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Guest Post: Paul Krugman’s Mis-Characterization Of The Gold Standard
Submitted by James E. Miller of the Ludwig von Mises Institute of Canada,
With a price hovering around $1,600 an ounce and the prospect of “additional monetary accommodation” hinted to in the latest meeting of the Federal Reserve’s Federal Open Market Committee, gold is once again becoming a hot topic of discussion.
George Soros made news recently when a filing with the Securities and Exchange Commission revealed that he had liquidated his position with major financial firms and had loaded up on gold; approximately 884,000 shares worth. Jim Cramer, the CNBC personality in constant search of growing business trends, recommends putting at least 20% of one’s assets in gold. Following the Republican National Convention, the party platform now proposes the establishment of a commission to study “the feasibility of a metallic basis for U.S. currency.”
Like the gold commission before it, this new interest in gold has brought out the critics who regard the precious metal as nothing short of, to borrow the infamous term coined by John M. Keynes, a “barbarous relic.” Wesleyan University economist Richard Grossman writes in the Los Angeles Times that the idea of a gold commission is a “waste of time and money” because the standard hasn’t “worked for 100 years.” In The Atlantic, fiat currency enthusiast Matthew O’Brien calls the gold standard a “terrible idea” and presents a few charts demonstrating that linking the dollar to gold failed to keep prices stable. Economist and New York Times columnist Paul Krugman has praised O’Brien’s article on his blog and makes sure to point out that the price of gold has been highly volatile since 1968 by showing the following chart:
There is a remarkably widespread view that at least gold has had stable purchasing power. But nothing could be further from the truth.
Krugman points out that when interest rates are low the price of gold typically rises. He claims that as interest rates tend to fall during recessions, gold’s rise in price would lead to “a fall in the general price level.” Lastly, Krugman ridicules the notion that a true gold standard would prevent asset bubbles and subsequent busts from occurring by calling attention to the fact that America suffered from financial panics “in 1873, 1884, 1890, 1893, 1907, 1930, 1931, 1932, and 1933.”
These criticisms, while containing empirical data, are grossly deceptive. The information provided doesn’t support Krugman’s assertions whatsoever. Instead of utilizing sound economic theory as an interpreter of the data, Krugman and his Keynesian colleagues use it to prove their claims. Their methodological positivism has lead them to fallacious conclusions which just so happen to support their favored policies of state domination over money. The reality is that not only has gold held its value over time, those panics which Krugman refers to occurred because of government intervention; not the gold standard.
Right off the bat, the Nobel Laureate makes the amateur mistake of conflating two different gold standards. There was not one set standard throughout the 19th century up to the Great Depression. Until the first World War, the United States and much of the West was under the classical gold standard. This meant that the dollar was just a name for a set amount of gold; generally 1/20 of an ounce. Following the massive inflation used to pay for World War I and the Genoa Conference of 1922, the gold exchange standard was adopted by many Western countries including Britain. Though the United States remained under an imperfect classical gold standard, other Western countries stopped redeeming gold coins for national currencies. Instead, they redeemed their currencies for dollars or pounds which allowed for expanded fiscal policies because the constraint of gold was not so prominent. At the same time, President of the New York Federal Reserve, Benjamin Strong, conspired with the head of the Bank of England, Montague Norman, to keep gold from flowing out of Britain by having the Fed adopt “easy money conditions in the United States” and “increase bank liquidity a great deal” according to economic historian Robert Higgs. This backroom deal was carried out as England readopted the gold standard in 1926 at the pre-World War 1 parity despite the pound being devalued during the war. Because trade unions and unemployment insurance made wage rates less flexible downwards, the ensuing deflation was detrimental and combated through further inflation aided and abetted by the Fed.
This new international agreement between central bankers may have appeared to be a maintaining of the classical gold standard but it was nothing of the sort. The inflationary boom in the later half of the 1920s was a product of the monetary scheming of the Fed and Bank of England. The final result was the stock market crash of 1929 which ushered in the Great Depression. Contrary to popular belief, the Depression was not caused by the classical gold standard but because of its rejection.
