'X' Marks The Spot - Wages Started Losing When The Dollar Delinked From Gold In 1971

Tyler Durden's picture

Submitted by Ralph Benko via The Pulse2016.com,

About a year ago, Stan Sorscher, Labor Representative, Society for Professional Engineering Employees in Aerospace, published a frighteningly important blog at The Huffington Post (where I also blog on a regular basis) headlined “Inequality — “X” Marks the Spot — Dig Here.”

It was as important for what it gets right as for what it misses.

Sorscher writes:

In 2002, I heard an economist characterizing this figure as containing a valuable economic insight. He wasn’t sure what the insight was. I have my own answer.

 

2015-07-27-1438024680-5677388-Productivitywages.arrow.800.jpg

Figure 1. Something happened in the mid-70’s

The economist talked of the figure as a sort of treasure map, which would lead us to the insight. “X” marks the spot. Dig here.

 

This figure tells three stories.

 

First, we see two distinct historic periods since World War II. In the first period, workers shared the gains from productivity. In the later period, a generation of workers gained little, even as productivity continued to rise.

 

The second message is the very abrupt transition from the post-war historic period to the current one. Something happened in the mid-70’s to de-couple wages from productivity gains.

 

The third message is that workers’ wages – accounting for inflation and all the lower prices from cheap imported goods – would be double what they are now, if workers still took their share of gains in productivity.

 

[…]

 

This de-coupling of wages from productivity has drawn a trillion dollars out of the labor share of GDP.

 

Economics does not explain what happened in the mid-70s.

 

It was not the oil shock. Not interest rates. Not the Fed, or monetary policy. Not robots, or the decline of the Soviet Union, or globalization, or the internet.

 

The sharp break in the mid-70’s marks a shift in our country’s values. Our moral, social, political and economic values changed in the mid-70’s.

The author is exactly right regarding “X” and exactly wrong in getting cause and effect backwards. At “X” Marks the Spot, he notes “[s]omething happened,” and the wages of goods-producing workers flatlined, never to recover. He is right and perceptive in this too little appreciated fact.

Yet he attributes this to some kind of mystical “shift in our country’s values. Our moral, social, political and economic values changed in the mid-70’s.”

As it happens, “X” correlates with Nixon shutting down the Bretton Woods gold standard in 1971 and the epic failure to get it fixed and restored in 1973. The drag, after a modest lag, filtered into the working economy. The rest is persistent stagnation for median families.

It was the destruction of the (dilute) gold standard which precipitated the death, or at least long coma, of the American Dream. That, in turn, caused the ensuing degradation “in our moral, social, political and economic values” as America turned Hobbesian.

Keynes, the great economic icon of the left, understood how subtle and insidious the processes at work during an earlier instance of monetary disorder. In his 1919 classic The Economic Consequences of the Peace, Keynes wrote:

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

 

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

Copernicus, who kind of invented (or anticipated) the gold standard — and really was a pretty bright guy, earning the grudging respect even of right wing Flat Earther geocentrists — made a comparable point in his Essay On The Minting of Money (whose modern translation I commissioned and served as lead co-editor):

ALTHOUGH THERE ARE COUNTLESS MALADIES that are forever causing the decline of kingdoms, princedoms, and republics, the following four (in my judgment) are the most serious: civil discord, a high death rate, sterility of the soil, and the debasement of coinage. The first three are so obvious that everybody recognizes the damage they cause; but the fourth one, which has to do with money, is noticed by only a few very thoughtful people, since it does not operate all at once and at a single blow, but gradually overthrows governments, and in a hidden, insidious way.

The GOP is beginning to come around to the gold standard. The academic (though not the ethnic or labor) left remains resistant.

Getting the gold standard wrong could be catastrophic. In getting the gold standard back in place the right way — a way that will be at least, and preferably more, beneficial to labor than to capital — it would be invaluable for the left to begin to come to terms with the crucial role the gold standard played, and again can play, in restoring a climate of equitable prosperity.

