@quantumushroom

Really? Reagan? I see you've bought into an incorrect historical narrative, a.k.a myth, that paints Reagan as some sort of conservative/libertarian god. Allow me to type some stuff that you won't believe because you're clearly in some sort of fantasy land, but is true anyway.

The economic model put into place during the Reagan years (supply-side economics) was, to put it bluntly, a one-hit wonder. It worked in that situation, in that time, and it has "worked" pretty well until recently, though its collapse has been fairly inevitable.

Our legal tender law forces everyone to use our governmentt-issued fiat currency. This combined with our fractional reserve banking system is what allows Reaganomics to seem like a good idea. All of our money is debt. If everyone (including the government) paid back all their debt there would be no money. So, when you vastly increase the national debt (defense spending in Reagan's case), there is more money(debt) created. Banks create money(debt) from nothing when someone signs a piece of paper promising to pay the money back with interest. When there's more money(debt) in the system, it's a lot easier to get credit and therefore easier to start businesses, etc. Combine this with low taxes and corporations will invest in factories and such and create jobs.

That's the logic, anyway.

Problem is, the reality of what has actually occurred as a result of supply-side policy is vastly different. The frustrations expressed in this video are a direct result of that. Really, since legal tender law was passed under Nixon, we've had a series of boom/bust failures in our economic system that everyone's pissed about in one way or another. This includes all subsequent administrations regardless of political affiliation.

We can go through all the stuff...the 1987 stock market meltdown, the S&L crisis, the creation of complex speculative financial instruments, the Financial Services Modernization Act...the list goes on. This stuff occurred under Nixon, Carter, Reagan, Bush, Clinton, and Bush again. It's not a Democrat vs. Republican thing. It's not a Right/Left thing. Until you open your mind to realizing that, you're going to be effectively asleep.

Most people don't even know how to express their problem with what's going on economically in our country, and so you have this sort of general anger that's let out in various ways. Tea party, Obama haters, Bush haters, etc. None of that matters, though...none of these (important) social issues like abortion, gun rights, gay rights, etc, really matter until our money system is reconstructed in a way that jives with reality and sustainability.

How silly.

What economic issue is it that this video is claiming is the Fed's fault?

Income inequality? Good argument for a more progressive tax, and a larger system of social welfare.

Fraud? Good argument for a strong regulatory regime for banks, and a Fed chair who's got a basic mistrust of corporate greed.

Inflation? Maybe, but it seems like low, constant inflation is a good thing in everyone's theory of macroeconomics, and a central bank is a key tool for keeping your inflation where you want it.

Unemployment? Maybe, but again, fixing your money supply to some constant (e.g. pegged to the dollar, or the dollar pegged to gold) takes a big tool for managing unemployment out of your toolbox.

Mostly though, people need to remember that all money is ultimately fake.

Gold is just as worthless as paper money -- you can't eat it, you can't smoke it, you can't drink it, you can't even use it as a raw material for anything useful unless you're a jeweler, a dentist, or a semiconductor fabricator (and even then, you really should use something more common like copper or tin).

Money is a consensual hallucination meant to keep us all working. I'm really, really sorry if you reached adult age thinking that stuffing cash into your mattress was the route to riches.

Rich people understand that cash is intrinsically worthless. It's why they invest, rather than build giant Scrooge McDuck-style money bins full of coins.

All money is the same, whether it's in the form of stamped $20 gold coins, promissory notes (i.e. a green piece of paper that says "this $20 bill can be redeemed for an ounce of gold at the US treasury office"), or fiat currency, it's only worth whatever you can buy with $20.

Part of basic financial literacy is understanding that the overall trend is for prices to go up, and therefore that if you aren't getting a raise equal to or greater than the inflation rate every year, you're taking a pay cut.

Which is a good argument for unionizing, even if you're a salaried professional...

I'd suggest that the issue here was an implicit assumption of chivalric behavior. Chivalrous behavior is mostly characterized as being polite beyond the normal socially expected norm for the situation.

For example, in this case, if the girls had made a move to go single-file, and blankfist stepped onto the grass with a wave and a smile, that's chivalrous.

Glancing down the sidewalk, and seeing a man coming, and then resolutely not getting out of his way because you assume he'll clear the sidewalk for your benefit seems a tad conceited.

@chilaxe, I thought in this situation the libertarian answer is to say "if we didn't have socialized sidewalks, we wouldn't have these problems with people abusing communal property because there wouldn't be any communal property."

