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Its Funny Money Honey

May 6, 2012

“Whoever controls the volume of money in our country is absolute master of all industry and commerce…and when you realize that the entire system is very easily controlled, one way or another, by few powerful men at the top, you will not have to be told how periods of inflation and depression originate.” – President James Garfield, 2 weeks before his assassination. 

Banks across the globe are all kneeling bedside praying to their God (the Hewlett Packard IP280)  that Mr. Ben Bernanke sparks up the HP again to prints a few dollars more . (Apparently 2.7 Trillion federal notes wasn’t enough to spark “demand”).  The Fed is hell bent on creating inflation – this will soon be the official policy.

I just don’t trust these guys pulling levers and manipulating the money supply, manipulating asset prices creating bubbles and debasing the currency. They don’t often (or ever) get it right. Greenspan, Bernanke etc.  all missed the 2007-8 meltdown, the savings and loan crisis, the great depression (remember – the Fed was pulling its levers back then too..)

Ultimately all they ever do is hit Ctrl+P over and over and over again making what little savings my mom has to live on disappear slowly and surely.  The only way out of our debt is via inflation. 

Printing fiat currency to create fiat growth.

When does it stop?  There is no restraint – across the globe the policy response is always the same-

Deflation: Ctrl + P. 

Recession: Ctrl + P.

Credit crisis:  Ctrl + P

An earthquake: Ctrl + P. 

Unemployment: Ctrl + P. 

 10 trillion has been printed since 08.  It’s a race to debase.


“The price for credit shouldn’t be controlled.  It results in cheap credit but for only those with special access” 

Cheap credit is available via capital markets for large corporations.  Small companies reliant on direct bank loans and lines of credit suffer as seen in 08 when their bank lines were pulled while the banks were provided free loans from the Fed.  


Banks love QE and other Fed programs (who wouldn’t like free money?) Too big to fail insolvent banks – magically, back to business as usual.

 The Fed has printed nearly 3 trillion since 2008 – all going to the banks who deposit these funds back to the Fed to earn 25 basis points.  Check your savings account lately? Bet your ass your not earning 25 bps…


The Feds mandate is price stability – however since the start of the Fed, prices have increased at the consumer level by 2,241%!    


We need to limit the ability of the central banks to manipulate the supply of money by pegging the dollar to Gold or even a basket of commodities.


“Between 1880 and 1914, the period when the United States was on the “classical gold standard,” inflation averaged only 0.1 percent per year.”

History shows that basing money on gold (thus limiting the ability for politicians from manipulating the money supply) results in less inflation, reduces the frequency of bank crises and still promotes growth.

“in the gold exchange standard years of 1948 to 1972 the world averaged annual per- capita growth of 2.8 percent, higher than the recent gold-free era.”

When money is backed by gold it’s impossible, or at least more difficult, for governments to manipulate and inflate. 

Banking crisis

A recent Bank of England paper suggests “gold stabilizes banks: The incidence of banking crises in the non-gold-standard period is higher than the incidence in the two gold periods.”

The paper went on to say

“Markets and countries enjoyed relative stability in gold- standard years, and capital in those years flowed to worthy growth-generating projects.”

Govt intervention manipulates rates and money and missalocates capital (see real estate bubble).

“The main sacrifice in gold regimes that the authors identify is that governments lose authority to micromanage economies. But given governments’ records, that may not be such a bad thing…”

 For the past 40 years or so most schools have excluded the gold standard from the classroom while focusing on the Keynes theory of Economics.  How many of us took economics class is about stimulus, deficit spending and manipulating money.  My professor in college acted like he was reading from a play book and the assumptions were all true – but they are not.  Economics is not an exact science and there are far too many variable involved for a few suits in a marble building to attempt to manipulate.



Robert Wenzel’s turn. Just released in the Economic Policy Journal are his own prepared remarks from his address to the New York Fed.

From EPJ:


My Speech Delivered at the New York Federal Reserve Bank

Thank you very much for inviting me to speak here at the New York Federal Reserve Bank.

Intellectual discourse is, of course, extraordinarily valuable in reaching truth. In this sense, I welcome the opportunity to discuss my views on the economy and monetary policy and how they may differ with those of you here at the Fed.