Therefore, I respectfully ask that progressives open their hearts to exploring the possibility, just the possibility, that the gold standard would go a long way toward restoring both economic prosperity and economic justice for all — the American Dream. America, and the world, greatly would benefit from participation from the Donks in making sure that the Pachyderms don’t do a wrongheaded pro-Ebeneezer Scrooge version of the gold standard.

Help us write a wonderful pro-Bob Cratchit version that will restore justice as well as prosperity. God bless us every one! (Including you, atheists!)

If we get this right, afterward there still will be much to argue about. We can have merry and spirited arguments as to whether all the extra tax money pouring in from all those new great jobs and businesses should be spent on family leave or abolishing the estate tax.

The thing is… if we get the gold standard right there will be plenty of money to do both. And more. According to a grounded assessment I made a few years ago at Forbes.com there’s probably at least $6 trillion (with a T!) of new federal tax revenues hidden in there, without raising tax rates. Visualize federal surpluses!

And there will be maybe 10X that for the private economy. Win-win!

“X” indeed marks the spot! By following Mr. Sorscher’s invitation to “Dig Here” one discovers that therein lies a buried, and lost, treasure chest of gold that can be leveraged to the common good rather than a mysterious “shift in our country’s … moral, social, political and economic values.”

Putting that gold — and yes, Uncle Sam has plenty of it, the most, by far, in the world — back to work in the right kind of way is highly likely, perhaps even certain, to restore wage growth, end privilege-based inequitable income inequality, and restore our moral, social, political and economic values like nothing else possibly could.

This isn’t partisan. Historically, progressive Democrats like Grover Cleveland were as committed to gold as were Republicans like William McKinley. The left is invited to participate.

So, my progressive friends, let’s grab our shovels, and let’s dig together. “X” marks the spot.

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beijing expat's picture

There's something going on.

Troy Ounce's picture

 

 

Manufacturing went down and "growth" was replaced by the fallacy of financialisation. 

 

Here we are. Back to 1971!

Dr. Spin's picture

There's only one small problem with this article.  All the gold is in Asia...

How we gonna git is bak???  This looks like a nice tree, somebody git a rope. 

;-D 

SWRichmond's picture

There's only one small problem with this article.  All the gold is in Asia...

Yes exactly.  The GOP might be waking up to gold (doubtful), but only after they emptied Fort Knox trying to maintain their government-loving hold on power.  So now they are targeting private holders, perhaps, in their own douchey manner, since there is no more government-held gold??

You can bet bullets to beans that any government policy that comes out of this will be just one more way to fuck the middle class, seize more power for the dot gov, pillage private wealth, and solidify corporate power.  There will be no gold standard until K Street and Wall Street want one and have positioned themselves to benefit from it.  Period.

jazz571027's picture

What about the gold in the Grand Canyon - purported to be guarded by US Marines?

https://youtu.be/G1wjhDI4XQE

 

 

Jeffersonian Liberal's picture

The answer is actually a combination of both interpretations.

Sticking to a gold standard forces countries to respect the amount of dollars they have in circulation, the velocity of money, and the purchasing power of each monetary unit relative to that of other currencies.

A country decouples their currency from some standard backing (such as gold) so that the amount and value of their currency is not anchored to that backing. That is, they decouple from it so that they can produce as much of the currency as they want to and can value the currency (that is, adjust the interest rate for borrowing it) to whatever they want.

That's why they call it a "fiat currency." "Fiat" means rather than it being anchored to some extrinsic and known value and quatitiy, they can create as much money as they want to for their own purposes.

Here's where the two interpretations join.

Not having that anchor sets you adrift on the waves and tides of economic changes and that leads people to become disoriented from their moral compass.

That is, switching to a fiat currency allows governmental leaders to do whatever they what with their currency in order to ensure their own continued place in government and to appear that they are "fixing" the economy and making it better.

When the people learn that the government has the power to "give them money," they become selfish and greedy and demand more of it.

