What happened to all of the doom and gloom economic threads?

[JAMESBJOHNSON]

Economics is a social science. Translation=its fund of knowledge is the result of votes rather than experiments.

 

[4est_4est_Gump]

Conclusion

As we said earlier, the role of money is to make trade easier. Without money, there would be the awkwardness of barter. The use of money also tends to minimize human errors, and thus unnecessary losses. The use of money makes economic calculation possible. This helps to increase the division of labor and encourages more complicated mass production for mass consumption. It results in increasing the transactions that are expected to increase the satisfaction of each participant. The increased production is distributed by market processes to all who contribute to the joint production, in accordance with what the individual participants value most among all the many alternative purchases open to them.

Money thus helps men to help others as they help themselves. Money might be called a catalyst for the Golden Rule. A sound and simple monetary system is probably the greatest material tool available to man for the multiplication of human satisfactions.

The question that men face today is: Who should choose the money? The government? Or the people buying and selling on the market? It was the market, not governments, that developed the precious metals as money. Few would maintain that present-day government interferences in the field of money have been helpful.

The value of money is always the anticipated use value of what it will buy. Permitting politicians to manipulate the quantity of money permits them to affect indirectly the values involved in every market transaction. In fact, it permits them to disrupt, prevent, and otherwise hamper transactions that would increase the satisfaction of every member of the society. Increasing the quantity of money does not increase the quantity of goods people want to buy. It only helps some at the expense of others.

If men are to remain free and if Western civilization is to continue, people must regain the right to limit the political expansion of the quantity of money and/or credit. We must never again permit politicians to print money or get their hands on the money we put in banks and think is always there. A free market economy cannot permanently operate on a politically manipulated paper money standard. Free men need a market-selected money. Under present conditions, this means a gold standard.

Percy L. Greaves, Jr.
http://mises.org/daily/6122/The-Theory-of-Money

 

[4est_4est_Gump]

CONTRARY TO CLAIMS OF JOB LOSSES from restructuring were closely studied and refuted by Harvard Business School eminence Michael Jensen and his team in the mid-1990s. Between 1976 and 1993, which covers Romney’s Bain Capital years, Jensen calculates that U.S. corporations conducted 42,621 merger and acquisition deals worth a total of $3.1 trillion. Selling firms won premiums of 41 percent, generating $899 billion in constant dollar gains for shareholders (well over a trillion in today’s dollars). Buying firms also gained on average, by increments that increased over the years. Since Bain under Romney was an out-performer, its results were better proportionally.

Harvard economist (later Treasury secretary) Larry Summers speculated that these gains disguised wealth transfers from bondholders, workers, suppliers, and communities. Jensen disproved this charge, showing—in the aftermath of the transactions— sharp increases in capital expenditures, R&D, employment, and share value. During this period, encompassing the Reagan years, the nation massively led the world in job creation with between 50 and 55 million new jobs, at steadily rising pay, compared to some 10 to 15 million jobs lost. With the U.S. generating jobs far faster than overseas rivals, this restructuring could hardly have caused job losses to foreign countries. We continued to lead the world in job creation, launched the computer revolution, and maintained our manufacturing employment level until the crash of 2000.

What was the reason for the huge impact of private equity investments and buyouts? Jensen stresses the importance of realigning the management with the stockholders and overcoming the “agency problem.” Ownership fosters good management because owners are their own agents. All other arrangements foster subtle or even open conflict between the managers—some prone to enrich their own worth, hire cronies, and build empires—and the shareholders, who in general single-mindedly want to maximize the worth of the enterprise.

The underlying reason for the efficacy of private equity transactions, however—as I learned from my meetings with Bain and later tutelage under Milken— is the better alignment of knowledge and power. Romney could build value for his investors because he combined the financial power of Bain with an intimate knowledge of all the companies in his portfolio and a dynamic understanding of the always-changing economic landscape. Like Warren Buffett and John Doerr and other successful investors who deal in entire companies, he exploited the legality of insider knowledge by owners and aspiring owners.

By contrast, government “fair disclosure” securities laws routinize and stultify information release by debouching it through law and PR departments, thus denying public company shareholders any similar access to their companies. The effect is to enforce ignorance on most public stock market investors, reducing them to a level short of real ownership. When a company goes public, ironically, its information immediately goes private, vetted and netted by lawyers and PR counsel until it contains no substance at all beyond quarterly disclosures of enigmatic numbers.

