Ragnarok
13th August 2010, 07:22 AM
A good read and a breath of fresh air for the Thoughtful gold holder:
http://fofoa.blogspot.com/2010/08/confiscation-anatomy-part-2.html
Snip:
"So it was the US dollar’s fixed relationship to gold and the dollar’s use as an international bank reserve, equally interchangeable with gold, that caused a “shortage of REAL money.†And as we’ll see, this would happen again and again.
FDR’s confiscation and revaluation of gold did not increase its use as money as the solution to the money shortage. What it did was increase the percentage of the official US gold hoard as a portion of total US reserves to a level that would sustain centralized balance of payment clearing for a few more decades. In essence, it restocked the one-way gold market known as the international gold exchange standard. Gold is always a one-way flow (out) when the price is fixed. That’s why to get any “in-flowâ€, you have to force it!
__________________________________________________ ________
Sidebar: I am certainly not defending the actions of FDR. They were obviously hideous. But I am making the point that it is extremely important to view history as objectively as possible when deducing the future. Otherwise you inadvertently end up applying inductive reasoning, which leads to qualitatively different conclusions than deductive logic. Chicken Little used inductive logic.
Here is an example of inductive reasoning/logic:
1. All of the swans we have seen so far are white.
2. Therefore, all swans are white.
It is a form of logic that allows for a false conclusion even when the premises are correct.
Now here’s an example of deductive reasoning:
1. All fiat currencies are eventually worth no more than toilet paper.
2. The dollar is a fiat currency.
3. Therefore, the dollar will eventually be worth no more than toilet paper.
The difference is that deductive reasoning presents a conclusion that must necessarily follow the set of premises. Inductive reasoning, the kind that leads to fears of confiscation, does not.
I always try my best to engage only in deductive logic, because I don't like surprises.
__________________________________________________ ________
In hindsight, if FDR had instead declared the US gold window to be a two-way (buy and sell) physical gold exchange, open to all, not at a fixed price, but instead at a global market-discovered floating gold price, the economic and monetary results would have been the same, only without the nasty confiscation and repulsive criminal penalties… and it would have been perpetually sustainable."
Much more at link.
fyi, R.
http://fofoa.blogspot.com/2010/08/confiscation-anatomy-part-2.html
Snip:
"So it was the US dollar’s fixed relationship to gold and the dollar’s use as an international bank reserve, equally interchangeable with gold, that caused a “shortage of REAL money.†And as we’ll see, this would happen again and again.
FDR’s confiscation and revaluation of gold did not increase its use as money as the solution to the money shortage. What it did was increase the percentage of the official US gold hoard as a portion of total US reserves to a level that would sustain centralized balance of payment clearing for a few more decades. In essence, it restocked the one-way gold market known as the international gold exchange standard. Gold is always a one-way flow (out) when the price is fixed. That’s why to get any “in-flowâ€, you have to force it!
__________________________________________________ ________
Sidebar: I am certainly not defending the actions of FDR. They were obviously hideous. But I am making the point that it is extremely important to view history as objectively as possible when deducing the future. Otherwise you inadvertently end up applying inductive reasoning, which leads to qualitatively different conclusions than deductive logic. Chicken Little used inductive logic.
Here is an example of inductive reasoning/logic:
1. All of the swans we have seen so far are white.
2. Therefore, all swans are white.
It is a form of logic that allows for a false conclusion even when the premises are correct.
Now here’s an example of deductive reasoning:
1. All fiat currencies are eventually worth no more than toilet paper.
2. The dollar is a fiat currency.
3. Therefore, the dollar will eventually be worth no more than toilet paper.
The difference is that deductive reasoning presents a conclusion that must necessarily follow the set of premises. Inductive reasoning, the kind that leads to fears of confiscation, does not.
I always try my best to engage only in deductive logic, because I don't like surprises.
__________________________________________________ ________
In hindsight, if FDR had instead declared the US gold window to be a two-way (buy and sell) physical gold exchange, open to all, not at a fixed price, but instead at a global market-discovered floating gold price, the economic and monetary results would have been the same, only without the nasty confiscation and repulsive criminal penalties… and it would have been perpetually sustainable."
Much more at link.
fyi, R.