What they’re doing now is a bit convoluted, but we can basically view it as flexible rate targeting. They’re trying to hit the inflation rate of 2%, they claim. In order to do that, the indefinite QE is the same amount of asset purchases every month. They claim in their press releases that they might adjust purchases upward, or downward, based on economic situation. What situation? They give a general outline related to the unemployment rate and inflation. Since they’re currently missing their target, with respect to both the unemployment rate and also inflation, one might expect that they would make larger purchases, but what do they do? Normally, nothing. They’ve revised the number once, and that was a fairly mild change. Bernanke has even been making noises about contracting again, when they’re missing both targets.
They’ve got a dual mandate. Both horns of their mandate would dictate more action, yet the trumpeter seems to be practicing the song of retreat. Bizarre. Totally bizarre. I’ve got this 1937 feeling…
So it’s pretty simple to do things differently. I would announce my target, let’s say, 6% NGDP growth. I would then make a conference in which I told the world that I’m targeting my internal forecast, which is to say, I’m going to make my purchases large enough to hit the target within six months. So, to oversimplify a bit, I would walk up to the podium and say something similar to this.
Level targeting makes up for past mistakes. I’m supposed to hit 6%. So if I only get 5%, then my target adjusts automatically so that I’m supposed to hit 7% the following time period. In other words, it punishes inaccuracy by forcing them to become more aggressive in hitting their target afterward. They can keep missing their 2% inflation rate target literally forever, and there’s nothing that forces them to adjust their aim. Level targeting would change that.
They make a lot of claims about how they might adjust purchases. I wouldn’t just make claims. I’d make clear promises about what I’d do if I missed, and then I’d take action to follow through with my promises.
I’ve asked you before but AFAIK never gotten a clear Yes/No answer:
Would not government investment in infrastructure – which is now far lower than it’s been for many years – be a far more certain and straightforward way out of economic malaise than this unprecedented monetary experiment?
I haven’t posted much in this thread, mainly due to the sheer quantity of text jayarod7 pumps out, but a few things jumped out at me:
You left out a fourth option: it can aid the private production of wealth. Government-built roads make it easier to move goods to where they are needed, facilitating the economic activity. Government-provided military and police forces mean that each company doesn’t have to hire on bodyguards and thugs to protect their interests from one other or bandits, freeing up capital to use for economic activity. Government-provided courts mean that each company has a fair recourse when a contract is broken; small companies have the some power (more or less) than larger ones in civil actions, because the government is bound to treat the parties equally, in a way that private courts are not.
Government is just a tool, it’s not a moral right or wrong. It’s good at some things, and bad at others. As a libertarian, my goal is to confine government to what it’s good at. Eliminating it entirely, or hamstringing it into ineffectiveness, is throwing the baby out with the bathwater.
It doesn’t really matter what the politician’s motive is, frankly. In a democracy, either an elected official provides what his constituents want, or he’s out of a job. If he wants to stay elected, then he must give the people what they want. This is a feature, not a bug.
No, our democratic system won’t produce ideal results for everyone, because not everyone benefits equally from any given action government takes. There’s no way around this with any system; whoever has the most power will benefit the most. In our system, that means majorities of voters, and to some extent the monied and influential. Who better to have the power than the people?
Voters aren’t no narrowly focused on their welfare check to ignore everything else the government is up to. Yes, it is possible for elected officials to use to deficits to finance goodies for the body politic, and that does happen. But it’s not some catastrophic out-of-control avalanche.
Hey, thanks, I think. As a self-described moderate liberatarian, I’d just like to say of jayarod7: this man does not represent us.
… And I apologize to any moderate libertarians whom I’ve accidentally insulted. I’ve decided to label fringe thinkers as “hyper-libertarians” though it now appears there are two or more hyper-libertarian schools, wildly disagreeing even with each other. :smack:
Oh yeah, libertarians are hopelessly factionalized. Some of the ideas are appealing to a decent chunk of people, but any actual influence on public policy is stunted by the disunified front presented, and the radical-fringe contingent that I find embarassing. Oh well.
