Obama sows seeds of demise

Re: Obama sows seeds of demise

PostBy: brckwlt On: Thu Apr 30, 2009 5:45 pm

jpete wrote:
brckwlt wrote:GWB isnt exactly a fiscal conservative, im not saying he was the messiah, we have him now. Id rather have GWB for 100 years compared to obamas first 100 days.


You're ALMOST there. :D

Just let go of the idea that one party is SLIGHTLY better than the other and you'll be a lot happier. :)


if we had a conservative party i would join that.

Im not saying republicans are a million times better then dems but maybe a half million times better
brckwlt
 
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Re: Obama sows seeds of demise

PostBy: jpete On: Thu Apr 30, 2009 6:02 pm

brckwlt wrote:then if it doesnt have to be that way how could it be. Like a socialist economy? please explain.


OK, I'm home and can go into this further. The market goes up and down because the money supply gets expanded. All those new dollars have to go somewhere.

See, I can ask for a raise, or my company can ask for a million dollars for it's product, but if the money doesn't exist, where will the increases come from?

Government prints money and inject it into the system. Banks loan it to businesses which start buying things. That stimulates demand. Demand stimulates prices. You see the rising prices and ask for a raise. Your company is getting it's million dollars for it's product so it gives you the raise.

All this "works" until the things start to get out of hand(like say $100,000 houses selling for $500,000) and the money supply gets shut off.

As we've seen, that's when the wheels fall off the wagon.

So why do governments print money? Because they like to buy things. Roads, bridges, tanks, countries. Whatever it is. But they can't spend money until they take it from the people in the form of taxes. If you don't have it, they can't spend it.

So they pump money into the system and business people do what they do....try to make more money. Maybe that's investing in a company with a sock puppet for a mascot or speculating on house flipping or trading derivatives. But everyone is happy because everyone is working. The politicians get reelected and the wheel goes 'round.

The fix is sound money. Something not easily counterfeited. Historically, that's been gold and silver.

Article 1 Section 10 of the Constitution says "Section 10. No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

The Constitution was well thought out. The words carefully chosen. "COIN" is different than "PRINT". They had done both and knew where paper money led. During the Revolutionary War, we printed "Continental Dollars". No one wanted them because they were just paper with nothing behind them. Lots of soldiers had a rough time at Valley Forge, not because there was nothing to be had, it was because as Washington said, "A wagon load of dollars will scarcely buy a wagon load of provisions."

And the second part about "no THING" but gold and silver was specified because it's the only thing which has proved through the years to retain it's value, be durable enough to be used as money, and can be verified as to it's value. Everything has been tried. Jewels, salt, spices, and sea shells. Nothing has lasted.

This is a bit disjointed but I'd be happy to expand on any/all of it if you'd like.
jpete
 
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Re: Obama sows seeds of demise

PostBy: brckwlt On: Thu Apr 30, 2009 6:07 pm

that all sounds like the economy we have no, works good the way it is
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Re: Obama sows seeds of demise

PostBy: jpete On: Thu Apr 30, 2009 6:09 pm

brckwlt wrote:that all sounds like the economy we have no, works good the way it is


You call this working good? You wouldn't rather have a stable economy rather than all the booms and busts?
jpete
 
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Re: Obama sows seeds of demise

PostBy: brckwlt On: Thu Apr 30, 2009 6:15 pm

jpete wrote:
brckwlt wrote:that all sounds like the economy we have no, works good the way it is


You call this working good? You wouldn't rather have a stable economy rather than all the booms and busts?


i like it just the way it is.

and i didnt see how what you explained was an different
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Re: Obama sows seeds of demise

PostBy: jpete On: Thu Apr 30, 2009 6:28 pm

brckwlt wrote:
jpete wrote:
brckwlt wrote:that all sounds like the economy we have no, works good the way it is


You call this working good? You wouldn't rather have a stable economy rather than all the booms and busts?


i like it just the way it is.

and i didnt see how what you explained was an different


The difference is a stable economy vs. an unstable one.
jpete
 
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Re: Obama sows seeds of demise

PostBy: KLook On: Thu Apr 30, 2009 6:57 pm

That was a great blurb about the economy jpete but it would take a lot of historical perspective to appreciate what you said by filling in the blank spots. I guess your favor going back on the gold standard? I think we should. What are the consequenses of doing that?
And I cant believe Jedbird thinks FDR improved the economy. He failed to rally the economy and only WW2 got us back on track. It was not a "spending program" in the sense of what we are doing now. This whole country changed what it was doing to ramp up for war. My aunts moved to areas with manufacturing jobs because women went to work for the first time in US history. The whole country rationed everything to help the war effort. I dont think you can compare not buying that new car as sacrifice equal to not what that generation did to make this country great. And there was no such thing as welfare to suck the system dry like there is now.

