Paul Volcker gives Wall Street a "wake up" call

[Zebo]

Paul who? He'll be totally marginalized like this Women was:
http://www.pbs.org/wgbh/pages/front...epage&utm_medium=proglist&utm_source=proglist

 

[Zebo]

Suspension of the Gold Standard was so governments could finance wars and give handouts to people. People don't like taxes so they found another way. They are taxing you if you save dollars so don't save dollars. Simple as that. Buy gold or other hard assets or investments which rise in conjunction with inflation. There was a thread in OT asking how much you got in bank account - my answer was as little as possible - understanding each day that goes by I'm losing money keeping it in a bank account. I will continue to buy a little each month probably forever as it's a wealth preserver and a hedge against other investments which may go south. There is nothing you can do about boom and bust cycles, which are p psychological exuberance, gold had them too, they were just longer.

 

[First]

But why is it necessary for our money to lose spending power over time?

Workers would rather see their wages increase nominally (even if purchasing power doesn't change, or hell even if purchasing power decreases slightly) rather than see their wages deflate or stay stagnant regardless of what happens to real purchasing power. The average consumer doesn't think about purchasing power, so the kooks here claiming we should go back to the gold standard (and therefore deflation), don't really understand that people don't think or sometimes even understand in some cases that your purchasing power can increase even if your nominal wages decrease. Therefore the alternative is small annual inflation, which will usually lead to more spending and a healthier economy and more confident consumer than the inordinately strong dollar policies that would occur if we went back to gold standard and fixed exchange rates. And since we have always been far and away spending-driven, it's hard to argue against the floating fiat.

 

[Zebo]

And don't forget once all gold is lent out what do you do now? Economy freezes. You got a sweet idea for cure for cancer to bad better pan some gold first to build your lab. Very anti-entrepreneurial system gold is.

 

[bamacre]

And don't forget once all gold is lent out what do you do now? Economy freezes. You got a sweet idea for cure for cancer to bad better pan some gold first to build your lab. Very anti-entrepreneurial system gold is.

Actually, no. In your hypothetical situation, you, equipped with a cure for cancer, can afford to borrow money at a higher interest rate than others. And because you are offering to pay a higher interest rate, you can easily get a loan. You have to understand that while at any given time, there may be a limited amount of money (gold or whatever is backing the currency), there is still a value attached to it. So, it isn't "anti-entrepreneurial," it's just that loans go to the most productive, or those with the best ideas, or those with the best reputation of being able to pay it back. And considering what we are currently going through, does that really sound so bad? Think about that.

 

[Craig234]

1. Repeal Glass Steagall through the Gramm-Leach-Bliley Act (combined commercial and investment banking as well as insurance)

2. Commodities and Futures Modernization Act (expanded CDS)

3. FAS140 (not a law, but an accounting standard from FASB, which sets US accounting standards). (Allowed off-balance-sheet securitizations, hiding liabilities, while booking gain on sale)

4. US Treasury decreasing the capital requirements of banks (allowed banks to get out of control)

Those are the top 4

LK, nice going in te other posts refuting the gold standard posts - a summary of the real and good reasons to stsy off it mght help too.

But on this post, you answered a good question - top changes enabling the crash - but not the one he asked, what changes have been done after the crasdh to fix things.

The answer as far as I kow is 'very little' and many say we're set up for repetition.

 

[werepossum]

How does gold have any inherent value?

It is a fiat currency, it's only worth what the collective insanity of humanity says it is worth. You can't eat it, you can't use it (80-90% of gold is used for worthless human baubles), you can't transport it easily. It's value is ONLY set by it's perceived worth as a medium of transaction.

Wait, doesn't that last sentence also describe paper currencies?

Unlike paper currencies gold has intrinsic value because people want it and because it is rare; the supply of gold cannot easily be inflated. Gold must be mined and extracted and takes extensive labor to increase the supply; paper money literally grows on trees and the supply can be grown exponentially almost without cost. It's true that people have to want it, but that is true of literally any commodity. If people stop eating steak and living in houses, then steak and houses cease to have any value, but commodities cannot be exponentially inflated at will - unlike currency.

 

[Zebo]

Unlike paper currencies gold has intrinsic value because people want it and because it is rare; the supply of gold cannot easily be inflated. Gold must be mined and extracted and takes extensive labor to increase the supply; paper money literally grows on trees and the supply can be grown exponentially almost without cost. It's true that people have to want it, but that is true of literally any commodity. If people stop eating steak and living in houses, then steak and houses cease to have any value, but commodities cannot be exponentially inflated at will - unlike currency.

