Stimulus Bill and Hyperinflation

[TwelveToneMusic 0]

Instead of making sneakers for us at basically slave wages, they should be making products for their own domestic markets. That's the only way that wealth differences between the West and the third world are going to shrink.quote>

The people providing them those 'jobs' don't want to shrink that difference.  That difference is the reason those people are willing to work for 3 cents an hour.  It's the best they can do.  That's the way they want it.  They make sneakers for Nike because they can't do any better.  Nike is not there to help them.  They're there to capitalize on them.

[Barbarossa 51]

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  Edited September 7, 2012 by Barbarossa  

[Duke87 1,070]

Originally posted by: hym

Take the modern engineering world, for another example.  As a whole, engineers have tried to automate, simplify, and streamline as much of their work as possible.  And yet the United States needs engineers so badly that US companies are having to look around the world to find enough people to do the work, offer them insane salaries to move to the US, offer to pay to move them and their family, streamline the process of getting visas and becoming naturalized citizens, buy them a place to live in the US, possibly a car, and other stuff.  All because they need engineers that badly. quote>

Well, that certainly isn't the case now. Bad economy stalls construction projects which means that people who design and manage those things end up out of work.

And last year it wasn't the case, either. In fact, the opposite was true. As it stood, the most secure jobs in engineering were (and still are) in construction management since you can't outsource that. If you look at other types of engineering... well, the factories that make the widgets were moving to China and places like that. Guess where the jobs for people that design the widgets were going.

Several years ago my uncle (chemical engineer) quit his job with DuPont because they wanted to move him and his family to Singapore.

Or maybe when it's time for Boeing to clean the welds off the aircraft it's making, maybe it shouldn't use a machine that doesn't care that it spilled caustic chemicals on itself.  Maybe the cruel, heartless, money-obessessed boss should make Bob do it, and then hope that Bob doesn't accidently spill the stuff on himself and then die an excruitating death while his coworkers are trying their best to help a man that is being eaten alive by caustic chemicals that are destroying his flesh. quote>

Let's flip this around a bit. Which position would Bob rather be in: having a job where there's a risk like that or having no job at all? I think he'd rather be in a bit of danger but supporting himself than "safe" but starving and homeless.

[Zezug 6]

Some interesting stuff here, just for though. http://engineering.calumet.purdue.edu/engineering/engineering/blooming_engineering_job_market_27_58.html demand for the top 10 jobs in the US back from 2007, Civil, Electrical, and Mechanical engineers are on there.

Also, engineers are on short lists for immigration to alot of countries, UK and Australia being the two others I've become most familiar with, civil is the highest in demand which does fo with what Duke said. And I did have a graph showing that even with the shedding of our manufacturing jobs, the actual production/capacity of the US kept increasing, but that report was from early 2000s and somehow the link now leads to a completely different thing now, so that's no help.

[saltandsauce 0]

i will warn you now about the gold standard and this is the main reason why we shouldn't have a GOLD standard

Gold prices are set by Mine owners and this can result in the mine company controlling the economy.

having money tied to the value of something is goood but Gold is not a good idea plus countries would have to retract things like eductaion and healthcare/welfare to help pay off their debt if they have any

[Barbarossa 51]

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  Edited September 7, 2012 by Barbarossa  

[TwelveToneMusic 0]

I think the gold standard is a funny idea.  I know it's something to set the dollar amount to, but who cares about gold?  I don't care about gold any more than I care about the US dollar.  Why not any other object to base our money on?  Gold holds no special properties for me.  I don't even own any gold and don't really care to.  It's just substituting one thing for the other.  What happens if people lose their (lol) faith in gold the way they can with the value of the dollar?  I'm sure this is just another thing I don't understand, but that's why I'm asking.  ;&gt

[Meg 368]

Because gold is a solid, tangible commodity and money is a fictional thing that only has value because we all believe it does. 

Think about it.  If everyone decided tomorrow that the dollar was worthless and they would only take payment in gravel, what good would the dollar be?

