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The Gold Standard: Can't Live With It, Can't Live Without It

The Pentagon was soley responsible for the dollar decoupling from gold.
An operating old standard creates, or is associated with, many advantages: 1) stable foreign exchange rates; 2) free multilateral clearing of currencies among nations; 3) the maximization of multilateral foreign trade; and, 4) relatively stable price levels e.g., no chronic inflation. All that is required to achieve this economic utopia is a 1) world free of major wars, depressions and cartels (OPECs); 2) markets with downward price flexibility, that is , true price competition; 3) creditor nations which impose no significant restraints on imports; 4) monetary authorities who abide by the “rules of the game”, i.e., the central banks expand credit (create commercial bank legal reserves) when gold stocks expand, and vice versa; 5) monetary authorities who restrict the expansion and contraction of central bank credit within a very narrow range, thus preventing the commercial banks from creating an unsupportable volume of credit money (transaction deposits); and, finally, 6) a world where the reserve currency countries (those countries whose currency serves as a store and standard of value as well as a transactions currency) never operate with chronic deficits in their balance of payments.

John Lee Responds to Nobel Laureate Stiglitz's Subprime Thesis

"Americans worry about their dependency on imported energy, but the $145,368,000,000 paid to OPEC in 2006 is a small part of the total import bill. Americans imported $602,539,000,000 in industrial supplies and materials; $418,271,000,000 in capital goods; $256,660,000,000 in automotive vehicles, parts and engines; $423,973,000,000 in manufactured consumer goods; and $74,937,000,000 in foods, feeds and beverages." Paul Craig Roberts

John Lee Responds to Nobel Laureate Stiglitz's Subprime Thesis

Some of the craziest shit I've ever read.

"Remove the government as the safety net and return the responsibility back to the people." We already went through that experiment many many times. That's why the Federal Reserve System was established.

"Until then, dollar will continue to lose value and gold and oil will continue to rise in dollar terms." (1) While the prudential reserve E-D market exerts downward pressure on the dollar, it is the current account deficit that that is the principal villian. (2) It is the current account deficit that feeds the E-D market. (3) The U.S. must drastically reduce our dependence on foreign oil, (4) eliminate our foreign multilateral claims on the dollar (our far flung military bases, e.,g., Korea, Germany, etc, and the wars in Afghanistan & Iraq) and (5) sell higher quaility and lower cost goods & services. And I bet these remedies will never be considered let alone take place.

But an even greater impediment to our "free wheeling speculation" is acquiring a technical staff that knows:

A. the difference between the supply of money and the supply of loan funds.

B. the difference between means-of-payment money and liquid assets.

C. the difference between financial intermediaries and money creating institutions.

D. recognize aggregate monetary demand is measured by the monetary flows (MVt) not nominal GDP.

E. recognize that interest rates are the price of loan-funds, not the price of money

F. recognize that the price of money is represented by the price (CPI) level.

G. & realize that inflation is the most important factor determining interest rates, operating as it does through both the demand for and the supply of loan-funds.

The U.S. will of course never understand, nor realize these objectives.