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Vintage threads from the first ten years

More Evidence of BUSH hurting the Economy

5/9/2003 7:49 PM
LFOscalator	More Evidence of BUSH hurting the Economy Bush does not want a strong dollar: http://news.yahoo.com/fc?tmpl=fc&cid=34&in=business&cat=us_economy If you are wondering why prices of foriegn goods are on the rise then here is part of the answer. Our dollar can no longer buy what it used to thanks to GW. Inflation here we come. LFO

5/10/2003 8:11 PM
Kursad K	This happens when the economy is not competitive enough. The value of Turkish lira has never been high, because only a small fraction of the people have the skills needed for creating a competitive economy and the necessary capital for investment does not exist. I don't think that this is the case in US, so there should be another problem. IMO, what keeps (had kept) the value of US dollar high is monopoly over certain tecnologies. As long as monopoly does not sustain, strong dollar policy cannot not sustain either. This is not Bush's fault; it's just that others are catching up. Kursad

5/10/2003 8:11 PM

Kursad K

This happens when the economy is not competitive enough. The value of Turkish lira has never been high, because only a small fraction of the people have the skills needed for creating a competitive economy and the necessary capital for investment does not exist. I don't think that this is the case in US, so there should be another problem.

IMO, what keeps (had kept) the value of US dollar high is monopoly over certain tecnologies. As long as monopoly does not sustain, strong dollar policy cannot not sustain either. This is not Bush's fault; it's just that others are catching up.

Kursad

5/13/2003 12:48 AM
Mark Ingram	Since we are on the topic of currency and its value... I remember when Nixon took the U.S. dollar off of the "gold standard", that is, he took the dollar away from a fixed value as compared to gold, such as $200 per ounce, and allowed the currency to fluctuate, to rise and fall as it was/is traded on international currency markets, etc. My question is: WHY No one has ever given me a satisfactory answer. Can any of you help me understand how this helps a country? Mark

5/13/2003 12:48 AM

Mark Ingram

Since we are on the topic of currency and its value...

I remember when Nixon took the U.S. dollar off of the "gold standard", that is, he took the dollar away from a fixed value as compared to gold, such as $200 per ounce, and allowed the currency to fluctuate, to rise and fall as it was/is traded on international currency markets, etc.

My question is: *WHY*

No one has ever given me a satisfactory answer. Can any of you help me understand how this helps a country?

Mark

5/13/2003 2:00 AM
John Fisher	[QUOTE]My question is: WHY No one has ever given me a satisfactory answer. Can any of you help me understand how this helps a country?[/QUOTE] Because paper money in worth nothing. It is only worth as much as people put their faith in it. Therefore if there is ever a shortage of money, just print more. John Fisher

5/13/2003 9:34 PM
MBSetzer	I think John said it quite succinctly. I'll elaborate The removal of the gold standard was Nixon's way of correcting for the improved standard of living that wage-earners had begun to realize as they benefitted from the rapid increases in their productivity since the time that gold had become the mandated standard stable foundation of wealth. If something had not been done, it would have been only a matter of a few years before working people (auto assemblers are the prime example) had the collective financial power with their continued hard work combined with investment of the increasing portion of their income which was disposable, to outearn the old money capitalists whose investments are effectively passive financial moves. The Nixon Wage & Price Freeze was not enough by itself, remember the freeze was not in response to nationwide inflation (which had not become out-of-control before that), it was targeting wage earners for as much disadvantage as possible while gauging the relative benefits (still net pain) to capital markets. Nixon did not initiate the runaway inflation which devastated all but the most insulated fortunes, until he lifted the freeze. Selling the gold just accelerated the process and allowed more rapid permanent damage to those who stood to benefit most from hard currency, otherwise it might have taken more time than Nixon was expected to be in office, and that would have weakened their advantage over the taxpayers if a subsequent administration was allowed to trend back toward a traditionally strong citizenry unless a nearly out-of-control scenario was developed for them to inherit. The removal of the gold standard was so significant a catalyst for inflation mainly because of the dramatic redistribution of wealth which had occurred over the period of time from when taxes on income had first been levied - - up until the '70's by which time so much of wage-earners' wealth had been transferred to the fed, that the government was financially stronger than the citizens. Before income began to be taxed, the US was unique because the citizens were wealthier than the government, allowing Americans to achieve their well-known outperformance of all other economic systems over a number of decades, and benefit directly in proportion to their performance. Trickle-down economics is just the opposite of the reward system but it is a valid functional concept now, however there is some argument that the only things trickling down are those which originated from places & times before income was taxed. Anyway, with the abandonment of hard currency, along with the gold was sold the accumulated wealth of the average citizens, to those who could afford it at the time and in years since. These were mainly powerful overseas concerns, but experience has shown that the US-based firms which benefitted at the time also attach the same priority to the well-being of the average citizen that the foreign interests show :-\ Since then (especially now), the floating dollar is more profitable to speculate upon than gold (plus there's more dollars than gold to go around), and like other mere paper securities a savvy speculator can profit both when the price is moving up as well as down. Don't think its very much of a bonanza for curreny traders though, most of them need to do it just to break even. It's the working wage earner who loses each time the dollar breaks out of a trading range whether its excursion is higher or lower compared to the rest of the world, this provides the resource for the traders to break even with. Now the actual value of the wage-earner's dollar can suffer periodic tumbles in between stable periods, and the cumulative affect is the same as a continued inflation rate near the double digit level, but for the benefit of financial markets, the reported inflation numbers are looking historically good. Statistics can be interesting. With the gold standard the US didn't have to compare itself to the rest of the world, it would have been pretty stupid back then because there was no comparison to begin with, and with the head start the US had it never would have been possible for any other part of the world to exceed American economic power as long as the balance of economic strength between citizens & government were maintained in proportion to how they were before income taxes were levied. Hope this helps, Mike

