Ron Paul Message on currency crisis

[Eric_Boyer]

True, but one of the best lessons learned from the Great Depression was to get off the gold standard.

Ron Paul wants to return to that

everything you said is false.

Sound money <> gold standard

 

[Eric_Boyer]

Weak people killed themselves.

your debate skills are weak

 

[TheDude]

everything you said is false.

Sound money <> gold standard

the gold standard prolonged and exacerbated the depression. This is not debatable

Backing money by a commodity is one of the most unsound financial ideas in the world.

 

[Eric_Boyer]

the gold standard prolonged and exacerbated the depression. This is not debatable

yes, it is debatable. but it is far too political to get into new deal programs on this board.

Backing money by a commodity is one of the most unsound financial ideas in the world. Every word I said was true

you have no clue what Ron Paul is advocating. The gold standard was a policy where men fixed the price of gold to money. He calls for an end to the monopoly on the dollar as currency, not to resetting a fixed price controlled by men in power.

you said nothing accurate

 

[TheDude]

Well, 100% for sure there'll more like Greece. Several have followed that same recipe,they were just a bit further along. Really, impossible for more not to get hit.

Eventually, even the US will too. But our being a sure thing, impossible debt semi-disaster situation eventually, does not mean it'll happen right away.

In fact, among the ugly duck pageants going, ours, as disastrous as it eventually be, is less ugly than many.

This may even help both our stock and the much larger bond market in the shorter term.
All smoke and mirrors though.

Pumping trillions of Monopoly money In to the market has done wonders for stocks...but even the worst economist knows it's not based on fundamentals.

Anyway, the US is resilient and will make it through this when it does finally hit.

Quantitative easing is really a simple asset swap where the fed bought longer term assets on its balance sheet and provide tons of potential liquidity for loans. Most economist assumed this would lead to runaway inflation. it didnt. In fact we cant get inflation to 2% becasue of - yep commodity prices (deflation)

It helped to fuel a stock recovery, rates fell and businesses could refinance debt at lower rates. The hope was to help banks increase loans. Where QE didnt meet an objective (but cant say it failed) is that simultaneously there were more stringent regulations on banks to tighten credit standards, hold additional capital (i.e. cash deposits at the Fed) and de-lever. In addition, the demographics of the US is aging and outside of student loans, the US households began to de-lever. There was no real demand for loans.

 

[TheDude]

yes, it is debatable. but it is far too political to get into new deal programs on this board.

No its not debatable. There were other factors to the casue (Smoot-Hartley, etc). But the gold standard did not prevent or soften but exacerbated the crisis

you have no clue what Ron Paul is advocating. The gold standard was a policy where men fixed the price of gold to money. He calls for an end to the monopoly on the dollar as currency, not to resetting a fixed price controlled by men in power.

you said nothing accurate

What? Do you even read his website?

Ron Paul website

http://www.ronpaul.com/fiat-money-inflation-federal-reserve-2/

Excerpt.

"If our money were backed by gold and silver, people couldn’t just sit in some fancy building and push a button to create new money. They would have to engage in honest trade with another party that already has some gold in their possession. Alternatively, they would have to risk their lives and assets to find a suitable spot to build a gold mine, then get dirty and sweaty and actually dig up the gold. Not something I can imagine our “money elves” at the Fed getting down to whenever they feel like playing God with the economy.

As you can see, inflation and fiat money are very seductive and beneficial to those at the top, and very dangerous to everyone else and the nation as a whole. That’s exactly what Henry Ford was talking about. He knew that every country that relies too much on fiat money is ruined sooner rather than later.

There is only one possible solution to the inflation problem: Stop creating money out of thin air. But we’re already in such a mess that the only way to have a real impact on the money supply is to increase interest rates so that people pay back their loans and borrow less money from the banks, which decreases the amount of money in circulation. However, higher interest rates might very well crash the economy. So the Fed’s current “solution” to overcoming inflation is… creating even more of it.