Thus fiat currency enables people to become more immoral in both creating money out of nothing and demanding more of that free money, Fiat currency encourages socialism and its thousand social programs that each demand its own stream of revenue, most of it created out of thin air by fiat.

This principle is no different in the world of finances and banking and investment than it is among the recipients of social programs. The financiers are as much as the FSA as those who could work but decide to depend on SNAP and grow indignant when the machines are down and demand to know who is going to feed their children. I don't think either end of that income spectrum is fully aware of where this money is coming from and why it has an immoral genesis and why the currency is doomed to become worthless. I've spoken to many people in investment who think the Fed is the savior and have almost no knowledge of monetary science and monetary policy.

Once the cycle starts, those tides and waves become a whirlpool drawing everything toward its center and eventually suck everything -- both values and that which should retain value -- right down its void, at which point we learn that the waves and tides on the vast and might expanse that we believed was our economy and the strength of our currency turns out to be the water in a toilet blow and that whirlpool nothing more than the flush.

The only thing that retains its value is that golden anchor that we foolishly cut loose.

Destruction and chaos follow and then people establish a new currency with an anchor and the cycle repeats itself.

Troy Ounce's picture

 

 

I could not have said it better J. Liberal. Thank you.

JRobby's picture

All part of the long term plan.

Gold standard dropped, inflation rampant. Who does inflation best serve?

Followed by financial de-regulation which adds additional inflationary pressures to assets that well outpaces wage inflation.

Stock bubble 1 - late 1970's to 1987

Housing bubble 1 - late 1980's into early 1990's (dress rehearsal)

Begin offshoring of jobs

Stock Bubble 2 - mid 1990's to 2000

Housing bubble 2 - mid 1990's to 2007 

Spartacus Rex's picture

As long as the Banksters are permitted to counterfeit via their "fractional reserve banking" ponzi scam,

the fraud and debasement will continue, until the whole fiat scheme goes up in flames,

while TPTB run off taking the Gold & Silver Money they hoodwinked the People out of,

to start a new scam, on a new generation, somewhere else.

Money is Minted

Fraud is Printed

Cheers!

GreatUncle's picture

You don't have enough gold to create a new gold standard!

All the debt stuffing, fiat paper etc. to move to a gold standard now has to have some truthful bearing on asset values. So what you going to do with the 250x paper gold ETF's ... just curious. Then the all the other FED "financial instruments" with 300T in derivatives.

The debt now holds all the their economic bars pins in place and TBH unless you can pay all that off in one go the only option is to keep stacking debt like building a bomb until some day in the future it explodes creating ashes and ruins in everything.

Only at that point can a new way be chosen ... but the banksters will demand we do it all over again so does anybody else see

iff the bankers first, then the debt, total chaos comes 3rd then you get to build and choose. The first prevents the repeat, the second allows the change and the chaos is what you have to pay for to get anything new.

Troy Ounce's picture

 

 

 

"You don't have enough gold to create a new gold standard!"

There is more then enough gold: the price will take care of that.

desirdavenir's picture

my end game theory, at least for Eurozone, is that the ECB will end up recreating a Gold standard (sort of) by buying to EZ states their gold, but at levels significantly higher than the current ones. At 10x current levels, selling all the gold would permit to achieve a less than 60% Debt/GDP ratio. This would of course create instantly undesired inflation, unless bondholders suffer steep (equivalent) losses on their investment, which given rates would mean 3-5% interest rates on existing, 10Y debt, a level most would describe as normal. 

In the end, the ECB would possess all the gold in the EU, and this would make for an unbreakable EZ, a probably fine by-result, except for those countries who decided to dump gold years ago

Jeffersonian Liberal's picture

Interesting. But I doubt that the EZ or the ECB would ever allow any vestige of a gold standard to re-enter their monetary picture.

The EZ governments would not want to relinquish the power that a fiat currency gives them.