 

 

[Barbarossa 51]

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  Edited September 7, 2012 by Barbarossa  

[krbe 193]

Originally posted by: saltandsauce i will warn you now about the gold standard and this is the main reason why we shouldn't have a GOLD standard

Gold prices are set by Mine owners and this can result in the mine company controlling the economy.quote>

Gold standard means that a government pegs its currency to a certain amount of gold—e.g. USD 35 per troy ounce (Bretton Woods). If you demand $40 for one ounce of gold as the mining company, you won't be able to sell you gold reserves, because the buyer would lose $5, when he redeems his ounce at the central bank.

[LarksTonguesInAspic 28]

On the gold standard facet of this discussion, I gotta add that The Wizard Of Oz was a commentary on gold and monetary policy. Each character represented a caricature of different arguments. There were the 'brainless' ones, the 'heartless' ones, the rusty industrialists, the naive farmers, etc. "Follow the yellow brick road" was ultimately the way to safety, in the allegory. The witch and her monkeys were bankers... the witch being crushed by a falling real estate market.

A basic rule of money is that it will always revert to its true value, eventually. Government policies can forestall it, but it must show its real value at some point. Paper notes for debt come due, and if the security for those debts isn't there, there is hell to pay. To a degree, it would be disastrous for those who have underwritten the US national debt to call it. It's a mutually assured destruction scenario for, say, the Chinese (to use them as an example again). Their economy would collapse also. But it does give them an enormous amount of clout, which should alarm most Americans.

[Duke87 1,070]

Originally posted by: saltandsauce

Gold prices are set by Mine owners and this can result in the mine company controlling the economy. quote>

Um... no it's not. Like everything else, it's controlled by supply and demand. Yes, miners can decide to step up or ramp down their efforts, but unless a significant number of gold mines act in unison to do this (unlikely), they can't have a noticeable effect. Also bear in mind that a lot of the gold "supply" is actually recycled. Old jewelry and whatnot melted down. Miners have no control over that.

countries would have to retract things like education and healthcare/welfare to help pay off their debt if they have anyquote>

They would have to cut excessive spending, sure... but how is that a bad thing, exactly?

Besides, like it or not, reality is that no entity, not even a national government, can go infinitely into debt. The money it spends ultimately has to come from somewhere. Whenever you have a situation where the government is spending more money than it's collecting, that's fundamentally a bad thing, whether they're spending it on cancer research that could save lives or whether they're using it to bribe the mafia. Simply economics, nay simple arithmetic here. Output can't exceed input unless there's a reserve to draw from. If it doesn't add up, it doesn't work. If I go to the store with $50 in my pocket, I can't buy $60 worth of stuff. Why should the government be able to do that?

[duack 14]

Wow! This forum has taken a really exciting turn!

Anyway, here's my opinions on some things I read. The gold standard may have been good years ago, but today it would only lag economic growth. Sure, mismanaged finances have caused this reccession but without all the borrowing, the economy would not even be as large as it is now. I'll use simcity for this example because we're all familiar with it. Say you have a small town that makes about 100 simoleons a month. You can use that to slowly grow the town until after about a couple hundred years, it becomes a large city that makes a high surplus and is succesful. Now say your back in that small town and instead of slowly growing your city, you borrow 200,000 simoleons and within a a short time, you quickly zone large areas of land and set up lots of infrastructure. your small town will grow into huge metropolis in a much shorter time. If you run out of money in the meantime, you can borrow more to pay off old debt. Risky, but if you time it well, it works. I always take the second option . Much in the same way, the US economy (and a lot of other developed nations) have printed and borrowed extra money that was never there and grown from this, and now the bubble is bursting. But reccessions only last a short time and this one is no different. Say this reccession ends in 2011, then in 2011, the total GDP will be a lot higher than it would've been if we had the gold standard which would have put a serious strain on funds, even if they weren't actual funds, and we would not have grown much at all. We would've avoided a reccession, but the long term damage to the economy would have been worse. Kind of confusing to understand .

