Comments by "Wojtek The Bear" (@wojtekthebear4958) on "The History of Paper Money - The Gold Standard - Extra History - Part 6" video.

  1. I kind of wish they had more time to talk about these events as they glossed over many of them, like the Great Depression. There were problems with the gold standard not mentioned in the video that many economists today say was the cause for said depression. Basically economists think the gold standard caused the depression.
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  2. OmegaFoxxtrot It should be pointed out that nearly every country left the gold standard for purely economic reasons, though some of them reasons may have their roots from World War 1.  With the Great Depression causing a lot of economic strife, countries were just beginning to start using Keynesian economic thinking. This thinking didn't go well with the gold standard though, and, because of this and other problems relating to said standard, it was eventually dropped to allow central banks to take a more active role in the economic recovery. Basically, the gold standard was dropped due to the Great Depression, but some of the roots of the Great Depression were in WW1 (and the gold standard itself).
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  3. OmegaFoxxtrot Not really, the gold standard has serious problems with it besides the fact that it stops countries from going to war. For one, it is very unstable, forcing countries to go through intense periods of inflation and deflation. Deflation, as you may know, is terrible for an economy, and almost always involves in contracting. This is widely blamed for causing the Great Depression, as most of the European countries entered this deflationary environment at the same time, severely hampering the exporting industry of the United States. Sources: http://isites.harvard.edu/fs/docs/icb.topic467999.files/October%2022%20and%2027%20-%20Trade%20Money%20and%20Finance/Eichengreen.pdf and http://www.nber.org/papers/w16350  Also, as the latter shows, it isn't hard for one entity to control most of the world's gold stock. The United States did so after both World War 1 and World War 2 after all.
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  4. Joe Vasicek Haven't I seen you before? Heck, I'm pretty sure I've debated you on this before. I am talking about short term inflation and deflation; you are talking about long term. As Keynes said: In the long term, we are all dead (something like that anyway). The average inflation rate under fiat currency has been 2%, which is very good and stable in the short term. In fact, it benefits the economy, not hampers it, as it encourages consumer spending and offers a buffer against deflation. Let's compare the Great Depression and the Great Recession, shall we? Until the repeal of the gold standard in 1933, the US economy experienced deflation of about 1.5% a year. (http://www.doctorhousingbubble.com/wp-content/uploads/2008/06/greatdepression-deflation.jpg) During the Great Recession under fiat currency and greater monetary control, the US (and EU) were largely able to escape entering deflation (http://www.gallatinrivercapital.com/wp-content/uploads/2014/09/Inflation-Rate-Chart-e1410975437193.jpg) To know more about why deflation is bad besides the link I provided previously, look here (http://www.economist.com/blogs/economist-explains/2015/01/economist-explains-4) and here (http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation-bad/?_r=0). To see why low amounts of predictable inflation is good, look here (https://www.federalreserve.gov/faqs/economy_14400.htm) and here (http://www.investopedia.com/ask/answers/111414/how-can-inflation-be-good-economy.asp) Finally, I do want to point out that fiat currency does not necessarily mean inflation. The Fed could target an inflation rate of zero and not really create currency (unless the velocity of money falls), but they instead find the 2% rate to be beneficial as one of the links I provided shows.
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  5. Yes, because your explanation is stupid. The only thing you HAVE to pay with USD is government taxes. Anything else you buy can be bought with any other currency. There's no law demanding grocery stores sell their products for USD, and there's no 'men with guns' demanding it either. The store choses to sell their products for USD as they are a stable, easily available currency valued by market forces.
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  6. Joe Vasicek Oh, you had more to your argument. Sorry, I'll address those too. 1. Deflation equals market correction. No, no it doesn't. The economy didn't fully recover until 1941-1942, when the United States entered World War 2. As you can see from this chart though (http://3.bp.blogspot.com/-ULZmy2UuiOU/UTecwCW40-I/AAAAAAAAC-w/yCgkboCwmUA/s1600/great+depression.jpg), there was no deflationary pressure "correcting" the market at the time. You're treating deflation as a medicine for the economy, when in reality its a symptom of the problem. 2. Something Something Labor Force Participation Rate The downward effects on the LFPR have little to do with discouraged workers from the economy. Don't believe? Type in "On the Causes of Declines in the Labor Force Participation Rate" into Google and you'll get a pdf from the Philadelphia Federal Reserve. I'd love to link it directly to you, but as a pdf I can't directly link it to you. Anyway, they cite three main reasons for the LFPR to have been declining. a. Disability payments have been rising since 2000, resulting in more people leaving the labor force. b. The baby boomers, the generation making up the largest segment of the population, are finally reaching the age of retirement, also lowering labor force participation rate. c. The younger generations require more years of education/training to acquire there specialized job (think college) so they aren't able to enter the workforce as quickly. Of these, the baby boomers make the greatest impact, but all three put together make up the fast majority of the downward pressure on the LFPR, not discouraged workers. 3. Are you blaming all that on fiat money? I can tell you the gold standard isn't going to stop the business cycle if that is your argument.  
