I think there's something really wrong with that line of reasoning. Gold is constantly being mined, and everything that's ever been taken out of the ground is still around. Historically, as economies have expanded, the demand for gold has skyrocketed. Maybe that wouldn't be the case in an economy where production is bleeding out. I don't know. I just know that too much gold was never been considered a problem in the 19th century.
I don't think we would have seen the growth in the US and the global economy had we stayed with gold backing the dollar. Of course, you could make the argument that the growth is false, since it is basically backed by promissory notes.
Here's a great article released recently by the WSJ about the gold standard -
https://blogs.wsj.com/marketbeat/2011/08/15/gold-standard-forty-years-gone-and-good-riddance/
I don't think money supply has been the issue with the decline in the US. As stated in the article, economic power is shifting, and I believe we desperately need another business cycle to continue. Some economists suggest agriculture again, but I'm not sure how that would work with Brazil playing such a key role in this area now.
That's kind of like saying communism would be perfect...if human beings weren't human beings. The truth is, gold prevents the exercise of the kind of greed you're talking about. Fiat rewards it.
I think any monetary system eventually rewards greed, don't you? Also, has any monetary system or country using gold or backed by gold actually survived? I honestly can't recall from economics class and I don't trust wiki.
But you're not seeing how under-production is the other side of the coin.
Are you familiar with Say's Law? Supply constitutes its own demand.
I understand what you're saying, but I take it you're also familiar with Keynes, though, right?
Nothing wrong with believing in either side. In fact, I probably reside somwhere in-between, depending on what level you're talking about. I'm just glad there's people on here who understand at least the basics of economics.
My economics is very common sense level, but I get the impression that the business cycle you're talking about is a feature of central banking. It's not real per se, or atleast not a necessary phenomenon.
With or without a central bank, I think you'll always have these cycles. As stated earlier, though, I believe you are correct in that most of the times the central bank will try to control the business cycle, extending or kick starting it. I don't mind them governing, but they've gone above and beyond over the past 10 years (but is it really their fault?).
Somewhat agreed. The problem is the exit plan. There seems to be none, unlike past situations.
...which is cooking the books on a mindnumbingly huge scale.
I want the books for China. I've read and heard from people on reuters and cnbc of them cooking their own books, so much that they're actually bankrupt. One article suggested they put their debt into companies started by the government. Must be nice to shovel tons of debt into a company you can use to write that debt off over time.
Not sure how that works out in the end, but they could be in a bigger problem than what most realize.
If they want things to move forward, they need to remove hurdles to production. Period. Money is nothing without something to buy with it, i.e. something to be traded.
Just want to understand your thoughts...do you think just because something is produced someone will buy it? Or do you think it's because prices are inflated and if companies produce more then it will lower prices and people will buy more?
I'm just firing this off in my last minutes of work, but I'll get back to it in more detail later if I've opened a can of worms.
No cans of worms opened, just good discussion.
