Re: US dollar: modern history

From: cantueso (cantueso_at_dieznet.com)
Date: 06/26/04 

Date: 26 Jun 2004 11:25:51 -0700

"smithaa02" <asdf@asdf.net> wrote in message news:<40dcd306_3@newspeer2.tds.net>...
> cantueso <cantueso@dieznet.com> wrote in message
> news:a76725c6.0406250029.e9bc05b@posting.google.com...
> > Jim Blair <see@sig.com> wrote in message
> news:<cbf48b$8o$1@news.doit.wisc.edu>...
> > > William F Hummel <wfhummel@comcast.net> wrote:
> > > >On Thu, 24 Jun 2004 15:28:46 +0000 (UTC), Jim Blair <see@sig.com>
> > > I though an out-of-date answer was better than none, which is what he
> had
> > > gotten so far.
> >
> > yes. this is a basic question. how do you justify getting off the
> > gold standard? sheer necessity? fig leaf ?
>
> The gold standard is complex... To start with, gold is fraudulent, because
> to act as a store of value it has to artificially inflate its price to pull
> itself away from the use market.

but you personify the metal. "it" has to ... ...inflate its price": I
would have imagined that the US, as the strongest buyer, would set
the price of gold.
 
> Thus it is fiat by being overvalued (like
> a paper note is overvalued in paper terms).

 I can understand the analogy, but there is a problem of proportion,
isnīt there?

> Put the other way, if gold
> was/is so wonderfull, then how can it exist as a currency, for everybody
> would go and use it, thus destroying the money supply. A silly
> contradiction!

"use" it, how? in jewelry?? or do you mean hoarding. maybe hoarding
would be a problem. there could be paper money covered by gold. I
understand that in war this would break down.

>
> But the gold standard is a good deal more complex then that. For nearly all
> of gold's life it has existed in fractional note and deposit form, such that
> there has never been a true gold standard to start with.

I know. partly policy and partly cheating and mostly both. that is the
way things are, but is it right to give it legal cover?

> The Central
> bankers and their private banks have been the creators of most money in
> these so-called 'gold standard' periods.

I understand. the fiat money gives governments very much, maybe too
much freedom of action (I live in Spain where wealth has broken out
like an epidemic, and there arenīt any people figuring out where all
the cash has come from.)

> The gold runs on public and
> private banks are mere recognizition of this fact. FDR and Nixon had little
> choice in dumping the gold standard.

> They were about to run out of gold
> reserves anyways (both were facing a run), so it was most logical to delink
> the dollar with gold at those times (any other president would have done the
> same).
>
> > and then: the US currency as world currency reserve: this means that
> > even hostile countries would be rather solidly tied to US decisions.
>
> ...and they don't like it. NK, Cuba, Venezuela and many other countries
> have been very loud in their complaints in how the present dollar reserve
> system is set up.

I did not know. I will look. (I talked to some low ranking soldiers
here who had not been in Iraq, but had had friends there who had told
them as thney told me: """they have a new shirt every day!!! in the
evening they take off their shirts and throw them away!!""" I could
just feel that it HURT them to see that kind of waste. )

  
> >
> > (as anyone can see, there seems to be some very basic thing that I do
> > not know or do not understand)
>
> I can't give you a rundown, but I know there are items that are. Oil is an
> example where many Arab countries sell it only for dollars, thus giving a
> huge windfall to the dollar.

buy a King and you have the oil. buy a President and you have the
bananas. I wonder whether in the medium run that would cause a moon
sheep to be elected to the presidency of the United States.

it does look scary.

thanks a lot. I learnt a lot.

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