“Hyper-libertarian” is a good phrase for the Murray Rothbard/anarcho-capitalist wing(s).
I have to wonder if it’s a chicken-and-egg problem: a disunified philosophy prevents candidates from getting elected, and the lack of elected candidates makes it harder to get people to fall in line with a party platform, which makes for a disunified philosophy.
If there were no centrist-left party, for instance, mightn’t people who vote Democrat now be just as Balkanized and squabbling, albeit in greater numbers?
What type of libertarian are you? Murray Rothbard was one of the most influential libertarian thinkers of the past century so for you to call yourself a libertarian yet reject Rothbard seems a little odd. Especially as your user name comes from the magnum opus of Rothbard’s mentor, Ludwig von Mises.
Did you support Ron Paul in 2008 and 2012?
Do you not support the Austrian school of economics and the explanations they provide such as the Theory of the Business Cycle?
I am honestly curious as to what type of libertarian you are. I am all of a large coalition of libertarians, but to reject Rothbard, reject Mises, reject Ron Paul, reject Austrian economics would put you way outside of what most people consider to be “libertarian”.
Yes. It’d also move him away from what many people consider the hallmark trait of many libertarians: “being wrong all the time about pretty much everything”.
P.S. any thoughts on the complete intellectual and empirical collapse of Austerity over the last three to four years?
The fiscal multiplier could be approximately zero. That’s plausible, and the more evidence I see, the more likely it seems that the spending multiplier is probably nothing, or at least in the neighborhood of relatively small values.
There is no proof. The evidence is compelling but indirect. But the fiscal spending multiplier would be approximately zero if the Fed’s “actions” – not just their obvious apparent actions but also their more subtle influence through their control of expectations, including any planned move they decide to forgo in response to spending – happen more swiftly and decisively than Congress’s spending projects. Which is to say that the Fed could work insidiously to undo any attempt at expansion through government spending, and they could do this work even if they give an outwardly benign appearance. The Fed might unmake all which Congress attempts to make.
I was pretty sure this was my response to you last time, but maybe I didn’t phrase it clearly.
I’m not opposed to fiscal spending on good projects, not at all, but I don’t think such spending is certain. I don’t think we can rely on that spending alone because the Fed gives every indication that the nominal economy is pretty much where they want it to be, and that they will destroy any other effort of recovery. The Federal Reserve is the problem. When Bernanke is making noises about contracting when they’re missing both their targets, then the Federal Reserve is the problem. I’m fine with a two-pronged approach, both fiscal and monetary, but I continue to insist that money is essential because the FOMC currently has their hands on the chain, and seem eager to yank it back at any time. That’s not a comfortable position for fiscal spending.
I reject anarchists of all stripes, left-wing and anarcho-capitalist.
Von Mises wasn’t an anarchist. This is a crucial difference. I can’t emphasize enough how strongly I reject anarchism.
No. I went with a pragmatic approach. No judgment on anyone you supported.
Not really. I think von Mises’ work has great value as political philosophy, but not so much as economics. I put more stock in Friedman and the Chicago School.
I don’t reject von Mises. Or Ron Paul, really. I don’t think a libertarian should be a pro-life absolutist, but I agree with many of his ideas.
I might not be orthodox enough for your definition, then. Up to you.
Put it this way: See the 2011 version of the Pew Political Typology. For the first time since 1987, “Libertarians” are now numerous enough to constitute a typology-category:
However, I think you’ll find most of these “Libertarians” either reject Austrian-school economics or, more likely, never have heard of it, and would never think of joining or supporting the Libertarian Party if they got one look at its platform, and would roll their eyes at the prospect of ending the Fed or Social Security. That is because moderate libertarianism and radical libertarianism are very different things, and differ in kind as well as degree.
