Tell Me About Gold And Economic Freedom

I hope this is not deemed as inappropriate. This is no way an advertisement. This is off of my weekly video series, but I'm sick of people responding that already support the return of a Gold Standard and who support abolishment of the Federal Reserve. Since I know that the majority of the people on this Board believe the contrary, then I figured I would get some incredibly interesting responses.

I'm confused as to whether or not a Gold Standard would work now, I'm leaning towards nay. However, people on these Boards for the most part are educated, and I want to get the scoop from all of you.

I can't wait to be given some references that I can read up on and some helpful understanding of this whole re-surfacing belief, especially among Ron Paul supporters -- whom I am becoming increasingly annoyed with.

Thanks folks.

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Should I have posted this entry there? Or is it alright here? Let me know. I figured it's current events related.

You'll find actual economics-type people there, which I think is what you're after. TheFuckOffKid (aka TFOK) owns that group, and (AFAICT) is knowledgeable - in the historical aspects as well as the current.

I'm guessing it's OK here, but the Lifestyle board might have been better. I don't honestly see it as current; I can't see any chance at all of a return to the gold standard, so Lifestyle probably fits it better. But I'm not an economist.

meh, I don't think I can remove it now. I don't want to double post. Oh well.

I want a pet unicorn.

I want genuine intelligent answers. Go figure.

I'll do that, but i thought for sure since my last post in which I talked about Ron Paul, a lot of people would be commenting about this. I was getting opinions left and right about how abolishing the Federal Reserve was a horrible idea, that the idea of a Gold Standard wouldn't work in the least and so on.

Now that I post up some information, a take and an open-ended discussion -- nothing at all.

Makes me wonder if people were just blowing hot air out of their ass or if they actually knew why they held such passionate opinions on the subject in the first place.

Oh boy, this would be fun to discuss anywhere but online.
Firstly, one must understand Objectivism to gain full insight into Greenspan's views while he was an Objectivist. More on that in a moment - in an oversimplified primer.

The publication "The Objectivist" was a monthly newsletter published by Ayn Rand, the author of Atlas Shrugged and heralded (incorrectly) as the creator of Objectivism. The publication continued until I think the early 70's and was later replaced by her own letter and she no longer accepted contributions from others.

I will take a lot of heat for this simplification, but Objectivism is the belief that in our world facts are simply just that; facts and should be taken, synthesized, and understood without benefit of "reason" or "emotion" or "desire." In its simplest form, the sun will rise in the east tomorrow, just as it always has. That is a fact and no amount of desire for something different is going to change that. Objectivism takes what I consider a gigantic leap from this point and suggests that everything on our earth should be viewed in the same way; devoid of emotion or desire.

It should come as no surprise that many software engineers are practicing objectivists - ones and zeros are absolutes.

With this simplified explanation as background, it's an easy leap to understand Greenspan's writing of the time; it captures the essence of fact. Metals are here forever, they have absolute characteristics, and these absolute characteristics are devoid of emotion or desire or whatever "soft" human characteristic you want to assign.

Then Mr. Greenspan woke up from his dream and began to understand that Ayn Rand wrote novels. Yes, it made interesting philosophy, but most philosophy is saddled with being a snapshot in time. I don't mean to say that most philosophy is bunk, it's just that the philosophical opines that we have forgotten and seemed so important at one time...were just that.

Fundamentally, what Greenspan finally came around to understanding was not that a precious metal should not be used as a standard, but that economics is woven into the fabric of our lives and we don't all live our lives the way John Galt "did," and we all must play fairly with one another. Gold is at the end of the day, a commodity, subject to the influences of commoditization. However, there is much more to this.

The past few years has seen the dollar devalued against other currencies including the Pound, the Euro, the Yuan, etc. Using gold as a standard, the US would have been forced to raise interest rates to maintain parity, spawning a certain, absolute, and rushed recession. Note that gold does not care if house values slide or fixed income investors get hurt or people lose their jobs or can't afford to drive to work or find the money to fight a war in Iraq. No one wants higher rates of unemployment.

The US economy would likely be hurt the worst and despite what Objectivists would like you to believe - you are the US economy - you would be hurt the worst - not some binary object in the ether.

In a gold standard based currency model the burden falls exclusively on deficit countries. Worse, righting a deficit situation when burdened with the entire load becomes nearly impossible - not because it's not mathematically possible, but because that thing Objectivists want to ignore "the human condition" will not tolerate the sacrifices that must be made. This played out in spades during the Great Depression. You might not be able to wait until the sun came up the next day, no matter the absolute nature of the event.