That said, I suspect my views are so different from those of you here today that my comments will be a complete failure in convincing you to do what I believe should be done, which is to close down the entire Federal Reserve System

My views, I suspect, differ from beginning to end. From the proper methodology to be used in the science of economics, to the manner in which the macro-economy functions, to the role of the Federal Reserve, and to the accomplishments of the Federal Reserve, I stand here confused as to how you see the world so differently than I do.

I simply do not understand most of the thinking that goes on here at the Fed and I do not understand how this thinking can go on when in my view it smacks up against reality.

Please allow me to begin with methodology, I hold the view developed by such great economic thinkers as Ludwig von Mises, Friedrich Hayek and Murray Rothbard that there are no constants in the science of economics similar to those in the  physical sciences.

In the science of physics, we know that ice freezes at 32 degrees. We can predict with immense accuracy exactly how far a rocket ship will travel filled with 500 gallons of fuel. There is preciseness because there are constants, which do not change and upon which equations can be constructed..

There are no such constants in the field of economics since the science of economics deals with human action, which can change at any time. If potato prices remain the same for 10 weeks, it does not mean they will be the same the following day. I defy anyone in this room to provide me with a constant in the field of economics that has the same unchanging constancy that exists in the fields of physics or chemistry.

And yet, in paper after paper here at the Federal Reserve, I see equations built as though constants do exist. It is as if one were to assume a constant relationship existed between interest rates here and in Russia and throughout the world, and create equations based on this belief and then attempt to trade based on these equations. That was tried and the result was the blow up of the fund Long Term Capital Management, a blow up that resulted in high level meetings in this very building.

It is as if traders assumed a given default rate was constant for subprime mortgage paper and traded on that belief. Only to see it blow up in their faces, as it did,  again, with intense meetings being held in this very building.

Yet, the equations, assuming constants, continue to be published in papers throughout the Fed system. I scratch my head.

I also find curious the general belief in the Keynesian model of the economy that somehow results in the belief that demand drives the economy, rather than production. I look out at the world and see iPhones, iPads, microwave ovens, flat screen televisions, which suggest to me that it is production that boosts an economy. Without production of these things and millions of other items, where would we be? Yet, the Keynesians in this room will reply, “But you need demand to buy these products.” And I will reply, “Do you not believe in supply and demand? Do you not believe that products once made will adjust to a market clearing price?”

Further, I will argue that the price of the factors of production will adjust to prices at the consumer level and that thus the markets at all levels will clear. Again do you believe in supply and demand or not?

I scratch my head that somehow most of you on some academic level believe in the theory of supply and demand and how market setting prices result, but yet you deny them in your macro thinking about the economy.

You will argue with me that prices are sticky on the downside, especially labor prices and therefore that you must pump money to get the economy going. And,  I will look on in amazement as your fellow Keynesian brethren in the government create an environment  of sticky non-downward bending wages.

The economist  Robert Murphy reports that President  Herbert Hoover continually pressured businessmen to not lower wages.[1]

He quoted Hoover in a speech delivered to a group of businessmen:

In this country there has been a concerted and determined effort  on the part of government and business… to prevent any reduction in wages.

He then reports that FDR actually outdid Hoover by seeking to “raise wages rates rather than merely put a floor under them.”

I ask you, with presidents actively conducting policies that attempt to defy supply and demand and prop up wages, are you really surprised that wages were sticky downward during the Great Depression?

In present day America, the government focus has changed a bit. In the new focus, the government  attempts much more to prop up the unemployed by extended payments for not working. Is it really a surprise that unemployment is so high when you pay people not to work.? The 2010 Nobel Prize was awarded to economists for their studies which showed that, and I quote from the Noble press release announcing the award:

One conclusion is that more generous unemployment benefits give rise to higher unemployment and longer search times.[2]

Don’t you think it would make more sense to stop these policies which are a direct factor in causing unemployment, than to add to the mess and devalue the currency by printing more money?

I scratch my head that somehow your conclusions about unemployment are so different than mine  and that you call for the printing of money to boost “demand”. A call, I add, that since the founding of the Federal Reserve has resulted in an increase of the money supply by 12,230%.

I also must scratch my head at the view that the Federal Reserve should maintain a stable price level. What is wrong with having falling prices across the economy, like we now have in the computer sector, the flat screen television sector and the cell phone sector? Why, I ask, do you want stable prices? And, oh by the way, how’s that stable price thing going for you here at the Fed?