Responding to facts like the empirical study I discussed that destroys the myth of deflation? If you ever become more like Human Action than Scott Sumner, the rest of us might enjoy a growing economy in the face of falling prices. (Or not since HA admits to being a Friedmanite. On Friedman, Mises had this to say: “Friedman is not an economist. He’s a statistician.”)
Maybe your smear on me would have more effect if you backed up your long-winded musings with empirical evidence in support of your claim that deflation “ruins an economy”.
You know, it says something very negative about society today that one can simply accuse one of favoring the gold standard and, without even entertaining his ideas, write him off as a lunatic. This is especially true as it is the case that virtually no so called “goldbugs” of today are advocating to a return to the gold standard as it existing in the 19th century.
Most on this post have conceded that central banks have made plenty of mistakes and have had to try new things and new policies as old policies have been demonstrated to lead to negative economic effects. And no one has any problem with trying new ideas and tinkering with monetary policy, but the mere suggestion that it might be better to have a commodity backing the currency or have the market set interest rates is immediately dismissed!
This is ridiculous. Hard money advocates have plenty of value to add to the national dialog whether you agree entirely with them or not. It is usually a sign of insecurity when people want to banish certain concepts from the national discussion.
Modern hard money advocates have improved significantly upon the gold standards of the past. Reforming legal tender laws, allowing competing currencies, eliminating the secrecy of central banking and bringing monetary policy under the Treasury department out in the open and many more eminently sensible ideas.
But you would have us believe that it is ludicrous to NOT have the mechanisms of monetary policy done in complete secrecy without any accountability. You think it is crazy and not even worth discussion to ponder whether or not our currency should have SOME link to something that cannot be multiplied as many times as those in power might desire.
I would say that you have swallowed some heavy doses of propaganda regarding the history of honest money and have a horrible understanding of the economic theory that supports it. There is nothing the economic and political establishment would want more than to have NO scrutiny and discussion about the Federal Reserve and honest money.
You know that has been a convenient excuse Krugman has been banding about as this quote has come back to haunt him again and again. It is fine to say he was quoting someone else, but it is completely clear that he obviously was agreeing with the quote!
If this was NOT the case he would have said something like “I disagree strongly with that assessment. That is a ludicrous concept to fuel a housing bubble rather than allow the ordered deflation of the Nasdaq bubble.”
He didn’t say this and to imply it was a joke only ignores Krugman’s history of similar statements and advocating of Fed credit expansion in just such a manner as Greenspan and, later, Bernanke undertook since 2001.
Here is a short article that backs up my assertion:
**As most readers will know, a collection of damning quotes has surfaced recently, exposing Paul Krugman, the doyen of the economic Left, as having been completely backward on the most material economic event in our generation: the housing bubble. My recent article on the subject, “Krugman’s Intellectual Waterloo,” has elicited some pretty heated rearguard apologetics, which, in the present article, I’d like to sum up and knock down.
The first quotes that surfaced are from a 2002 editorial by Krugman. This was followed by a cluster of even more damning 2001 quotes collected by Mark Thornton. The first editorial could be twisted, if one was inclined to twist, into something seemingly benign. The second wave of quotes is much harder to mischaracterize (which is not to say that the most unquestioning of Krugman’s devotees don’t try). The laziest tactic of the Krugman apologists is to only address the more stretchable 2002 editorial, and completely ignore the 2001 quotes. But not even that approach, if accepted, helps Krugman’s case, since the 2002 editorial is damning enough on its own, once the benign interpretations of Krugman’s apologists are shown to be nonsense.
One protestation offered has been that a quotation offered in my “Waterloo” piece omits the context, which shows that Krugman was “merely” quoting someone else:
“To fight this recession the Fed needs … soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”
The last sentence quoted reads in full,
“And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”
“Partisan misquoting!” the apologists cry. But lets pull the lens back even further, and add even more context by including the whole paragraph, and the one preceding it.