5/13/2003 9:34 PM

MBSetzer

I think John said it quite succinctly.

I'll elaborate

The removal of the gold standard was Nixon's way of *correcting* for the improved standard of living that wage-earners had begun to realize as they benefitted from the rapid increases in their productivity since the time that gold had become the mandated standard stable foundation of wealth.

If something had not been done, it would have been only a matter of a few years before working people (auto assemblers are the prime example) had the collective financial power with their continued hard work combined with investment of the increasing portion of their income which was disposable, to *outearn* the *old money* capitalists whose investments are effectively passive financial moves.

The Nixon Wage & Price Freeze was not enough by itself, remember the freeze was not in response to nationwide inflation (which had not become out-of-control before that), it was targeting wage earners for as much disadvantage as possible while gauging the relative benefits (still net pain) to capital markets. Nixon did not initiate the runaway inflation which devastated all but the most insulated fortunes, until he lifted the freeze. Selling the gold just accelerated the process and allowed more rapid permanent damage to those who stood to benefit most from hard currency, otherwise it might have taken more time than Nixon was expected to be in office, and that would have weakened their advantage over the taxpayers if a subsequent administration was allowed to trend back toward a traditionally strong citizenry unless a *nearly* out-of-control scenario was developed for them to inherit.

The removal of the gold standard was so significant a catalyst for inflation mainly because of the dramatic redistribution of wealth which had occurred over the period of time from when taxes on income had first been levied - - up until the '70's by which time so much of wage-earners' wealth had been transferred to the fed, that the government was financially stronger than the citizens. Before income began to be taxed, the US was unique because the citizens were wealthier than the government, allowing Americans to achieve their well-known outperformance of all other economic systems over a number of decades, and benefit directly in proportion to their performance. Trickle-down economics is just the opposite of the reward system but it is a valid functional concept now, however there is some argument that the only things trickling down are those which originated from places & times before income was taxed.

Anyway, with the abandonment of hard currency, along with the gold was sold the accumulated wealth of the average citizens, to those who could afford it at the time and in years since. These were mainly powerful overseas concerns, but experience has shown that the US-based firms which benefitted at the time also attach the same priority to the well-being of the average citizen that the foreign interests show :-\

Since then (especially now), the floating dollar is more profitable to speculate upon than gold (plus there's more dollars than gold to go around), and like other mere paper securities a savvy speculator can profit both when the price is moving up as well as down. Don't think its very much of a bonanza for curreny traders though, most of them need to do it just to break even. It's the working wage earner who loses each time the dollar breaks out of a trading range whether its excursion is higher or lower compared to the rest of the world, this provides the resource for the traders to break even with. Now the actual value of the wage-earner's dollar can suffer periodic tumbles in between stable periods, and the cumulative affect is the same as a continued inflation rate near the double digit level, but for the benefit of financial markets, the reported inflation numbers are looking historically good. Statistics can be interesting.

With the gold standard the US didn't have to compare itself to the rest of the world, it would have been pretty stupid back then because there was no comparison to begin with, and with the head start the US had it never would have been possible for any other part of the world to exceed American economic power as long as the balance of economic strength between citizens & government were maintained in proportion to how they were before income taxes were levied.

Hope this helps,
Mike

5/13/2003 10:09 PM
Skreddy	[QUOTE]blah blah blah Hope this helps,[/QUOTE]No. Now I'm more confused than ever. So we're supposed to believe that Nixon was trying to destroy the wealth of the common, working class American? Really? That was his motivation? I'm only giving you one chance to start making sense here...

5/14/2003 1:54 PM
earl	Good God!!!! Nixon only removed the price control on gold. The gold standard had been moot for many years. Your time line is all screwed up as well. With such opinions being asserted as fact it is no wonder people don't understand economics. It's not that difficult or complex or contrived or a conspiracy.

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