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  7. Joe Vasicek Our monetary policy isn't Keynesian. Mainstream economics doesn't follow the Keynesian or Neo-Keynesian schools of economics. Instead it's a mesh of different monetary ideas. Actually, besides the economic recession, which is a statistical outlier, we are in a great place! Here's the growth of one of our stock market indexes since the 1970's (http://www.bankonyourself.com/wp-content/uploads/Dow-Growth-0173-to-08111.jpg). It grew exponentially Here's our GDP per capita (http://www.tradingeconomics.com/united-states/gdp-per-capita). Also grew by a large margin. Here's our GDP since 1900-ish (http://users.econ.umn.edu/~tkehoe/U.S.GDP.gif). I'm not saying this proves me right, but its interesting to note that the GDP growth actually looks a little steeper after the Great Depression than before. And here is the US inflation rate since 1916 (http://www.aboutinflation.com/_/rsrc/1369736776695/inflation-rate-historical/us-inflation-rate-historical-chart/US_Inflation_Rate_Historical_1916_2012.png). It has stabilized a lot. It also shows you how unstable our monetary system was under the gold standard, though we were more stable under Bretton Woods. What else is there? Unemployment? (http://2.bp.blogspot.com/-mnJY5hilQEM/UJBQMUrjDNI/AAAAAAAABGY/6t4th1t6WRw/s1600/US+Unemployment.bmp) Still nothing seems to have changed. So, I fail to see how this has been a detriment to our economy. Inflation does not hurt the poor more, far from it. Inflation hurts savers more as the money they save loses value. As the poor usually spend their money instead of saving it, it doesn't affect them as much. Example 1: If both me and a saver both earn $100 and I decide to spend it immediately while the saver saves it, who is most effected? Well I get the full value of the $100 and buy it on whatever. The saver deposits it in his bank and waits, I don't know, five years to spend it. Average inflation is 2% a year, so the value of his deposited money is $90. Well actually it's a little more as the 2% isn't always coming off of the full $100, but I'm not doing that much math and the result is still the same. The saver has just lost money. Here's another reason your argument doesn't work. No matter how many assets I own, inflation is still going to eat the same percentage of it, so inflation isn't eating any more of the assets of the poor as a percentage as the rich. Example 2: Inflation rate of 2%. I, a poor person, have $100 to my name. Mr. Schmoe, a rich person, has a $100,000. At the end of the year, how much does inflation eat up? Well 98% of $100 is $98, and 98% of $100,000 is $98,000. Which one of us was effected more? Well as a nominal value the rich person actually, but as a percentage of our assets it's the same. Also do you have a source for your Romance example? It's not that I doubt you; I'd just love to read about the topic myself as it's a question I never really considered. Actually the USD is an excellent store of value as it's so stable. Don't believe? Why do you think countries like Guatemala have adopted it as their official currency? Or why doing you thin 85% of FX trades are done in it? (http://www.bis.org/publ/rpfx13fx.pdf). This is also shown in our low interest rates on government bonds. If the currency was more unstable, the investors wouldn't buy the bonds unless they were sold at a higher rate. Ironically many economists would probably argue the exact opposite of your conclusion. You're conclusion seems to be Keynesian economics fails and we should let the free market reign supreme (which it mostly already does) as then the rich won't be so powerful. While European countries, which follow a more socialist route, don't have the issue of the rich and the poor as incomes are much more evenly distributed, the US, which is much more free in its markets, has a more unequal system. Therefore, some would say, the US should move closer to their economic systems. Note: I do not subscribe to socialism or communism as I don't find the inequality to be much of an issue.
