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Letters by a modern St. Ferdinand III about cults

Gab@StFerdinandIII - Plenty of cults exist - every cult has its 'religious dogma', its idols, its 'prophets', its 'science', its 'proof' and its intolerant liturgy of demands.  Cults everywhere:  Islam, the State, the cult of Gay and Queer, Marxism, Darwin and Evolution, 'Science', Globaloneywarming, Changing Climate, Abortion....a nice variety for the human-hater, amoral, anti-rationalist to choose from.  It is so much fun mocking them isn't it ?

Tempus Fugit Memento Mori - Time Flies Remember Death 

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Monday, August 11, 2014

Forbes and Ames: 'Money' - a good book on why a Gold Standard is mandatory

Since 1971 massive Keynesianism has imperiled our modern political-economy

by StFerdIII

 

Forbes' new book, 'Money', likely written mostly by Ames, is a pretty good read. The best parts are about the destruction of money's real value since 1971 and the de-linking of the U$ from the gold standard. Since then 80% of the currency's value has been lost.

Since 1971 the dollar’s purchasing power has declined by more than 80%. Much of that slide has been recent: since the year 2000, according to the consumer price index (CPI), the dollar’s value has declined by about 26%.”

Thanks central banks. Gods of finance. Seers with Ivy League degrees. Ephors of society.

The not-so-good parts in this book, are about the Euro, which the authors mistaken for a fixed-exchange-regime similar to that of a gold standard. The Euro will eventually fail because it defies economics laws and is simply a cover for massive Keynesian/Marxist spending. What makes the book readable and interesting is that the main theme is why a gold standard is both necessary and inevitable, if Western nations hope to avoid a systemic implosion.

Keynesianism is bunk and junk:

Traditional economists regarded the production of products and services as the real economy and money and credit as the “symbol economy,” the tools of commerce. Keynes defiantly reversed this pecking order: money and credit were the real drivers of the economy, upon which production was dependent. In this universe, government, which supposedly could control the flow of money and credit through bureaucratic fiat, was far more important in determining where an economy went than mere individuals, entrepreneurs, and companies. This was a radical departure from classical economics.” [Keynes and all modern central bankers have everything backwards].

Phillips curve, the graph purporting to show that creating inflation reduces unemployment and reducing inflation boosts joblessness—correlations that have never been true.”

..trade or balance of payments deficit is a fallacy. Yet these policies over the years have resulted in needless protectionist measures that have damaged the United States and the global economy, in addition to inflaming tensions between nations.”

Waddling off to WalMart does not mean you are 70% of the economy:

Measuring intermediate steps needed to produce products and services, this provides a fuller picture of economic activity. Consumption goes from 70% to 40% of the economy. The importance of investment surges; the importance of government spending is sharply reduced.”

GDP is a spending algorithm and is a joke. Government spending is not a part of the real economy and stimulates nothing except bureaucratic costs and eventually bankruptcy. Imports are a positive not a negative as the GDP algorithm calculates them. Spending printed money, debt or extortionate taxation does not a society wealthy.

The Gold Standard:

A gold standard would obliterate inflation. From 1821 to 1914 the cost of living in Great Britain went up 0.1% a year. Compare that to the double-digit rate of inflation in the United States between 1971, when the link to gold was severed, until 1983, when that bout of inflation was conquered. Since then the average rate has been above 3%, based on the highly imperfect CPI..”

Gold is far less rigid than most people realize. It is both flexible and stable. Contrary to the common perception, it allows the monetary base to grow, or to shrink, in response to transactions and monetary demand while preserving the value of money. A gold standard no more means a fixed supply of money than a use of the metric system means there has to be a fixed number of rulers.

Financial chaos is due to flexible exchange rates. Booms and busts since 1971 are now common. Government-Keynesian micro-management, including the 2008 crisis, which is not over, is to blame. Not having a valid monetary price of your currency, linked to gold means 2 things: 1) endless expansion of government and paper money and 2) real world [not central bank 'models'] inflation and massive capital dislocation, in which assets such as real estate or stocks, in lieu of manufacturing or technology businesses, receive inflows.

After Great Britain formally established the ratio for the pound to gold in 1717, lenders could rest assured they would be paid back in money that wouldn’t lose its value. Capital creation and investment in the country exploded. The strength of Great Britain’s currency helped create capital markets that turned that island from a second-tier nation to the mightiest industrial power in the world.”

But;

1971 the entire monetary base was $85 billion. Today it is well past $4 trillion and climbing.” [This ensures a massive future economic meltdown].

Unless we have a gold standard a system-wide implosion is simply a matter of time. Forbes and Ames do a nice job of explaining why, caveats about the Euro notwithstanding. What does all this modern post-1971 Keynesianism mean?

The destruction of the dollar is the reason that two incomes are now necessary for a middle-class family that lived on one income in the 1950s and 1960s. To see why, one need only look at the numbers from the U.S. Bureau of Labor Statistics. What a dollar could buy in 1971 costs $5.78 in 2014. In other words, you need almost six times more money today than you did 40 years ago...”

 

Big government is always a big problem. One of the few constraints on Keynesian-Marxism is the gold standard. Bring it back.  


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