Fiat money is a dangerous addiction. Even if the Fed found a way to stop inflation, as long as the current system persists the temptation will always be there to resume pushing the easy money button. That’s why we need to get back on the gold standard and eliminate the Federal Reserve altogether."



For you to claim I know nothing about Ron Paul when I state exactly what is advocated on website, then you must be one of those who just like to sound "in the know" without providing anything of value. Tying anything to the price of a commodity is dumb. Especially a precious metal.

 

[DFWJC]

Quantitative easing is really a simple asset swap where the fed bought longer term assets on its balance sheet and provide tons of potential liquidity for loans. Most economist assumed this would lead to runaway inflation. it didnt. In fact we cant get inflation to 2% becasue of - yep commodity prices (deflation)

It helped to fuel a stock recovery, rates fell and businesses could refinance debt at lower rates. The hope was to help banks increase loans. Where QE didnt meet an objective (but cant say it failed) is that simultaneously there were more stringent regulations on banks to tighten credit standards, hold additional capital (i.e. cash deposits at the Fed) and de-lever. In addition, the demographics of the US is aging and outside of student loans, the US households began to de-lever. There was no real demand for loans.

But as you know, QE isn't really "just a simple Asset swap". About as far from that as we can imagine.

One asset, the bonds, are "real" while they are being purchased by newly created electric cash....which did not exist beforehand.

Basically trillions of cash created out of thin air.

The banks cash swells and they replace one asset with another, a din so e case with stocks or stock funds directly or indirectly. This floods the stock market with new money...which tends to make the market go up.
Again, artificially.

Meanwhile, The Fed balance sheet is 4x larger than it was just a few years ago.

And we won't even go into real govt liabilities....which are so high now that they. Really can neberbe repaid without so e outer worldly changes.

 

[Eric_Boyer]

No its not debatable. There were other factors to the casue (Smoot-Hartley, etc). But the gold standard did not prevent or soften but exacerbated the crisis

yes, it is debatable, and highly political.

and your fan site link is weak.

For you to claim I know nothing about Ron Paul when I state exactly what is advocated on website, then you must be one of those who just like to sound "in the know" without providing anything of value. Tying anything to the price of a commodity is dumb. Especially a precious metal.

considering you can't even properly source quotes and mistook a site that is clearly not Ron Paul's, you should go away and let the grown ups talk.

 

[zrinkill]

Lol .......... nope ......... this is a trap ........ not falling for it.

 

[Eric_Boyer]

I think it was pretty much nailed on page one. the core of this is political. the purpose of the video is to engage in political dialogue, specifically Austrian Economic Theory favored by extremely intelligent men like Nobel laureate Friedrich Hayek but I understand why some would prefer to debate a fan site controlled by who knows what.

 

[TheDude]

But as you know, QE isn't really "just a simple Asset swap". About as far from that as we can imagine.

One asset, the bonds, are "real" while they are being purchased by newly created electric cash....which did not exist beforehand.

Basically trillions of cash created out of thin air.

no the banks swapped long term assets (mortgages be it portfolio or MBS securities) for cash. That cash is held at the Fed as Excess reserves. You have to look at both sides of the equation. If "trillions were created out of thin air, where is the rampant inflation? Japan has >200% debt to gdp rate. why are they in deflation for decades.

The banks cash swells and they replace one asset with another, a din so e case with stocks or stock funds directly or indirectly. This floods the stock market with new money...which tends to make the market go up.
Again, artificially.

Meanwhile, The Fed balance sheet is 4x larger than it was just a few years ago.

And we won't even go into real govt liabilities....which are so high now that they. Really can neberbe repaid without so e outer worldly changes.

I wont deny that the stock market has been helped by QE, but that is a peripheral impact. The Fed Buys UST and conforming MBS. In fact they were taking down all production FNMA, GNMA and FHLMC MBS production for almost a year. It doesnt buy stocks.


The US Treasury liabilities (on/off bal sheet) are QE related. They pay for Social Security, medicare, defense, etc. That is completely different than QE The issues existed long before QE. You can make an arguement QE has softened that true impact by creating $200M of income to the Treasury.

