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sugarkang
07-16-2011, 01:00 PM
Ron Paul has lost his mind (http://www.salon.com/news/politics/war_room/2011/07/14/bernanke_ron_paul_is_gold_money). A sober take (http://www.thenewamerican.com/usnews/politics/8219-ben-bernanke-to-ron-paul-gold-is-not-money).

Oh, and as long as we think about "tradition," we might want to think about these two old sayings:
"As good as gold."
"Not worth the paper it's printed on."

Or just look at the fucking chart from 2001-2011:
$250 to $1,600

miceelf
07-16-2011, 02:15 PM
And money is not time...

But yeah, this is a good find. Thanks.
Would you approve of someone on the left not supporting Paul for this reason?

sugarkang
07-16-2011, 03:01 PM
And money is not time...

But yeah, this is a good find. Thanks.
Would you approve of someone on the left not supporting Paul for this reason?

Look at the comments in the Salon article. The point isn't what Bernanke or Paul think about gold; they're both smart guys who happen to differ on ideology. The point is what the public thinks about gold. That part is terrifying.

Don Zeko
07-16-2011, 03:23 PM
The underlying assumption of Paul's argument and that second link Kang produced seems to be that increasing the value of your currency is, ipso facto, a good thing, and that losing value in your currency must be bad. But why is this the case? I mean, I'll grant that a more valuable currency is great if you want to buy stuff abroad or if you are a net creditor with debts denominated in dollars, but the flipside of that is that it would be terrible if you want to sell things abroad or if you are a net debtor. And in fact we're in a situation where consumer demand is weak because consumers have too much accumulated debt, and that we've also got a large trade deficit and weak exports. Why, it's almost as if a "strong" dollar is the opposite of what we need to fix our economic problems, and that's without getting into the horrible, horrible effects of a deflationary spiral.

sugarkang
07-16-2011, 04:00 PM
The underlying assumption of Paul's argument and that second link Kang produced seems to be that increasing the value of your currency is, ipso facto, a good thing, and that losing value in your currency must be bad. But why is this the case?

$250 to $1,600 over 10 years is 20% compounded interest.
By contrast, a NASDAQ index fund would've gotten you 7% over the same decade.

If you save $5,000 each year, these are your results after a decade:
GOLD = $186,000
NASDAQ = $83,000

The point isn't that we should go back to a gold standard. The point is that Bernanke and the other Keynesians are eroding your wealth and you're cheering them on. There is a grave misunderstanding as to what it means to be Keynesian. It does not mean Paul Krugman.

Keynesianism is interventionism for short run aggregate demand problems or liquidity traps or balance sheet recessions. Emphasis on short term. The long run rule is monetarism aka Milton Friedman. In the end Milton is always right. Though, the famous Keynesian quip is, "In the long run, we're all dead."

Don Zeko
07-16-2011, 05:24 PM
$250 to $1,600 over 10 years is 20% compounded interest.
By contrast, a NASDAQ index fund would've gotten you 7% over the same decade.

If you save $5,000 each year, these are your results after a decade:
GOLD = $186,000
NASDAQ = $83,000

What on earth does the fact that gold has appreciated have to do with the wisdom of Bernanke's monetary policy? Oil has appreciated dramatically too. So what? Commodities are commodities; their prices rise or fall for reasons specific to that commodity. South Africa could discover a massive new gold deposit tomorrow and cause the price of gold to crash. If that happened, would it mean that the Fed has been too tight after all? We have high unemployment, low interest rates and near-zero inflation. How do you get from that to a conclusion that we need tighter money and fiscal contraction?

The point isn't that we should go back to a gold standard. The point is that Bernanke and the other Keynesians are eroding your wealth and you're cheering them on. There is a grave misunderstanding as to what it means to be Keynesian. It does not mean Paul Krugman.

Keynesianism is interventionism for short run aggregate demand problems or liquidity traps or balance sheet recessions. Emphasis on short term. The long run rule is monetarism aka Milton Friedman. In the end Milton is always right. Though, the famous Keynesian quip is, "In the long run, we're all dead."

Man, I wish that Bernanke were eroding my wealth with higher inflation. If he were then we could have a lower real interest rate, less household debt, and therefore less unemployment.

sugarkang
07-16-2011, 05:41 PM
What on earth does the fact that gold has appreciated have to do with the wisdom of Bernanke's monetary policy? Oil has appreciated dramatically too. So what?
Quantitative Easing is just printing money. Even if it doesn't cause inflation in the short run, you end up debasing the currency in the long run. Why do you think there's been a gold run up? Part of it has to do with Europe, which you Democrats are so eager to become. Part of it has to do with "loose monetary policy."


Man, I wish that Bernanke were eroding my wealth with higher inflation. If he were then we could have a lower real interest rate, less household debt, and therefore less unemployment.
I should've gone into finance. Because then at least I'd be earning money off of you instead of trying to convince you that I'm on your side. I'll be moving along.

rfrobison
07-16-2011, 09:34 PM
If you save $5,000 each year, these are your results after a decade:
GOLD = $186,000*
NASDAQ = $83,000*

[I]*DISCLAIMER: Historical performance should not be taken as an indicator of future returns.