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  8. Joe Vasicek Uh yeah, just about everyone knows about the business cycle. I'm glad you know too? Uh, no, WW2 definitely ended the Depression and I find it strange that you would say otherwise. I mean just think of all the war materials as ordinary goods and the US government as a business. The draft and enlisting into the army decreased the unemployment rate as men found jobs in the army. Goods were being churned out of factories to fuel the war effort, going to China, Britain, Russia, Norway, etc. This improved the profits of these factories, who paid their workers, who then used the money to buy crap, like food and war bonds. Here's the unemployment rate dropping from 10% to 2%, which is considered well within full employment (http://betweenthenumbers.net/wp-content/uploads/2011/10/unemployment4.jpg). Note, full employment does not mean 0% unemployment as there will always be frictional unemployment. In 1941 and 1942 the economy grew by 18% and 16% respectively (http://economics-charts.com/images/gdp-1929-2004-semilog.png). Heck, we head so many things being produced that we needed people in the workforce, which is why women began working in factories during WW2. So yes, the war definitely was a boost to the American economy and ended the Great Depression. Sure, the economy needed to transition from a war economy to a consumer focused economy after 1945, but that was a different issue, namely a new depression in 1946 (http://cepr.net/blogs/cepr-blog/clearing-up-some-facts-about-the-depression-of-1946), not a continuation of the Great Depression. I do agree that on the net wars destroy wealth, not create it, but the wealth was destroyed in Europe, not the United States. Instead, the United States economy (not the government) was able to profit off of the war by selling war supplies, which did generate wealth.
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  9. Joe Vasicek I'm not here to argue the morality of such decisions, only the economic effects they caused. In other words, it's irrelevant to the topic of conversation. Actually GDP probably wouldn't go up to much of a degree if people got cancer. After all, where's the money to pay for it coming from? If people are paying for medical treatment, they have less money for other activities. It's not like an individual has an unlimited quantity of resources that they can just spend on whatever they need/want. Similarly, the job to dig holes and fill them up would only boost GDP if the money wasn't being used previously as otherwise the same money would be spent on something else, like cancer research for the giant cancer epidemic that has effected everyone. Long term GDP is only effected by the supply curve in the long term as the supply curve is completely inelastic. It doesn't matter how much demand there is for goods in the long term, the economy can only produce so much, giving us said inelasticity. This means that to reach a short term goal, like getting out of an economic depression, they might try to bolster aggregate demand, to reach a long term goal they wouldn't. As already shown with two different academic sources on the topic, the depression was caused by a contraction in the economies of the European nations due to deflationary pressure as they didn't control enough gold stock. This hurt the exporting industry of the United States, which hurt other industries in the United States, which brought on Black Tuesday, the worst day of the American stock markets in history. Black Tuesday was therefore caused by the hysteria over the decreased expectations of the stock market, leading to a decrease in consumer spending and the velocity of money, bringing along with it deflation, banking panics, etc. Do you know what a business cycle is? The repeated boom and busts brought on by the increasing and decreasing expectations of the economy, and the hysteria that can happen when these expectation fall (http://www.investopedia.com/terms/e/economic-cycle.asp?lgl=bt1tn-baseline-below-textnote). Let's go over some busts in history shall we? Panic of 1837- caused by a closing of the National Bank of the United States and leading to a deregulation of the Banking industry. This brought on deflation, huge unemployment (possibly worse than Great Depression), and the bankruptcy of almost half the banks in the United States (https://en.wikipedia.org/wiki/Panic_of_1837) Long Depression- caused by the United States leaving the silver standard as a huge portion of the money supply vanished, causing inflation. This lead to the largest economic contraction in history, bankruptcies of even more banks, 18,000 businesses, and a decline in manufacturing by about 10% (https://en.wikipedia.org/wiki/Long_Depression). Panic of 1907- Caused by a reduction in the availability of money due to banks overleveraging themselves, and a loss of confidence in their depositors. This lead to a near collapse of the stock market, many trusts going belly up, and J.P. Morgan (and others), stepping in to personally insure the deposits at banks (https://en.wikipedia.org/wiki/Panic_of_1907). These are just a few of the major economic downturns in American history. None of these were caused by economic regulation by the government, in fact the Panic of 1837 was caused by deregulation. So, as the economic consensus goes, no one entity causes the business cycle, it has existed since forever. We can even go all the way back to the Tulip bubble, one of the first in history, to see that. What causes the booms and busts in the change in expectations of the economy, which can turn into hysteria is expectations change to rapidly. I decided to ignore your comments on FDR because I'm 90% positive I already talked to you about him before and this would just be going in circles then.
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  10. ***** The video mentioned that the countries still on the gold standard (which was almost all of them) were hamstrung during the recovery, but it didn't say that the standard was the cause of the depression itself.
