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Clearly you were suggesting a currency backed by "something of value," which usually refers to gold or silver:
In response to your comment where you assumed that a currency "backed by something of value" would not cause panics, I pointed out that there were many panics while we had a "currency backed by something of value." Once again, all you need to do is look up the many panics that occurred prior to the creation of the Federal Reserve, and/or prior to the abandonment of the gold/silver standard in 1971.
Basically, I've answered your question, but for some reason you don't seem to want to acknowledge thus.
Basically you're babbling the same non answer. I asked "why would a currency backed by something of value cause a financial panic."
All you've responded with is that there were panics with a gold backed currency. Again can you explain what is intrinsic to a value backed currecy that would cause a panic?
Trump wants the fed to continue to artificially keep the interest rate lower. Not likely he will end it, he wants to manipulate it to his satisfaction.
Well at least the fed saw the 2008 crash before it happened and kept us out of that mess. And the kept out of the great depression.
Oh, wait a second...
I thought two years ago Trump complained that the rates were kept too low for too long. Now he wants them to remain too low.
Well at least the fed saw the 2008 crash before it happened and kept us out of that mess. And the kept out of the great depression.
2008 wasn't near as bad as it could have been. Rates were cut to near zero and then we had quantitative easing. It can be argued whether or not QE should have happened but it did help keep things from getting as bad as they could have.
Quote:
Originally Posted by Oklazona Bound
I thought two years ago Trump complained that the rates were kept too low for too long. Now he wants them to remain too low.
It's good for the stock market and it helps the economy in the short term by creating bubbles. Most people who know anything about the economy though would agree that rates were too low for too long.
Basically you're babbling the same non answer. I asked "why would a currency backed by something of value cause a financial panic."
All you've responded with is that there were panics with a gold backed currency. Again can you explain what is intrinsic to a value backed currecy that would cause a panic?
You seem to be too lazy to do the research I suggested, so if you insist, here is as direct an answer as possible: Metal backed currencies are too inflexible. Let's say your population is growing by 2% a year, but due to its fixed price against gold (say, $35/ounce, or whatever) and the inability of miners to produce an additional 2% increase in the supply of gold per year, demand for new money will outstrip the supply. As a result you will get deflation and some sort of panic caused by shortages of money. This is why panics of some sort occurred every 10 years or so prior to the creation of the Fed, and prior to the abandonment of the gold/silver standard in 1971. Since 1971, recessions have actually become less frequent.
The reason why fiat currencies work so well is because their value is based on supply and demand. Currency is (mostly) created when someone takes out a loan (which amounts to demand of new currency) and it is destroyed as that loan is paid off. If demand for new loans increases, the system allows the supply of currency to increase. If demand for new loans decreases, the system allows for the supply of new currency to decrease. This is difficult to do in a metal-backed system, unless you allow banks to create their own currencies (which many did back in the day), which is essentially a subversion of the metal-backed system, so why even bother? Fixing the value of a currency is an artificial restraint on its supply. It is as stupid to fix the value of a currency (via a metallic standard) as it is to fix the value of cars, corn, widgets, or anything else.
At this point I can't help but wonder if Trump is trying to intentionally collapse the economy. The current economy isn't great but its bearable for most people. A good economy is the number one barrier to an authoritarian dictator taking over. If we see an economic collapse, it's very possible a far-right theocratic dictatorship could replace the current US government ala "A Handmaid's Tale." I wonder if that's the ultimate goal of Trump and the GOP.
Here we come Great Depression 2.0. I hope all you Trump supporters enjoy your soup lines and tent cities. You want 1955 but you are going to get 1935.
Why do you think the Fed is the only chartalist system there is? Why does the government even need interest bearing bonds anyway? Gold has no yield.
We should have a simple chartalist a 5th grader could understand. What we have is a shell game few people understand.
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