Since the start of the Fed, prices have increased at the consumer level by 2,241% [3]. that’s not me misspeaking, I will repeat, since the start of the Fed, prices have increased at the consumer level by 2,241%.

So you then might tell me that stable prices are only a secondary goal of the Federal Reserve and that your real goal is to prevent serious declines in the economy but, since the start of the Fed, there have been 18 recessions including the Great Depression and the most recent Great Recession. These downturns  have resulted in stock market crashes, tens of  millions of unemployed and untold business bankruptcies.

I scratch my head and wonder how you think the Fed is any type of success when all this has occurred.

I am especially confused, since Austrian business cycle theory (ABCT), developed by Mises, Hayek and Rothbard, has warned about all these things. According to ABCT, it is central bank money printing that causes the business cycle and, again you here at the Fed have certainly done that by increasing the money supply. Can you imagine the distortions in the economy caused by the Fed by this massive money printing?

According to ABCT, if you print money those sectors where the money goes  will boom, stop printing and those sectors will crash. Fed printing tends to find its way to Wall Street and other capital goods sectors first, thus it is no surprise to Austrian school economists that the crashes are most dramatic in these sectors, such as the stock market and real estate sectors. The economist Murray Rothbard in his book America’s Great Depression [4] went into painstaking detail outlining how the changes in money supply growth resulted in the Great Depression.

On a more personal level, as the recent crisis was developing here, I warned throughout the summer of 2008 of the impending crisis. On July 11, 2008, I wrote[5]:

SUPER ALERT: Dramatic Slowdown In Money Supply Growth

After growing at near double digit rates for months, money growth has slowed dramatically. Annualized money growth over the last 3 months is only 5.2%. Over the last two months, there has been zero growth in the M2NSA money measure.

This is something that must be watched carefully. If such a dramatic slowdown continues, a severe recession is inevitable.

We have never seen such a dramatic change in money supply growth from a double digit climb to 5% growth. Does Bernanke have any clue as to what the hell he is doing?

On July 20, 2008, I wrote [6]:

I have previously noted that over the last two months money supply has been collapsing. M2NSA has gone from double digit growth to nearly zero growth .

A review of the credit situation appears worse. According to recent Fed data, for the 13 weeks ended June 25, bank credit (securities and loans) contracted at an annual rate of 7.9%.

There has been a minor blip up since June 25 in both credit growth and M2NSA, but the growth rates remain extremely slow.

If a dramatic turnaround in these numbers doesn’t happen within the next few weeks, we are going to have to warn of a possible Great Depression style downturn.

Yet, just weeks before these warnings from me, Chairman Bernanke, while the money supply growth was crashing, had a decidedly much more optimistic outlook, In a speech on June 9, 2008, At the Federal Reserve Bank of Boston’s 53rd Annual Economic Conference [7], he said:

I would like to provide a brief update on the outlook for the economy and policy, beginning with the prospects for growth.  Despite the unwelcome rise in the unemployment rate that was reported last week, the recent incoming data, taken as a whole, have affected the outlook for economic activity and employment only modestly.  Indeed, although activity during the current quarter is likely to be weak, the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.  Over the remainder of 2008, the effects of monetary and fiscal stimulus, a gradual ebbing of the drag from residential construction, further progress in the repair of financial and credit markets, and still-solid demand from abroad should provide some offset to the headwinds that still face the economy.

I believe the Great Recession that followed is still fresh enough in our minds so it is not necessary to recount in detail as to whose forecast, mine or the chairman’s, was more accurate. 

I am also confused by many other policy making steps here at the Federal Reserve. There have been more changes in monetary policy direction during the Bernanke era then at any other time in the modern era of the Fed. Not under Arthur Burns, not under G. William Miller, not under Paul Volcker, not under Alan Greenspan  have there been so many dramatically shifting Fed monetary policy moves. Under Chairman Bernanke there have been significant changes in direction of the money supply growth FIVE different times. Thus, for me, I am not at all surprised at the current stop and go economy. The current erratic monetary policy makes it exceedingly difficult for businessmen to make any long term plans.  Indeed, in my own Daily Alert on the economy [8] I find it extremely difficult to give long term advice, when in short periods I have seen three month annualized M2 money growth go from near 20% to near zero, and then in another period see it go from 25% to 6% . [9]

I am also confused by many of the monetary programs instituted by Chairman Bernanke. For example, Operation Twist.

