Just throwing in petrodollars - which aren’t any kind of currency - as something to be talked about in a conversation about a gold standard is enough to make us leery of anything else you have to say.
Now, admittedly, a fiat standard is indeed extremely profitable while a gold standard would immediately send the entire world’s economy into a depression. Most of us, however, think profitable is therefore a good thing.
But you fascinate me strangely. Please tell me how in this or other any world the Arab countries stopping denominating oil in dollars would help the poor be less poor, since that seems to be the point of your harangue.
On the other hand, John Morressey wound up writing a whole series of novels about a wizard whose origin, in part, was the idea that if the philosopher’s stone was ever created, a real killing would be made in figuring out how to turn all that gold back into lead. The idea pretty much dwindled to a throwaway line in the first novel.
“Change the color of the price stickers on the shelves => massive economic disruption.”
Such an odd belief, isn’t it? You’re right that there’s a fascinating aspect to this.
What’s happening here is that some unfortunate souls conflate two different functions of money: the yardstick of value vs the token that gets passed around – the unit of account vs the medium of exchange. If countries price their oil in euros instead of dollars, then well golly gee, they bloody well hafta sell their oil for euros and only euros, don’t they? Dollars wouldn’t count anymore.
But of course, this is nonsense. They could price their oil in cowrie shells, cacoa beans, cartons of cigarettes, ounces of gold, or whatever else, but when the US swaggers drunkenly up to them with billions of greenbacks in exchange for boatloads of that sweet crude, they will open their wallets wide and happily accept the flood of Franklins. Ain’t gonna make no damn difference the color of the price stickers on the shelf. (Or the denomination of the currency quoted for the oil price.) A lot of people have major troubles grokking that. In their own personal experience, every transaction they ever saw was quoted in dollars, and exchanged in dollars. That’s what the world looks likes to them. It takes a modest feat of abstraction to realize that a price can be quoted in one way, and then transacted in another.
And murder rates will drop because using bullets is throwing away money!
I don’t get how people who speak sneeringly of “little pieces of paper with dead people on them” see shiny rocks as an inherently superior alternative, myself.
By “the 2% mandate” are you referring to the fact that the FRB tries to keep the inflation rate slightly above zero, rather than zero?
How does inflation transfer wealth from the poor (who tend to be debtors) to the rich (creditors)? The guy I mentioned who left $1,000,000 in banknotes under his mattress wasn’t poor. Don’t wave your hands or link to anti-Semitic cartoons; show us with an actual example how the purchasing power is lost.
That bit about JFK’s speech denouncing “secret societies” was misleading too, the cartoon implies that Kennedy was talking about the secret society behind the Fed, but Kennedy was actually denouncing the Russians and Communism, and warning the press to not fall for disinformation campaigns from the Russians…
Sounds familiar, and it is not the current president the one who is aware of the current dangers, but I digress…
Much more about how that cartoon misleads over here:
In fact, I’ve already cited a falsehood in the video. I just did it in an earlier post, my first post in this thread.
In Post 14 of this thread, I pointed out the common misconception about the Fed being a “private” bank. I linked the Fed’s own website to make the point that the Fed is, in fact, a government agency. The link goes to federalreserve.gov. (They have a dot-gov address because they are gubmint.)
In Post 14, I also mentioned briefly the history of the Fed which makes their government status confusing to people who don’t know the weird structure of the organization. I can go into more detail about that history and structure if it still seems confusing after you check that post. (It’s legitimately confusing.) All of this is to say that I cited a factual rebuttal to one of the falsehoods in that video before you posted the video. I’m ahead of the game here.
I’m not interested in going through each error in that video point-by-point. There are way, way too many. But I guess I can do one more right now. The video states that tax revenues from the IRS are used to finance the Fed’s “debts”. This is not just wrong, but the exact opposite of reality. The Fed is self-financing. Tax revenues do not flow to the Fed from Treasury. Revenues flow from the Fed to Treasury.
The Fed does not receive IRS revenues to finance its operations. The Fed is self-financing, from its monopoly on base money creation.