Kevin
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Re: Obama sows seeds of demise

PostBy: jpete On: Thu Apr 30, 2009 8:43 pm

KLook wrote:That was a great blurb about the economy jpete but it would take a lot of historical perspective to appreciate what you said by filling in the blank spots. I guess your favor going back on the gold standard? I think we should. What are the consequenses of doing that?


You're right, there is a whole lot of "back story" there. It was the best I could do while helping my wife with dinner and keeping the kids busy. :D

The consequences of a gold standard would ultimately be a stronger, more stable economy. I don't by any means think it could be done over night. There is so much malinvestment in the system now that things would be difficult for a while. We were gradually brought off the system, we'd have to gradually be brought back on.

I'm not so set in stone on a gold standard as I'd like to see massive tax and spending cuts. The Fed policy of 0%-.25% interest rate is exactly backward. They tried that in Japan in the 90's. It's called "The Lost Decade". All the people praising the status quo must never heard of it.

No one likes to take the medicine, but if we are going to get better, it must be taken. A very long recession/depression is the answer. Combined with cutting the government and NOT going back to an inflationary policy is the medicine we need.
jpete
 
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Re: Obama sows seeds of demise

PostBy: KLook On: Thu Apr 30, 2009 8:56 pm

I agree. I have read about the lost decade. Funny, saying that we need a recession/depression is almost sedition/blashphemy. But it will put the citizens back on a fiscally responsible track that has been lost by the "good times borrowing" and high gov. spending of the last 80 years. The trouble is that no gov. ever tries to get smaller and ours is no exception. I really cannot see it happening without some catastophic event occuring. Every day that passes we create more people that think we need more gov.

Kevin
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Re: Obama sows seeds of demise

PostBy: brckwlt On: Thu Apr 30, 2009 9:04 pm

jpete wrote:
You're right, there is a whole lot of "back story" there. It was the best I could do while helping my wife with dinner and keeping the kids busy. :D

The consequences of a gold standard would ultimately be a stronger, more stable economy. I don't by any means think it could be done over night. There is so much malinvestment in the system now that things would be difficult for a while. We were gradually brought off the system, we'd have to gradually be brought back on.

I'm not so set in stone on a gold standard as I'd like to see massive tax and spending cuts. The Fed policy of 0%-.25% interest rate is exactly backward. They tried that in Japan in the 90's. It's called "The Lost Decade". All the people praising the status quo must never heard of it.

No one likes to take the medicine, but if we are going to get better, it must be taken. A very long recession/depression is the answer. Combined with cutting the government and NOT going back to an inflationary policy is the medicine we need.


i dont think i get it yet, would we use gold to buy things? i thought our money was backed by gold anyway? or is that a myth.

I agree that the super low intrest rates right now is a very bad thing, but to say our whole economic way is flawed is just wrong. it needs to be worked on or fixed how ever you want to look at it. Maybe i just dont know enough about the history of our country but isnt this sort of how things always worked. If i wanted to buy a goat from you 200 years ago and they were selling like hot cakes then i would of paid a premium for it, if they sat around and no one was buying them then i could of got them for cheap. Maybe i need some more information as to what your talking about.
brckwlt
 
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Re: Obama sows seeds of demise

PostBy: KLook On: Thu Apr 30, 2009 9:10 pm

Our money is currently "fiat" money. It is only worth one dollare because the gov says it is. It used to be based in the gold standard and the silver standard. I read awhile back that in 1964 we had 15.3 Billion in gold in the federal reserve and we did not own one ounce of it because we had borrowed more then that from foriegn gov. It was in a video put up by one of the members here. We have been hughely in debt for many many years.