Conglomerates such as Berkshire Hathaway or General Electric, venture capitalists such as Doerr’s Kleiner Perkins, and private equity players such as Romney’s Bain Capital all escape this trap. They can intimately understand the investments they make.They legally join the knowledge of ownership with the power of profits. They are entrepreneurs, commanding the most powerful money in any economy: fully informed finance.

If Romney had been listening more attentively when I gave my speech back in 1982, he might have been more cogent in responding to the charges of “vulture” capitalism in later years. I showed that consumer spending is nowhere near 70 percent of the real economy (GDP leaves out all intermediate transactions in the supply chain) and is nearly irrelevant to economic growth (“supply creates its own demand”). I spoke on the centrality of venture capital and the power of entrepreneurs responding to tax rate reductions: “High tax rates don’t stop rich people from being rich; they stop everyone else from getting rich,” I said. “Progressive tax rates don’t redistribute incomes, they redistribute taxpayers…from factories and offices and onto foreign beaches and early retirements,” among other old favorites that still ring true looking across to Europe in 2012. And I made my case that capitalists thrive only by serving others. But at the time, in the early 1980s, I still did not really grasp the deeper sources of the power of venture capitalists and private equity players.

George Gilder, Romney, Bain and Me
http://spectator.org/archives/2012/08/31/romney-bain-and-me/print

 

[RobDownSouth]

George Gilder, Romney, Bain and Me

Between 1976 and 1993, which covers Romney’s Bain Capital years....

http://spectator.org/archives/2012/08/31/romney-bain-and-me/print

So now Rmoney's retroactive resignation from Bain Vulture Capital is now 1993 not 1999?

Well, like the noted Randian philosopher 4est_4est_Gump (tribal birthname: Dances With Falsehoods) often sez...."Ya gotta lie, so go big or go home!"

 

[Ulaven_Demorte]

Anyone want to guess what U_D has said about Krugman in the past?

No need to guess, I said he's more often wrong than right. But regarding going back to the gold standard, he's most definitely right. History proves exactly that.

 

[4est_4est_Gump]

No need to guess, I said he's more often wrong than right. But regarding going back to the gold standard, he's most definitely right. History proves exactly that.

At which point in history have you observed the failure of an economy going back to the gold standard?

 

[RobDownSouth]

At which point in history have you observed the failure of an economy going back to the gold standard?

At which point in history have you observed the success of an economy going back to the gold standard?

 

[Ulaven_Demorte]

At which point in history have you observed the failure of an economy going back to the gold standard?

We went off of the gold standard because it is inherently unstable and subject to speculation. As evidenced by US economic instability in 1873, 1884, 1890, 1893, 1907, 1930, 1931, 1932, and 1933.

The gold standard acts as a limit on economic growth. As an economy’s productive capacity grows, so should its money supply. Because the gold standard requires that money be backed by metal, then the scarcity of the metal retards the ability of the economy to produce more capital and grow.

Then total amount of gold mined amounts to just over 142,000 metric tons, about 6 trillion dollars worth. Large deposits of gold are located in other countries, many of whom you would consider our "enemies". In 2010 the largest producers of gold, in order, are China, followed by Australia, the US, South Africa and Russia.

6 trillion dollars worth of gold in the world and you want to base our economy on what little of it we possess? Yeah, that's insane.

 

[Ulaven_Demorte]

At which point in history have you observed the success of an economy going back to the gold standard?

To my knowledge there are no countries that currently base their currency on a gold standard. Several do hold substantial reserves. Switzerland backs about 40% of it's currency in gold, but no longer allows it to be converted.

 

[4est_4est_Gump]

What the gold standard debate and any gold commission are really about is who has ultimate authority to decide the course of monetary instability. Should the people be restored that authority or should it remain as a centralized agent of the banking cartel and government? In so many ways central banks have already abused that political authority, not just in the artificial stability and growth of the past few decades, but in violating their own rules and philosophies that they themselves use for the very justifications for their own power grab. If the people are to lose their power over money because they supposedly cannot distinguish good banks from bad banks, what are we to say about an unaccountable government/banking agency that refuses to do exactly the same? These were the same professional classes and political intellectuals that were supposed to offer a better monetary alternative, and even they recoiled at the debasement and dysfunction.