This is not the first time an Operation Twist was tried. an Operation Twist was tried in 1961, at the start of the Kennedy Administration [10] A paper [11] was written by three Federal Reserve economists in 2004 that, in part, examined the 1960’s Operation Twist

Their conclusion (My bold):

A second well-known historical episode involving the attempted manipulation of the term structure was so-called Operation Twist.  Launched in early 1961 by the incoming Kennedy Administration, Operation Twist was intended to raise short-term rates (thereby promoting capital inflows and supporting the dollar) while lowering, or at least not raising, long-term rates. (Modigliani and Sutch 1966)…. The two main actions of Operation Twist were the use of Federal Reserve open market operations and Treasury debt management operations..Operation Twist is widely viewed today as having been a failure, largely due to classic work by  Modigliani and Sutch….

However, Modigliani and Sutch also noted that Operation Twist was a relatively small operation, and, indeed, that over a slightly longer period the maturity of outstanding government debt rose significantly, rather than falling…Thus, Operation Twist does not seem to provide strong evidence in either direction as to the possible effects of changes in the composition of the central bank’s balance sheet….

We believe that our findings go some way to refuting the strong hypothesis that nonstandard policy actions, including quantitative easing and targeted asset purchases, cannot be successful in a modern industrial economy.  However, the effects of such policies remain quantitatively quite uncertain. 

One of the authors of this 2004 paper was Federal Reserve Chairman Bernanke. Thus, I have to ask, what the hell is Chairman Bernanke doing implementing such a program, since it is his paper that states it was a failure according to Modigliani, and his paper implies that a larger test would be required to determine true performance.

I ask, is the Chairman using the United States economy as a lab with Americans as the lab rats to test his intellectual curiosity about such things as Operation Twist?

Further, I am very confused by the response of Chairman Bernanke to questioning by Congressman Ron Paul. To a seemingly near off the cuff question by Congressman Paul on Federal Reserve money provided to the Watergate burglars, Chairman Bernanke contacted the Inspector General’s Office of the Federal Reserve and requested an investigation [12]. Yet, the congressman has regularly asked about the gold certificates held by the Federal Reserve [13] and whether the gold at Fort Knox backing up the certificates will be audited. Yet there have been no requests by the Chairman  to the Treasury for an audit of the gold.This I find very odd. The Chairman calls for a major investigation of what can only be an historical point of interest but fails to seek out any confirmation on a point that would be of vital interest to many present day Americans.

In this very building, deep in the underground vaults, sits billions of dollars of gold, held by the Federal Reserve  for foreign governments. The Federal Reserve gives regular tours of these vaults, even to school children. [14] Yet, America’s gold is off limits to seemingly everyone and has never been properly audited. Doesn’t that seem odd to you? If nothing else, does anyone at the Fed know the quality and fineness of the gold at Fort Knox?

In conclusion, it is my belief  that from start to finish  the Fed is a failure. I believe faulty methodology is used, I believe that  the justification for the Fed, to bring price and economic stability, has never been a success. I repeat, prices since the start of the Fed have climbed by 2,241% and there have been over the same period 18 recessions. No one seems to care at the Fed about the gold supposedly backing up the gold certificates on the Fed balance sheet. The emperor has no clothes.  Austrian Business cycle theorists are regularly ignored by the Fed, yet they have the best records with regard to spotting overall downturns, and further they specifically recognized the developing housing bubble. Let it not be forgotten that in 2004, two economists here at the New York Fed wrote a paper [15] denying there was a housing bubble. I responded to the paper [16] and wrote:

The faulty analysis by [these] Federal Reserve economists… may go down in financial history as the greatest forecasting error since Irving Fisher declared in 1929, just prior to the stock market crash, that stocks prices looked to be at a permanently high plateau.

Data released just yesterday, now show housing prices have crashed to  2002 levels. [17]

I will now give you more warnings about the economy.

The noose is tightening on your organization, vast amounts of money printing are now required to keep your manipulated economy afloat. It will ultimately result in huge price inflation, or,  if you stop printing, another massive economic crash will occur. There is no other way out.

