trillion dollars. So when the order
        was given and cheerfully carried out,
        you have 6 trilion dollars worth of goods
        and services (supply) chasing 300 billion
        dollars worth of money (demand).
        With the zeros knocked off 60 chases
        3. Supply would be 20 times demand.
        Demand would be 95% below supply.
        During the Great Depression according
        to Keynes, demand was only 10% below
        supply. Oh how we might long for
        the happy and prosperous times of
        the Great Depression.
        This is where the notion of executive
        order takes me.
      • Tom Uffner
        returning to the gold standard, without making other changes at the same time will do nothing to increase financial privacy, nor will it eliminate the
        Message 3 of 16 , Jan 1, 1999
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          returning to the gold standard, without making other changes at the same
          time will do nothing to increase financial privacy, nor will it eliminate
          the possibility of inflation. banking and credit will not go away anytime
          soon--the italians let the genie out of the bottle about 600 years ago
          and to get it back in you would need to convince everyone worldwide that
          they should transact business by carrying or shipping gold rather than
          using credit, checks or electronic funds transfers.

          as long as the people allow it, governments will regulate banks and
          require them to turn over their records to the tax agencies. it makes
          no difference whether they denominate the accounts in dollars or oz. AU

          and as long as the people allow fractional reserve laws to stand, banks
          will have the power to wave their magic wand and create more gold.

          and by the way, this answers the question about how to increase the gold
          supply to match the GDP. if you let them, banks can inflate gold the same
          way they do it with fiat currencies. the problem only arises when too
          many people want to withdraw their money at the same time because they
          can't just kill a few forests and crank ap the printing presses.

          this discussion has wandered a bit too far from the purpose of this
          list: discussing ways to promote libertarian ideas and get Libertarians
          elected.
          --
          Tom Uffner tom@...

          Themes were useless. Destiny was here, and the foot pedals were bleeding!
        • nauticon@xxxx.xxxxxxxxxxxxxxxxx)
          Ron Dr Paul s book was on loan and like a good boy I did returned it to it s rightful owner. Will try to get his web page address or the proper title. They
          Message 4 of 16 , Jan 1, 1999
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            Ron

            Dr Paul's book was on loan and like a good boy I did returned it to it's
            rightful owner. Will try to get his web page address or the proper
            title. They were, if I recall, both panics and depressions. The CA gold
            rush panic-depression could not happen today as Dr. Paul pointed out. It
            took months to communicate what is done in a couple of seconds today.
            Gold was physically moved across oceans than by sailing ship. Today they
            move it a few feet in the NY Fed's vault.

            Your confusing money supply with money velocity or turn over rate. The
            amount of gold has nothing to do with the size of the economy. The
            switch would be chaotic but in theory simple. The Fed sells Treasuries
            reducing money supply in an amount equal to the amount of gold it buys
            putting an equal amount of money back into circulation. In simplistic
            banking terms, the Fed is swapping low grade collateral - political
            manipulated future tax revenues - for high grade collateral with a fixed
            value.

            I've not read enough Keynes to do any sort of comparison. Moral is my
            term related to the freedom of the market to self-adjust. Should the
            market be free to adjust to the demands of each individual or be
            controlled by governments? I use moral in an ethical or free sense.

            The Austrian economists refined Adam Smith mainly by applying their ideas
            to the ever increasing repressive power of governments. He predated the
            end of the gold standard, the explosion in global trade that paralleled
            the industrial revolution. When he was writing most international trade,
            most trade, was still barter or for gold. There were local panics but
            your right, usually of short duration, usually caused by crop failure or
            some such phenomena.

            That's why I call it moral.

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          • Tom Uffner
            ... anyone who doesn t want to hold their breath while waiting for a President to issue that executive order start using gold on their own whenever possible.
            Message 5 of 16 , Jan 1, 1999
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              Jim E Larsen wrote:

              > I've not yet
              > located anything on a mechanism for a return to the gold standard tho
              > Jude Wanniski may have covered it. The US could do so tomorrow by
              > "Executive Order".

              anyone who doesn't want to hold their breath while waiting for a
              President to issue that executive order start using gold on their own
              whenever possible. it has a current market value of $287.83/oz. and you
              can get it in units of 1/10th oz and up at many coin shops, gun shows,
              or any bank if you don't mind leaving a paper trail.

              you should olso take a look at the e-Gold web site at:
              http://www.e-gold.com/e-gold.asp?cid=100124 and get an account you can
              use to spend and receive gold electronically. they also have some good
              general info about gold, and the number of people and businesses that
              accept e-Gold is growing rapidly.

              Tom Uffner tom@...

