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The American Dream

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    #41
    Originally posted by Robinho View Post
    It's nothing to do with the packages and all to do with the distortion of risk by the hand of the government. Government set interest rates made it stupid to not take out a large mortgages and loans instead of saving, they also backed certain mortgages taking away the risk and introducing moral hazard. Fiat money mean't there was essentially an infinite supply of money for mortgages which drove and drove the property prices up attracting more buyers. Eventually it all reaches a tipping point and the world goes to hell. But now the banks are wildly over-leveraged and have to be bailed out.

    The boom would not be possible without fiat currency, market-set interest rates and the government staying out of mortgage financing.
    Whenever I hear the cliche "fiat currency" my Tea-Party, rabid nutcase alert flashes red.
    In actual fact only an economic illiterate would advocate some sort of standard, gold or otherwise (isn't that an Atw saw, case closed).
    True the Fed and Clinton interfered in the markets by pushing dodgy mortgages, but in truth it was the packaging of the those mortgages with good ones so that their value was UNTRANSPARENT, and in fact unknoweable, that led to the crisis.
    Such a packaged bond would have been illegal prior to 1986.
    Hard Brexit now!
    #prayfornodeal

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      #42
      Originally posted by sasguru View Post
      Whenever I hear the cliche "fiat currency" my Tea-Party, rabid nutcase alert flashes red.
      In actual fact only an economic illiterate would advocate some sort of standard, gold or otherwise
      Fair enough, why state an intelligent reason when you can just resort to childish insults?

      Comment


        #43
        Originally posted by Robinho View Post
        Fair enough, why state an intelligent reason when you can just resort to childish insults?
        I was being factual. Do you really think anyone could or would go back to the gold standard?
        Only survivalist nutcases in the US propose that and its based on a fundamental misunderstanding of economics based on an inability to think abstractly and to understand how value is created in a modern economy.
        A fiat currency is based on the competitiveness of the country(ies) that use it. That value is no less tangible than gold, if harder to measure. And it explains why the Euro has roughly kept its value during the European crisis - because it's Germany's currency for the time being. Likewise for all its flaws investors understand that the US is still a powerful country economically.
        Hard Brexit now!
        #prayfornodeal

        Comment


          #44
          Originally posted by sasguru View Post
          I was being factual. Do you really think anyone could or would go back to the gold standard?
          Only survivalist nutcases in the US propose that and its based on a fundamental misunderstanding of economics based on an inability to think abstractly and to understand how value is created in a modern economy.
          A fiat currency is based on the competitiveness of the country(ies) that use it. That value is no less tangible than gold, if harder to measure. And it explains why the Euro has roughly kept its value during the European crisis - because it's Germany's currency for the time being. Likewise for all its flaws investors understand that the US is still a powerful country economically.
          You've not given an actual reason there. Again you've just resorted to insulting proponents of the system.

          Comment


            #45
            Originally posted by Robinho View Post
            You've not given an actual reason there. Again you've just resorted to insulting proponents of the system.
            Ok, economies were not that great on a gold standard e.g. the Great Depression occured in spite of being on one, so it's clearly not a panacea.
            Hard Brexit now!
            #prayfornodeal

            Comment


              #46
              Originally posted by sasguru View Post
              Ok, economies were not that great on a gold standard e.g. the Great Depression occured in spite of being on one, so it's clearly not a panacea.
              Thanks to a big round of Keynsian spending from successive presidents....

              Comment


                #47
                Originally posted by Robinho View Post
                Thanks to a big round of Keynsian spending from successive presidents....
                Are you saying the Depression came about due to the Keynesian spending?
                Hard Brexit now!
                #prayfornodeal

                Comment


                  #48
                  Originally posted by sasguru View Post
                  Are you saying the Depression came about due to the Keynesian spending?
                  It was prolonged thanks to it. As well as a great ton of other market-distorting policies.

                  There's no actual reason why a gold standard won't work. People cite deflation but they fail to distinguish deflation as the result of a fixed money supply with deflation from an actual downscaling of an economy.

                  Comment


                    #49
                    Originally posted by Robinho View Post
                    It was prolonged thanks to it. As well as a great ton of other market-distorting policies.
                    .
                    Can you give an example of that? You seem good at the grand all-ecompassing phrase, but frankly you've not put any evidence forward for your bizarre theories.
                    Hard Brexit now!
                    #prayfornodeal

                    Comment


                      #50
                      And you're just throwing out the rich examples aren't you. So far after much enquiring your only argument against the gold standard is "they had it during the depression".

                      Stimulus spending (hoover dam), price-fixing, wage-fixing the government went crazy thinking it could control the market.

                      Edit: They even burnt grain to keep the prices high - madness.
                      Last edited by Robinho; 21 August 2012, 15:47.

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