Now for my opinion on all the people who are saying that robots will take over every job leaving us with nothing, Im telling you to stop watching sci-fi movies. Robots are basically capital, so here's a brief history of labour vs capital. In the medieval ages, 25 families worked to feed 26 families (their own families plus the family of their lord). Slowly, the agricultural sector became more efficient through the development of sharper spades and scithes (which are capital). So people decided, Im going to learn to make better tools for people's farms and live off that. They were called blacksmiths, who made up the entire manufacturing sector, and some decided to become merchants who made up the entire services sector. For a while very little happened until the 1800's. At this point, capital was developed to overtake some farming jobsleaving many people unemployed. But from this huge unemployment pool, a few entreprueners arose and decided that they were going to start open factories to produce commodities other than food, and they became very wealthy. Now that manufacturing was huge, and a wider range of goods available, they decided they needed to manage how to distribute it, thus the rise of services. At first, the services sector was small but gradually it grew larger. Now that there was enough food for everyone, the popultaion exploded providing a huge supply of labour. People developed more and more goods to sell, and as capital continued to replace labour, the labour supply was larger, so then people decided to make more and more unneccasary (but great) goods, stuff like televisions, electronics, lightbulbs (remember, the only neccasary good is food. Everythign else is unneccasary). Whatever there was money to be made in, someone made it. But as production shifted to other countries or to capital, labour became more concentrated towards the services sector, things like marketing and management. (those who study business would know that in later stages, the management and advertising of goods becomes more important than production). So in the future, robots may take over the production sector but thats okay. The services secotr will continue to grow, providing higher paying jobs. Also, demographically speaking the labour supply is about to get into a serious shortage. By 2050, (probably sooner) the world's population will stop growing and labour will become our most precious resource. Jobs will be seriously high paying, even people in the low end, like cleaners and maids, will have high wages, because labour will be that scarce. So robots wont ever take over, but make things better. I'd better stop now this is a huge response .

[TwelveToneMusic 0]

Because gold is a solid, tangible commodity and money is a fictional thing that only has value because we all believe it does. 

Think about it.  If everyone decided tomorrow that the dollar was worthless and they would only take payment in gravel, what good would the dollar be?quote>

Lol.  See, that's even MORE ridiculous.  What good is gold?  Jewelry?  Lol.  Money has no more fictional value than gold does, that's my point.  I'm telling you right now that gold is not valuable to me.  Money is physical in the same sense that gold is physical.  It doesn't matter what you base it on, the value gets there the same. 

"Think about it, if everyone decided tomorrow that gold was worthless and they would only take payment in gravel, what good would gold be?"

[hym 358]

I'm telling you right now that gold is not valuable to me.quote>

That might be true for you, but that's not true for most people. More than one person has been killed for their gold.

"Think about it, if everyone decided tomorrow that gold was worthless and they would only take payment in gravel, what good would gold be?"quote>

Historically, gold has always been considered to have value. Paper money can't say the same thing and has had many times where people wouldn't take it. Paper money is supposedly backed by the full faith and credit of the federal government, but interestingly, that same government also passed a law mandating that US companies take federal currency as payment to ensure that the system never collapsed.

[TwelveToneMusic 0]

I understand what you're saying.  It makes sense to me how it works, but it's still nonsensical.  Just because gold is shiny and malleable, and people like that, doesn't sound like a good reason to me to base a currency off of it.  Anyway, I get it.  Just sayin'.

[Duke87 1,070]

Originally posted by: TwelveToneMusic

Lol.  See, that's even MORE ridiculous.  What good is gold?  Jewelry?  Lol. quote>

Maybe you don't like jewelery, but a lot of people do. Not to mention that gold also has uses in industry and electronics.

Money has no more fictional value than gold does, that's my point.  I'm telling you right now that gold is not valuable to me.  Money is physical in the same sense that gold is physical.  It doesn't matter what you base it on, the value gets there the same. quote>

The difference is that a gold coin is worth exactly the same as the gold it's made of. On the other hand, bills are taken to be worth far more than the paper and ink they're made of. The fact that bills of exactly the same size can be worth as little as $1 or as much as $100 should speak to that.