Who cares? Your paper is easily convertible to gold if you want that buy it@monex

In fact I suggest it Gold will be at $5000 in 4 years way Obama is running the presses. Inflation only hurts savers of cash or those on fixed income if said income doesnt keep up with inflation rates.

 

[werepossum]

Who cares? Your paper is easily convertible to gold if you want that buy it@monex

The point wasn't that gold was unavailable, the point was that our current system of allowing the Fed to create money in Their Wisdom has in part caused the decline of the value of the dollar. Some think the answer to that is to give the power of inflation back to government, some think the answer is to tie money to tangible wealth (gold or similar standards), and some think the answer is to suck it up and ride that dollar all the way to the bottom - just make the bills bigger so there's room for all the extra zeros needed to buy a loaf of bread.

 

[ebaycj]

The picture inked on and the extra 0 inked on. It doesn't represent anything.

I'm pretty sure that's what zero is supposed to do. Not represent anything. Or Represent Nothing. I can't remember which.

 

[StageLeft]

1. Repeal Glass Steagall through the Gramm-Leach-Bliley Act (combined commercial and investment banking as well as insurance)

2. Commodities and Futures Modernization Act (expanded CDS)

3. FAS140 (not a law, but an accounting standard from FASB, which sets US accounting standards). (Allowed off-balance-sheet securitizations, hiding liabilities, while booking gain on sale)

4. US Treasury decreasing the capital requirements of banks (allowed banks to get out of control)

Those are the top 4

What has been put into law SINCE this kicked in, though? What has Congress been doing to avoid a recurrence?

 

[drebo]

You don't get it; gold doesn't fix that problem, because it doesn't really represent anything different or significant.

It absolutely does. It represents a fixed asset whose value remains the same whether the US dollar has gone bust or not. Gold will still be worth money to other nations. Additionally, gold's value is set by the free market, not an organization over which the public and its elected officials have no control or oversight.

I'd prefer a currency based in a tangible good. If the government tried to introduce more money into the market and dilute the value of the dollar, I could simply stockpile more gold. Right now, I can't do anything about it and the government has no checks or balances when it comes to printing money. The Fed can do it at will.

If you don't want it abolished, then you should at least recognize the need to audit the Fed (another thing we are forbidden to do) and require that its decisions be brought before a congressional panel.

The Fed is not needed, however, as the free market will determine the worth of a currency just fine.

 

[drebo]

What has been put into law SINCE this kicked in, though? What has Congress been doing to avoid a recurrence?

Absolutely nothing. There are only attempts to alliviate the symptoms, which will only prolong the recession or make it worse. Congress as a whole has no reason to try and fix it because they all make so much money off of the broken system the way it is now (whether through direct ties to the banking industry/Wall Street or lobbyists).

 

[drebo]

Who cares? Your paper is easily convertible to gold if you want that buy it@monex

Gold has several distinct disadvantages at this particular time. Capital gains taxes and sales tax are just two of them.

 

[sandorski]

It absolutely does. It represents a fixed asset whose value remains the same whether the US dollar has gone bust or not. Gold will still be worth money to other nations. Additionally, gold's value is set by the free market, not an organization over which the public and its elected officials have no control or oversight.

I'd prefer a currency based in a tangible good. If the government tried to introduce more money into the market and dilute the value of the dollar, I could simply stockpile more gold. Right now, I can't do anything about it and the government has no checks or balances when it comes to printing money. The Fed can do it at will.

If you don't want it abolished, then you should at least recognize the need to audit the Fed (another thing we are forbidden to do) and require that its decisions be brought before a congressional panel.

The Fed is not needed, however, as the free market will determine the worth of a currency just fine.

The $$s value is set by the Market on actual tangible Values, unlike Gold.

 

[LegendKiller]

The point wasn't that gold was unavailable, the point was that our current system of allowing the Fed to create money in Their Wisdom has in part caused the decline of the value of the dollar. Some think the answer to that is to give the power of inflation back to government, some think the answer is to tie money to tangible wealth (gold or similar standards), and some think the answer is to suck it up and ride that dollar all the way to the bottom - just make the bills bigger so there's room for all the extra zeros needed to buy a loaf of bread.

The inflation of prices and decline of the dollar makes no difference provided long-term wages keeps up with long-term inflation. They have, thus, any arguments against the dollar are irrelevent.

Absolute currency valuations are worthless, PPP is all that matters.

 

[JS80]

It absolutely does. It represents a fixed asset whose value remains the same whether the US dollar has gone bust or not. Gold will still be worth money to other nations. Additionally, gold's value is set by the free market, not an organization over which the public and its elected officials have no control or oversight.