*"A few months ago the vast majority of business economists mocked concerns about a ‘‘double dip,’’ a second leg to the downturn. But there were a few dogged iconoclasts out there, most notably Stephen Roach at Morgan Stanley. As I’ve repeatedly said in this column, the arguments of the double-dippers made a lot of sense. And their story now looks more plausible than ever.
The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. [Emphasis added.]"*
So the first paragraph introduces the “double-dipper iconoclasts”, and then clearly states that he, Krugman, agrees with them. The second paragraph then outlines the “basic point” of the double-dippers, which again, he agrees with. And the basic point in question is that to “fight this recession the Fed … needs soaring household spending.”
Krugman then continues to say how the Fed would need to accomplish this goal, which again, he supports; he says that the recession needs to be fought with soaring household spending, which Alan Greenspan needs to induce by creating a housing bubble to replace the Nasdaq bubble. By writing, “as Paul McCulley of Pimco put it”, Krugman is not “merely” quoting another person; he is using someone else’s phraseology to express his own opinion.
Another protestation is that Krugman was saying the housing bubble won’t work, since later in the editorial he wrote,
“Judging by Mr. Greenspan’s remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman’s crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging.”
But this protestation completely ignores the fact that when Krugman wrote in the editorial,
“Despite the bad news, most commentators, like Mr. Greenspan, remain optimistic.”
and
“But wishful thinking aside, I just don’t understand the grounds for optimism. Who, exactly, is about to start spending a lot more? [Emphasis added.]”
he was clearly characterizing a housing bubble as an object of optimism, whether or not he thought it was possible. In other words, at best, Krugman could be interpreted as saying that it would be great if Greenspan could pull off a housing bubble, but that he, Krugman, doubts whether he’ll be able to accomplish such a worthy feat.
So it should be clear that the Fed causing a housing bubble in order to bring about “soaring household spending” was Krugman’s optimal situation, whether or not he thought it was doable at the time. Given the consequences of the housing bubble that did ultimately happen, that alone should be enough cause for the public to stop listening to this fellow.
Another question is, how did he see the Fed bringing about his optimal situation? He answered this question himself in a 2002 interview with Lou Dobbs (which can be found here, though not at the page originally linked to in Thornton’s collection):
“Low interest rates, which promote spending on housing and other durable goods, are the main answer. [Emphasis added.]”
This brings us to the key point that all the Krugman apologists egregiously ignore: namely that it would be surprising if such an arch-Keynesian economist as Krugman (he’s written extensively on what he has called “the greatness of Keynes”) didn’t adovocate a housing bubble to replace the dot-com bubble, since doing so would dovetail perfectly with basic Keynesian doctrine. As a Keynesian, Krugman should have wanted lower interest rates (as he actually did want, as is revealed by the previous quote). To quote Keynes himself,
“Thus the remedy for the boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom. (General Theory, p. 322; emphasis added, but the exclamation point is Keynes’s own.)”
To be true to his Keynesian principles, Krugman ought to have to welcomed the housing bubble, since to him
it was a good way to achieve his coveted “soaring household spending”, and
it was the likely result of Keynesianism-prescribed lower interest rates.
Now let’s take a look at some more recent and more directly damning evidence of Krugman’s pro-bubble economics. In my recent article, I pointed out that in Krugman’s 2001 editorial, he implicitly agreed with the Onion’s facetious call for a new bubble to replace the old one. In a brilliant comment left in Krugman’s own blog (which you can still read until it gets “moderated” (purged), as is the fate of many critical comments there), one “M Ingelmo” reveals, in a most devastating manner, that in 2009 Krugman explicitly agreed with the Onion piece.
*Mr. Krugman,
I don’t know if you were on the grassy knoll, too, but you certainly were in Spain in March, chatting with that most fervent of your admirers, Prime Minister Mr. Zapatero, and interviewed in the Spanish public TV channel.