The ECB would never give up the profits and the power that a fiat currency gives them.

And neither side of that demonic team would ever want the citizenry to see that a gold-back currency can ever make any type of improvement in an economy. Once they let that genie out of the bottle, they fear, they'd never be able to get it back in.

desirdavenir's picture

Maybe... maybe I lack imagination, but this is the only way out of the current crisis I found for EZ. Quite similar to what happened at the beginning of the USA, but not contradicting the direct financing of EZ governments by ECB. To go against my "end game", I never would have thought the current ECB QE would be accepted nor the current "bailouts" for Greece. 

Troy Ounce's picture

 

 

They will first try the SDR to quell the uprise. They will then link the SDR to some commodities, read: only those commodities which will fall into the paper Ponzi and which can be manipulated. They will fail as citizens will want to know where their savings and pensions are. 

 

Jeffersonian Liberal's picture

I understand your view and your reasoning. It is sound and logical. Unfortunately, the history of central banks is that they never "go back."

When the crises (and that plural is deliberate, because a monetary crisis starts an avalanche of ever more threatening crises) reaches a critical point, cannot be remedied or prolonged and the citizenry grows restless, the central banks always always always lead their countries into a hot and nasty war.

This is their deus ex machina at the end of the tragic drama they knowingly create.

At one and the same time this absolves the nations of all their debt, erases from everyone's collective awareness the theft that the central banks make of the value of the currency and its purchasing power, and shifts the anger and righteous outrage of the citizenry from their governments and central banks that have been the cause of their impoverishment, enslavement, and constant anxiety to an outward enemy in the name of patriotism.

Unfortunately for them this time around, I fear too many people have taken the red pill and now know exactly what has been happening and what approaches. This is the main reason they want to censor the Internet. They don't want to be exposed for the traitors they are.

unklemunky's picture

Sure you do. No matter how much they print, the gold value is pretty constant, it is simply the number of their phony dollars it takes to buy it that changes. The problem is the fiat. Once people realize it is not worth crap os when the shit hits the fans. They cant print infnity and as everyone knows here, when demand for something is zero, so is its value. Phony currency os in fr a bumpy ride.

Jeffersonian Liberal's picture

I'm not Milton Friedman's number one fan. While I liked his writings on free markets, he was, at core for most of his life, a monetarist which meant that he supported central management of monetary policy and the fiat printing of money. The hypocrisy of this is that this fascistic central management directly conflicts with all of his other writing and lectures and debates on free markets being the soundest base for an economy and greatest economic guarantor of liberty. That's why the Keynseians adore Friedman and why I think he was greatly conflicted. At the end of his life, however, he did start to come around to this conflict and suggested that monetarism could only survive if there were an Amendment restricting the new creation of money to some fractional percentage of GDP. He was on the right track, but not completely, as he overlooked the fact that 1/3 of GDP is government spending. So, to get around the Amendment, all the House would have to do is increase spending some massive amount and this would be all they'd need to create the new money. That is, the Amendment would simply put the cart before the horse.

That said, Friedman pointed out that in theory you could establish (or re-establish) any currency on a gold standard with even a paltry amount of gold (even an ounce, in theory). All you'd need to do is re-denominate your currency to match the gold supply. Of course, this would make for a currency that is fairly worthless compared to the purchasing power of other currencies, but the theory is sound otherwise.

But here's the main point of his theory: we would be foolish to try to return to a gold standard now with our current debt and GDP and the current purchasing power of the dollar. We'd need to hit the 'reset' button to set all parts of the economy back in line with the amount of gold we have, not the other way around.

Not My Real Name's picture

Having Govenment spending in the GDP calculation is another folly. Because it requires wealth generated from the private sector, Government spending, by definition, cannot add anything to the GDP.

Raging Debate's picture

Jeffersonian - Nice discussion and I appreciate your views. I liked Friedman's views on floating currencies. Anyways, I think this all comes down to debt. Investors are expecting returns which based on how things were managed (along with a demographic imbalance) which cannot be further materialized. The US can go on whatever standard it wants to but bondholders are going to have to take a hit no matter what. This happened in 1956. It was a tough year of recession. But the econony came back. 