The Fed "liabilities" are just bank deposits. Below shows the growth of deposits at commercial banks those deposits are cash(assets for the banks). The fed can shrink the balance sheet though reverse repos, term facility or outright asset sales.
pretty quickly. But new regulation such as the Liquidity Coverage Ratio forces Banks to maintain cash and UST.


Deposits vs loans

Deposits vs loans + excess reserves

And because the Feb balance sheet includes securities, it has earned interest on those securities that interest is distributed to the US Treasury as interest income. And with rates low, the projected deficit and Debt/service/GDp and Debt service/budget has shrunk.

 

[TheDude]

yes, it is debatable, and highly political.

and your fan site link is weak.



considering you can't even properly source quotes and mistook a site that is clearly not Ron Paul's, you should go away and let the grown ups talk.

I assumed he owned his name website. There are numerous examples out there - how about this interview.

http://www.cnbc.com/id/48782481

Do you as a highly intelligent -Nobel laureate loving guy think that there cant be a hording or run on gold, silver, corn, paperclips if one country returns to the gold standard and others across the globe maintain central bank monetary policy?

 

[Eric_Boyer]

Well how about this interview

http://www.cnbc.com/id/48782481

again with your return to the gold standard. it's laughable at this point. I'm not going to debate 20 second sound bytes when lectures and books exist explaining the nuances of the idealogy

a return to the gold standard means we are fixing the price of a dollar to gold. That is not the concept being advocated.

Do you as a highly intelligent -Nobel laureate loving guy think that there cant be a hording or run on gold, silver, corn, paperclips if one country returns to the gold standard and others across the globe maintain central bank monetary policy?

Do you think a concentration of wealth doesn't exist today?

 

[DFWJC]

no the banks swapped long term assets (mortgages be it portfolio or MBS securities) for cash. That cash is held at the Fed as Excess reserves. You have to look at both sides of the equation. If "trillions were created out of thin air, where is the rampant inflation? Japan has >200% debt to gdp rate. why are they in deflation for decades.




I wont deny that the stock market has been helped by QE, but that is a peripheral impact. The Fed Buys UST and conforming MBS. In fact they were taking down all production FNMA, GNMA and FHLMC MBS production for almost a year. It doesnt buy stocks.


The US Treasury liabilities (on/off bal sheet) are QE related. They pay for Social Security, medicare, defense, etc. That is completely different than QE The issues existed long before QE. You can make an arguement QE has softened that true impact by creating $200M of income to the Treasury.

The Fed "liabilities" are just bank deposits. Below shows the growth of deposits at commercial banks those deposits are cash(assets for the banks). The fed can shrink the balance sheet though reverse repos, term facility or outright asset sales.
pretty quickly. But new regulation such as the Liquidity Coverage Ratio forces Banks to maintain cash and UST.


Deposits vs loans

Deposits vs loans + excess reserves

And because the Feb balance sheet includes securities, it has earned interest on those securities that interest is distributed to the US Treasury as interest income. And with rates low, the projected deficit and Debt/service/GDp and Debt service/budget has shrunk.

No rampant inflation because new money was not reinvested into the economy at a rate that might be expected.

Do you have concerns that when the feds finally sell the assets they have accumulated, that interest rates will take off?
There is the risk, imo, but that's a bit hard to predict.

 

[TheDude]

Do you think a concentration of wealth didnt exist

again with your return to the gold standard. it's laughable at this point. I'm not going to debate 20 second sound bytes when lectures and books exist explaining the nuances of the idealogy

a return to the gold standard means we are fixing the price of a dollar to gold. That is not the concept being advocated.

tying the value of money to anything only shifts the confidence to underlying. Food is the only thing that is a necessity. Sitting with 400 Ferraris, 100 gold bars, $1m indexed notes issued by the govt wont do you a bit of good in many situations

Do you think a concentration of wealth doesn't exist today?