As for the other panics Krugman mentions, neither were caused by the gold standard but by government intervention in the money market. As economist Joseph Salerno explains, the pervasiveness of fractional reserve banking, or the expansion of credit unbacked by gold reserves, played a key role in creating financial instability. The panics were caused primarily by
..the establishment of a quasi-central banking cartel among seven privileged New York banks resulting in the almost complete centralization of U.S. gold reserves in their vaults by the National Bank acts of 1863-1864. This New York City banking cartel was able to expand willy nilly the monetary base and the overall money supply by expanding their own notes and deposits on top of gold reserves. Their notes and deposits were then used as reserves by lower tier banks (Reserve City Banks and Country Banks) on which to pyramid their own notes and deposits.
Moreover, banks, especially the larger ones, were encouraged in their inflationary credit creation by the firmly entrenched expectation that they would be freed from fulfilling their contractual obligations in times of difficulty by the legal suspensions of cash payments to their depositors and note-holders that recurred during panics throughout the 19th century.
In sum, an adherence to a real gold standard was not the main cause of all the financial panics Paul Krugman lists. It was his favorite institution, the state, and the incessant fiddling around with the economy by the political class that created an unstable monetary system. It is also worth pointing out that the late 19th century was a period of incredible economic growth for both the United States and the rest of the world in spite of the flawed gold standard. Though it is often alluded to as a time of robber barons, worker starvation, and terrible deflation, the U.S. economy experienced its highest rate of growth ever recorded as the 1800s drew to a close. As Murray Rothbard documents in The History of Money and Banking in the United States: The Colonial Era to World War II:
The record of 1879–1896 was very similar to the first stage of the alleged great depression from 1873 to 1879. Once again, we had a phenomenal expansion of American industry, production, and real output per head. Real reproducible, tangible wealth per capita rose at the decadal peak in American history in the 1880s, at 3.8 percent per annum. Real net national product rose at the rate of 3.7 percent per year from 1879 to 1897, while per-capita net national product increased by 1.5 percent per year…
Both consumer prices and nominal wages fell by about 30 percent during the last decade of greenbacks. But from 1879–1889, while prices kept falling, wages rose 23 percent. So real wages, after taking inflation—or the lack of it—into effect, soared.
No decade before or since produced such a sustainable rise in real wages.
From 1869 to 1879 the total number of business establishments barely rose, but the next decade saw a 39.4-percent increase. Nor surprisingly, a decade of falling prices, rising real income, and lucrative interest returns made for tremendous capital investment, ensuring future gains in productivity.
When the United States maintained a gold standard to a fairly significant degree, the economy blossomed. The relative absence of inflation ensured that the dollar acted as a store of value in addition to facilitating transactions. Without the threat of looming price increases, the public was more willing to put off consumption and add to the supply of capital availability by saving. The prudent technique of producing more than you consume allowed for a greater number of entrepreneurs to put capital to work. This set the foundation for mass production and giving consumers access to an abundance of goods never thought possible just a century before.
To the Keynesians’ befuddlement, the economic renaissance of the late 19th century occurred at a time where prices weren’t rising or stable but actually falling. The fall in the general price level occurred as the production capacity expanded at a faster rate than the money supply. Today, economists of the Keynesian and monetarist school remain convinced that a stable price level is good thing when common sense dictates otherwise. Falling prices are a godsend for consumers; not a catastrophe. As long as entrepreneurs are able to utilize the inherent feedback mechanism of an undistorted pricing system to forecast input costs, falling prices are only a minor problem. The focus on price stability is why many economists missed the Depression and the Fed-engineered boom of the 1920s. In a free market, the tendency is for prices to fall as production increases.
Krugman denies not only that sound money leads to economic stability and growth, he does so while attempting to show that gold has been incredibly volatile since Richard Nixon cuts the dollar’s tie to the precious metal in 1971. But Krugman puts the proverbial cart before the horse with his example as it hasn’t been the price of gold that has fluctuated to a high degree but rather the dollar’s value. As Forbes editor John Tamny pointed out in August of 2011
as Brookes calculated in his essential book The Economy In Mind, “In 1970 an ounce of gold ($35) would buy 15 barrels of OPEC oil ($2.30/bbl). In May 1981 an ounce of gold ($480) still bought 15 barrels of Saudi oil ($32/bbl).” Fast forward to the present, and an ounce of gold ($1750) buys roughly 20 barrels of oil ($85)
Krugman also asserts that when interest rates fall, the price of gold increases [ZH - we discussed the various regime changes between interest rates and gold here in great detail]. But again he makes the same mistake of not recognizing the role dollar manipulation plays in both measures. Interest rates haven’t been formed by market forces since the Federal Reserve was established. In a free market, interest rates are determined by the public’s collective time preference or the discounting of future goods against present goods. When more people are saving, and therefore putting off consumption, there is a higher supply of loanable funds. This higher supply translates to lower interest rates as the price of present capital lowers. Under a fiat regime like the Fed which oversees a system of fractional reserve banking, interests rates are manipulated by a few central bankers instead of the market. These central planners increase the supply of money in an effort to push down interest rates and induce consumers into borrowing. This also has the effect of pushing up the price of gold as investors lose confidence in the dollar’s value.