It was a long and slow transformation that was often unnoticed under the growing cover and opacity of technological complexity, but Ben Franklin was exactly right. The artificial economy and the insidious perversions of asset inflation generated more than enough apathy, a form of anesthesia really, to allow the financial economy, with full approval of the political and economic authority elite, to dominate. The big banks just got bigger and more prevalent, but as long as 401k's were doubling or tripling and house prices were allowing HELOC's to function as ATM's no one cared; even stagnant real wages failed to arouse the people from the debased stupor as fungible ledger money lifted away the last vestiges of dispersed control over money and finance. Now that monetary authority is fully gone, we have only one option to return to true stability since central banks continually demonstrate their preference for intentional instability: reclaim that monetary authority. But we must be serious and resolved this time or we will end up in another thirty years agreeing how Einstein was right about insanity.

http://www.realclearmarkets.com/art..._money_lets_get_it_right_this_time_99852.html

 

[Ulaven_Demorte]

Oh look, an op-ed piece.

Is this one of those that you actually agree with or one you're going to pull a Vette from later?

 

[4est_4est_Gump]

We went off of the gold standard because it is inherently unstable and subject to speculation. As evidenced by US economic instability in 1873, 1884, 1890, 1893, 1907, 1930, 1931, 1932, and 1933.

The gold standard acts as a limit on economic growth. As an economy’s productive capacity grows, so should its money supply. Because the gold standard requires that money be backed by metal, then the scarcity of the metal retards the ability of the economy to produce more capital and grow.

Then total amount of gold mined amounts to just over 142,000 metric tons, about 6 trillion dollars worth. Large deposits of gold are located in other countries, many of whom you would consider our "enemies". In 2010 the largest producers of gold, in order, are China, followed by Australia, the US, South Africa and Russia.

6 trillion dollars worth of gold in the world and you want to base our economy on what little of it we possess? Yeah, that's insane.

This is an incorrect assessment based upon the fallacy of a limited amount of gold.

I recommend "What Has Government Done to Our Money," Murray N. Rothbard.

It can be downloaded for free from several sources.

What is actually insane is the manipulations of fiat money which rewards those at the top with quick profit while punishing those at the bottom with unlimited inflation. There's a real reason that gold is so expensive today and it is not scarcity, but the rapidly declining value of the dollar thanks to its inflated supply.

There are a couple of links right above you that explain this.

 

[unregistered]

 

[Ulaven_Demorte]

This is an incorrect assessment based upon the fallacy of a limited amount of gold.

I recommend "What Has Government Done to Our Money," Murray N. Rothbard.

It can be downloaded for free from several sources.

What is actually insane is the manipulations of fiat money which rewards those at the top with quick profit while punishing those at the bottom with unlimited inflation. There's a real reason that gold is so expensive today and it is not scarcity, but the rapidly declining value of the dollar thanks to its inflated supply.

There are a couple of links right above you that explain this.

The "fallacy of a limited amount of gold".

LMAO.. Classic.

Tell us Cap'n Mathematician, how much is 144,000 metric tons of gold (nearly all that's been mined) worth at today's rates? Do you think it's enough to back our economy? Remember, we don't possess all or even most of this gold.

Unlimited inflation? Where Henny Penny?

The reason for the high price of gold is EXACTLY because it's scarce. If it were available in unlimited quantities, then it would be worthless. There isn't a a Sand standard for a reason.

 

[4est_4est_Gump]

I found it amusing for him to decided that this one time Krugman was correct...

Did Gold Cause the Great Depression?

Before moving on, let me quickly address that particular claim. I've written a longer response here, but for now we have to wonder: If the gold standard caused the Great Depression, what else was going on? After all, the gold standard wasn't implemented in the 1920s. Although there had been plenty of industrial crises or financial panics in the previous hundred years, there had been no prolonged global depression approaching the experience of the 1930s — even as more and more countries joined the growing worldwide market of gold-based economies. So clearly it's not enough to point to the "golden fetters" of the monetary system to explain what happened in the Great Depression.

