Greenspan debunked the gold standard?

[Daal]

"Mr. GREENSPAN. Mr. Chairman, so long as you have fiat currency, which is a statutory issue, a central bank properly functioning will endeavor to, in many cases, replicate what a gold standard would itself generate.

If you take the period in the United States where the gold standard was functioning as close as you can get to its ideal, which would be from probably 1879 probably through the turn of the century, you had a number of business cycles in that period. And in many respects, they had very much the same characteristics that
we just observed in the last couple of years: the euphoria that builds up when the outlook improves and people overextend themselves and the markets shut them down.

Well, what shut down the market was the very significant rise in real, long-term interest rates in 1999, and in that regard, that is the way a gold standard would have worked. So I would submit to you that the presumption that if you have a hard currency regime, you will somehow alter human nature any more than a fiat
currency one will, I will suggest that that does not happen."

What the gold bugs make out of this?His argument is pretty interesting

 

[gnome]

The best lie is one couched within a bit of truth.

Greenscam debunks any ties of currency to gold because that's what is necessary for the Fed to do its primary function... create inflation.

 

[dhpar]

Quote from gnome:

The best lie is one couched within a bit of truth.

Greenscam debunks any ties of currency to gold because that's what is necessary for the Fed to do its primary function... create inflation.

so true...

 

[Daal]

Come on guys, I expect some real arguments from smart people like yourselves.
The cpi might be a bad statistic yet even as bad as it is, mischief in the 70's made it go to double digits, volcker and greenspan did bring those numbers down however badly they are calculated they did it and deserve the credit.
Bubbles exists ever since people started to trade and if you go blaming greenspan everytime we have one you dont understand human nature

 

[gnome]

You're talking about the "tree"... suggest you consider the "forest".

America had no inflation before the creation of the Fed in 1913. Since then, the $USD has lost between 94-99%, of its buying power, depending upon reference.

That is ALL the doings of the Fed and Gummint deficit spending. Those are the shenanigans they pull with the money... creating bubbles both intentionally and accidentally.... couldn't do any of that with a gold standard. That's why we don't have one.

Early in his career Greenspan advocated a gold standard just so what has happened, could not. Then he "got political", changed his view, and became "Greenscam"!

Remember that old saying, "... but you can't fool all of the people all of the time..."? The Powers have come pretty close.

 

[Daal]

Quote from gnome:

Since then, the $USD has lost between 94-99%, of its buying power, depending upon reference.

This doesn't tell the whole story. At the same time the US became the richest nation in the world and attracted more foreign capital than all other countries(a huge sign of confidence) all of that without classical gold standard. Not saying it would be a bad thing if we had it but nothing is black or white like that.
The same people who advocated it were the people saying the fed should have done nothing in the great depression in order to 'cleanse' the system and I dont think that would be desirable at all

 

[gnome]

Quote from Daal:

This doesn't tell the whole story. At the same time the US became the richest nation in the world and attracted more foreign capital than all other countries(a huge sign of confidence) all of that without classical gold standard. Not saying it would be a bad thing if we had it but nothing is black or white like that.
The same people who advocated it were the people saying the fed should have done nothing in the great depression in order to 'cleanse' the system and I dont think that would be desirable at all

There is NO MORE IMPORTANT story. By the time the inflation/currency debasement has run its course, nearly all of Americans will be bankrupt.... and the Fed will have contributed mightily to it.

My most optimistic hope is that the fiat money system does not collapse during my lifetime. (Oh, we'll still have our "money"... only it will take boatloads of it to buy anything... that's technically bankrupt.)

 

[dhpar]

Quote from Daal:

This doesn't tell the whole story. At the same time the US became the richest nation in the world and attracted more foreign capital than all other countries(a huge sign of confidence) all of that without classical gold standard. Not saying it would be a bad thing if we had it but nothing is black or white like that.
The same people who advocated it were the people saying the fed should have done nothing in the great depression in order to 'cleanse' the system and I dont think that would be desirable at all

I don't get your point. Similarly we had WW2, AIDS, environmental damage etc. without the gold standard.
Do you try to imply that US would not fare as good as it did without gold standard?, i.e. that economy works better with inflation than without it? Then prove it.

 

[JamesVU2000]

Governments need a standard in order to prevent complete currency debasement. Right now the world is in all out print-a-thon to see who can debase theres the quickest. There was a reason why the gold standard existed.

 

[gnome]

Quote from JamesVU2000:

Governments need a standard in order to prevent complete currency debasement. Right now the world is in all out print-a-thon to see who can debase theres the quickest. There was a reason why the gold standard existed.

There is lots and LOTS of history on this. It always, always, ALWAYS, A-L-W-A-Y-S ends up with the people getting hosed!

Anyone who defends the Fed either:

1. Knows little of history

2. Knows less of economics

3. Is a crook at heart, or

4. Is a FREAKIN' MORON!


As mentioned in earlier post, Greenscam once advocated a gold standard. Then he decided he wanted "in on the party" and changed his view... so that he could milk the public purse for his own benefit.

Milton Friedman, rest his soul, once claimed "The Fed should be abolished... and be replaced with a computer which increases the money supply by the amount of the growth in the population... about 2% per year..."

Later he claimed, "The Fed is doing a fabulous job". (I suspect the Gummint had kidnapped his grandchildren to get him to change his view....)