Any “profits” made by the Fed, after operating expenses, must by law be remitted back to the US Treasury. Now, these “operating expenses” include dividend payments to the private bank participants in the System. The regional Fed banks pay dividends to private banks. However, those dividends are not determined by the private banks, or the regional Fed banks. The dividends are determined by act of Congress. And in fact, Congress specifically decreased the dividend to certain large banks fairly recently. They did this for the specific purpose of increasing the flow of revenue payments to Treasury from the Fed.
If you have any specific questions about monetary claims in that video, I can try to address them. But you’re better off ejecting out of your brain any claim in that video. Off the top of my head, there are only two monetary claims I remember that were actually true, and even those two facts would be better learned in a different context, without the Jewish banker conspiracy theory nonsense.
It’s an odd fact that libertarians have Alexander Hamilton (who worked his way up from modest and troubled beginnings) as a villain, while Jefferson (who was born into his position) is a hero.
Also, the rich are bigger debtors than the poor. I suggest you read up on how US dollars (and virtually every other major fiat currency in circulation today) comes into existence. Every dollar is a debt instrument issued initially to a bank.
Now, Economics 101: the value of something is strongly correlated to its scarcity. This includes currency. This is why Weimar Germany and every other government that tried to print a lot of money went through a hyper inflation. Unfortunately, the effects of inflation are not instantaneous. It takes time for money to proliferate - just because a huge sum of money appears in a buyers hand does not mean that the sellers are aware of it or able to react. They react when said buyer begins to buy up all of the available merchandise, and raise their prices.
Because banks, and therefore the shareholders of the banks, are always the first recipients of the dollars that are created, they enjoy the benefit of spending those dollars before inflation hits. It is slow to move from the top hands down the through the economy, because banks don’t generally buy shoes or milk, they buy stocks, derivatives, corporate bonds, and other large investments. The non-smaller-bank beneficiaries of these investments then go on to buy more stocks (usually their own) or capital expenditures (which are now at about parity). Capex goes to smaller corporations, manufacturers, etc, and that finally makes its way to the workers. By that time, the value of the dollar has diminished. In short: the banks get to spend before inflation, and you get to spend after inflation.
That is wealth transfer. You are made poorer because the unit of measure is shifted against your favor. Especially where houses are concerned. Wages don’t even come close to matching inflation, either, so you get a lovely double whammy. In the housing market, it is even clearly zero sum: they get to buy the house at a cheaper price, before that money even has a possible means by which to arrive in your hands, and then sell it to you at a marked up price.
Yeah, I haven’t mentioned any cartoons and don’t appreciate the slur. If you can’t manage a single reply without insinuating I’m an anti-semite or a racist, you’re really not worth discussing with.
The complaint was addressed against 2% annual inflation. This corresponds with 0.005% daily inflation. $100 on Monday will be worth only $99.995 on Tuesday, only $99.989 on Wednesday, and only $99.984 on Thursday. If there were a 3-day delay of the type you postulate, then that delay would mean I’ve somehow been cheated out of 1.6¢. But have I?
Dollars are fungible. The $100 I already have in my pocket is worth exactly as much as the $100 that banker has, regardless of which note is fresh off the presses. Whatever he can buy with $100 I can buy with mine — more perhaps, as eggs are cheaper in the boondocks than on Manhattan. You seem to be saying that the banker will buy a share of stock and get a 1¢ profit because inflation hasn’t worked its way through — but then the counterparty, also presumably a rich financier, will suffer the 1¢ loss. If your formulation were even sensical.
Postulate a 2% daily inflation and things would be more interesting. Your scenario might apply. (Though even then I’m doubtful: traders under hyper-inflation have calibrated the inflation rate.) But a daily inflation rate of 0.005%? I’m unconvinced.
I do like your citing an article by an actual economist, Nicolás Cachanosky. However he’s linked to Mises, Hayek and the Alabaman School. :smack: Since you describe the lesson you were trying to convey as “Econ 101”, I should hope you could find a more mainstream citation than a minor Alabama-school economist posting at a hyperlibertarian “think tank.”