Bonus points if you can bring fiat currency into it somehow.

>> ^happyTurtle:
As I understand it, employment typically lags the economy by about a year.
Are you saying we shouldn't be happy that the economy is turning around because employment hasn't caught up yet? Seems to me that the sooner the economy turns around, the sooner people will be able to get back to work. That's reason enough to cheer it on for me.
GO recovery GO!!!


There is only one problem. The economy has been in the tank, and is still in the tank.

Gold is up and the dollar is down. The US owes a shit load of debt to the Chinese, and Japanese. The time to pay that debt is soon. When countries stop trading in your Fiat currency then your currency fails. Which is what we are seeing.

http://www.informationclearinghouse.info/article19205.htm

This is from wikipedia:

Public debt $11.9 trillion (October 2009)[8] 83% of GDP
Revenues $2.106 trillion (2009)[9]
Expenses $3.515 trillion (2009)[9]
Economic aid ODA $19 billion, 0.2% of GDP (2004)[10]

I really do question what we've learned in school. I think it's national indoctrination, that's why I dislike the public school system so much. That, and my education was sub par, and I was not the sharpest tool in the shed at 18 because of it. I've done better as an autodidactic which has also lead me to understand what I learned in school was not so much a lie but a cherry-picking of information devised for social engineering and thinly veiled as unbiased education. Regardless, I don't think any of my classes properly explained Capitalism to me, nor the free market, nor fiat currency, Corporatism, the Federal Reserve, etc. etc. etc. They didn't teach me a lot of things except how to be dumb and be a cog.

I get it. I don't tow the lines. But, you seem to want to lump me in with anti-abortionists (I refuse to call them by any euphemism), creationists, anti-immigrationists, homophobes and racists. Seriously? All of that is antithetical to my positions and those of Libertarians. In fact, if California was a Libertarian state, I bet gays would no longer be secondhand citizens like they are in the blue state. Democrat civil liberties fail.

What's so wrong with personal liberty, DFT? What's wrong with giving the individual a right to be captain of his own destiny? Why shouldn't we honor self-reliance over dependency? Why do you feel people are too stupid and incompetent to live with freedom? I believe you veil elitism under the banner of democracy. Most people do who believe they know what's best for everyone instead of allowing the individual to choose. When your direct democracy leads to bad legislation and tyranny you will pretend it wasn't democracy, but a lack of it; and therefore it's a selective democracy where the pro-Democratic voices should be heard, but dissenters should not. To me your party sounds a lot like the other party.

Also, I understand your fears of Corporations. I, too, am anti-Corporatist and I certainly don't trust them. They wouldn't exist if government didn't allow them to. In fact, it used to take an act of Congress to create a Corporation; now it all has to do with how much money you have. And it's government regulation that allows them to monopolize the markets by squeezing out the small business owners. Corporations, like government, hate competition, and most regulation is set up to protect Corporate interests, not ours. I've given a great example of this here in the 5th and 6th paragraph and show how a protective government bureaucracy like the EPA is only used to further the Corporate agenda, not protect us. That's your government regulatory system failing... again.

I could ask you the same question about being a Democrat that you asked me about being Libertarian. Seriously, if you were part of the Green Party or a Marxist I'd probably have more respect for your position. But a Democrat? Sure I can see how you agree with some of their positions, but all of them? Hell, most of them? The continuation of the unconstitutional war? More troops sent to Afghanistan? No mention from your party on closing the 700+ military bases in 130 countries overseas. And, what about the Patriot Act? Your party isn't moving to repeal it, only modify it. Your party is a sham. And the fact that you can't see how similar your party is to the Republican Party is very amusing but mostly frustrating. Pot, meet kettle.

In reply to this comment by dystopianfuturetoday

>> ^dgandhi:
Did the valuation of gold rise, or the valuation of the dollar drop? What if the valuation of the dollar dropped more than the valuation of gold rose? They could both be dropping, and you could still see what we see. The relative valuation of two fictions provides you absolutely no information about the real world. The function of any economy is to facilitate real world transactions.


The value of gold in relation to the US Dollar is high. So, yes, the dollar's value dropped and continues to drop. The only way gold can be devalued is when the supply increases, which is happening because they are still mining. But, the amount that can be "found" (and thus "created") in a day is controlled. In a fiat currency system, paper money has no limit - in a day trillions can be created.