In his crusade to keep Keynesianism as a legitimate school of thought, Krugman has yet again attempted to mischaracterize gold and blame it for crises caused solely by government intervention. What Keynesianism amounts to is a theory of state worship and the virtue of hedonism. Its leading proponents declare there is such thing as a free lunch and that it is served directly by the printing of money. In other words, it is based on backwards logic and remains distant from reality.
The Keynesians admit there was a housing bubble then fret over an “output gap.” They blame market exuberance for recessions but then prescribe the exact same policies that lead to exuberance to begin with. This irrationality was best displayed with a remarkable quote by former Treasury Secretary and former director of President Obama’s National Economic Council Lawrence Summers who wrote in an editorial for the Washington Post:
The central irony of a financial crisis is that while it is caused by too much confidence, borrowing and lending, and spending, it can be resolved only with more confidence, borrowing and lending, and spending.
Keynesians have no pure economic theory; they are totally ad hoc in their approach. Any data point which fits their view is trumpeted. Any theory that presents a challenge to the idea that the economy can be finely tuned like a child’s trinket is dismissed as right-wing propaganda. Keynesians ultimately reject the golden rule of economics: savings represents deferred consumption and producing more than is consumed. Real savings in the form of capital goods (factories, equipment, machinery, etc.) are the backbone of any economy. Government only squanders these scarce resources through its constant pillaging of wealth.
Keynes himself was contemptuous of the middle class throughout his professional career. This is perhaps why he held such disdain for gold. Gold is the market’s choice for money; not the statist ruling class dependent on spending virtually unlimited sums of tax dollars. Because a true gold standard prevents runaway inflation and budget deficits from occurring in perpetuity, Keynesians will do all they can to discredit gold as a workable form of currency. Their allegiance lies with the state and paper money; not the natural choices of the common man.
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But after criticizing everybody left, right, and center the only thing you can come up with is hope to select/elect/create a higher being/committee/group that will fix everything for us.
I don't believe that's what the Founders envisioned.
And you constantly confuse "the right to be left alone" (a/k/a going Galt) with "giving a damn about anything."
I simply want elected government rather than the oligarchs telling us what to do. Who are the top 20 donors of the von Mises Institute?
I hope one day you can overcome your fear of the unknown, and become able to
forsake "guaranteed" outcomes (which cannot be done, and leads to more and more rule-breaking especially in times of crisis)
for enforcing simple rules (which can be done) that allow largely unknown outcomes, within those rules.
fonz,
Deception is a large part of the game plan. Keep an open mind and never bend to pure emotion.
"That being said I am armed and I plan on being wrong."
You'll be fine IMO ;-)
Speaking of deception... who are the top 20 donors of the Institute?
(- o -)
Typical liberal. You think that something is of the utmost importance and rather than working it out for yourself you loudly demand that someone else find the answer for you.
I'm asking the author to tell me because it is not public. And I am asking the ideologues here to think about why it's not public. Don't worry, I don't expect you to care or question. Cult member and all that.
Perhaps you are unfamiliar with the way the reply feature works but you did not ask the author you asked nmewn and malek. If you'd attend the regular cult meetings you'd know this stuff.
I've given up trying to have any "honest" debate with you...as soon as a point is made with which you disagree with...you don't debate anymore. There are no government factories churning out asphalt, concrete, rebar, tractors etc. that the public can benefit from...probably much to your chagrin. They are all private for good reason.
But there are government factories churning out mindless idiots like you that the public has absolutely no use for...Krugman leads a class such as this.
Oh...can't forget the wink ;-)
A nod's as good as a wink to a blind bat.
http://www.youtube.com/watch?v=ona-RhLfRfc
lol...love Monty...tis but a scratch...look you silly bastard you have no arms left!!!
http://www.youtube.com/watch?v=mjEcj8KpuJw
Cheap. "I'll ignore the argument because I dislike the guy making the argument." Gee you should go into American politics, lots of people just like you there.