Again, thank you for inviting me. You have prepared food, so I will not be rude, I will stay and eat.

Let’s have one good meal here. Let’s make it a feast. Then I ask you, I plead with you, I beg you all, walk out of here with me, never to come back. It’s the moral and ethical thing to do. Nothing good goes on in this place. Let’s lock the doors and leave the building to the spiders, moths and four-legged rats.




















10 Comments leave one →
  1. D'z nuts permalink
    May 7, 2012 1:04 pm

    it is my oppinion that the world (as a WHOLE) is getting better. slow, short steps definitly, but better. less violent, wealth spreading to areas that never had much, food becoming more readily avaible to those same areas (even if it’s not ultra healthy it’s better than nothing; die young of starvation or possibly live to 50, 60 even 70 with some collesteral problems) and so on. with the internet and its delivery componants becomeing cheaper and cheaper (exponintially so, Moore’s Law) areas and people once not able to access this tool are becoming able and as a result more people across the globe are thinking innovatively. i could go on, but i just wanted to give an idea of why i see the world getting better.
    now, that said, i find it very interesting and telling of the U.S. citizens mentallity that most everyone i talk to or hear speak, without actually saying it outright, veiws this global sharing as bad for the growing U.S. comfort level. it seems people in the U.S. would rather keep the extreme comforts they acguired though an old system, which they don’t seem to realize is at the expense of a peoples somewhere else, than share a little, still having so much, and the world in turn is a little more comfortable, thus nicer.
    i think what the U.S. is going through right now is a steady death of an old system. a consumer and capital generating system that was needed, I guess, for its time, but that time has gone and a new system is moving in, even if it resembles the old system just without borders.
    the old system, which was a new system at one point and looked just as scarey and ugly in its early days to many people, was the industrial revolution, spawning capitalism and communism. capitalism won, for the most part, because no matter how evil it seems to us now, it is a very smart system for generating capital and power, but that time is done or atleast changing drastically and people are scared because it’s all they know. the digital revolution is here and it is going to stay and grow reguardless of what many want. the whole world is getting overhauled. new tributary systems are going to come about, our children are going to persue careers that don’t even exist yet and eventually it will become a system taken for granted.
    the monitary system is not exempt from this change. the transition may not look pretty while you’re in it micro-analyzing it, but in time it will be for the benifit of the world as a whole, not just us.
    empires rise and fall. it’s a dynastic cycle, but what rises, usually the main contributor to the fall of the other, is much more often than not a little better. baby steps.
    what does any of this have to do with the Fed and gold standards and so on. well, this is not an oppinion on how to fix it, it’s an oppinion, i guess, on how to accept that it’s dying or at least changing dramatically; un-stoppable, a tsunami. if the invisible hand of this new system gathering momentum is as powerful as i think it might be, by time my kids are my age, or maybe their kids, this old, industrial-era system of money and gold as we know it now will be obsolete.
    let the “greedy” corporations operate without borders and give some of our jobs to Africa. fuck it. activism is way to fuckin’ slow. greedy corporation will inadvertantly bring some wealth and prosperity to Africa and other nations that need it inconceivably faster than any Bono or green peace ever imagined. apply Adam Smith’s butcher analogy to the entire world; to contenants instead of a few (relatively)individuals (that would be us). we call the corporations greedy, but i’m startin’ to wonder who is actually greedier; corporations and the “elite” or U.S. citizens needing to keep this extreme level of comfort we’ve acquired while ONLY feeling sorry for starving people elsewhere, but at heart opposing what may bring true help, even if inadvertantly.
    By the way, Ctrl + P, is something that we all can apply to our everday existance, in fact, the poor bastards at the “top” are more a slave to their lifestyle than we are. i’ll remain a bottom-feeder if that’s what being on top looks like.
    also, i hear a lot of people scream the 1% vs. 99% slogan, but it’s being used as the 99 are the victims of the 1. people love to be the victim. it takes the fact that their lives are shitty out of their own hands. if you were to look at it as 99% manifesting the destiny of the 1% then it takes on a whole new feel where the 99 are actually in charge and responsible for their shitty existance and actually the creators of the 1, but people cannot stand to look at themselves and would rather play the blame game than face the truth of their lives.

    • debaseface permalink
      May 7, 2012 3:13 pm

      The world is improving agreed, but due to technology and in spite Of these bozos at the Fed.