I agree, Fractional Reserve Banking eats away at our wealth. It's bad any way you slice it.

>> ^blankfist: So, how can you say value of assets are declining?


Did the valuation of gold rise, or the valuation of the dollar drop? What if the valuation of the dollar dropped more than the valuation of gold rose? They could both be dropping, and you could still see what we see. The relative valuation of two fictions provides you absolutely no information about the real world. The function of any economy is to facilitate real world transactions.

If you can eat it it rots.
If you can wear it, it wears out.
If you can drive it, it breaks down.
If you can live in it, it will fall.
All things which have real human value are subject to decay.

If the money supply is static, and if the level of decay exceeds the production level of the economy, you have a net value loss, and the medium of exchange, which represents the value in the economy, will also lose value, whether it's shiny or not.

Fiat currency is just as much a lie as gold backed, but gold gains you nothing. If you are using paper and your government/economy collapse, you won't get gold out of it in either case. If you have gold on hand, it's only functional value is its ability to be converted to paper. Being stuck holding paper, especially in a fractional reserve system, guarantees you nothing, no matter what you think it's backed by.

^Gold backed money is a value backed currency. Coins made from panda shit are not.

Gold and silver are and have almost always been precious metals throughout the world and throughout time. Panda shit has never been nor ever will be.

Fiat currency has no value because there's no value added material backing it. A $20 bill in a fiat currency system is worth $20 of nothing. With a value backed currency, the money is always worth the amount in a valued asset. If I had a $20 bill in a value backed currency, I could trade it in for $20 worth of gold, because that's what the bill represents.

Gold and silver is currently worth $1004.80 per ounce and it continues to increase. Here's gold prices since 1968: http://en.wikipedia.org/wiki/File:Gold_Price_(1968-2008).gif

So, how can you say value of assets are declining?

>> ^blankfist:
the ability to "store" the value without manipulation from bureaucrats.

If I minted panda feces coins would you be willing to accept them as payment? They would certainly be rarer than gold coins, they no doubt would cost a lot to produce. These facts, the basis on which gold is claimed in the video to be intrinsically valuable, don't work for panda feces, because they don't work at all. That story is just a cover for the hidden assertion that value can be losslessly stored, but it can't, physics won't allow it.

Whether you use controlled creation of fiat currency, or some arbitrary rare material makes no difference, you are still engaging in the fiction that work done 100 years ago is as valuable as work done yesterday, it's not, and never will be.

Using the videos analogy, if the milk the bill represents rots, then the bill is worth rotten milk, no amount of shinny will overcome the fact that the value of all real assets is constantly in decline. Trading in shiny metal does no more to mitigate these realities of the market than using paper does.

Only the lie, the collective agreement to accept as valuable matters, because the "reality" of stable value is, of necessity, false.

>> ^GeeSussFreeK:
BTW, it doesn't even mention fractional reserve...what video where you watching?

A gold standard currency is still subject to a fractional reserve system, if a bank prints 10 $20 bills for every $20 worth of gold, you still have 90% fiat currency.

^Exactly, the gold and silver standard has its problems, but not nearly as many as fiat currency. Capitalism and free enterprise has its problems, but it's the best system we have. Until a better solution is offered, I want free enterprise and gold.

I agree with everything that was said here, but I would like to point out that the gold standard isn't the end of all end all's. It has its own share of problems, but those are smaller in comparison with the evils created by a fiat system. More over, a hard currency system remains in market hands instead of bankers and other extremely rich/powerful people. If you like deciding what something is worth, then you like a gold standard more than a fiat standard

BTW, it doesn't even mention fractional reserve...what video where you watching?

Edit: typo. I said a fiat currency remains in market hands, which is backwards from what I meant, and the truth

I just witnessed two counts of fraud.

Saying "that's the new $10 silver coin" is a claim to value as legal tender.

The coins are also composed of metals worth considerably less than their face value, this is really a semi-fiat currency run by a private organization.

This is a rebuttal without a rebuttal.

He even says in his little diatribe that gold has value because people except it as valuable, which is exactly what TJ said.

He also completely disregards the fact that the fractional reserve system predates state-fiat currency. Even on the gold standard most "money" is still just paper.

>> ^Psychologic:
I've never seen Paul or Schiff talk about the inherent deflationary nature of information technologies in the context of Austrian Economics, despite their constant talk of inflation. The price of a given amount of processing power or data storage drops by a fairly consistent percent per year (on average)... the same is true for dna sequencing, solar power, or many other high-tech devices.
Maybe they don't think it's a big deal, but I've never even seen them mention it. Austrian Economics were formulated well before the information age, so I'm curious how these new trends fit into it.