Explain what difference it makes who is funding whom? We know you are merely tacking on trophies, your ideology is well-known, as is the fact that you leap at any opportunity to make nonsensical ad-hoc accusations (such as that to which I am replying) and likewise make every effort to avoid serious debate (as you have done no less than 5 times below with CrockettAlmanac, who, by the way, wiped the floor with you as usual).
Back to the point, the truth, validity, or soundness of an argument has no relation to the person advancing it. If your boy Obama happens to say "water is wet", who has contributed to his campaigns is utterly and totally irrelevant to my assessment, and agreement, with the statement.
So what you've done here is telegraph that you are not willing to make a counterargument against the article, instead you simply wished to let us know that you have nothing of substance to say that is tangent to the article but wanted an excuse to attack "the Rand cultists" (who shall remain nameless, I presume) for the millionth time and the author of the article too - without actually doing so, mind you, because you offered up no actual refutation or counterargument and are literally pissing in the wind. And based on your historical pattern of this very same behavior (see below for a perfect example), I conclude that you simply have no case to make, or you would have made it already, and would not feel the need to elect to use - not eventually resort to using - ad hominems, baseless accusations, diversionary tactics, irrelevant information, and this bizarre endless obsession with trashing Ayn Rand.
In case you have not noticed, you have been repeating these same actions for quite some time and have accomplished exactly one thing: pestering those of us with enough spare time and energy to do something about the offense and horror inspired by your incessant whining, e.g. call you out on it.
Well, you've been called out yet again, but I stand by my conclusion that what you have to say is not worth hearing (a quick review of your posts should suffice as evidence), not so much because the arguments, premises, and conclusions are fallacious/invalid/unsound/dead wrong (they generally are), but because you go to such lengths to avoid clearly stating said arguments, preferring instead what can only be described as (classic hit-and-run) troll behavior.
It seems nmewn and CrockettAlmanac enjoy your tete-a-tete more than I, I wish them the wisdom to pick their battles well, but nonetheless the fortitude to continue whichever fights they will.
Occasionally I interlop! You have a brilliant mind! :) Stay " healthy"! We need your Beautiful thoughts.
nmewn From day one! " always liked ya"
I'm a silient/violent type. I'm concerned about Slewie? Brilliant mind?
That axe blade HAS to be grinded down to a nub at this point, eh LTER?
If your comments are serious, you are a fool. If your comments are for humor, you're not funny. Try reading more and commenting less.
If your comments are serious, you are a fool. Convinced?
Most people believe ignorant stuff that makes them feel good. I just spent two days explaining to a troll there is no production subsidy on corn ethanol. He still angrily follows me around insisting I am an ahole and that there is one. LOL. He is like Krugman. Krugman is not going to be won over with actual facts. His ego is at stake. I saw him in a debate once where a guy explained to him that Japan was the best example of Keynesian economic failure. Krugbag said it was a great example of Keynesian success. That is is the mindset this guy has. He is not entertaining facts or reality.
Your right that direct subsidy ended in January 2012.
But,...
Under the RFS, about 25 percent of U.S. corn is diverted from the food system to ethanol production. Consumers pay for this mandate through increased corn prices -- this is an indirect subsidy, and a huge one.
The RFS, which was enacted in its current form in 2007, has been the Holy Grail for the ethanol industry. The industry was even willing to let the tax credit expire so as to earn political points in its fight to preserve the RFS. Jon Doggett, vice president of public policy for the National Corn Growers Association, recently said that his members "view the RFS as more important than the farm bill."
Of course you're right again that; "Most people believe ignorant stuff that makes them feel good."
So far you are the only one who actually looked up what I was saying about no subsidies. Good job. I thought I was in an intellectual desert. But keep in mind that the corn is still used as cattlefeed after the ethanol process:
http://www.youtube.com/watch?v=LxbsLioiXKs
I don't care if you call me a Barbarian, I have Gold.
Krugman, the lead "progessive" promoter of war & welfare...because thats exactly what un-backed fiat is.
it's Krugmans un-backed opinions that are the mark of a progressive ...and an economist and an academic for that matter
our era is marked with so many crones with so little between their ears
Progressives are socialists. Krugman is a socialist just like Keynes was with a few twists here and there because every other time they try micro managing any economy without it being a dictatorship it fails.