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  11. It's valued through supply and demand like ever other good on the market.
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  12. No, most countries were hamstrung. As this graph shoes (https://upload.wikimedia.org/wikipedia/commons/b/b5/Graph_charting_income_per_capita_throughout_the_Great_Depression.svg) nearly every country noticed an improvement during the Great Depression once they dropped the gold standard.
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  13. deathschool91 Those are the fault of business cycles and the over-speculation, not fiat money itself.
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  14. deathschool91 That's completely false. Me overvaluing certain stock and not adequately weighing the risk of my investments has nothing to do if my money is paper, digital, or commodity based. This is evident in the tulip bubble (https://en.wikipedia.org/wiki/Tulip_mania), Black Tuesday (https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929), the Mississippi Bubble (https://www.britannica.com/event/Mississippi-Bubble), etc. All bubbles and crashes that happened with commodity based currency. If you want something more related to the Financial Crisis, we have the Panic of 1837 (https://en.wikipedia.org/wiki/Panic_of_1837) and the Long Depression (https://en.wikipedia.org/wiki/Long_Depression). Like I said, the currency we use has nothing to do with business cycles or stock market bubbles. 
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  15. Antilli Does the Treasury participate in fractional reserve banking? No. Isn't money lent out with interest and has to be paid back? Yes, but that has little to do with anything. Money doesn't just disappear when it's used up. My dollar isn't burned by the government when I pay taxes or buy something from the store. Instead it is then used by the store owner/government and may eventually end up back in my hands. This means that it is possible to pay back all of the debt owed to banks as the circulation of money will eventually bring it back to you. Think about it this way. there are currently 1.2 trillion US dollars circulating, and yet the US GDP is approaching $18 trillion. How can the US sell so much worth of goods with such little currency? Because the currency continues to flow after a single transaction and isn't just burned up. Moving on to inflation. Inflation is the increase in prices due to the increased liquidity of currency. Basically, as money is used more, demand for products rises, meaning that firms raise prices to keep their goods at their equilibrium point. This increase in price is called inflation. Inflation isn't only caused by an increase in the money supply though, but also the velocity of money, or how quickly it circulates throughout an economy. It is talked more in depth relative to inflation here (http://www.investopedia.com/terms/v/velocity.asp?lgl=no-infinite). As another example, why did we experience very little inflation even after the quantitative easing imposed? The Fed injected the economy with over a trillion dollar worth of debt forgiveness and bond purchases (http://www.heritage.org/research/reports/2014/08/quantitative-easing-the-feds-balance-sheet-and-central-bank-insolvency), and yet inflation barely rose above 2%, the target rate. It's because after the initial injection, banks did very little with the money, and consumer spending already fell, so the speed and which the dollar was circulating fell drastically. This lead to the liquidity injection bringing very little inflation along with it. Taxation is definitely a service you can cancel. Just leave. Otherwise, the government performs several key functions to the people  that require money to maintain. If you don't like it, show that through your vote. Ironically as we live in a democracy, it is literally something you agreed to. It's even written into the US constitution that Congress will control all taxing and spending. Last I checked it was ratified by every single state.
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  16. When the US abandoned the gold standard, the USD was still the most reliable and abundant currency out there, so most countries still use it to this day in foreign exchange trades. I think it's about 87% of all foreign exchange trades involve the dollar.
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  17. We don't do that. Its against the Federal Reserve's policy to do that.
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  18. Yep, look at our rampant inflation right now! What are we at, like .5%? Scary!
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  19. waldosan Yeah, that's because low amounts of predicted inflation are good for the economy as they encourage consumption. Deflation on the other hand is bad for economic growth. In fact the Great Depression is commonly thought to have been caused by many European countries deflating their economies at once (http://www.nber.org/papers/w16350). Yes, in the long run our currency will lose its value, but one: in the long run we are all dead (attributed to Keynes), and two, we can always replace the currency with one more valuable when that happens. Sure during hyperinflation that's bad, but not with inflation such as ours. 