"Think about it, if everyone decided tomorrow that gold was worthless and they would only take payment in gravel, what good would gold be?"quote>

You're making a false generalization here. Gold inherently has value. Paper money only has value because the government says it does. If people didn't accept the bills, you'd have mere paper in your pocket, worthless. If people didn't accept gold as payment... well, for one thing, that's ridiculous, since why wouldn't they? But even if they did, you'd still have something of value that you could exchange for something else they would accept.

Of course, the other problem here is that the amount of currency in circulation in the US alone far exceeds the estimated value of all the gold in the world. So we couldn't go back to strictly a gold standard. We'd have to use other metals, too (silver, platinum, whatever).

Personally, I'd like to see the reserve get a little creative. Anyone up for a manganese standard? Heh.

[Easy Bakes 253]

Steel

[JanYpe 17]

Originally posted by: Duke87

"Think about it, if everyone decided tomorrow that gold was worthless and they would only take payment in gravel, what good would gold be?"quote>

You're making a false generalization here. Gold inherently has value. Paper money only has value because the government says it does. If people didn't accept the bills, you'd have mere paper in your pocket, worthless. If people didn't accept gold as payment... well, for one thing, that's ridiculous, since why wouldn't they? But even if they did, you'd still have something of value that you could exchange for something else they would accept.

quote>

And you are merrily generalizing along. Not accepting bills would be just. as. ridiculous. Only on the internet and with paranoid libertarians (shall I go ahead and tick both boxes here? ) is a full return to the gold standard still a viable idea.

[hym 358]

How is the quoted comment a suggestion of going back to the gold standard?

[JanYpe 17]

Originally posted by: hym How is the quoted comment a suggestion of going back to the gold standard?quote>

It wasn't, but it's part of the trend of this thread to put more shine on gold than it really deserves IMHO.

[Meg 368]

No, we aren't returning to the gold standard any time soon.  There were valid reasons why we left it.

Just a historical note:   (I'm hoping that sounds better than the dreaded "back when I was a kid"  )

 

For a while, after the gold standard was eliminated, it was still possible to redeem US paper money for silver.    They were called "silver certificates".    If you actually read the money then and the money now, the difference is evident.

 

That bill says right on it that it is a silver certificate.  If you continue reading, you can see that it says  "This certifies that there is on deposit in the treasury of the United States of America one dollar in silver payable to the bearer on demand."

People could take these bills and cash them in for silver.   Then they stopped issuing silver certificates.  For a while, both silver certificates and the new bills were in circulation.  They declared a date, after which silver certificates were no longer redeemable for silver.

People were perturbed about this, some said go get your silver while you can.  Others said keep the bills, they would be worth more as collector's items.

The new bills are Federal Reserve Notes.  Many people have seen them frequently without noticing the words "Federal Reserve Note" along the top.

Here are the US Treasury's comments on Federal Reserve Notes:

Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are "backed" by all the goods and services in the economy. quote>

::: wobbles along with a shaky cane cackling "yeah, sonny, back in my day, you could get some actual silver for that dollar"  ::::

Okay, I'll stop   (and, yes, I still have a few silver certificates)

[Danlikebooks 6]

Originally posted by: SkiGeek Because gold is a solid, tangible commodity and money is a fictional thing that only has value because we all believe it does. 

Think about it.  If everyone decided tomorrow that the dollar was worthless and they would only take payment in gravel, what good would the dollar be?

 

 quote>

Ah, the power of shiny objects.  For some reason everyone in the world is attracted to pale yellow and shiny metals.  Why?  We'll never know.

[Odainsaker 2,137]

Speaking of historical footnotes...I've been working on a BAT of the Shanghai waterfront's old Bank of China, for which there has been some historical discussion on why its lofty plans for a towering Art Deco tower were so severely scaled down to a mere 18-story building. Among one of the offered reasons was the uncelebrated adoption of the silver standard in the United States under Roosevelt in response to wildly fluctuating gold prices, which had the effect of draining silver reserves out of Shanghai. I read somewhere it was like half the silver stockpile in the city was withdrawn, undermining the stability of the trading hub's mighty banks and leading the Bank of China for curtail its loftier headquarters plans.