I'd prefer a currency based in a tangible good. If the government tried to introduce more money into the market and dilute the value of the dollar, I could simply stockpile more gold. Right now, I can't do anything about it and the government has no checks or balances when it comes to printing money. The Fed can do it at will.

If you don't want it abolished, then you should at least recognize the need to audit the Fed (another thing we are forbidden to do) and require that its decisions be brought before a congressional panel.

The Fed is not needed, however, as the free market will determine the worth of a currency just fine.

Why can't you just convert all your dollars to non-dollar assets? And as soon as you get your paycheck buy GLD? Problem solved.

 

[zephyrprime]

What we really need to do is outlaw fractional reserve banking. Full reserve banking is the only fair form of banking.

Volcker is right about financial innovation being a non-existant thing. In reality, financial innovation is merely a euthenism for new forms of financial theft.

 

[First]

It absolutely does. It represents a fixed asset whose value remains the same whether the US dollar has gone bust or not. Gold will still be worth money to other nations. Additionally, gold's value is set by the free market, not an organization over which the public and its elected officials have no control or oversight.

How does gold's value remain the same whether the dollar goes bust or not, that literally makes no sense. Gold fluctuates like anything else, and it's a horrible long-term investment, worse than practically any investment you could make over a long period of time. It's nothing more than a hedge against inflation and merely represents what people are willing to pay for it and nothing more, just like other money and equity. These "other nations" that gold will still be worth money to are who, exactly? 3rd world countries? Because every single nation uses fiat currency save for nations that don't have economies to begin with. Fiat, whether it's the dollar or not, will always be worth more than gold because people don't want to use gold as a form of exchange. Welcome to the 21st century.

I'd prefer a currency based in a tangible good. If the government tried to introduce more money into the market and dilute the value of the dollar, I could simply stockpile more gold. Right now, I can't do anything about it and the government has no checks or balances when it comes to printing money. The Fed can do it at will.

If you don't want it abolished, then you should at least recognize the need to audit the Fed (another thing we are forbidden to do) and require that its decisions be brought before a congressional panel.

We've been able to audit the Fed for a good few decades now.

The Fed is not needed, however, as the free market will determine the worth of a currency just fine.

Got any examples of the free market successfully determining interest rates and avoiding catastrophes in U.S. history or any other nation's history in the last, say, 100-150 years? Nope.

 

[Zebo]

and it's a horrible long-term investment, worse than practically any investment you could make over a long period of time.
-----------
BS - 35 in 70 to $1132 now is pretty good. Better than etoys or a house in Detroit for example (and millions of other that went to zero)

No it's not the best investment there are better but it's not the worse either. It's a store of value with minor speculation.



merely represents what people are willing to pay for it and nothing more,
-----------------------
The lowest it can represent is mining costs to get it out of the ground which is about $225.

 

[First]

and it's a horrible long-term investment, worse than practically any investment you could make over a long period of time.
-----------
BS - 35 in 70 to $1132 now is pretty good. Better than etoys or a house in Detroit for example (and millions of other that went to zero)

No it's not the best investment there are better but it's not the worse either. It's a store of value with minor speculation.

Gold was over $800/ounce in 1980. Factor in inflation and it has lost a ridiculous boatload of value even at its current price of $1132. Stocks have absolutely destroyed gold over that period of time.

 

[BoberFett]

Gold was over $800/ounce in 1980. Factor in inflation and it has lost a ridiculous boatload of value even at its current price of $1132. Stocks have absolutely destroyed gold over that period of time.

The DJIA was 14,000 in 2007, so I guess the stock market is a terrible investment also.

See! I can cherry pick data too!

 

[Zebo]

Gold was over $800/ounce in 1980. Factor in inflation and it has lost a ridiculous boatload of value even at its current price of $1132. Stocks have absolutely destroyed gold over that period of time.

Ridiculous to chose gold price in speculative market. Should I pick stock in spring of 07 to show dows underperformance? You either didnt understand meaning of my post or are being dishonest is this debate. Try again

 

[Zebo]

The DJIA was 14,000 in 2007, so I guess the stock market is a terrible investment also.

See! I can cherry pick data too!

Or how about NASDAQ 5000 :rolol

Then there is the droping listing of underperformers in the tickers which vastly overrates stock performance

Again Yeah you could have bought Microsoft and made some serious bank. Or bought etoys or millions of others and lost it all. Or bought Gold and preserved your wealth with inflation never zero never a barn burner..

 

[Zebo]

bober - Gold may be in a speculative market right now similar to 1980. If you think hyperinflation will occur it's not at all but if real recovery occurs and govt stop printing and gets debt financed it will drop to about $600. So be careful.