| History of Depression |
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Saturday, August 21, 2010
Bad news- Good news
13 comments:
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Anonymous said...
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Is that a pistol in the child's hand? I bet if that pic was now the libs would be losing there minds.
SherryM -
8/21/10, 1:52 PM
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Rodger the Real King of France said...
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Looks like a real revolver; kid was out foraging
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8/21/10, 2:34 PM
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Hell_Is_Like_Newark said...
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Back then the dollar was still backed by silver. Therefore $2.95 = about $41.00 today.
My wife picks up dresses at sample sales for as little as $5.00. -
8/21/10, 4:18 PM
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Rodger the Real King of France said...
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The dollar was backed by gold until 1933 wun't it?
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8/21/10, 4:42 PM
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Hell_Is_Like_Newark said...
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Rodge: We actually had 6 different types of currency before FDR and LBJ mucked up the works. The United States treasury issued a fiat currency (United States Note), The Federal Reserve issued one back in gold, and the treasury issued gold back certificates as well.
General spending money was backed in silver, both in certificates (generally up to $5) and coin (which were 90% silver). Notes $10 and higher were backed in gold.
The dollar was originally only supposed to be silver coin. Gold was to be known as the 'Eagle'.
Some additional info here:
http://www.youtube.com/watch?v=1FiaUpeJxcA&feature=player_embedded
http://www.friesian.com/notes.htm -
8/21/10, 5:06 PM
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Rodger the Real King of France said...
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I feel like I own a talking encyclopedia of all knowledge here. Thanks Hellboy
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8/21/10, 5:13 PM
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Hell_Is_Like_Newark said...
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I started taking an interest in monetary systems of the past a couple years back. I pretty much see the USA headed for two scenarios:
1. Argentine type collapse with a rise of an autocratic, but not very functional central government (i.e. our IRA's and 401k's get seized). The government inflates its way out the debt crisis... which has been the rule for nations in decline since Emperor Marcus Aurelius increased the copper content in the gold coinage: Hyper-inflation was the result.
2. Formation of a 4th American republic: Pressing the economic 'reset' switch. Lots of defaults from the municipal level all the way up to the Federal govt. In the end, govt. shrinks to a size not seen since the 1920's (or maybe even the 19th century). Gold and silver become legal tender by default (the Federal Reserve note no longer has value) since currency backed by debt has been defaulted on. Trade and other financial transactions require hard assets backing them to be considered valid.
I break with the hardcore libertarians in regards to the demand that all fiat money and fractional reserve lending be terminated. I posed a question to the author of the video (see link in previous post) as to how a gold or silver system would work in a rapidly expanding economy when the supply of precious metals can't be pulled out of the ground fast enough to feed demand. What happens when the economy doubles in size but the supply of say gold is constant? If you took out a loan to start a business, you find yourself owing twice as much (since the cost of the gold back dollar just doubled). This would destroy long term investment as nobody would trust the price stability of the currency (in this case deflation, instead of inflation). This is what happened to the USA during the post Civil War industrial driven economic boom. The boom morphed into the Long Depression in part due to deflationary pressures. -
8/21/10, 5:37 PM
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Anonymous said...
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backed by gold until 1933
I remember paper money having "Silver Certificate" printed where "Federal Reserve Note" is now.
As far as I know, international dollar transactions and currency exchange rates were backed by gold until 1971. That year government gold coverage of the paper dollar declined to 22% because of heavy printing of paper money to cover Great Society/Vietnam War debt, Germany bailed out of the Bretton Woods gold/currency agreement, Switzerland redeemed about $50 million in Treasury paper for gold, France demanded about $200 million in gold for their T-paper, and Nixon refused, imposing wage/price controls to stop perceived inflation/price gouging in the USA and "shock" the world into order. Within a year or so after that, the world's major currencies were floating, no longer backed by gold.