So, they come up with what they think are clever terms like neo-keynesianism...its like throwing a coat of paint on a rusted out car, looks great but start pickin at it and it falls apart.
No there there.
Say, I came across some intriguing stuff..
http://www.canadafreepress.com/index.php/article/31863
Now I’ve got to check this out:
“Keynes at Harvard: Economic Deception as a Political Credo
Anybody have a take on the veracity of any of these amazing allegations?
Whoa..
“Keynes was characterized by his male sweetheart, Lytton Strachey, as “A liberal and a sodomite, an atheist and a statistician.” His particular depravity was the sexual abuse of little boys. In communications to his homosexual friends, Keynes advised that they go to Tunis, “where bed and boy were also not expensive.” As a sodomistic pedophiliac, he ranged throughout the Mediterranean area in search of boys for himself and his fellow socialists. Taking full advantage of the bitter poverty and abysmal ignorance in North Africa, the Middle East, and Italy, he purchased the bodies of children prostituted for English shillings[See Lytton Strachey, A Critical Biography, Michael Holyroyd, Holt, Rinehart and Winston, two volumes].”
SUGAR KEYNES by Zygmund Dobbs
Reprinted from The Review of the News, June 23, 1971
http://www.knology.net/~bilrum/keynes.htm
Minor semantic point. Progressives are not socialists if you use the historic definition of socialism which was prevalent until around the time of the rise of Lenin, whether it be left-libertarians or left-Marxists or even communists - at the time these all referred to ideologies which were centered on proletarianism - labor socialism, the core (in my opinion) thesis of economic Marxism; ownership of the means of production by the workers, and by extension, perhaps, communitarianism. Progressives, neo-libs, neo-cons, totalitarians, and various others hijacked this definition of socialism and did whatever was necessary to fit it to their similar rhetorical (propagandistic) needs.
By the modern popular American definition of socialism, perhaps, but it is somewhat dishonest and dangerous to let this corruption slide.
Now, inevitably someone can and therefore will interpret this to be an attack on whatever definition of socialism he or she prefers. It is not. Nor is it a defense. Socialisms either ignore, discount, or suppress the market, among many other idiotic blunders for which they may be condemned.
"Socialisms either ignore, discount, or suppress the market, among many other idiotic blunders for which they may be condemned."
That sounds more like the work of Marx's Bankocracy to me.
good post though, anyone can tell you're tryin'... though I think you may be wasting your time with nmewn. I've attempted many times to outline the pertinent definitions for him, but he and the other acolytes adhere to their misconceptions quite stubbornly; it's almost as if their self serving ideology hinged on it.
Anyway, using your preferred definition: if the pressure is for workers to tend to own the means of production, as a rule would a socially mitigated capitalist system, a mixed economy, favour smaller or larger privately owned businesses in it's economic 'environment'?
This isn't about money - in any form.
This is about Control -- and "control" also means a bloated collection of small minds, each hanging on to their own personal illusion.
Simple dereliction, over time...
the chaos is here,
and Krugman is nothing but a symptom of how far down we are.
Jeesh why do we have to hear about Krugman AGAIN. The man is such a tool. Ignore him and he may just go away.
Krugman , is a covert operative , for the " Zimbabwean Treasury Dept "...
isn't that just another subsidiary of Giesecke and Devrient?
Paul Krugman must have been sitting on the toilet. While reading the New York Times and passing a Marxist movement, intellective economic clarity finally settled in.
I just finished rereading "The creature from Jekyll Island". What struck me the most is the similarity of the actions taken by the central banks recently, and their activites just prior to the Great Depression. All written with well documented references.
Looks like the next step is to accomodate the ECB. If that is followed by a secret meeting of the CB's and the primary dealers, look out below.
Since reading that book, I too have had moments where I step back from this "QE forever" debate and try to remember that interests of the bankers may not be what I believe them to be.
I honestly have no idea what would benefit them because I cannot see their books.
That story about Biddle was particularly wild...
if labour was paid in gold the rich would have none.
there is the problem. funny
"Best Comment of the Thread Award", right there!
"Instead of utilizing sound economic theory as an interpreter of the data, Krugman and his Keynesian colleagues use it to prove their claims."
Probably pure trivia here, but has anyone, or could someone, please present a single "sound economic theory"
I've never heard of one, ever, in this most worthless of 'professions'
Price is directly proportional to demand and inversely proportional to supply.
