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uomo_senza_nome
2012 Aug 29, 6:26am
Enough with the gold...
haha. I actually thought it was an interesting article showing the problems with the gold standard.
Similar to Krugman's : http://krugman.blogs.nytimes.com/2012/08/26/golden-instability/
And the GOP is toying with the idea of a return to gold standard, which would be a disaster for a lot of reasons.
Eman
2012 Aug 29, 5:24pm
GOP is toying with the idea of a return to gold standard
Toying indeed, but it will not happen.
Gold would not have prevented the pre 2008 sub prime boom, but it would have made the consequences far more severe .
What a banker speak!
Of course, it would prevent the whole bubble by making bailouts impossible. Lenders do lend irresponsibly only eyeing further bailouts. Furthermore, it would make impossible the injecting of hundreds of billions at the end of 1999 with the excuse of Y2K. Would stop the dot.com bubble two years earlier, would keep American economy healthy after that. It would also make two recent wars impossible.
Of course, it would prevent the whole bubble by making bailouts impossible. Lenders do lend irresponsibly only eyeing further bailouts.
Unfortunately, we could still have bank bailouts if we had a gold standard or even a tie to gold, but we couldn't make up the difference with borrowing. With gold, we'd have to cut the same amount out that we gave in bailouts. This is the danger of gold. our elites will give bailouts, which means everything else would be on the chopping block, irregardless of the consequences to our society. The people who love gold think it will create a form of fiscal discipline in our representatives or fear in our banksters. Nothing will do that.
Dan8267
2012 Aug 30, 9:12am
Gold, it's good for jewelry, conductors, and fighting cybermen. It's a good niche, but not exactly something the world revolves around.
http://macrobits.pinetreecapital.com/we-like-gold-not-a-gold-standard/
So a gold standard introduces a recessionary bias to economies with the burden always falling on countries with weaker currencies (typically as a consequence of trade deficits). This inflexibility prevented governments from introducing policies that generated the best outcomes for their domestic economies (high employment).
Gold would not have prevented the pre 2008 sub prime boom, but it would have made the consequences far more severe .
At the end of the day, a currency is not simply an investment/savings vehicle, but a tool for provisioning government and optimizing real economic performance. We haven’t done a great job on the latter for the past few years, but I would argue that this is because our policy making elites are still infected with “gold standard†type thinking.