Metal melt values are always a good indicator about inflation over the long history of time. Let us look at penny melt values. This would be a relation of the fiat value of a penny vs the market value of the copper.

http://mises.org/images4/3069figure1.jpg

The worst part of this is that the penny has been changed every so often with less and less copper (other coins as well). Soon, pennies will be filled with steal as that is one of the cheapest metals you can have. After that, it is the end of the line for a penny. What graphs and graphs like this show ( you can look it up for gold, silver, and nearly any other rareish earth metal) and the trend is the same, metal is more highly prized over time than US dollars. This eats away until the system snaps (like back in the currency crunch of 33 when the government outlawed gold...forced you to sell gold so the treasury could have something real to give dollars value after the failed works projects of the 30s.). Fiat currencies and currency under control of central bankers tends to eventually undermine itself. The world is complex and full of players and vested interests and various other things that make prediction along a specific time frame hard. You could have massive investment of a foreign saver nation rescue a monetary system from collapse (IE China to the USA). But when the music stops for debt, the game is up, you have to face the monster your created. And like most things, the longer you wait to fix it, the worse it will be at that time if finally needs mending.

You are also talking about two different ideas. Because tech gets cheaper doesn't mean there isn't inflation. Technology is fairly different from things like, say food, or metal. New processes make something more efficient to produce over its life cycle. Chips become cheaper because of size. The smaller it gets, the cheaper it can be produced and as consequence, more of them can be sold per unit of silicon wafer. If you ever wandered why smaller is better it is because silicon wafers have to be manufactured circular, it is part of the physic's of aligning the silicon molecules properly. However, chips are usually rectangular. This means that you have to throw away all the edge pieces that don't line up to make squares out of the main circle. This doesn't just scale linearly; the smaller you make a chip, the more of the silicon you use.

The same is kind of true of other techs. Hard drives use a similar shrinking so that less can do more. But a building isn't going to use much less material than it did 20 years ago. Also, inflation is really hard to place effectively when you have the government interfering with prices. When you distort prices by government hand out, it is hard to know what the value of something is. Lets take houses for starters. When the government was handing out nearly free money for housing stuff, the market inflated. House prices when up by 50% a year in some areas. This bubble finally burst along with some other bad lone stuff. The prices of homes have fallen dramatically in most areas, but this isn't "deflation", this is a market readjustment.

In other words, the ideas of metals and stuff still apply to tech. Tech is neat in the way that new advancements mean you can do more with less. (same for DNA stuff, as tech gets more advanced, the less you have to play people and computer time to do the same amount of work).

As for their predictions, Shiffs has been saying for years watch out for the bubble burst. He also predicted that the stock and gold values would merge before we saw the end of the stock tumble, which it pretty much did.

By "tough on savers", what you mean is traders at the expense of savers. Traders are still free to trade in a hard currency system, they just can't wildly speculate...which has been a major problem anyway in terms of recessions and panics. How many times have savers caused an economic downturn vs how many massive speculations, panics, contagions sown by freeish money made available through government fiscal policy and lose central banking.

You are right though, there is an incentive to destroy the environment for hard currency when that currency is gold. Look at Zimbabwe, they are destroying their rivers and other live giving infrastructure. You could use something other than metals, but really, metals aren't going anywhere, the are going to be mined milled and used in other areas. Not having them as a basis of currency isn't going to stop people from wanting gold, silver, oil or whatever we wanted to choose. In fact, it is BECAUSE they are valued and hard to obtain that we wanted to select it as a currency denomination.

As I see it, when you favor Fiat currency, the evils you make are inflation (which can be rightfully called a tax), larger business cycles, and the debt monster which will one day eat your currency alive when exponential growth is no longer possible.

SS is no answer to this at all, our current SS policy is a ponzi scheme. It requires more investors to pay out dividends to the old ones. At some point, that will bust, and to the detriment of everyone alive at the time to watch it.

In short, I think central bankers morgage the future for current gains. This is at the direct cost of the savers, they are being exploited the whole while. The recent bank bust is just more case to this. The savers forced to bail out the massive speculators. Not only does their money get debased, but they have to bail them out when massive speculation made possible by freeish money finally comes crashing down.