A metal standard applies some discipline and some trust. The latter is most important. I do not care if it is shells, measurings sticks, silver, electrons, gold we go to. Unsustainable promises are going to have to be broken. The more this is delayed, the more civil unrest and violence ensues. It may already be too late when for world war to be avoided but not imposible. Human beings wont accept stagnation for twenty more years which is what the current plan seems to be. 

 We are not arguing, I am just adding my own opinions. I don't want a horrible say 18 months. But I would take it over 20 more years of stagnation.

OpTwoMistic's picture

"You don't have enough gold to create a new gold standard"

You do if you set the price right. 10-15,000 an ounce to cover the hidden devaluation?

China is going to do it anyway and if US does not, the dollar will be worthless.

The Chinese will set the price for you, just wait.

David Wooten's picture

"...get this right..."

To get it right (100% backing), just divide the number of 'printed' dollars by the number of ounces of gold on deposit at the Fed (supposedly 261m) to get the price.  Don't know what this works out to but it is well north of 5000 dollars per ounce.  At that price or higher, anyone holding an ounce of gold in whatever form, including jewelry, will immediately have $5000 or more to pay his debt or make purchases.  Additionally, gold miners will go into overtime to dig up more 'dollars'.  All that extra money should stimulate the economy and cause prices of other things to rise for a few years before levelling off.  Lenders might not like being paid back with cheaper dollars but at least they'll be less likely to be stiffed via bankruptcies.  Ultimately, voters may decide they like capitalism and vote to free up society a lot more.

Heavy's picture

"Democratic" Socialism is for banks because they bought the legislature., and most the rest of it too

Democratic used to mean sortition

Ghordius's picture

if you put your legislature for sale, someone... will buy it. how about "blaming the game, not the player"?

the "game's rules" are how money can or cannot be used in electoral campaigns. the exceptional rules are: "whatever, money is good, secret money even more"

unklemunky's picture

I would say your comment about money in politics is similar to the anti gun nuts. They always want to take guns away from law abiding citizens leaving criminals the only ones armed. Same thing with money in politics. With respect to campaigns, money s simply used to buy air time to get your message out. The democrats have free airtime because they are the media. One and the same, but as soon as conservatives start to level the playing field they want to take money awy from us. Just like guns, they strip conservatives of money and only the crooks have the ability to control the narrative. If all of the free airtime for lefty causes on the network news, sitcoms, dramas, reality tv shows and hollywood movies were added up it would be well into the billions. So, fuck them assholes. We on the right have all the money anyhow. We actually earn it instead of steal it.

Ghordius's picture

you forgot secret money, didn't you? how do you know that foreigners aren't paying for it... if it's secret?

meanwhile, I am not an expert on the American media landscape, but what about FOX? you make it sound like the whole US media was under the Democrats' thumb. what about radio?

look, it's simple: the average campaign in the UK takes a few weeks. the average campaign in the US... well, the presidential campaign of 2016 will cost billions and is going on since last year, and will drone us in the whole world for months to come

at what point do you think this is not just exceptional?

Raging Debate's picture

Unkle - No. Bought politicians are not just buying air time on media. They write and approve legisation that makes donor exempt from the laws they write. And those laws like repeailing Glass-Steagall provide a ways to steal by co-mingling funds. 

 Media sucks up to politics because the owners of media are lobbysists. 

Sandmann's picture

Most of the money in Us elections goes on TV ads. Quite why US voters are suh consumers of pablum beats me, but for some reason it needs lots of propaganda to keep Americans conditioned into the voting paradigm

Trubador's picture

As of 5/31/16 the US Gold reserves are 261,498,926 troy ounces (at a statutory rate of $42.2222 per oz).