As Mr. Greenspan later learned, distributing the burden for adjustments between balance of payments, surplus, and deficit countries is the best approach. It's manipulative and it's risky, but it keeps the majority of us from living in a cardboard box under the viaduct. More importantly, it prevents the total collapse of fragile or developing countries whose resources and support the world needs.

My disqualifier. I'm an investment banker. I make money buying, selling, and merging companies in the technology space. You would think I would love Ayn Rand. The opposite is true.

Finally, there is just too little space here to give this the detail it deserves; I'm sure I introduced more questions than I answered.

There's always the simple fact that a lot of the people who want the gold standard think of the economy as a zero sum game, in which gold would be the perfect medium. But if you take some economics classes, you realize that the economy is dynamic, and the fed is indeed very good at optimizing the dollar given certain objectives.

Another thing that a lot of gold standard proponents often have is a high rate of savings, which is strongly favored by a gold standard. You can get gold and put it under the mattress, guard it with a shotgun, etc. The government can't easily track transactions made in gold. And the gold will inflate in value, without being in a bank, simply by value of a dynamic growing economy vs a (for the most part) static supply of gold

Gold is useful on an international scale, as an intermediary store of value though. The WTO, IMF, et al use gold as part of their operations. But in theory, the UN could always make "UN Bucks" and have the same effect.

Calm down, Cocheese. This isn't abortion rights or something. This is a relatively obscure and highly technical economic subject that isn't exactly debated often. You posted the thread five hours ago. Take a chill pill.

This, as usual from Adroitbeing, is highly informative.

The US has about $164 billion in gold reserves, but $820 trillion dollars worth of currency in circulation. What do you think would happen to the US economy if that currency was suddenly pegged to $164 billion worth of gold?

Would turn into



The German "milliarden" is the same as the American English "billion." That's one hundred billion marks. In 1923 it was about enough to buy a loaf of bread.

That's incredibly interesting about objectivism. I've never read Ayn Rand, but that goddamned book "Atlas Shrugged" seems to be making an appearance everywhere in research I'm doing, or I'll see someone reading it with a really serious look on their face. I figure I should read it myself to see what it's all about.

But, the whole fact without emotion shindig is exactly the way look at situations. I've told a number of people that I don't believe passion and emotion should be included in environments that thrive off of pure reason and unbiased fact. I get shouted out usually -- people love passion and they think it's a good thing. I always figured it as a blinding emotion; a wildfire. Maybe it's because of my experience in charismatic churches as a young man, I know first hand how ridiculously easy it is to get someone passionate and inspired about anything. Because of that, I figure it's best to stray away from passion and emotion and just stick to the facts. So, that's very interesting.


No, everything you wrote was really informative. I figured that is the way it would be with a gold standard now-a-days. See, but that just confuses the hell out of me even more.

I just don't like authority. I especially don't like an authority that controlls money, that is private, that is virtually unchecked and unbalanced - the Fed. That is my main discontent. So I keep wondering what to do to put it either under more scrutiny, or get rid of it.

I've had two pretty neat suggestions. One person said that getting rid of the Fed would just allow us to print our own money, which would mean it is no longer lent to us upon interest from the Federal Reserve. This means we don't pay anything back to the Fed and there would be no need for a Federal Income Tax, or at least it would be lowered exponentially.

Another suggestion was that the Fed no longer lend money upon interest, but on credit. But... isn't credit the same thing? Or am I just getting that out of whack.

Anyway, that's my journey right now. I don't think it's right that a private corporation that is in fact not at all Federal (about as Federal as Federal Express) prints OUR money and loans it to us. Then, almost 100% of our Income Tax goes back to pay the government's debt to the Federal Reserve. That's 35 cents of every dollar I make -- I don't appreciate it. All of my other direct taxes go to pay important things, and they're constitutional. The Federal Income Tax? Most of it is unaccounted for and what is accounted for can be traced directly back to paying off debt to the Fed. It's just silly to me.

Quite honestly, from the history that I've read, one of the primary reasons, if not the ONLY reason we sought freedom from during the Revolutionary War was directly a result of our discontent with an implementation of a centralized bank. And throughout history centralized banks were attemped, but always shot down -- Andrew Jackson for example shot down one of the first attempts at a centralized bank.

Yet, in 1913 a few private bankers meet in Jeckyll Island off the coast of Georgia (OMG I totally know where that is!) and during christmas break just decide to install the Fed.

To my reasoning, it seems ludicrous. I figure there is something fishy about it, although I don't have enough study under my belt to really provide a logical solution. I do think that there has to be a way to regulate more carefully the Fed.

It just doesn't sit right with me that a private corporation with no accountability could be allowed to control something as important as an entire economy. Well, not the ENTIRE economy, but you know what I mean.

Thanks again.