finance based economy

US markets seems to be shrugging off scandals over scandals, without investors losing faith in the important economic system for investing and making savings grow.

Specialists, mutual funds and corporate powermongers - even stock exchange top-dogs - all seem to radiate honesty and trust to investors.

Tough for the kids who lost their college funds, or retirees who lost their savings or pension fund.

Corporate america is booming though. :)

What happened to good old honesty being a cornerstone in a sound and efficient capitalist system. Perhaps the top leaders, and varying personal/family goals, are biasing/inspiring everyone on Wall Street to fend for themselves in more aggressive ways.

Law and order in a finance based economy is famously difficult to uphold, with court cases being simplified because of difficult and complicated evidence - often obscured by many loops and leaps in corporate structures.

The lack of fairness in foreign financial/political dealings seem to be reflected in national financial/politics as well.

Personally I stay away from conflicts with the law, but also seek out conditions/locations more favourable to myself - especially with regards to taxes, costs etc. Outright crookedness in financial markets is perhaps an unfortunate side of the get-rich-quick, shortcuts-are-best cultures and expectations. The continous shocking thing however, is that the biggest financial institutions/players are some of the worst perpetrators, and they just continue to buy their way out of jail. Nice legal system.
 
Printing Press History

Examples of Prior Attempts at Fiat Money Systems 20 BC - Roman Empire - After a highly successful period of empire building, Augustus, ordered mines in Spain and France to be mined 24 hours a day to support his tremendous infrastructure costs. Money was increased faster than production, however, creating inflation. He cut back on coinage, but later his stepson put coinage into government coffers, which was eventually abused by emperors that followed him including: Caligula, Claudius, and Nero. Their lavish spending on consumption, (sound familiar?) wiped out most of Rome's riches when Nero got the idea to debase the currency in 64 AD by putting less silver into coins. This allowed the emperor to continue his lavish spending, building increasingly large trade deficits with Rome's colonies, and causing the wealthy to either hide their wealth or flee from the confiscating government. This did not have a happy ending as we now know.

910 AD - China experiments with paper money - It takes several hundred years but the system is abandoned due to unacceptable levels of inflation as money printing exceeded production.


1500'S - Spain gathered gold from Mexico and the new world, becoming the richest nation in the world. Instead of developing their own economy they sent gold to trade partners in a consumption orgy not dissimilar to the US today. Then they went on a military rampage to extinguish pirates, (terrorists?) in an imperialistic march into other lands, dropping any distinction between terrorists, (I mean pirates) and the countries that harbor them. Their excessive consumption ran through their gold hoard, so they turned to financing the war with debt, bankrupting them.


1716 - John Law convinced France to use paper money and declared all taxes must be paid with it to gain acceptance. The idea snowballed and paper money became more desired than coin. It led to excessive printing, additional moneymaking schemes and fraud. Exaggerated values coinciding with money printing eventually blew up the system.


1791 - The French Government again tries its hand with a paper currency. The Government confiscated land from aristocrats and issued "assignats" which paid interest against the properties. Land was auctioned off in exchange for these notes, inflation rose to 13,000% by 1795. Napoleon ended the revolution and replaced the "assignats" with the gold franc, which set off over a century of prosperity for France. In the 1930's Socialists came to power and brought the Bank of France fully into the Government. They quickly removed gold backing of the currency and made the franc a managed fiat currency. In only 12 years the currency lost 99% of its value.


1853 - Argentina went on a gold standard and thrived for close to 100 years. A central bank was created in 1932, beginning a long downfall. Juan Peron took charge in a 1943 coup and depleted reserves causing trade to fall. Argentina continued on this path of paper money, falling from the eighth largest economy to a mere shadow of its former self, which it has not recovered from as of today.


1862 - Abraham Lincoln passed the Legal Tender Act allowing the Government to issue paper money, backed by nothing but government promises. A huge inflation transpired that caused the practice to fall out of favor until the Federal Reserve System was put in place in 1913.


1923 - Weimar Republic - After World War I, Germany, crippled from its loss in the war, was held accountable for its war reparations. The country was destitute so found no other choice but to simply print the money in massive quantities to pay the reparations. The result was the plundering of the entire middle class, wiping out all value of savings, and paving the way for Hitler in front of an angry public.