      • D'z nuts permalink
        May 7, 2012 9:09 pm

        it’s a massive topic to discuss and i certainly could go on and on. i just try to hang on to “the world is improving” and try to realize that some of the so called bozos are actually helping- we just can’t see it because we are at the quantum level micro-analyzing and view it as “AMERICA CRUMBLING”. plus we watch way to much t.v. as for the bozos who are actually fucking shit up- they are only fucking up the old system and in return opening the eyes of the masses to the fact that things need to change. by fucking it up they are causing the need for change to come faster, then they will fall with the only system they know how to thrive in, the old one.

        i believe this is just the ugly duckling phase of the transition and i’m excited for the future of my daughters.

        imagine all the crazy changes your grandparents saw throughout their life that they may have percieved as “AMERICA CRUMBLING” sort of moments, yet somehow we grew up with more privledges and comforts than they had. of course, i’m trying lately to be an opptimist now that i have offspring. MAD MAX is still in me if that time does come, but then none of this will matter anyway.

  2. A Strung permalink
    May 8, 2012 9:05 am

    I don’t think they “miss” things like the 08 meltdown, it’s that they ignore warning signs. WHen things are going well, it’s not an easy sell to talk about slowing things down, etc. Nobody wants to hear it

    • debaseface permalink
      May 8, 2012 1:50 pm

      Agree with you Mr. Strung. The punch bowl is always at this party.
      Read today that the Japanese Fed purchased a few billion in equities today.
      Yep, investing in equities.. Right.
      D’znuts – I’m surprised. I thought certainly you’d be in the “tear down the establishment” camp.
      I for one, welcome the old days – in terms of economic policy is concerned – i.e. freedom and true capitalism.  Combine that with today’s technological, industrial medical advances etc. the world would be a much better place to live.
      The news is dominated with sovereign debt crisis and soon hyperinflation – but we will all feel better about ourselves watching such news on or 52′ flat screen TV’s – or 4G
      iPads. My father bought a house and raised 6 kids all with a gambling problem and on a Janitors salary.
      Think you could do that today??
      It will take real change and perhaps some pain to reduce the reliance on debt, and end Ctrl + P policy.  It is nearly political  impossible to implement austerity and maintain popular support – but Thatcher did it in the 80’s. Obama has lost all Credibility to me.  And you D’znuts – give me the sense of apathy.
      There, the gauntlet has been thrown.

      • D'z nuts permalink
        May 8, 2012 3:33 pm

        let’s make absolutly no mistake here. i view this civilization that has come about since around 9000 to 6000 b.c. with the advent of farming as the source of all that is wrong with people today. i could go off on this topic from the first seed taken from it natural habbitat and planted elsewhere as the start of genetic modification, to the husbandry with domesticable animals as the start of slavery, spread of disease and waste that we had never had to deal with before this because we never lived so close with the animals, sense of ownership leading to a few having power and controlling the rest and so on and carry it right up to what is going on today in all aspects of life and why people really are unhappy and incapable of taking in good news.

        i personally would like to see all laws abolished; all of them. i’d like to get back to small hunter/gatherer tribes, see the destruction of the monitary system completely and the distorted values that have evolved from it. abolish lanquage and get back to intuitive auditory and gestural forms of communication such as grunting and laughing. Scieces and mathmatics are a method of viewing the world with the means to change and control it. well, get rid of all that shit too.

        however, i am not delusional. i know what i want is a fantasy. so i choose to understand civilization as it is and try to view the macro picture. i encourage the fast moving digital age, and the funny money, and the globalization and spead of exponintial innovation, colonies on mars, finding life in the waters of jupiters moons, A.I., robot chaos, lawlessness, overhaul of religon to incorporate ancient aliens every crazy futuristic idea that seems to be getting further and further away from a simpler, more primitive time because i know that that is what is going to get us to a more primitive time quicker, either through nuclear destruction and melting of ice caps or through the “civilized” societies leaving the planet. if the world is getting along better then the chances of the latter happening are more likely and everybody’s happy. pipe dream, i know.

        on another note, how can returning to a gold standard possibly work?
        i mean how would it be any different than it is now? for that to work you would also have to return to a simpler time with less products and services and less people and desire for that matter, otherwise, wouldn’t the gold standard have to inflate to an outrageous amount being that there is only a fixed amount of it in the entire world? it seems you’d have to keep creating the idea that it’s worth more and more and isn’t that kind of the same thing as printing funny money?

        kudos to your dad by the way. but the system he was able to do that in was great for U.S. citizens, but at the expense of many other people and resources in many other places. that’s starting to change is all.

        am i apathetic?