As of 6/1/16 there is approx. $1.46 trillion in U.S. currency circulation ($1.4T of which are in federal reserve notes).

That 261.5m Toz would have to be valued at approx $5350-5600/Toz in order to balance the sheet.

As an aside, silver was decoupled in 1961 (ten years earlier). Although it's both a currency as well as an industrial metal, there has historically been an approx. 50-40:1 Gold to Silver pricing ratio. That would make silver hit approx. $107-140/Toz if this scenario was to occur.

Heavy's picture

Church Lady: Satan?

Wow72's picture

This is the point at which GREEDY people who DONT WORK started using FAKE PAPER MONEY to RIP EVERYONE ELSE OFF.

This is  where WE WENT WRONG.  THIS IS WHERE THE CROOKS AND NON-PRODUCERS TOOK THE POWER and MONEY by starting to PRINT FAKE MONOPOLY MONEY!

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 They PRINT and give themselves ALL THE FAKE MONEY and ALL THE POWER.... ITS ALL FAKE POWER that they PRINTED, not that they PRODUCED or EARNED!!  THEY ARE ALL NON-PRODUCER FAKES!!!!  Thats 1 for you 19 for ME!!!!

Plato says man has no use for paper money and this chart is WHY! Thats what GREED and HUMAN NATURE will always do, ABUSE and Take Advantage of OTHERS WITH FAKE PAPER MONEY.  ALWAYS!  Wake UP PEOPLE.  This one chart really tells us EVERYTHING.

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The best thing to do would be REPLACE EVERYONE CURRENTLY in the UNITED STATES GOVERNMENT AND TAKE THEIR PROTECTION AWAY!

desirdavenir's picture

Though there is a relation, I don't think that getting out of the gold standard per se means more wage inequality or whatever.

It has more to do with the cost of the Vietnam war, and thus the cost of the MIC, which became too burdensome to be born with a sound dollar. Having to choose between stoping giving money to partners, the government (Nixon) decided to hide this expenditure with debasement. Thus, this is the government deficit spending that ruined everyone, and getting out of the gold standard was just a mean to enable the continuation of that policy.

Wow72's picture

No paper money gets mis-allocated away from where it needs to go and you get distortions and YES IT DOES PRODUCE INEQUALITY LOOK AT WHERE WE ARE? ALL THAT FAKE PRINTED CASH WENT TO THE TOP????? THATS WHAT HUMAN NATURE DOES, IT TAKES IT!

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I have absolutely NO DOUBT ITS THE CAUSE.  Fake money printing, GREED and Human Nature happens over and over historically.  When you only have so much money, YOU HAVE TO MAKE IT COUNT? when you have limitless paper GREED and HUMAN NATURE TAKES OVER.  THIS PATTERN HAPPENS OVER AND OVER IN HISTORY WITH PAPER MONEY. 

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HUMANS CANT HANDLE PAPER MONEY, SHOW ME A TIME IN HISTORY WHERE THEY COULD?  THEY SIMPLY CANT.  It produces BIG DISTORTIONS and GET Ready to find out IM RIGHT ON THIS ONE!

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You cant obtain GOLD by "faking it", when you hold gold in your hands everyone knows you had to do REAL WORK FOR IT and YOU EARNED IT.  When you print paper, YOU DO or EARN NOTHING.... FUCK PEOPLE WAKE UP, THEY ARE RIPPING EVERYONE OFF AND TAKING EVERYONES EARNED POWER!  WAKE UP!!!!

Wow72's picture

Show me a time in history where paper money worked FAIRLY for those who produce? Its doesnt, people who dont produce need paper money because they are fucking losers? its so simple?  It happens over and over in history.  What is there to deny?

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If you really work and produce, you would not fear going to a gold standard.  You would welcome it because you produce.  Only lazy losers want fake money!

Troy Ounce's picture

 

 

Right you are Wow.

It is a matter of time. Debt will explode and nothing will be left in fiat land. People will be furious. Blood will fill the streets

We WILL go back to the gold standard. People will demand it.