"You can find good deals at garage sales."
Now give me my PhD.
Read "Man, Economy, and State" by Rothbard.
Best book on economics ever written, and sums up every sound economic theory there is.
Thank you for that reference. I am looking at ordering it on Amazon for $35. I did find the reviews all favorable. I did want to share this one....
"Just to note, this book has been released for free in electronic form at the mises.org website (epub, pdf, html) for general use. Feel free to preview it before adding it to your bookshelf!
mises.org/resources/1082/Man-Economy-and-State-with-Power-and-Market"
Even if a government adopts a gold standard, there is still the strong possibility that the government will devalue the currency at some point in the future. Very few governments have been able to stick to a pure gold standard for extended periods of time.
What I would like would be for the government to eliminate the tax consequences of exchanging PM's for goods or fiat. That would allow people to use PMs as a medium of exchange if they desire to do so without any need for government involvement.
We have to put forth a plan to use the gold standard and existing petrodollar recycling program. Currently, we have no budget constraints to control costs. Children are running this country, you’re being laughed at.
FYI
yeah, Krugman - he got one of those shiny-thingys for economics, like Obama and Henry Kissinger did for peace. Might as well have been 'Man O' the Year,' like Benny, add even more discredit to his reputation among thinking people
Gold is the money I save and paper is the money I pay with, for everything else. Gresham's law in action.
Edit: Eh, of course I am going on a canoe trip this weekend and I will be taking the opportunity to air out and polish my things of value. I hope I don't have to call the insurance company to report a loss. Anything could happen...just sayin'
So we are in debt up to our arses, gubmit spending at high levels, taxation (if look beyond the marginal rates and at hidden taxes) are very high, yet the way to solve this is to SPEND more gubmit money, AND raise taxes, to do otherwise would be catastrophic, right?
Yes, to do otherwise would result in real lifestyle choices for the tenured class.
What everyone needs to understand is, the very FIRST act of government is self perpetuation...meaning, feeding itself...not us. Its no accident that fully one third of "shovel ready jobs" stimulus went to government and its hangers on.
Now, if it can just corrupt/ensnare another third ;-)
'tenured class', does that include the 'class' of people who inherited their wealth rather than earning it?
You want a meritocracy, I'll give you meritocracy.
"He's the one who likes all our pretty songs, and he likes to sing along, and he likes to shoot his gun. But he don't know what it means..."
I think a bullshit artist like Krugman should put his money where his mouth is .... if Gold goes to $3k per ounce (proving he is again wrong) he has a choice ..... to maintain his honor he should either fall on his sword, or I'll buy him dinner at a high rise, and he can exit from the balcony +15 floors. History is a great teacher, and it is tough on the bullshit artists.
You needn't wait for the (manipulated) price of gold to hit some magical threshold number in order for Krugman to "put his money where his mouth is."
Krugman is a big believer in the "broken window" stimulative theory of economics. If he wanted to put his money where his mouth is, he should be running around, smashing every window, breaking every fence, and otherwise destroying every piece of private property he can lay his hands on.
According to his own economic theories, that would be far more useful than him sitting around writing a piece for a MSM newspaper.
What? Destroying other people's property is a crime? Fine. Then he should be destroying everything in his own house. As soon as the glazier installs his new window, he should just smash it again. As soon as the plumber installs new pipes, he should flood the bathroom. Finally, he should put cash in bags and bury it in the ground, and pay a second set of workers some money to dig it up, so that it can then be used to pay off the first guys.
Gold will be down $50 tomorrow no matter what the Barnanck says or doesn't say. It will force deliveries into the Chink's vaults. They are taking Western Gold and moving it East. Hold onto your gold physical because the enemy is the Eastern "banksters" holding the U.S. hostage over everyone.
The Ruskies and the Chinks are paying the U.S. back for INVADING a SOVERIEGN NATION w/o DUE CAUSE. Think IRAQ where Cheney and Co. now control the oilfields. Why don't you Yanks finally take back control of your fucking country?
Fucking wimps.
You my friend will be taking that middle finger and servicing yourself. Currency wars are out of your league. Please continue to post on ZH, your input is vital. Winks!
They give those Nobel's to just about anyone nowadays.
Sho nuff. My last 3 are for sale on eBay.
Good luck with your GOD. Its the same crazy belief as FIAT. Go buy farmland, or silver and break a bank. 1 ounce is $1600? Are you crazy?