  3. May 8, 2012 2:25 pm

    There’s a lot of shit going on in here.

  4. debaseface permalink
    May 8, 2012 6:49 pm

    Yeah D’znuts! I like your point and agree here.
    “getting further and further away from a simpler, more primitive time because i know that that is what is going to get us to a more primitive time quicker”

    On Gold – backing your currency with commodities will likely increase the value of your money. What we are doing now is debasing the currency making it worth much less. I for one would rather have a currency that increases in value.

    • May 8, 2012 11:41 pm

      so when you talk about getting back on a “gold” standard do you mean more a commodity standard and “gold” is just the term that stuck? maybe it explains it in the post. there’s a lot in there. i’ll read it again.

      what if we (the people) are the main commodity backing our currency, but don’t realize it and this is the Fed’s way of letting us know we’re cheap or worthless to them or at least worth less than before because they’ve found people elsewhere worth more (to them and their vision).
      hmmm… i know a lot of the brains that we drained from other countries with our h-1b visas of the past decades are starting to go back to their places of origin. i know that the global middle class is the biggest it’s ever been and it’s projected that by 2030 85% of the global middle class will live in Russia, Brazil, China and India which brings us to major urbanization projects and a whole new working class that the world hasn’t seen yet. maybe our working class (u.s.) has seen it’s hayday. unless we can cut back some regulations. there are some major ideas here that are being snuffed that might boost our economy quick.

      what if all this funny money is being generated now because the planners forsee a lot of commodities in the future that will back the large amounts of currency and eventually the currency will have a high value agian and there will be already in existance what is needed to go around for this time of abundance.
      that one’s a long shot. i actually put it out there just so you could poke holes in it.

  5. May 9, 2012 1:38 pm

    I don’t understand why everyone is fascinated with the gold standard. It does merit discussion, but it is easy to become overly fixated upon it. In regards to fiat currency, the gold standard does to an extent deter fluctuation; but at the end of the day, gold is still an arbitrary unit of value. The price of gold still fluctuates. The amount of global gold reserves is still, albeit slowly, increasing. Gold standard or wampum, an arbitrary standard is just that.
    .In theory, if not practice, the US dollar is backed by the potential tax revenues of its citizens. What becomes disturbing is that the tax payers wealth is calculated primarily by their real estate ownings. This becomes a compound crisis when factoring in the artificially inflated housing crisis.
    To me, the truly disturbing new aspect of the fiat currency is the lunacy of the cash flow of bank lending processes. Gold standard or not, it doesn’t really matter if they can lend out 40 units of currency with interest while holding one unit of currency as collateral. This completely destroys the original function of the bank. They no longer need your money as collateral. There is nothing non-speculative you can invest in with a return greater then the rate of inflation. The bank simply doesn’t need your money anymore. Even with the insanity of the current banking crisis lending practices, the FED bailed them out penalty free. I guess you can propose that if they didn’t have the bullion to back their printing presses, the bailout wouldn’t have happened. I ask you this; do you really think organizations designed to prevent the crisis in the first place wouldn’t have found other means to bail out the banks? Assuming that institutions that have proven to be irresponsible and self-serving would instantly be put in check by a gold backed currency just seems like wishful thinking to me.
    So how did people hedge inflation. Several different scenarios present themselves. Investors could buy commodities, a mainstay being gold. The price of gold is currently hyper-inflated by speculative hedging. Having your currency based on the value of something which is in itself hyper inflated seems awfully counter-productive and defeats the whole point of the gold standard exercise.
    I have a whole bunch of shit rattling in my head, but I think I’ll end this drivel here.

    TL;DR: It seems to me that the focus of money shouldn’t be so much it’s worth per unit, but where the money as a whole is flowing to. I’m not saying inflation and how the fiat currency are valid concerns, I’m just saying a crooked system invariably tipping money into preordained coffers is a much larger and pressing issue.

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