Then, after 30 - 40 years from now, the next generation will forget. Fiat money will take over again, now under another name in another country.

And everything will start over again.

Makes you think, huh. People are stupid.

Wow72's picture

Exaclty, with enough time everything in human nature REPEATS.  One of the most important rules to remember, there is always enough time for history to repeat and WE FORGET!  EVERYTIME WE FORGET because we seem to listen to GREED and we like to pound our heads against the wall.

1980XLS's picture

Mostly right. But for now, those that don't produce have been the winners. We'll see how sustainable that remains.

OpTwoMistic's picture

Who was the last "leader" that had held a "job". When was the last leader that had to make a payroll?  This has to change.  Being a senator or rep is not a career.

Raging Debate's picture

Wow72 - I like your spunk. But consider gold ETFs and the ability to manipulate them. So we have a gold standard again. A banker group takes $100k gold deposits.Then they lend out at 40x the deposits. They also state they have $200k of gold when they don't. They bought the government to make sure they cannot be audited. 

The US can easily go on whatever standard it wants to in measuring productivity. But over time, what is promised be them voters, lobbyists, bondholders is either fulfilled based on trust or it isn't. The measurement does not mean it saitifies trust between parties to do what they say. 

 

Wow72's picture

Well right we need to get rid of the bankers and create a system that has integrity before anything happens, your talking about trying to patch the hole in the side of the Titanic? We NEED a whole new ship. There is no way to make it "Fun".  It will be NOT GOOD getting there.  GOOD WILL..... WILL WIN EVENTUALLY, IT ALWAYS DOES IN THE END.  Some bankers dont belong in our country any MOAR. 

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Paper gold is a fantasy that NEEDS TO END.  We need business people who understand the virtuous cycle and that practice it, WE HAVE GREED.  We are a long ways from Kansas Toto.

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Business people in America have had it too good because of fiat, so they take money for granted.  We have to get to a point again where people appreciate having customers.  Business people think they can only take and it will work, NOT SO.   If you catch all the fish in the pond, the pond wont feed you well.

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We are being guided by people who have NO HUMILITY, although I bet some are starting to grasp the situation at hand.  Humility will come soon. There has been way too much HUBRIS for there not be some humility headed our way.  Its really all about the COMPLETE LACK OF HUMILITY by those who have benefited from FIAT.  Of Course NOT ALL, BUT MOST. 

I think currently the people who made their way to the top, like the cream that settles to the top are the biggest losers.  They are the greediest, the most ruthless and they are taking all the fish from the pond.  They are ungrateful and full of Hubris. We need different types of personalities at the top if we are to succeed, WHICH WE WONT.  We arent that smart collectively which is hard for me to accept some days.  How can so few CON so MANY? ILL NEVER UNDERSTAND.

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People should fear the Evil that Fiat Produces and thats no joke.  The reason you have to use gold is because ITS REAL and IT REPRESENTS REAL WORK PERFORMED.

Sandmann's picture

You may be right but let us suppose The Great Society rewarded people who were not WORKERS. If the Burns Fed was able to boost credit expansion and inflation it would allow Big Government to finance itself without taxes and to build its Client State.

The increasing real tax burden on productive workers to fund a bloated State would lead to direct cost pressures on Manufacturing because Overhead is loaded onto Workers rather than ABC Costing systems and the move to rationalise headcount impoverishes productive workers as they carry the burden of additional Non-Workers.

Bacon & Eltis had much the same thesis in 1970s Britain.....and it only got worse until de-industrialisation took hold

http://www.amazon.co.uk/Britains-economic-problem-too-producers/dp/03331...

Wow72's picture

"let us suppose The Great Society rewarded people who were not WORKERS"

 

Thats what fake money does and it goes to the GREEDY because they will do anything to get it.  Lie, Cheat or Steal, sound familiar?