Since these days a video is worth a thousand words, allow me to quote you and say: “guys, watch it for yourselves”. The program is about other things, innovation, and in Spanish (sorry), so go straight to the 35 seconds in the interview after minute 2:50. Under the Spanish translation I’m sure you’ll be able to hear the English original. Quite enlightening:
To be honest, a new bubble now would help us out a lot even if we paid for it later. This is a really good time for a bubble…
There was a headline in a satirical newspaper in the US last summer that said: “The nation demands a new bubble to invest in” And that’s pretty much right.
Not a piece of policy advocacy? Just economic analysis? Will it look like it to all your defenders and commentators here? Personally I am delighted with the words “pay for it later”; are we paying right now for the last one, advocated in 2002, or maybe not enough yet, Mr. Krugman?
If governments follow your “not-a-piece-of-policy-advocacy-just-economic-analysis”, (as it seems certain at least with ours), when that new bubble thus inflated eventually bursts, and we are “paying for it” in a few years time, what will you write in your blog then, Mr. Krugman?*
But perhaps the most instructive lesson out of all this is that, implicit in Krugman’s quotes, there is a big fat finger of blame pointed directly (and correctly) at the Federal Reserve. Krugman himself would only admit to blaming other factors for our present crisis. But, if
as any sane person will recognize in hindsight, the housing bubble was disastrous for the economy
as Krugman himself stated, the Fed can induce such a bubble by lowering interest rates, and
as the public record shows, the Fed did drastically lower interest rates in the time leading up to, and in the thick of, the housing bubble,
then according to the vanishingly few economic principles Krugman actually gets right, he should blame the Fed for the present crisis. Although somehow I doubt he’ll be supporting the “Audit the Fed” campaign, or Ron Paul’s Federal Reserve Transparency Act anytime soon.
As it turns out, Krugman’s apologists shouldn’t demand more context for his notorious quotes, since it only shines even more light on how confused and backward he is as an economist.**
What’s strangest about ideological libertarians is how gleefully so many of them jump into certain predictable mistakes, even after I explicitly warn them to be careful.
This is a paragraph from the post I wrote.
Emphasis added. I have another post where I make a similar distinction.
Yet this is how WillFarnaby carelessly glosses my assertions.
And of course, I didn’t say that. He didn’t even make it to the end of the sentence, let alone the paragraph.
And on preview, I see jayarod7 stands by his Krugman reading, since it has “has come back to haunt him again and again”. Amazing. Just amazing. The only reason why this still comes up is that people of the exact same ideological disposition as himself keep bringing it up. And he takes it as evidence that because people of the same beliefs as him also believe the same thing about this quotation, and therefore keep endlessly referring to it year after year, that somehow makes their beliefs stronger, because they’ve all believed the same thing and have talked about the same thing for so long. It’s a real issue because they keep talking about, and because they keep talking about, that’s proof that this is a real issue. This has got to be the single most hopelessly circular belief I have ever seen in my life.
Human Action, I don’t know what to tell you.
They don’t speak for you, and they don’t speak for all libertarians. I know they don’t. You know they don’t. There are other sensible libertarians and libertarian-ish people on the board. I respect your ability to distinguish your own moral concerns from practical matters. That’s a skill that not everyone has.
But it seems to me that the ideologues have indelibly branded libertarianism. This stain will never come off. Maybe my perceptions are wrong. I’m looking at it from the outside and maybe my vision is skewed for that reason. (Not to mention, I used to spend a lot of effort deliberately trying to stain the brand of libertarianism myself, because of my disgust at the sorts of attitudes that have shown up constantly in this thread.) I have some sympathy for certain libertarian ideas, but still, if there’s another, like, brand name you could find, a different label, a different flag to march under, that might be your best bet. Minarchist, maybe. Focus on that.
Or hell, that might be terrible advice. No special reason to listen to me.
I’ll continue to keep an eye on this thread if anyone has any honest questions, or if someone has evidence that one of my previous assertions was false. By which I mean one of my actual assertions, and not a strawman attack on something I never said. But at a certain point, after their behavior has been sufficiently documented, there’s not really any further use to keep contributing. Questions? Okay. Errors? Okay. But the ideological merry-go-round has to end sometime.