This is a public service announcement brought to you by rfrobison Investment Advisors

"We'll find a way to get your money--somehow."

sugarkang
07-16-2011, 10:07 PM
"We'll find a way to get your money--somehow."
What is it about Japan that refuses to inflate their currency? Do you follow monetary policy at all? Is it because they're expecting a whole bunch of people to just die off? I just do not understand that country.

rfrobison
07-17-2011, 05:01 AM
What is it about Japan that refuses to inflate their currency? Do you follow monetary policy at all? Is it because they're expecting a whole bunch of people to just die off? I just do not understand that country.

This is a difficult question to answer. The short version is that Japan is caught in a classic Keynesian liquidity trap: Interest rates are basically at zero. People expect prices to fall, which they've been doing, broadly, for the last 15 years or so. So they hold onto their cash, which in turn slows the economy and causes prices to fall further...

There have been calls for the Bank of Japan, the central bank, to adopt a formal inflation target and simply print money until deflation is reversed and the target is reached. This is easier said than done, however, when the banks are reluctant to lend and can earn a nice, risk-free profit just on the spread between Japanese government bonds -- the 10-year note currently has a yield of a whopping 1% or so -- and the even more derisory rate they pay depositors on regular savings accounts of around 0.1%.

Until Japanese investors begin shifting their investments to higher-yielding assets and the government does more to stimulate consumption with, say, income tax cuts, it's hard to see a way out of this problem.

A falling, graying population that has little appetite for risk-taking doesn't have the pull to bring in a slowly rising inflationary tide, it seems.

There is one upside, though. The yen is at a record-high against the dollar, which makes my trips home much cheaper!

Ocean
07-17-2011, 10:16 AM
There is one upside, though. The yen is at a record-high against the dollar, which makes my trips home much cheaper!

Should we reword that to say that the dollar is at a record low against the yen?

I mean, I could also say that the Uruguayan peso (http://en.mercopress.com/2011/06/02/us-dollar-looses-1.85-against-the-uruguayan-peso-in-may-7.44-in-five-months) is at a record high against the dollar. Funny.

And Uruguayan soccer (http://en.mercopress.com/2011/07/17/uruguay-the-spoiler-beat-the-favourite) is going strong too!

rfrobison
07-17-2011, 11:11 AM
Should we reword that to say that the dollar is at a record low against the yen?

I mean, I could also say that the Uruguayan peso (http://en.mercopress.com/2011/06/02/us-dollar-looses-1.85-against-the-uruguayan-peso-in-may-7.44-in-five-months) is at a record high against the dollar. Funny.

And Uruguayan soccer (http://en.mercopress.com/2011/07/17/uruguay-the-spoiler-beat-the-favourite) is going strong too!

It's a bit of both, I suppose. The yen has been on a fairly steady upward trajectory against the greenback for the last several years--decades, really.

As for Uruguay, I see from the U.S. State Department that it has had considerable economic success in recent years. From 2004 to 2008, it averaged annual growth of 6.5%. In 2009, growth slowed to 2.9%, and estimates for last year put GDP growth at 8.5%. Like much of Latin America, the country is probably sucking in a great deal of foreign investment, both direct (factories, etc.) and portfolio (stocks, bonds, etc.). Assuming that is the case, demand for the peso, relative to the U.S. dollar, has probably risen, which would tend to push the currency up.

Congratulations on your famous victory over the Galactic Empire of South American soccer, "La Albiceleste"!

Ocean
07-17-2011, 11:36 AM
It's a bit of both, I suppose. The yen has been on a fairly steady upward trajectory against the greenback for the last several years--decades, really.

As for Uruguay, I see from the U.S. State Department that it has had considerable economic success in recent years. From 2004 to 2008, it averaged annual growth of 6.5%. In 2009, growth slowed to 2.9%, and estimates for last year put GDP growth at 8.5%. Like much of Latin America, the country is probably sucking in a great deal of foreign investment, both direct (factories, etc.) and portfolio (stocks, bonds, etc.). Assuming that is the case, demand for the peso, relative to the U.S. dollar, has probably risen, which would tend to push the currency up.

Congratulations on your famous victory over the Galactic Empire of South American soccer, "La Albiceleste"!

Yes, Latin America has been doing well relatively speaking. Those left leaning governments have managed well, haven't they? :)


Thank you for the congrats on the soccer win. There have been many victories like that in the past.

Considering that Argentina has a population of 40M, and Uruguay has a population of 3.3M, it is quite impressing that they can pull such a good team.

Don Zeko
07-17-2011, 02:31 PM
Quantitative Easing is just printing money. Even if it doesn't cause inflation in the short run, you end up debasing the currency in the long run. Why do you think there's been a gold run up? Part of it has to do with Europe, which you Democrats are so eager to become. Part of it has to do with "loose monetary policy."


I should've gone into finance. Because then at least I'd be earning money off of you instead of trying to convince you that I'm on your side. I'll be moving along.

So we have assertions instead of arguments, pointless non sequiturs about Europe, and more assertions instead of arguments. I knew there was a reason I'd been refraining from talking to you.

rfrobison
07-17-2011, 07:07 PM
Yes, Latin America has been doing well relatively speaking. Those left leaning governments have managed well, haven't they? :)

After they abandoned traditional leftist statism and embraced free markets...

;)

But as Deng Xiaoping is reputed to have said, "It doesn't matter if a cat is black or white, so long as it catches mice." And you can't argue with the success of countries like Brazil and Uruguay...or Colombia and Chile in the last decade or so. Heck, even Mexico, with its dependence on the depressed U.S. market and bloody drug war, seems to have come right.

Now if the U.S. can learn something from its neighbors to the south, everything'll be hunky dory.