              Themes were useless. Destiny was here, and the foot pedals were bleeding!
            • jru486@xxxxx.xxxxxxxxxxxxxxx)
              Its been a while, and I have forgotten velocity. I ll have to look it up. I m glad we both enjoyed the way Mr. Baldino sandbagged the hell out of us with the
              Message 6 of 16 , Jan 2, 1999
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                Its been a while, and I have forgotten
                velocity. I'll have to look it up. I'm glad
                we both enjoyed the way Mr. Baldino
                sandbagged the hell out of us with the
                von Mises quote.
                If the Fed sold treasuries and bought
                gold at any rate. I am reminded of Gresham's
                Law. Bad money drives out good. This is
                the closest thing in ecnomics to a real law.
                I believe that to find an exception might win
                the Nobel Prize. Therefore, it follows that
                gold would driven out of circulation.
                Remember how fast silver change
                disappeared back in the 70s. I have to
                reject this plan.
                Keynes is reguarded as an evil
                statist in most LP circles. Hitler was
                probably the first to agressively impliment
                Keynesian economics. Roosevelt and
                the rest of the world quickly followed.
                I feel that the Libertarian critism
                of Keynes is mostly well founded and
                deserved. If I stray from the Party line,
                its here. I think his analysis of the Great
                Depression was essentially correct. His
                solution and also position in a nut shell
                was the the government must intercede
                to stimulate aggregate demand. Here,
                I might differ, and the Party must. But,
                it worked, and continues to work even
                now. And no one has proposed a
                sensible alternative. So far as I am
                concerned Freidman and Laffer only
                refined or fine tuned Keynesian
                economics.
                I probably need to spend more
                time with the Austrians. I'd like a
                concise overview of von Mises. Again,
                I loved the quote.
              • nauticon@xxxx.xxxxxxxxxxxxxxxxx)
                I ve never been able to understand Keynes but he is reported to have said in the fine print that government borrowing to prime the pump during bad times should
                Message 7 of 16 , Jan 2, 1999
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                  I've never been able to understand Keynes but he is reported to have said
                  in the fine print that government borrowing to prime the pump during bad
                  times should be paid back during good time. Like corrupt politicians
                  everywhere, they take from economic theory only that part they want to
                  use to enhance their power. I doubt if Keynes ever said or wrote that
                  governments should borrow 3 to 10% of the GDP every year, regardless of
                  the state of the business cycle.

                  Tom U is not amoured with our discussion of the gold standard. I
                  disagree for the simple reason that we are closer now to a global
                  economic meltdown than we've ever been. Compared to 1929, government
                  counterfeit debt is exponentially larger than any time in history.
                  Figgie wrote a book a few years book delineating the effects of a mild
                  depression on tax revenues. One percent of the highest paid people pay
                  40% of the income tax including capital gains. Corporations pay another
                  30%. It isn't rocket science to figure out that it wouldn't take much of
                  an economic slow down to force to US government to default on it's debt.
                  That's why the politicians are conspiring with the central bankers all
                  over the world to keep the balls up in the air, bailing each other out
                  with even more government debt.

                  They've already dropped the Asian and Russian balls. Africa is a basket
                  case. They're boggling the Latin American ball and the EU is so busy
                  trying to make the euro work that they too could collapse. Where next?

                  What does this have to do with us? When all else fails, the only thing
                  left is the gold standard. Banner Seagraves suggested that we have a
                  policy on every issue - the gold standard is one of them. If the dominos
                  fall as far as the dollar, we, Jack Kempt, and steve Forbes have the
                  answer. It won't happen until our economy is taxes to oblivion and our
                  savings wiped out by financial collapse.

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                • Tom Uffner
                  ... actually i find it very interesting and i have been reading and participating in it. but i don t consider the LPD list the proper venue for this
                  Message 8 of 16 , Jan 2, 1999
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                    Jim E Larsen wrote:

                    > Tom U is not amoured with our discussion of the gold standard.

                    actually i find it very interesting and i have been reading and
                    participating in it. but i don't consider the LPD list the proper venue
                    for this discussion. we already have a clear position on the gold
                    standard in the LP platform. i think everyone who has posted anything
                    in this thread agrees with that position.

                    i don't think the State of Delaware can do much about the gold standard
                    even if Libertarians win every available office in 99 and 2000.

                    more importantly i don't think discussing the gold standard attracts many
                    new prospects to the LPD, nor does it raise funds, find candidates, or
                    help get them elected. we need volunteers, we need money, we need about
                    100 serious candidates for the 2000 elections, we need a real party
                    organization where all the work doesn't get done by 3-6 people;
                    discussing what von Mises, Keynes, Harry Brown, Ron Paul, etc. said about
                    the gold standard, no matter how fascinating, only serves as a distraction
                    from these things.

                    > What does this have to do with us? When all else fails, the only thing
                    > left is the gold standard. Banner Seagraves suggested that we have a
                    > policy on every issue - the gold standard is one of them. If the dominos
                    > fall as far as the dollar, we, Jack Kempt, and steve Forbes have the
                    > answer. It won't happen until our economy is taxes to oblivion and our
                    > savings wiped out by financial collapse.

                    we've had the answer in our platform for 28 years, but even if anyone had
                    asked the question, they would have just ignored us as a bunch of cranks.
                    even if the economy collapses, they will still ignore us. buy gold or
                    other assets that don't depend on fiat currencies for their value if you
                    think our economy will fail. find or create alternatives to the government
                    controlled banking system. guarantee that you'll have a chair when the
                    music stops. do it as an individual. follow Robert J. Ringer's advice and
                    keep a low profile about it or you may become a target if things get really
                    bad.

                    this list gets read by hundreds if not thousands of people who will decide
                    to join and contribute, or write us off as useless and give their support
                    to some other party partially on the basis of what we post here.

                    e-gold has a mailing list. the usenet has several newsgroups where a gold
                    standard discussion would fit in well, or you can create gold@onelist.com
                    --
                    Tom Uffner tom@...

                    Themes were useless. Destiny was here, and the foot pedals were bleeding!
                  • MikeBanIRS@xxx.xxx
                    Bravo Tom!!!! Lets turn this list back to the Libertarian POLITICAL PARTY not the RandianMisesHayekWhatever debating society. Have I mentioned I need
                    Message 9 of 16 , Jan 2, 1999
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                      Bravo Tom!!!! Lets turn this list back to the Libertarian POLITICAL PARTY not
                      the RandianMisesHayekWhatever debating society.

                      Have I mentioned I need volunteers for Tax Day recently? :)
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