I think my views are far more in line with the facts but that is not important at this time.
I just want to highlight two things in particular. First is the absolutely fallacious notion that Hoover was some sort of “free market” laissez faire advocate who kept his hands off the economy. This was not the case at all. In fact, Hoover was tremendously interventionist.
As Murray Rothbard points out in his article “Herbert Hoover’s Depression”, the policies of Hoover were so interventionist that he has termed them “Hoover’s New Deal”. In fact FDR was more of a continuation of Hoover policies with only superficial rather than fundamental differences in their approach.
Read here:
The reason you should familiarize yourself with Austrian economic theory is that it offers the only complete explanation of the business cycle. If you don’t understand what causes recessions and economic downturns, how can you possibly understand how to fix them?
Keynesians might claim that the market economy is simply prone to fall into recession or that the business cycle is something that is inherent in capitalism.
They are entirely wrong. Instead of thinking how to solve a recession, you should be asking “what caused the bubble in the first place?”
There are two types of economic growth. There is sustainable, steady economic growth based on real production and the correct allocation of resources based on the price system.
Then there are economic bubbles where some factors are influencing loans and malinvestment such that resources are misallocated in the economy. This doesn’t just happen. The Austrian make the claim that it is the artificial lowering of interest rates which distorts the price of money and allows companies and individuals to get loans they otherwise could not have gotten. If you couple this with modern government’s habit of diverting resources and encouraging production of things like housing (the Community Reinvestment Act and other similar legislation) you get a horribly misallocated economy full of malinvestment. Thus the resources do not exist to complete all the projects that have been started.
The result of this is that a recession is inevitable. What we should do is allow the fastest possible deflation of the asset bubble and allow prices to adjust and the bad debt to be wiped off the books. There is a reason recessions are also called economic “corrections”. The economy must be allowed to correct for the mistakes of the boom period.
Both Hoover and Roosevelt abandoned this reasonable response to depressions and their interventions combined to create a fifteen plus year tragedy that could have been avoided had we only taken the approach we pursued in the Depression of 1920-21, an economic downturn so sharp, but also so rapidly resolved that it is merely a footnote in history.
For more information of this economic event, see Tom Woods article “Warren Harding and the Forgotten Depression of 1920”:
And lastly, I find it rather disturbing that you think it was a great policy for FDR to steal all the gold people privately owned. This is an outrageous act of tyranny! This cannot be excused and is one of the most reprehensible acts of any president in US history.
Even IF a president felt the need to detach the link of gold to the dollar, why should the American people not be permitted to keep gold? And for that matter, if gold is so worthless and unnecessary for the Federal Government, why do they keep gold at Fort Knox? What is the purpose?
As for that reprehensible act of FDR, here is the executive order in its entirety:
**Executive Order 6102
April 5th, 1933
BY VIRTUE Of the authority vested in me by Section 5 (b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933, entitled “An Act to provide relief in the existing national emergency in banking, and for other purposes,” in which amendatory Act Congress declared that a serious emergency exists, I, Franklin D. Roosevelt, President of the United States of America, do declare that said national emergency still continues to exist and pursuant to said section do hereby prohibit the hoarding of gold coin, gold bullion, and gold certificates within the continental United States by individuals, partnerships, associations and corporations and hereby prescribe the following regulations for carrying out the purposes of this order:
Section 1. For the purposes of this regulation, the term “hoarding” means the withdrawal and withholding of gold coin, gold bullion or gold certificates from the recognized and customary channels of trade. The term “person” means any individual, partnership, association or corporation.
Section 2. All persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve Bank or a branch or agency thereof or to any member bank of the Federal Reserve System all gold coin, gold bullion and gold certificates now owned by them or coming into their ownership on or before April 28, 1933, except the following:
(a) Such amount of gold as may be required for legitimate and customary use in industry, profession or art within a reasonable time, including gold prior to refining and stocks of gold in reasonable amounts for the usual trade requirements of owners mining and refining such gold.