Not My Real Name's picture

60% of the US budget goes towards entitlements. The MIC is about 18%.

opport.knocks's picture

First rule of science: high statistical correlation implies cause and effect, but does not prove it. 

It is a combination of automation, global outsourcing (low wage competition) and cheap energy that has killed wage growth in the USA. The relative strength of the USD due it's status as a world reserve currency has also contributed.

I personally like gold as a hedge against bankster fiat, but the world is not going back to the gold standard. Get over it and plan accordingly.

Wow72's picture

" high statistical correlation implies cause and effect, but does not prove it. "

But GREED and HUMAN NATURE Throughout HISTORY DOES???? WTF?

PAPER MONEY HISTORICALLY HAS NEVER WORKED... WHY IS THAT???? DUHHHHHHHH!!!

.

IS EVERYONE JUST FUCKING DUMB, LAZY and GREEDY?  Human Nature does not allow FAKE PAPER MONEY TO BE DISTRIBUTED FAIRLY, ITS ONE FOR YOU 19 FOR ME!!  ALWAYS! THATS JUST HUMAN NATURE.. ITS SOO SIMPLE

Look at us in the MIRROR?   NO inequality HERE?  I HAVE SOME BRIDGES FOR SALE AGAIN.

.

Show me a time in history Fake FIAT MONEY has worked? Greed and human Nature WILL NEVER ALLOW IT.  ASK PLATO.

.

If you work and produce you should want nothing other than a gold standard, everything fiat paper just dilutes the value of your work? DUH?? 

.

IM NOT AFRAID OF GOLD? ARE YOU?  CHICKEN SHITS!

ft65's picture

There are way too many factors going on, also economics is not a science. All these graphs, charts and figures are reflections on human attitudes and emotions. By the 1970's the lies were catching up with everyone, the clever people just got ever smarter keeping the Ponzi going.

HenryHall's picture

Correlation is not causation.

The flat-lining of worker's wages and the abandonment of the gold standard merely share the same cause. It is not that either caused the other.

And that cause is the decision of the American government to pursue a war (the Vietnam war) that it could not afford to pursue without taking on unrepayable debt.  The USA had never done that before, previously it had only waged wars that it could finance and eventually repay. The reason why de Gaulle pulled his gold out of the USA and so precipitated the end of the Bretton Woods agreement was that de Gaulle was afraid that America could not afford to wage the war in Vietnam that it was waging. Pulling out of Vietnam was a realistic alternative to abandoning the gold standard, but Nixon chose not to pull out of Vietnam for whatever reason.

What we see now is the inability to kick the can down the road any further as to war debt for the Vietnam war and all subsequent wars.

Wow72's picture

 

BULLSHIT! YOUR FULL OF FEAR!  When HISTORICALLY HAS FAKE FIAT MONEY WORKED EVER? YOU WONT ANSWER IT? IT ALWAYS FAILS, ALWAYS!

.

" high statistical correlation implies cause and effect, but does not prove it. "

But GREED and HUMAN NATURE Throughout HISTORY DOES???? WTF?

PAPER MONEY HISTORICALLY HAS NEVER WORKED... WHY IS THAT???? DUHHHHHHHH!!!

.

IS EVERYONE JUST FUCKING DUMB, LAZY and GREEDY?  Human Nature does not allow FAKE PAPER MONEY TO BE DISTRIBUTED FAIRLY, ITS ONE FOR YOU 19 FOR ME!!  ALWAYS! THATS JUST HUMAN NATURE.. ITS SOO SIMPLE

Look at us in the MIRROR?   NO inequality HERE?  I HAVE SOME BRIDGES FOR SALE AGAIN.

.

Show me a time in history Fake FIAT MONEY has worked? Greed and human Nature WILL NEVER ALLOW IT.  ASK PLATO.

.

If you work and produce you should want nothing other than a gold standard, everything fiat paper just dilutes the value of your work? DUH?? 

.

IM NOT AFRAID OF GOLD? ARE YOU?  CHICKEN SHITS!