US Money...

[Sukerkin]

Ah, I see that Crue is on-line at present. Excellent. I just wanted to ask what financial background you have as it is clear that you speak from an informed point of view?

For myself, I'm a qualified economist who (ever so briefly) worked in the sector before deciding that the whole corrupt kit-and-kaboodle was on a one way ticket to eternal boom-and-bust.

It is of interest {yeah, economics based pun attack } that we appear to hold almost entirely opposite views on this, admittedly heinously complicated, subject.

EDIT after re-reading and seeing that my words could be misinterpreted:
Just to be absolutely clear, all I'm asking here is what it is that you encountered in your background and study that has lead you down the 'other' fork in this economic road. I'm not attempting to begin any kind of 'my expertise is bigger than yours' contest :lol:.

 

[Cruentus]

Sukerkin,

If you are a qualified economist in that you have academic (undergrad or grad) or professional credentials (CFA, CIPM, CFP, etc.) then you are a step ahead of me. I have degree(s), but not in finance. My background up against a highly credentialed economist would be akin to putting my background in mathmatics against arnisadors (a mathmatician) because I tutered and taught high school mathmatics while in college. lol... in a nutshell I would metaphorically get my *** kicked in the long run if there were some sort of competition. However, as you know, credentials are just that; and opinions have to be backed by solid argument and proof regardless.

I simply worked in the industry for a couple years at what was at the time the worlds largest private bank. I was looking at getting credentialed and working on the analyst side of things, which would have required a relocation and some sacrifices that I was not willing to make at that time. So I instead worked on the financial planning and investment banking side. Beyond Series 7, 63, and insurance licenses, I don't have any additional credentials. I was interested at one time in taking it further, but I was not really satisfied with the whole thing and left the industry.

It was a good experience, however. I got to spend about a month and a half in NYC working and training. I got to rub elbows with some very brilliant analysts (both tech and fund.), and got access to good research that the ordinary person would have to pay for and I read up. I got a lot of good experience because our client focus was those with no less then 1 million (USD) of investible assets. I was really an investment banker rather then just a "stock brooker" or "insurance salesman" pawning off the latest annuity. I got experience diversifying assets in many different markets such as art, real estate, commodities, and currencies, as well as the normal stuff (stocks, bonds, mutual funds, etc.). I was not an expert on all of these topics; but I had the direct line of experts all over the world that I would tap into when a client needed something particular.

It was a rewarding experience, and I learned a lot. I would never go back to it, however. I work for the government now (hence you will notice I don't put a lot of quantitative personal details on the net anymore because I am limited in that regard due to my current job), and I am much more satisfied with my current work.

Sorry for the long answer, but you asked! No offense taken either; Though people should be respected for them, we both know that by itself, credentials don't make the argument.

That said, from what I have read and seen, people who look into this stuff (both the armchair economist and well credentialed one alike) tend to fall into 2 categories: those that want to move back to a commodity based monetary system, and those that feel that doing so would cause more harm then good.

Those that want to see currency backed by a commodity feel that would make currency more stable, and less corruptable. I tend to be more of an anarchist on this subject, and I start asking tough questions that get to the heart of the matter. So we go to a gold standard, but then 'who' decides how much the dollar, yen, yuan, peso, etc. is worth in relationship to gold, and by what standard? And why gold, and not moon rocks or poop of an endangered species? And so on, and so on. And I know that there are answers to these questions (I've looked them up myself), but the point is what it ends up boiling down too is that tieing currency to a commodity of an assessed value (with supply/demand of that commodity now in the picture) ends up being more arbitrary then even our current system. A countries wealth boils down to goods and services; a country is only as weathy as the quality/quantity of these. The value of currency is proportional to this, and remains so in our current fiat system where many economic factors can be not only considered, but can be traded in a marketplace; guided by the 'invisible hand,' yet controlled by a process. More complicated? Perhaps. But this is certianly is better then having a currency tied to a commodity that rises in falls with trends of supply and demand (like mining trends and practical usage) that have nothing to do with real socio-economic factors like employment rates, debt, or GDP. That, plus the added problems of rigidly fixed exchange rates and no way to adjust for risk, panic, and the rise and fall of various markets easily makes me wonder why we would even consider going back to a commodity based system again. Then there is the inevitable introduction to a social contract that would have to further regulate this process, and I am now nervous by the proposal.

The fact is, gold is just a metal. Paper is just thing as well. Neither matters any more or is worth any more then what the collective 'we' thinks it is worth. And that is based on the goods and services that we provide and trade. And backing a currency by a commodity doesn't change the fact that it is still only as viable as our traded goods and services; we accomplish only adding another variable into the mix. And that variable has its own set of problems.

People need to remember that we had major financial crisises while on the gold standard as well (in fact, ones that are worse then the current situation); and there is a reason why we moved to our current system in the first place.

But that is just my opinion; both agreed and disagreed with by people with much higher credentials then I!