"1 ounce is $1600? Are you crazy?"
Well, just go find and dig up some more, and the price will go down. Simple, right? Gold is worth what it's worth because it requires LABOR to get it. Fiat requires no labor whatsoever. What don't you get?
The PRICE of gold is around $1,600/oz because it is VALUEd. Its value is about 17 barrels of oil today. The price of gold has little to do with the cost of production, very little.
I am looking for people who value gold less than I do. I will gladly exchange USD, EUR or whatever color paper they want at a price point they consider fair.
Yes, and it's VALUED because unlike fiat currency--which simply requires a keystroke to create--gold is finite, and it requires effort to obtain. My post had nothing to do with the cost of production...
Krugman and the gold-bashers should read Professor Roy Jastram's (UC Berkeley) book The Golden Constant ( http://www.amazon.com/Golden-Constant-American-Experience-1560-2007/dp/1... ). Since around the fourteen century, he reports, an ounce of gold has always purchased approximately one cow, or one fine man's suit.
Naturally, no fiat currency can claim anything close to this record of stability, in part because no fiat currency survives for very long, their average lifespan being about 40 years. Oops, I can't believe how long ago 1971 was...
Stick this dumb fuck in the same room as Bill Kristol.
I stopped reading at Paul Krugman's. Somehow I feel better off............
Man Clint Eastwood, could be a mummy, and that guy would"still", have a heart beat! :-)
Look on the bright side. After the people's revolution they have always killed the 'intellectuals' who championed their bs first. Always. In our case if it goes bad, I'm sure they'll throw the media commentators overboard too. They add nothing to the gene pool...
Most of politics is a tedious propaganda war, with different sides simply repeating themselves, like living things in the jungle attempting to grow up to the light, against the competition of others putting them in the shade. In that context, I repeat my comments posted under the previous Zero Hedge article about The Gold Standard Debate Revisited ...
"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance."
--- James Madison (1751-1836), 4th US President, and one of the main authors of the Bill of Rights.
Americans especially appear to have forgotten almost everything that the founding fathers of their country knew! The triumph of propaganda brainwashed enough of the people to agree with the biggest bullies' bullshit, which became so totally dominant that the controlled opposition presents the same basic frame of reference as the established elites do regarding the social situation.
Money IS based on robbery, backed by murder. Sorry Folks, but civilizations are operated and must be operated according to the principles and methods of organized crime. "Citizens" are members of an organized crime gang, which is their "country." However, after they have been brainwashed enough so that they do not understand that, then they can be terminally tricked by those who are the best at being dishonest robbing them blind. What we should have is a perpetual arms race of critical thinking, so that the established elites can not so easily get away with their frauds. However, the series of victories of the organized crime networks in the past have now accumulated to the point where "economics" is totally dominated by insane bullshit, that deliberately ignores the ecology in which it exists. An article like this one correctly changes a few levels, during its criticisms, but does not continue on through the infinite tunnel of deceits of miliarism, which sustained the money system.
THE SYSTEMS BECAME ASTRONOMICALLY AMPLIFIED!!!
WE SHOULD HAVE SOME PROFOUND PARADIGM SHIFTING!
Various gold standards only shunted around how money/murder systems operated. I feel that these kinds of debates about the "gold standard" are merely recycled bullshit, within the same old false fundamental dichotomies. It is IMPOSSIBLE to go backwards to any kind of old-fashioned guns and gold models, when the world has moved forwards to become runaway electronic frauds, backed by atomic bombs. Indeed, the problem is that those trends are now rushing onwards at exponentially accelerating rates, which leave the understanding of the vast majority of people, including almost all "intellectuals," behind in the dustbin of history.
Just to be clear...Regardless the outcome, whether good or bad...Gold and Silver, is the choice HERE!
Say what you may...I'm convinced!...Totally!!
The medium of exchange has nothing to do with what causes panics Krugman....What causes panics is excess LEVERAGE period, dot, end of story.....Why do people continue to fail to aknowledge this truth?? Excess Leverage leaves everybody exposed, the lender, the borrower and the tax payer that is left holding the bag after the bank comes to them hat in hand....It really is that simple!!!!!
A milliniea of economic history can not be ignored. Those who borrow greedily should be prepared to meet their doom when their enterprise fails due to lack of demand for their shit they peddle or the value of the collateral they borrow against turns out to be worth nothing...... Why the fuck do we need people with PHd's when this is the principle that ALWAYS drags it down?