Thus, to blame the Great Depression on the gold standard is just as nonsensical as blaming it on the "laissez-faire" policies of Herbert Hoover, who (even if we take the caricature of him seriously) was no different from all his predecessors. It would be like explaining a particular airplane crash by citing gravity.

As a final point, let's not forget that FDR abandoned the gold standard in 1933. The Great Depression thus lingered on — after leaving the allegedly awful gold standard — for at least another 8 years (and I would say 13 years, because I don't think World War II "fixed" the economy), in what was still the worst economic period in US history. It's odd that the gold standard could wreak so much havoc in the early 1930s — even though it had never done anything comparable earlier in US history — and then could continue to "cause" the Great Depression, from 8 to 13 years after abandoning it. It starts to make you wonder whether the "economists of all stripes" know what they're talking about.

http://mises.org/daily/5379/The-Gold-Standard-Myths-and-Lies

 

[Busybody]

‘Seniors Suffer under Obama. Where’s the Outcry?’

August 30, 2012 - 4:52 pm - by Ed Driscoll



“Thank goodness we have a Democrat in the White House. Otherwise, America’s seniors would be facing a serious crisis,” Glenn Reynolds writes in USA Today:


The Federal Reserve’s low interest rates are a boon to overextended banks and to the borrowers who owe them money. (As well as the world’s greatest debtor, the U.S. Treasury). But these benefits come at the expense of savers — both those who hope to see their savings grow enough that they can retire someday, and those who have already retired expecting to live on interest at rates far higher than those that prevail today. The low rates are, basically, a tax on savers for the benefit of borrowers and those who made bad loans.

There’s little hope the policy will change because the Federal Reserve says to expect this to last.





That’s not all. For senior citizens, it’s a double squeeze. While incomes for retirees are going down, costs are going up. Gasoline is now roughly double what it was when President Obama took office and, in many places, it’s back up in the neighborhood of $4 a gallon.

According to the Bureau of Labor Statistics, ground beef recently hit a national average of more than $3 a pound, the first time in history it’s reached that level. (When Obama was inaugurated, it was $2.35). Anyone who has spent time in a grocery store knows that this sort of thing is happening on every aisle — coupled with “shrinkage,” as manufacturers reduce the amount of product in a box while keeping the price the same, a way of hiding price increases from (they hope) inattentive consumers. And it’s going to get worse, according to the Department of Agriculture, when this summer’s drought hits food prices in a few months.

In fact, with this double squeeze, we have the makings of a major national crisis. There’s only one thing missing: the kind of news media attention you’d usually get with this many senior citizens suffering in an election year.

Actually, the MSM has most of those bases covered. High gas prices? Good news says NBC, the New York Times, the Washington Post, and the Politico. High meat prices? Helps fight global warming, says “Scientific” American. Heck, the whole flatlined economy helps the environment, according to Democrats John Kerry and Claire McCaskill.

Think of retirement as a permanent case of what the L.A. Times called “funemployment” in 2009, and the joys of what Virginia Postrel dubbed the MSM’s serious case of “Depression Lust,” at the end of 2008. Because undoubtedly, that’s how the MSM justifies America’s moribund economy.

That is, if they think about its impact on the elderly at all.

 

[Busybody]

lets remeber

Under Bushco when GDP was at 3%....unemployement was 5%.....gasoline under $3


WE WERE TOLD

ITS THE WORST ECONOMY SINCE H HOOVER

 

[4est_4est_Gump]

The "fallacy of a limited amount of gold".

LMAO.. Classic.

Tell us Cap'n Mathematician, how much is 144,000 metric tons of gold (nearly all that's been mined) worth at today's rates? Do you think it's enough to back our economy? Remember, we don't possess all or even most of this gold.

Unlimited inflation? Where Henny Penny?

The reason for the high price of gold is EXACTLY because it's scarce. If it were available in unlimited quantities, then it would be worthless. There isn't a a Sand standard for a reason.

Hey, U_D, the price of gold is not fixed.

The Federal Reserve balance sheet jumped from $0.889 trillion in December 2007 to $2.247 trillion in December 2008. The yearly rate of growth of the balance sheet climbed from 2.6 percent in December 2007 to 152.8 percent by December 2008. Additionally the Fed has aggressively lowered the federal-funds rate target from 5.25 percent in August 2007 to almost nil by December 2008.