(b) Gold coin and gold certificates in an amount not exceeding in the aggregate $100 belonging to any one person; and gold coins having a recognized special value to collectors. of rare and unusual coins.
(c) Gold coin and bullion earmarked or held in trust for a recognized foreign Government or foreign central bank or the Bank for International Settlements.
(d) Gold coin and bullion licensed for other proper transactions (not involving hoarding) including gold coin and bullion imported for reexport or held pending action on applications for export licenses.
Section 3. Until otherwise ordered any person becoming the owner of any gold coin, gold bullion, or gold certificates after April 28, 1933, shall, within three days after receipt thereof, deliver the same in the manner prescribed in Section 2; unless such gold coin, gold bullion or gold certificates are held for any of the purposes specified in paragraphs (a), (b), or (c) of Section 2; or unless such gold coin or gold bullion is held for purposes specified in paragraph (d) of Section 2 and the person holding it is, with respect to such gold coin or bullion, a licensee or applicant for license pending action thereon.
Section 4. Upon receipt of gold coin, gold bullion or gold certificates delivered to it in accordance with Sections 2 or 3, the Federal Reserve Bank or member bank will pay therefor an equivalent amount of any other form of coin or currency coined or issued under the laws of the United States.
Section 5. Member banks shall deliver all gold coin, gold bullion and gold certificates owned or received by them (other than as exempted under the provisions of Section 2) to the Federal Reserve Banks of their respective districts and receive credit or payment therefor.
Section 6. The Secretary of the Treasury, out of the sum made available to the President by Section 501 of the Act of March 9, 1933, will in all proper cases pay the reasonable costs of transportation of gold coin, gold bullion or gold certificates delivered to a member bank or Federal Reserve Bank in accordance with Section 2, 3, or 5 hereof, including the cost of insurance, protection, and such other incidental costs as may be necessary, upon production of satisfactory evidence of such costs. Voucher forms for this purpose may be procured from Federal Reserve Banks.
Section 7. In cases where the delivery of gold coin, gold bullion or gold certificates by the owners thereof within the time set forth above will involve extraordinary hardship or difficulty, the Secretary of the Treasury may, in his discretion, extend the time within which such delivery must be made. Applications for such extensions must be made in writing under oath, addressed to the Secretary of the Treasury and filed with a Federal Reserve Bank. Each application must state the date to which the extension is desired, the amount and location of the gold coin, gold bullion and gold certificates in respect of which such application is made and the facts showing extension to be necessary to avoid extraordinary hardship or difficulty.
Section 8. The Secretary of the Treasury is hereby authorized and empowered to issue such further regulations as he may deem necessary to carry out the purposes of this order and to issue licenses thereunder, through such officers or agencies as he may designate, including licenses permitting the Federal Reserve Banks and member banks of the Federal Reserve System, in return for an equivalent amount of other coin, currency or credit, to deliver, earmark or hold in trust gold coin and bullion to or for persons showing the need for the same for any of the purposes specified in paragraphs (a), (c) and (d) of Section 2 of these regulations.
Section 9. Whoever willfully violates any provision of this Executive Order or of these regulations or of any rule, regulation or license issued thereunder may be fined not more than $10,000, or, if a natural person, may be imprisoned for not more than ten years, or both; and any officer, director, or agent of any corporation who knowingly participates in any such violation may be punished by a like fine, imprisonment, or both.
This order and these regulations may be modified or revoked at any time.**
You excuse this type of executive action? It took nearly fifty years for private ownership of gold to be legal in the United States. If gold is so worthless at least regarding economic policy, why would governments feel threatened if the American people held all the gold? If adopting a fiat money system is so wise, why not allow the people to hold their own gold and, furthermore why not sell off the remaining gold at Fort Knox to private citizens?