The US dollar went off the gold standard in stages:

1934 - President Roosevelt revalued gold from its official price of $20.67 to $35 an ounce in an attempt to print more money, with the hope that this would lift us out of the depression.


1944 - The Bretton Woods Agreement was made to treat the dollar as a substitute for gold, since a dollar was defined as 1/35th of an ounce of gold, which was pegged at $35 per ounce. The door was opened worldwide to print money; foreign nations could print if they had gold or US dollars.


1971 - President Nixon closed the gold window, ending convertibility of dollars to gold. This came about because the US was printing too many dollars and living beyond its means. Foreign nations led by France, recognized this and began demanding payment in gold, breaking the system as the US experienced a major gold drain.

The end has already been determined. History is bound to repeat itself.

Precious metals=preservation
 
Quote from CrimsonTyde:

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The end has already been determined. History is bound to repeat itself.

Precious metals=preservation
More...
Spoken like a true, pure capitalist. :)
 
A speech given in Washington D.C. in 1948 by Congressman Howard Buffett from Nebraska, father of the most successful investor of all times, Warren Buffett. The address was entitled “Human Freedom Rests on Gold Redeemable Money”:



“Our finances will never be brought into order until Congress is compelled to do so. Making our money redeemable in gold will create this compulsion. […] The paper money disease has been a pleasant habit thus far and will not be dropped voluntarily any more than a dope user will without a struggle give up narcotics. But in each case the end of the road is not a desirable prospect.[…] I can find no evidence to support a hope that our fiat paper money venture will fare better ultimately than such experiments in other lands. Because of our economic strength the paper money disease here may take many years to run its course. […] But we can be approaching the critical stage. When that day arrives our political leaders will probably find that foreign war and ruthless regimentation is the cunning alternative to domestic strive. That was the way out for the paper-money economy of Hitler and others. […] I warn you that politicians of both parties will oppose the restoration of gold. […] Also those elements here and abroad who are getting rich from the continued American inflation will oppose a return to sound money. […] But, unless you are willing to surrender your children and your country to galloping inflation, war and slavery, then this cause demands your support. For if human liberty is to survive in America, we must win the battle to restore honest money. […] There is no more important challenge facing U.S. than this issue – the restoration of your freedom to secure gold in exchange for the fruits of your labors.”
 
The disposable income numbers were reported on a monthly basis, up until 2-2.5 years ago.When the d.i. number hit zero,and then dipped into the negative range,on two reports,all of a sudden the d.i. numbers disappeared off the radar, never to be seen since.The 3% number was as a result of interest rate cuts,tax cuts,and misc. stimulous.Which was reported by an independant research firm on cnbc about a month ago.2.5 years ago the market was doing a pretty good Greg Lugainis impression,and the average family was so encumbered with debt,the fed had to to cut interst rates 13 times,to bring that part of the consumer base, that had no spending power,back into the economic equation.No disrespect intended,but do you really use the feds numbers for key information sources?If so, we'll never see eye to eye.goodluck.
 
Quote from hollywood:

The disposable income numbers were reported on a monthly basis, up until 2-2.5 years ago.When the d.i. number hit zero,and then dipped into the negative range,on two reports,all of a sudden the d.i. numbers disappeared off the radar, never to be seen since.The 3% number was as a result of interest rate cuts,tax cuts,and misc. stimulous.Which was reported by an independant research firm on cnbc about a month ago.2.5 years ago the market was doing a pretty good Greg Lugainis impression,and the average family was so encumbered with debt,the fed had to to cut interst rates 13 times,to bring that part of the consumer base, that had no spending power,back into the economic equation.No disrespect intended,but do you really use the feds numbers for key information sources?If so, we'll never see eye to eye.goodluck.
More...

hollywood,

You mention they "were reported..." Who reported them and what was the basis. The Fed numbers I looked at are found at:
http://research.stlouisfed.org/fred2/series/DPI/. Are we talking about the same thing or was the series you refer to based differently?

DS
 
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