Of course, other factors could be involved, including a change in the board of directors following the prewar nationalization of the Bank of China by the Republic of China, building weight and subsidance problems with the watery soil, and even egomanical political scheming by the bank's British concession neighbors who did not want a Chinese building to be taller than theirs. Whatever the reason, the resulting stubby tower is an Art Deco oddity capped by a stylized Chinese roof. With the 1949 Communist victory over Chiang Kai-Shek's Nationalists, the spectacle of the great plundering of China's banks occurred as the evacuating Nationalist forces emptied the Bank of China's Shanghai branch of its reserves and carted the bullion away to Taiwan.

[Easy Bakes 253]

Originally posted by: Danlikebooks

Originally posted by: SkiGeek Because gold is a solid, tangible commodity and money is a fictional thing that only has value because we all believe it does. 

Think about it.  If everyone decided tomorrow that the dollar was worthless and they would only take payment in gravel, what good would the dollar be?

 

 quote>

Ah, the power of shiny objects.  For some reason everyone in the world is attracted to pale yellow and shiny metals.  Why?  We'll never know.quote>

 

National Georgaphic Story from last month

The Real Price of Gold 

Read and Learn

[Duke87 1,070]

Originally posted by: JanYpe Not accepting bills would be just. as. ridiculous. quote>

Ridiculous, yes, but not as. It's obviously a far fetched scenario but it's not an impossible one.

Only on the internet and with paranoid libertarians is a full return to the gold standard still a viable idea.quote>

I never said it was a viable idea. In fact, if you read my posts you'll see me explain why it's not. In brief:

1) It can't happen unless we pay off that national deficit first

2) There isn't enough gold in the world to do it.

Point 1 can be and should be but won't be dealt with in the near future. Point 2 can be worked around by using other substances instead of or in addition to gold.

And it's not paranoia, it's healthy concern and skepticism.

[Muck308 55]

I'm pretty sure you can still march a silver certificate to Washington and redeem it for silver. Why you would bother is another issue...

[Meg 368]

Originally posted by: Muck308

 I'm pretty sure you can still march a silver certificate to Washington and redeem it for silver. quote>

mmm . . . not so much.

According to the Historical Timeline of the US Treasury:

 

 

June 24, 1968 - The exchange of silver certificates for silver bullion was discontinuedquote>

 

1968 was a very unusual year.  I remember it well.

Why you would bother is another issue...quote>

 

Well, at the time, they often exchanged them for the Peace Silver Dollar.  These are worth more than a dollar these days.   It was unusual, even back then, to find a Morgan Silver Dollar in circulation.   Most of the ones I have were given to me from my grandfather.

 

 

[TwelveToneMusic 0]

You're making a false generalization here. Gold inherently has value. Paper money only has value because the government says it does. If people didn't accept the bills, you'd have mere paper in your pocket, worthless. If people didn't accept gold as payment... well, for one thing, that's ridiculous, since why wouldn't they? But even if they did, you'd still have something of value that you could exchange for something else they would accept.quote>

"Gold inherently has value".  That's just as false as what you're saying about the value of the dollar, because both have implied value based upon contextual situations.  Gold has value when people have some degree of monetary surplus, and they can use it to make jewelry, even microchips, or shiny objects to look at all day.  Now take 5 people, give only one of them a gold brick.  Drop them off on an island that only has food enough for 4 people.  Who's going to trade food for that gold brick?  Lol.  I realize this is extreme, but the value of gold is situational, just like money is.  People make more microchips with money than they do with gold when you think about it.  My point is that gold is not always valuable.  To say it otherwise is just as brainwashed and delusional as saying money always has value. 

[Meg 368]

Let's not call each other names.   We can discuss the issues without discussing each other.