Consequently the yearly rate of growth of the AMS measure[3] of the US money supply climbed from 1.5 percent in April 2008 to 14.3 percent by August 2009.

Contrary to Bernanke and most mainstream thinkers, such pumping has inflicted severe damage to the process of real wealth generation. It has severely impoverished wealth generators and laid the foundation for serious economic troubles ahead.

Allowing the money supply to be determined by the production of gold leads to stability and not chaos as Bernanke suggests. In an environment where money is gold and no one is engaged in the act of money printing, economic swings, i.e., boom-bust cycles, cannot emerge. (Note that money printing sets in motion an exchange of nothing for something, i.e., an act of embezzlement.) Contrary to Bernanke, it is policies that aim at stabilizing the economy that result in instability and economic chaos.

http://mises.org/daily/6003/Contra-Bernanke-on-the-Gold-Standard

In short, we don't even need all available gold.

"What matters is not the amount of money as such but its purchasing power. Hence with an expansion in real wealth the purchasing power of dollars will increase and every holder of dollars will be able to command more real wealth. A general fall in prices, which is labeled deflation, therefore permits more individuals to access an expanding pool of wealth."

 

[4est_4est_Gump]

http://mises.org/money.asp

 

[Busybody]

Hey, U_D, the price of gold is not fixed.


."

You PUTZ


You fall into the same trap REPOZ and RWingers fall into

Feeling you MUST defend yourselves against the CRETINS

When you do, you dignify them and their INSANITY

There is one way to deal with em

NOT YOUR WAY

 

[4est_4est_Gump]

FAQs at Mises

1. There simply is not enough gold for it to be used as money.

This is just like saying “we cannot possibly measure the size of microbes because inches are too large”. An excellent counterpoint to this line of thinking is to ask “what amount of gold will make it acceptable for use as money?”

Hoppe writes:

Once a money is established, any stock of money becomes compatible with any amount of employment and real income. There is never any need for more money since any amount will perform the same maximum extent of needed money work: that is, to provide a general medium of exchange and a means of economic calculation by entrepreneurs. [Source]

The total amount of gold that has ever been mined is 142,000 tonnes. If half of that gold disappeared, it would still be viable to use as money, and prices of goods would simply adjust downward to fit the quantity of money.

However, one could ask the question, "Could one ounce of gold serve as the monetary base?", or "If gold became as common as aluminum, would it still be useful as money?" Certainly the effort you'd have to put into buying a car (microscopes, nanotubes in the first case, perhaps a crane in the second) would change, and whatever means you are using to store your own money would have to adjust, but clearly, the answer is yes.

Similarly, if gold, which is a useful commodity is found to cure cancer, the non-monetary value of gold would cause a shift in the desirability to use it as currency... rather than a life saving cure.

A fundamental tenet to the Austrian analysis is an understanding of the origin of money. Gold became the most useful commodity to use as currency because of its particular characterisitcs. No one decided to use gold, it was just the best thing available at the time, and perhaps it still is.

The suitability of gold as a monetary base is the result of a number of different market factors. One of the factors is the value per weight. If it falls to that of aluminum or lead, then storage costs alone will undercut the usefulness of this element as currency. Silver may take its place. The fundamental truth, however, is that the commodity chosen by the market should be the one in use as currency.

The market seems to choose gold, and the shifts in its supply and value over the generations have not deterred them. One thing that people trust about gold is the relatively stable supply of it. It makes the value of gold somewhat predictable. A large shift SHOULD result in a market evaluation, but historically, these shifts have been fairly stable.

However, saying that "ANY" amount of gold will be enough to act as a medium of exchange misses the point. The market is fully capable of running on gold, but it wouldn't have evolved that way if gold did not have the characteristics that make it ideal for monetary exchange. If you posit a RADICAL change to those characteristics, such as supply, you will cause the market to re-evaluate its usefulness.

If India acquired ALL of the gold, that wouldn't mean we had no alternatives for a monetary base. All land and capital can serve as money, because money is just a type of capital. Indeed, land or commodity baskets may be preferred by the market outside an environment of market interference. Gold is a fantastic currency base, but it is far from the only one.

