This is the follow up to Apropos of Everything by Paul Brodsky. It was one of themost popular pieces we ever published in the Think Tank.
This is parts II and III:
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
"Dollar depreciation leads to higher inflation and ultimately forces foreign creditors to question their rationale and indeed their sanity for continuing purchases of U.S. Treasuries." -Bill Gross
Signs continue that European markets are getting tired. The Spanish and Italian stock markets, big beneficiaries of the sharp decline in their bond yields over the past few months are falling to the lowest since Feb 1. The European bank index is at a 1 1/2 week low after earnings reports from Commerzbank and Credit Ag (RBS bouncing although reporting weaker than expected earnings) were disappointing. This market action is in spite of the German IFO business confidence figure which rose to a 7 month high coming in a touch above expectations and Italian consumer confidence which bounced more than...
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April 21st, 2011 at 2:10 pm
Thoughtful answers to some of the points I made. (thanks for the link love Barry)
I agree for the most part with the flaws pointed out in the current monetary system. The part I’m not really on board with is – the gold standard substitutes in place of the rather arbitrary and volatile machinations of the Fed what I think are the fairly arbitrary and volatile machinations of gold investors, traders and speculators. (If you read any you know what I mean, plus… anyone remember Drew, Fiske and Gould and the Hunts?)
I also have a little difficulty with viewing permanent tight money, deflation, and the occasional panic and depression as a feature as opposed to a bug.
Finally, I think the adaptability of the fiat regime is underestimated – Volcker pulled it together in the early 80s, and when things get sufficiently hairy, the public demands a better system, and the political will emerges, there are a number of regimes short of an old-style gold standard that would bring effective transparency and discipline to bear.
For both political reasons and the legitimate issues, I feel on pretty solid ground saying that short of hyperinflation and complete collapse of the fiat currency system, central bankers would not willingly go back on the gold standard.
April 21st, 2011 at 2:52 pm
[...] – “Apropos of everything“. [...]
April 21st, 2011 at 10:31 pm
@ druce
I agree with your analysis of this goldbuggery. But there is one thing that bothers me. If the fiat system gets into trouble.
Do you think Bernake has the calyons that Volcker had?
April 22nd, 2011 at 7:23 am
@duaneteddy
Fear not and put complete faith in the man behind the curtain.
April 22nd, 2011 at 7:39 am
ha! Bernanke and Geithner are 1) academics 2) captured 3) view a little inflation as a good thing right now.
picture I have is it takes time, maybe this year you get some commodity inflation flowing into CPI, next year you get some yuan appreciation and stuff at Walmart is more expensive, there are half-hearted measures to reverse QE, banks and the Euro blow up, there’s more QE, more stagflation, maybe Bernanke’s successor or the one after gets in a big enough pickle to grow some cojones.
or the result could be even bigger dingbats and wingnuts get elected, and they don’t grow cojones and they run the printing presses, and we get wars, hyperinflation, and the collapse of the monetary system and the world as we know it.
hopefully more like a slow train wreck with time for people to take necessary painful steps.
April 22nd, 2011 at 8:57 am
The gold standard isn’t arbitrary! Why do you think God made gold shiny, heavy, and…well, GOLDEN?
If gold isn’t golden, then meaning doesn’t mean anything. And if meaning means nothing, then the concept of arbitrariness has no meaningful import. Either there is such a thing as arbitrariness, and gold isn’t arbitrary, or gold is arbitrary, and everything is meaningless.
YOU pick :)
April 22nd, 2011 at 10:11 am
if memory serves me – Moses after speaking to God – tossed & broke the Big10 Tablets upon seeing an image of a gold calf
April 22nd, 2011 at 12:20 pm
@lburgler :) “The whole world is an enigma, a harmless enigma that is made terrible by our own mad attempt to interpret it as though it had an underlying truth.” – Umberto Eco.
the most extreme gold bugs are builders of systems of unattainable ontological certainty and which usually rewrite the laws of human nature… they have always been around, always will, and have usually wreaked havoc when given the opportunity :).
April 24th, 2011 at 5:31 am
A gold standard would mean a huge loss of wealth to the banking system and a huge loss of power to congress. Both institutions will fight to the last man to prevent it.