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Wednesday, August 16, 2006

Current monetary system.

Bill Bonner, at LewRockwell.com, recounts the 35 years of "goldlessness."

8 Comments:

Blogger Henry Meers said...

His dates are a bit off; the gold standard ended when Roosevelt banned ownership by Americans in 1933. This is similar to what happened during the Civil War, although foreign governments could redeem dollars for gold under the Bretton Woods Agreement of 1944 until 1971.

Let's remember one really big thing: the free, American economy worked and works without reliable money; we have been living through it for all those years. It would be a whole lot more efficient with a sound dollar, but the "progressives" who have dominated Washington since the New Deal neither get that nor want to.

A further consideration might be the old Russian joke under the communist regime: "they pretend to pay us; we pretend to work. The difference is the capitalist, free-market system here encourages practical solutions in order to keep business running, a constant "work around" when dealing with the Federal government. It, by the way, is the real loser, because inflation encourages people not to use its money unless they have to, and inflated dollars buy less.

The Public has reacted to terrible monetary policies by instructing its representatives to lower taxes and generally reduce government financial interference. This has been very successful, even though a lot of you are too young to remember all the controls on banking, interest rates ad infinitum that only began to disappear in the late Seventies. Who needs dollars, when you can have money-fund shares?

The point of this is that things aren't as bad for us, the individual, as Rockwell and others might claim. They are a mess, but an open society can handle the situation. The government has been very anti-captialist since 1933, but the forced relaxation of its powers has allowed economic growth. A sound dollar, as was the case into the Nineties, after a mistakenly strong currency in the early Eighties gave us strong financial markets, the underpinning of captialism, and can again.

3:45 PM  
Blogger ed hanson said...

The LewRockwell bunch have never progressed beyond the '64 Goldwater.

10:21 PM  
Blogger Dick Fox said...

Ed,

I know that you do not agree that the floating dollar has been a disaster, but if you look at the past 35 years with a dispassionate eye you have to see the massive inflation.

One thing that seems to never enter any discussion of the disparity of wealth is the effect of inflation. The more wealthy nearly always put their wealth into hard assets while the less wealthy tend to save money so that they can acquire hard assets. But as the money is debased the less wealthy see their savings erode and they enter the ranks of the poor while the more wealthy become even more and more wealthy as their assets appreciate.

One of the primary reasons socialist societies have such huge disparities in wealth is because socialism has no way of valuing goods and services; therefore, the function of money to value goods and services is hampered. The result is that hard assets have meaning while the money does not.

5:09 AM  
Blogger ed hanson said...

Dick

One reason for the failure of socialist and communist societies certainly is the pricing component of products and labor, but not because of the monetary unit. These cocieties think they can transcend the natural laws of economic interaction. I am reminded of Lan's sign off statement.

As for thr Rockwell group, I am talking about more than severe Austrian gold standard, but also the rampant isolationism which is also a basis of their philosophy.

5:38 AM  
Blogger David Wood said...

I agree, Ed. I'm a long-time libertarian, but stopped reading Rockwell years ago. That crowd had gone round the bend almost to the point of paranoia, IMHO.

7:42 AM  
Blogger Dick Fox said...

Ed and David,

I do not agree with the Austrian draconian gold standard, but I do agree with this article. A floating dollar has been a disaster.In 100 years economists will look back on the 1970 and shake their heads at how we could have been so stupid. And I will venture to say that inflation has stolen more wealth from citizens than any other government action. Consider that a dollar saved in 1970 would be worth about $0.05 today.

12:56 PM  
Blogger Henry Meers said...

Dick,

You really have to go back to 1933 and the New Deal to see the change from respect for the individual to the emergence of big government telling him what to do. That was signified by the end of the gold standard, convertibility on demand, not the tatered remnent that was hauled down in 1971. FDR took the dollar down a huge amount and Carter finished the job at $850 and ounce from $20 in 1930. It was the attitude towards the people that changed, the money followed.

4:43 PM  
Blogger Henry Meers said...

Dick,

You really have to go back to 1933 and the New Deal to see the change from respect for the individual to the emergence of big government telling him what to do. That was signified by the end of the gold standard, convertibility on demand, not the tatered remnent that was hauled down in 1971. FDR took the dollar down a huge amount and Carter finished the job at $850 and ounce from $20 in 1930. It was the attitude towards the people that changed, the money followed.

4:44 PM  

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