By the way, MY MAIN MAN, I for one, appreciate how you keep them hits a commin!!
It appears to me that the left has formed a number of groups like professors of economics, professors of political science, and so forth whose main purpose is to give awards to each other for being loyal liberals though the awards will have impressive sounding names, the whole scheme is a mutual affirmative action society. Clearly the Nobel prize committee has become a part of the unearned honor award game. Gore gets an oscar? Michael moore is on a par with alfred hitchcock? Krugman is the equal of Milton Friedman . Give me a break.
Please don't forget Obama's Nobel Peace Prize.
I'm curious as to whether people like Krugman are affraid that they will be without work in a non-fiat system. If a big change happens what will professional academics do in order to sustain themselves?
well, since they're all fucked up and their shits all retarded, prolly just sit around 'batin' all day.......
Krugman = dishonest POS..
Buy Silver Bitchez!
Krugman will be relegated to his former occupation of giving hand jobs and blowjobs to the other college professors with more tenure who managed to keep their positions......
Krugman and the gold-bashers should read Professor Roy Jastram's (UC Berkeley) book The Golden Constant ( http://www.amazon.com/Golden-Constant-American-Experience-1560-2007/dp/1... ). Since around the fourteen century, he reports, an ounce of gold has always purchased approximately one cow, or one fine man's suit.
Naturally, no fiat currency can claim anything close to this record of stability, in part because no fiat currency survives for very long, their average lifespan being about 40 years. Oops, I can't believe how long ago 1971 was...
yo Krugman, the Keynesian experiment from hell: China is running out of CNY, why? Inflation, they are swapping over to USDs and gold. What does Keynesian madness do to bond markets, even creditor nations?
Answer. F*cks them up (China's bond market is collapsing):
http://pdf.reuters.com/pdfnews/pdfnews.asp?i=43059c3bf0e37541&u=2012_08_...
America will be next, Fed buys everything, oil goes over a 100, Americans gets poorer, hungry and angry.
What Krugman says about gold is just a continuation of his constant campaign to have himself seated as the next chairman of the federal reserve. Can anyone name anyone else who would be more favored by predators-DBA-government and predators-DBA-corporations than Krugman?
Yup, thought not.
Krugman: "You should make me chairman of the federal reserve because my helicopter is bigger, badder and lots faster!".
Please forgive my presumption. It is time for some neurolinguistic programming (NLP).
You do not "sell gold", ever. There may come a time when may choose to exchange your gold for some absolute necessities, but you do not and cannot "sell gold".
If you believe that gold is money, or the only real money and a store of value, then please consider changing the way you talk about gold. Gold is something you acquire but never sell. Interest is something you earn, not pay (to avoid debt slavery).
When you go out to buy your 54" LED TV, you don't say "I sold some dollars for this flat-panel", why would you talk about gold that way?
Thank you!
This is exactly right.
There is a fundamental legal difference between an executory contract and an executed contract.
Any transaction involving Federal Reserve Notes is an executory contract because payment is not made IN FACT till some foward date.
(does not apply to bankruptcy law)
BREAKING NEWS:
China and Germany will no longer do business in USD, Euros and Yuan preferred;
http://www.cnbc.com/id/48838061
So,... How come the Tylers haven't picked up on this?
So,... How come the Tylers haven't picked up on this?
"China and Germany will no longer do business in USD"
I would surmise it is because the link in question says no such thing; hump.
Invasions plans on Obama's desk in 3....2.....1......
You don't even need gold. You can use digital certificates within a closed system. But for those that prefer to use gold that is fine.
hahahahah Japan just fired 1st shot: Trade War
http://www.marketwatch.com/story/japan-court-rules-for-samsung-against-a...
Oh this is going to be good.
I am so tired of reading Keynes misquoted. In fact Keynes was pro gold.
In truth, the gold standard is already a barbarous relic.
Monetary Reform (1924), p. 172
I am so tired of reading Keynes misquoted. In fact Keynes was pro gold.
In truth, the gold standard is already a barbarous relic.
Monetary Reform (1924), p. 172
(Deleted.)
"it hasn’t been the price of gold that has fluctuated to a high degree but rather the dollar’s value"
EXACTLY!
Good try Krugman, not everyone is stupid as your plagarising students.