I'm no economist, but it seems to me that allowing governments to "monetize debt" or prop up a failing economy by "quantitative easing", printing "money" as required, by whatever euphemism it's called, is a license for governments to buy votes by spending what they don't have, impose tyranny on the beneficiaries of that stolen "money" and to steal savings through inflation and to steal our children's future as well.
Supposedly Ponzi schemes are illegal, but not for governments, and BTW, ever see a Congressman go broke? I haven't either.
Lt. Col. Gen. Tailgunner dick -
8/21/10, 8:47 PM
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Anonymous said...
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fractional reserve lending be terminated.
I agree we can't do that without strangling our economy.
That said, "credit" comes from Latin "credere" -to believe - and when investing in stock becomes not making loans to expand a business, but outright gambling on hedges, derivatives, CDO's and all that other junk that do nothing for a business, when mortgage companies give loans to anyone with a pulse, making all their profit off fees up front and not caring about interest because they can dump all problems on the taxpayers through Fannie and Freddie, when the government can seize a private company and break contracts by paying off unions before bondholders and stockholders, the belief, the trust, the full faith and credit is gone, and everybody retreats to their cave and hoards whatever they have left while barbarians and brigands roam the land.
We need to restore something like Glass/Stiegall where savings institutions are that and not casinos, where mortgage companies hold the mortgage and protect their interests by screening their customers, to go back to 10% margin, not the 40 or 50 to 1 leverage seen in investment banking, to go back to when companies who take big risks and fail go out of business, to when bankers who short the very instruments they tout go to prison and not merely pay a fine that doesn't even match their profits on their skullduggery.
Until this changes, we are at the bottom of the Ponzi scheme and we are screwed.
Lt. Col. Gen. Tailgunner dick -
8/21/10, 9:14 PM
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Hell_Is_Like_Newark said...
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Tailgunner:
Bretton Woods was not a real gold standard.. It was in fact a fractional reserve system. We started printing so many dollars that the European nations lost confidence and demanded gold instead. Nixon refused to convert dollars to gold, which constituted a default on our obligations. Which in turn resulted in some pretty awful inflation during Nixon's reign.
Argentina in 2001 and Chile (back early in Pinochet's reign) did the same thing, except the US dollar was the reserve instead of gold. If I remember correctly, the Chilean peso lost something like 95% of its value almost overnight. Imagine that happening to us? Suddenly we can't afford clothes, food (half our seafood is imported now), and fuel because the Chinese, Saudis, etc. won't take our dollars.
We would find ourselves in the 9th configuration of economic hell. -
8/21/10, 10:42 PM
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Anonymous said...
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Hell_Is_Like_Newark -no argument there.
We printed that money because that MFCS bully Johnson wanted his war and a Great Society with a War on Poverty, and just like now with the Obama Society, there wasn't enough money in the whole world to do that without printing it as needed. We've only avoided an Agentina 2001 until now because of the enormous size of our economy and not being too far down the Ponzi letter chain. We're at the bottom now, with nobody to pass money to us, unless you count our unborn great-grand children.
in the 9th configuration of economic hell.
That's where we are headed, unless some political and banking heads roll on the way to restoring sanity, and it better be pretty damn soon.
Lt. Col. Gen. Tailgunner dick -
8/21/10, 10:58 PM
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Anonymous said...
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Hellboy, what were the 3 american republics?
thoR~
III -
8/22/10, 3:25 AM
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Hell_Is_Like_Newark said...
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thoR~:
I was referencing a rather profound essay posted at 'The American' sometime last year.
1st Republic: Ratification of the Constitution with a weak central govt. and powerful, almost independent State governments.
2nd Republic: Civil War resolved that sovereignty belongs to the nation first and the states second. Much stronger federal govt. and federal court system.
3rd Republic: New Deal (and later Great Society). Rise of the welfare state.
The above is a seriously abbreviated explanation of the theme of the essay. Best if you just read the whole thing here:
http://www.american.com/archive/2009/april-2009/the-coming-of-the-fourth-american-republic -
8/22/10, 8:58 AM
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