Kevin
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Re: Obama sows seeds of demise

PostBy: brckwlt On: Thu Apr 30, 2009 9:26 pm

KLook wrote:Our money is currently "fiat" money. It is only worth one dollare because the gov says it is. It used to be based in the gold standard and the silver standard. I read awhile back that in 1964 we had 15.3 Billion in gold in the federal reserve and we did not own one ounce of it because we had borrowed more then that from foriegn gov. It was in a video put up by one of the members here. We have been hughely in debt for many many years.

Kevin



i understand we have huge debt. but are you saying we dont own any of our own gold?
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Re: Obama sows seeds of demise

PostBy: KLook On: Thu Apr 30, 2009 9:34 pm

If I have $20 and I owe you $40 I don't own anything. This country has been in the red for years.

Kevin

It was not a video but a speech made my Barry Goldwater in the 64 pres. election campaign. It was a real eye opener and people ignored him then as they ignore our worse situation now.
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Re: Obama sows seeds of demise

PostBy: jpete On: Thu Apr 30, 2009 9:40 pm

brckwlt wrote:i dont think i get it yet, would we use gold to buy things? i thought our money was backed by gold anyway? or is that a myth.

I agree that the super low intrest rates right now is a very bad thing, but to say our whole economic way is flawed is just wrong. it needs to be worked on or fixed how ever you want to look at it. Maybe i just dont know enough about the history of our country but isnt this sort of how things always worked. If i wanted to buy a goat from you 200 years ago and they were selling like hot cakes then i would of paid a premium for it, if they sat around and no one was buying them then i could of got them for cheap. Maybe i need some more information as to what your talking about.


First, no we are not on the gold standard. Up until 1964, coins were actually silver. Dimes, quarters, and half dollars were all around 90% silver with copper and nickel mixed in for hardness.

After that, the assumption was that the dollar was backed by gold. That is, the government would buy and hold gold when it printed money. That's why we had places like Fort Knox. But the printing presses ran faster than we were buying gold and eventually, Nixon just did away with the system of valuing the dollar to the price of gold.

What we have now are "Federal Reserve Notes" or "FeRNs". They are backed by "the full faith and credit" of the US government. If we run out of those two things, what is the money worth?

And your goat story is correct. That is the law of supply and demand. But the other side of that story is, if you spend a lot of money on a goat, you don't have the money to buy some other item. Therefore, the demand for that falls and it's price comes down.

When the money supply is stable, you will get some fluctuation in prices. But it can't get too far out of control because high demand/high prices for one item means low demand/low prices for other items. And prices can't get too high because there is a limit to how much people will pay for a goat.

But in our current system, the Federal Reserve(which is A:Not a Federal institution and B:Not a reserve holding institution) prints the money out of thin air. If you do it, they call it counterfeiting. When they do it, it's "monetary policy". Go figure.

Now we know that part of the value of something is based on how much of it exists. An ounce of gold is worth more than an once of beach sand because sand is pretty easy to come by compared to gold. So if I start printing dollars out of thin air, and lend them out at 0%, that makes them pretty easy to get. So the value goes down.

When I want to buy a goat with my now lower value dollars, the farmer demands more of them for it. The price has risen. And it didn't go up because the value of the goat went up, it's the value of the dollar that went down.
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Re: Obama sows seeds of demise

PostBy: jpete On: Thu Apr 30, 2009 9:42 pm

brckwlt wrote:
KLook wrote:Our money is currently "fiat" money. It is only worth one dollare because the gov says it is. It used to be based in the gold standard and the silver standard. I read awhile back that in 1964 we had 15.3 Billion in gold in the federal reserve and we did not own one ounce of it because we had borrowed more then that from foriegn gov. It was in a video put up by one of the members here. We have been hughely in debt for many many years.

Kevin



i understand we have huge debt. but are you saying we dont own any of our own gold?


In order for us to go back to the gold standard, and cover the amount of money out there right now, gold would have to be roughly $6000/ounce.

As to how much, if any gold we still have, no one knows. They don't allow people into Fort Knox. I think it was sometime in the 70's was the last time anyone saw the inside of the vault.
jpete
 
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