2. At current market prices, all the mined gold on earth is worth $4.5 trillion. This is much less that all the currency that has been printed in the whole world!

The price of gold in terms of pieces of paper is irrelevant. After all, fiat currency notes can be printed with very little effort at all. As gold catches on as money again, its usefulness and therefore its value will rise. The 4.5 trillion number is now dated, and perhaps 9 trillion is more accurate, and this is because more and more people are realizing that gold makes a better currency than fiat currency.

http://mises.org/Community/wikis/economics/gold-as-money-faq.aspx

 

[4est_4est_Gump]

You PUTZ


You fall into the same trap REPOZ and RWingers fall into

Feeling you MUST defend yourselves against the CRETINS

When you do, you dignify them and their INSANITY

There is one way to deal with em

NOT YOUR WAY

I'm talking past him to those curious few with open minds.

4. The money supply must grow at the same rate as the economy.

No it doesn’t. Prices are not independent of the money supply. The quantity of the money supply overall does not matter (See 1.). If the amount of goods and services increases, while the money supply stays fixed, prices of all goods and services will fall.

 

[Busybody]

I'm talking past him to those curious few with open minds.

you are WRONG!

 

[RobDownSouth]

FAQs at Mises


http://mises.org/Community/wikis/economics/gold-as-money-faq.aspx

What teh intellectual frauds at Mises won't tell you is that a gold standard would basically equate to $11,000 per ounce, in essence crippling the American economy.

 

[4est_4est_Gump]

Here's another great lesson for open minds.

http://mises.org/daily/1829

The major objection against 100 percent gold is that this would allegedly leave the economy with an inadequate money supply. Some economists advocate a secular increase of the supply of money in accordance with some criterion: population growth, growth of volume of trade, and the like; others wish the money supply to be adjusted to provide a stable and fixed price level. In both cases, of course, the adjusting and manipulating could only be done by government. These economists have not fully absorbed the great monetary lesson of classical economics: that the supply of money essentially does not matter. Money performs its function by being a medium of exchange; any change in its supply, therefore, will simply adjust itself in the purchasing power of the money unit, that is, in the amount of other goods that money will be able to buy. An increase in the supply of money means merely that more units of money are doing the social work of exchange and therefore that the purchasing power of each unit will decline. Because of this adjustment, money, in contrast to all other useful commodities employed in production or consumption, does not confer a social benefit when its supply increases. The only reason that increased gold mining is useful, in fact, is that the large supply of gold will satisfy more of the non--monetary uses of the gold commodity.

There is therefore never any need for a larger supply of money (aside from the non-monetary uses of gold or silver). An increased supply of money can only benefit one set of people at the expense of another set, and, as we have seen, that is precisely what happens when government or the banks inflate the money supply. And that is precisely what my proposed reform is designed to eliminate. There can, incidentally, never be an actual monetary “shortage,” since the very fact that the market has established and continues to use gold or silver as a monetary commodity shows that enough of it exists to be useful as a medium of exchange.

The number of people, the volume of trade, and all other alleged criteria are therefore merely arbitrary and irrelevant with respect to the supply of money. And as for the ideal of the stable price level, apart from the grave flaws of deciding on a proper index, there are two points that are generally overlooked. In the first place, the very ideal of a stable price level is open to challenge. Hoarding, as we have indicated, is always attacked; and yet it is the freely expressed and desired action on the market. People often wish to increase the real value of their cash balances, or to raise the purchasing power of each dollar. There are many reasons why they might wish to do so. Why should they not have this right, as they have other rights on the free market? And yet only by their “hoarding” taking effect through lower prices can they bring about this result. Only by demanding more cash balances and thus lowering prices can the dollars assume a higher real value. I see no reason why government manipulators should be able to deprive the

consuming public of this right. Second, if people really had an overwhelming desire for a stable price level, they would negotiate all their contracts in some agreed-upon price index. The fact that such a voluntary “tabular standard” has rarely been adopted is an apt enough commentary on those stable-price-level enthusiasts who would impose their ambitions by government coercion.

Money, it is often said, should function as a yardstick, and therefore its value should be stabilized and fixed. Not its value, however, but its weight should be eternally fixed, as are all other weights. Its value, like all other values, should be left to the judgment, estimation and ultimate decision of every individual consumer.[34]