 

[Makalakumu]

Here's how I understand it. The key to understanding the matter lies in understanding the nature of value. Right now, our money doesn't have a fixed value. It fluctuates based on the decisions of an oligarchy. This has massive implications to how economies function. The whole concept of "elastic currency" is an apologetic term.

So, what is value? Why does gold have value? Why does anything have value? Is value fixed? What items have a stable value?

My guess is that value is measurable in joules. I've been thinking about this a lot and it seems to make sense. The higher energy expended on both the supply and demand sides, the higher the value. Thus a rare commodity has more value because of the energy expended to get it out of the ground and because of the energy expended by those that need it.

 

[Bob Hubbard]

Last time a US President tried to shut down the Fed, and put the US back on a metal standard, he went to Dallas in a car, and came back in a bag.

I can't see now being any different than then.

Executive Order 11110 - Was It Good Night for the Federal Reserve?

 

[Makalakumu]

Last time a US President tried to shut down the Fed, and put the US back on a metal standard, he went to Dallas in a car, and came back in a bag.

I can't see now being any different than then.

Executive Order 11110 - Was It Good Night for the Federal Reserve?

Wow, just wow. I never knew about that. I knew that Kennedy was opposed to the Fed loaning the government money at interest, but I never knew that he took action against it.

 

[Cruentus]

Last time a US President tried to shut down the Fed, and put the US back on a metal standard, he went to Dallas in a car, and came back in a bag.

I can't see now being any different than then.

Executive Order 11110 - Was It Good Night for the Federal Reserve?

lol... interesting. However, I don't think his assassination was "orchestrated" by anyone but the lone shooter, but I guess that's a whole 'nother topic!

 

[Bob Hubbard]

lol... interesting. However, I don't think his assassination was "orchestrated" by anyone but the lone shooter, but I guess that's a whole 'nother topic!

That ones floating around here too a page or 2 back I think.

 

[Sukerkin]

Thanks Crue for your excellent post earlier in response to my query :tup:. If I'd had to bet on your background, I would have said it was in banking as your comments on how the system worked were very solid :rei:.

I'm, as you referred to, an Economics graduate and so I tend to look at the fiscal machine as just one part of the whole 'engine', allbeit a very important one.

You're quite right too that there is a sharp division of opinion amongst economists as to which would be the best course of action on 'money'.

For me, the most pivotal point is that money has to bear a relation to the actual 'worth' of the pool of goods and services in an economy. With the present fiat currency system, this is just not the case. Yes there are some checks and balances in place but these give the 'form' of regulation without the 'function'. Some banks just prior to the crunch were running absurdly low ratios of fractional reserve (1-30 or more in some cases the news reported).

This means that attempts to control the economy via monetary manipulation are doomed from the start - in essence the 'lever' is too unbalanced and induces huge effects in interest and inflation rates. These in turn destabalise the system and prevent a semblance of stable equilibrium being reached. Even Milton Friedman, the economist who 'invented' Monetarism, admitted that it just doesn't work (I linked to this in an earlier discussion).

Of course, decades ago, we had other problems too when we attempted to use demand-side measures (Keynsian economics). It's almost as if we should just leave the darned thing alone and let the seven-year cycles play themselves out as they will .

The big problems with the current international financial system are ridiculous fractional reserve figures, currency speculation and fiat money. What the calls for a Gold Standard type of money supply are trying to address is the latter but really its the first two that need calming down. They are the ones that cause the tidal surges and retreats in the fortunes of an economy and, for my money {yeah, fiscal pun attack !} are directly responsible for our current woes.

 

[dancingalone]

Let's say Obama does something really radical on January 21, 2009. He puts the US back on the gold standard, or the chick pea standard or whatever medium you choose. I'll continue to use gold for the moment to stand in for that medium... 'cause it's easy. (And shiny!) He sets the dollar as being equal to a given amount of gold. (or sneakers, or the letter Q...)

What effect would that have on both the US and the world economy?

I haven't had time to read this thread, but it's a situation that will never happen. The US doesn't have enough reserves to go back to the gold standard, and with all the deficit spending we're going through right now with the bailouts, it just becames less likely each day.

 

[Makalakumu]

lol... interesting. However, I don't think his assassination was "orchestrated" by anyone but the lone shooter, but I guess that's a whole 'nother topic!

Not to derail this thread, but there is so much forensic evidence out there that clearly shows there was more then one shooter it becomes an effort in disbelief to think that LHO was the "lone nutter" the government claims he was. There's a good thread on the Kennedy Assassination floating around in the Study. Check it out!

Now, back to your regularly scheduled programming.

 

[Cruentus]

Not to derail this thread, but there is so much forensic evidence out there that clearly shows there was more then one shooter it becomes an effort in disbelief to think that LHO was the "lone nutter" the government claims he was. There's a good thread on the Kennedy Assassination floating around in the Study. Check it out!

Now, back to your regularly scheduled programming.

Oh boy... :lol: I'll find one of the old threads on this and post some info if I have the time (if I didn't already years ago).

Sukerkin,

Awesome last post; you explained the problems with our current system very well!