Do you think wealth concentration didnt exist with the Gold standard. unrelated

 

[TheDude]

No rampant inflation because new money was not reinvested into the economy at a rate that might be expected.

Do you have concerns that when the feds finally the assets they have accumulated, that interest rates will take off?

New money wasnt really created. The Fed pays banks .25% for excess reserves. Banks deposit money at the Fed. The Fed buys securities with cash. If the Fed stops paying interest on excess reserves, banks will remove money and buy securities.

There are multiple programs in place to keep this contained within the system. Also, the fed doesnt have to sell anything. In fact they are still reinvesting paydowns (MBS) and maturies (UST) into the securities. Most of the blance will roll off by 2019 as MBS average life is 7 years not 30

QE wont be the cause of a rate spike or inflation. Inflation is driven by wage growth or supply scarcity. Rates will be more impacted by global options, The Euro and issues in china falling will continue to have global investors attracted to the dollar and thus keep rates in check.

 

[Eric_Boyer]

Do you think wealth concentration didnt exist with the Gold standard. unrelated

it is related. hording exists in any system. We are certainly granted favorable status in this system. The chances of us running out of "paperclips" isn't the same as it is for say Greece, but you are wrong to think losers don't exist in this way of doing it.

 

[TheDude]

it is related. hording exists in any system. We are certainly granted favorable status in this system. The chances of us running out of "paperclips" isn't the same as it is for say Greece, but you are wrong to think losers don't exist in this way of doing it.

Who is "we"?

Then what did the gold standard do to prevent the Great Depression and income inequality in the 1920s (actually through most of the late 1880s to early1900s)?

.

Move to gold, bitcoin or cowhide - its all fiat. It still requires confidence in an underlying. That underlying is ripe for manipulation. The Fed is there to try to combat that. The bigger issue is that really no one knows how finance or the economy/monetary system works. Those that do, tend to profit from it. Those that dont, have all the quick answers

QE or the Fed are not creating spending problems and deficits. Spending, taxes, etc is the US Treasury completely different debate that has been around long before the 2008-9 crisis



I submit coming off the gold standard in 1971 is not a driver of any woes. The issue (depending on your view) is that productivity has continued and really skyrocketed in mid 1990s (computers/tech). You didnt need people to copy and collate and proof read, accounting green sheets, manual reconciliations, continued automation, etc. At the same time, in the early 1970s, you had a influx of new labor into the market from women entering the workplace. Immigration continued sending even more labor supply and more supply = lower price (wages). Free markets found even cheaper labor overseas and the US became a service industry and only a defense (govt subsidized) manufacturing industry.

The Euro is a flawed premise to begin with. You cant have a central currency without a central political governance. This is the same as having one currency in the US but no federal government.


Austrian Economics has been shot to hell with valid criticisms also, If you are such a proponent lets go down that road. Tell me why it is best and I will retort only on the theoretical premise, not political

 

[TheDude]

No rampant inflation because new money was not reinvested into the economy at a rate that might be expected.

Do you have concerns that when the feds finally sell the assets they have accumulated, that interest rates will take off?
There is the risk, imo, but that's a bit hard to predict.

Also, the fed wants inflation. We cant get to the 2% mandate. If it were that easy they would have done it. The issue is demand (wage) side is hard to control when the consumers have been de-levering (and aging). Coupled with slowdown and issues in Europe and China, the demand for the dollar (bonds, etc) remains strong globally.

Couple that with the required fixed demands form new banking regs and rates may rise, but I doubt we see a 6% 10 year Treasury in the next 40 years

 

[TheDude]

Has anyone watched the Ron Paul message on the coming currency crisis? It looks like it's a sales pitch for a report on how to weather the crisis. I was just wondering if anyone ordered the report. As of today the Dow is negative for the year and the S & P isn't too far behind. The weekly and monthly charts look pretty bearish.

currencies backed by commodities can be even more volatile than "fiats" dont be fooled. Just read what went on in Russia last year and Venezuela this year as oil prices have plummeted (less demand and same supply). These arent exactly pegged to oil, but serve as a proxy as being backed by it