[iltos]

continued from here

[eggplant43]

Paq, I'd go back earlier and add the response of Nixon to the monetary crisis when he took us off the gold standard, making all of this possible. In the end, I see this all as ending in hyperinflation, which will make what is really bad right now, horrid. I hope I'm wrong, but I don't see how it can end any other way.

The first rule of dealing with an out of control child is stop the funds. Will that happen, or will we watch him crash into the tree?

[wacor]

Bob you made a great point about not wanting to get ones hands dirty. There are many jobs that young people refuse to do.

Mine is one of them. Except for family you won't see many youngins looking to do this kind of work.

[Paquadez]

It is fine aspiring for your kids to become college profs, doctors and etc.

However, someone still has to create wealth and new real jobs.

I have written much about such as GE: last time I looked Jack Welch was shuttering plants all over continental USA and throwing hundreds of thousands onto social security or McJobs.

And meantime GE was generating circa 70% of its revenues from Financial Services!

And I use the term getting hands dirty figuratively.

West Germany was was copied the old British system of education: Grammer Schools were for professional classes. Secondary Modern Schools taught artisans.

Germany updated this and the level of math taught in their Secondary Moderns was extremely high, allowing their graduates to write programmes for CNC machine tools for example.

Trouble is it has all been far too easy for Wall Street traders to become multi-millionaires when in the real world outside they would have trouble running a hamburger stand.

And they are financial pimps: nothing more and nothing less.

Same in the UK: thanks to the idiot woman Thatcher, they have successfully wrecked the UK economy for all time.

I repeat what I said earlier: financial services can only ever be a subservient activity, hiving off the main process of wealth and job creation: i.e. real activity, rather than gambles on bits of paper.

Shares in a corporation for example, rely on that corporation actually doing something to create revenue.

(Whether it's a good thing, morally, socially, economically is a different argument.)

Gold Standard: Hmm Eggy.......

It is a nice concept but post the 1930s world trade had already superceded using the gold standard.

Post WWII there was not enough gold to back all tradeable currencies.

From the 70s on and the huge consumption of gold in electronics and etc, there would never ever be sufficient gold to back all global currency values.

Nothing intrinsically wrong with fiat currencies: all provided those in charge of the printing press remember that there is an off switch!

Hyperinflation?

Possible: which is why I earlier mentioned the Weimar Republic which is worth revisiting.

Undoubtedly, by the Treasury and the Fed flooding the markets with liquidity, this is going to depreciate the core value of the US Dollar.

[eggplant43]

Paq, I'll defer to your much greater knowledge about the gold standard. I just haven't informed myself that much about it. But I'd like to stipulate that I believe that every great society that has used fiat money has historically failed, in the long run. Something about the greed factor.

Now I'm off to read more about the gold standard.

[Paquadez]

Eggy:

Particularly examine Britain's return to Gold Standard, partially, when Churchill was Chancellor of the Exchequer in the Mid 1920s.

Highly significant.

http://en.wikipedia.org/wiki/Great_D...United_Kingdom

Also very well worthwhile reading this and its eery parallels to today!

http://en.wikipedia.org/wiki/Great_Depression

On Gold Standard this isn't too bad.

http://en.wikipedia.org/wiki/Gold_standard

[iltos]

Originally Posted by Paquadez

It is fine aspiring for your kids to become college profs, doctors and etc.

However, someone still has to create wealth and new real jobs.

I have written much about such as GE: last time I looked Jack Welch was shuttering plants all over continental USA and throwing hundreds of thousands onto social security or McJobs.

And meantime GE was generating circa 70% of its revenues from Financial Services!

And I use the term getting hands dirty figuratively.....

perhaps i misunderstood the point of that last post then, paq.
were you referring specifically to "financial services", rather than the expansion of the entire service sector in the "post industrial" economies of the west?

[Paquadez]

Clarify herewith.

Financial Services have been elevated to the illusory point of being hailed as "An Industry": clearly they are not and can never be.

Every aspect of financial services has to be subservient to another process or series of processes.

Service Industry generally I am also not happy with: like speculative house building it cannot be exported!

For me in any case the very name is a misnomer: it isn't an industry: it's an activity. And mainly coined some 25 years ago by idiot politicians trying to justify their way out of the mess they had made of your and our industrial economy bases.

[eggplant43]

Thanks for the reads, my head is now spinning, and I've got lots of thinking to do, but I am now much better informed, due to your links.

[Paquadez]

Perhaps the best illustration of why it wouldn't work is right now!

The essence of operating a Gold Standard backed curency is "Convertibility": i.e. anyone holding a paper note can take it to the Central Bank and demand gold in exchange at that day's value.

Now at the best of times, gold backing of a currency was only ever partial: i.e. there were never enough reserves of gold bullion to warrant each and every currency note issued.

However the notion of convertability offered a comfort zone.

Additionally, Governments could not allow total money in circulation to stray to far from the total value of bullion reserves held, since otherwise there would be a huge disparity of true value between the unit of currency to be honoured and the equivalent gold value of notes.

Imagine what would be happening right now!

The Fed and the ECB would be besieged by note holders demanding they be paid out in gold!

As would the Bank of England.

[LANMaster]

Good one.




Here

[wacor]

but if there was a gold standard in place would there have been such lending issues to begin with?

[LANMaster]

LATimes So Afraid of McCain Confronting Obama on the Economy They Embargo His Remarks on Fannie/Freddie, and Then Claim He's Afraid to Talk About the Economy
—Ace

That's how afraid they are.

They actually simply cut his speech off before his remarks on Fannie/Freddie, and then said he was afraid to talk about the economic crisis.

[Paquadez]

Originally Posted by wacor

but if there was a gold standard in place would there have been such lending issues to begin with?

Since time immemorial, creative bankers have found ways to subvert whatever regulation was in place.

Various Banking Acts and the Bank Charter Act reserved the right of only the Bank of England to print money.

http://en.wikipedia.org/wiki/Banknot...pound_sterling

Up until that point many banks issued paper notes and crashed.

And Britain was then on the gold standard.

Britain was the leading banking state in the World, mainly since the Lombardy bankers came and showed us how to operate.

Lombard Street deep in the heart of the City of London is named after them and is the home of many leading banks.

The core of this current problem, as I have stated previously, started with the repeal of the Glass-Steagall Act and lack of application of the lessons learned post the Wall Street Crash of 1929 and the lifting of rafts of restrictive legislation immediately post that era.

[wacor]

I am aware of the ever present attempts to subvert regulation.

I was just wondering if we were on the gold standard if it would have reached these extremes. In other words I suspect credit would not been as stretched as far as it was.

and the other part of the equation was the pressure on banks to lower the standards they used to provide credit. lots of parts to the puzzle