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  20. waldosan You have some fundamental misunderstandings of our financial system here. First, your savings account interest rate is almost never supposed to be over inflation. Banks wouldn't make money that way. You have to remember that the same inflation that eats into your interest also eats into the bank's interest on a loan. The interest in your savings account is just an incentive for you to store your money there, not a way to make money. Anyway, our inflation rate is not nearly as large as you think it is. As +mkvenner2 said, it's targeted at 2% a year, and over the past couple of years has been less. In 2015 it was .12% (http://inflationdata.com/inflation/inflation_rate/currentinflation.asp). Yes, it didn't even reach 1%, much less 2. Even if it was 2% inflation though, it would take 50 years for the value of the dollar to be halved, which is still within reasonable grounds for it's use. Sure, we might get rid of the penny, but considering we still use that and other such coins, the dollar has a long ways to go before it's value deteriorates too much.
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  21. The supply of it in circulation and how quickly it changes hands. Basically money becomes more easily usable the more it's printed, so for a business to stay in equilibrium on the supply and demand graph, they have to raise prices to match the increased demand. This rise in prices (and wages) is what's known as inflation, which determines the value of the dollar domestically.
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  22. KamuiFTW It's supply and demand, the same thing that governs basically every single market ever. 
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  23. Raises have nothing to do with fiat currency. That only deals with supply and demand and the principle-agent problem.
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  24. Gyrre No, that's like blaming fiat currency for our poor healthcare system. The two are not related in the least. The reason politicians get raises is because they have different goals in office than the people who put them there. Because of this, they say one thing during the election cycle, and do another when they are actually elected, making it hard for the electing body to judge a candidate. Then supply and demand factor into their pay because the government obviously wants to incentive technocrats going into government, but technocrats are usually paid a crap ton of money in the private sector, so the government has to find some way to match it. I can't talk about the deregulation maneuvers of Clinton or Reagan though as those subjects rarely interest me. 
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  25. Gyrre I'm still confused how this relates to money backed by the government..... 
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  26. They didn't. The US didn't much like Bretton Woods either and knew that they couldn't give everyone the gold they wanted due to the overvaluation of the US dollar, so they give it up.
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  27. If only economics agreed with you.
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  28. What? No, not at all. Even without inflation, the Entente powers during World War 1 were able to pay for their war effort through foreign loans, namely loans from the US. You could say this was some nefarious plot to promote war, but at the same time when you native home is at war, you tend to want to help them however you can. So why are monetary systems almost always handled by a singular entity somehow tied to the government? Because that's the best way to create a stable currency. If private banks were to print their own currency, the currency would no longer be as stable as private banks have perverse incentives. Basically they are for profit. What if their profits don't look good enough? Well they could just print more money. Who really cares that this leads to inflation as long as our financial statements look nice! This also makes banks nearly impossible to regulate. What's the FDIC supposed to do when a bank that uses its own currency collapses? Pay the depositors in the now worthless bank currency? Use a different currency entirely? Not do anything and cause banking panics? Another thing to note is that central banks, while a part of the government, rarely are influenced directly by it. For instance the Federal Reserve has a dual mandate: keep inflation and unemployment low. As long as these objectives are met, they are no obligated to do anything else. They also have little reason to do anything else since, while facing some oversight from Congress, Congress has no direct authority over them. The only thing that can happen is that the Fed chair can be replaced by someone else, but they are only one of nine members on the regulatory committee.
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  29. oasntet As the video said, the US, along with just about every other nation, got rid of the gold standard during the Great Depression. They would later revive it after WW2 through Bretton Woods, though that wasn't much of a gold standard itself. Anyway, Keynesian economic thinking was starting to become huge in the 1930's, and Keynesian economics didn't work well under the gold standard. Currency's couldn't be devalued, it was harder to run a deficit, and deflation was just as common as inflation. All these factors hampered the recovery during the Great Depression and were all attributed to the gold standard. It was only after most countries got rid of it did they start to notice a better recovery, but that would end with a new recession in 1937 (https://en.wikipedia.org/wiki/Recession_of_1937%E2%80%9338). By the way, Keynes himself called the gold standard a barbaric relic of the past. I'm not saying he was right, just that it shows how much he hated it. Finally, many economists today blame the gold standard for the Great Depression as indirectly talked about here: http://www.nber.org/papers/w16350
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  30. And fix how they described fractional reserve banking in one of their earlier episodes and it was wrong.
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  31. More like the dollar was still the most abundant and reliable currency tied to the strongest economy in the world, so it was still the ideal currency to trade with in foreign exchange markets. Today the dollar still comprises about 87% of all foreign exchange trades.
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  32. I no expert on the matter, but I'm guessing you're right in the assumption. Banks make money off of loans. Credit cards are basically short term loans. By giving you a credit card, they are basically guaranteeing you a set amount of a loan should you use it.
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  33. Hans Smirnov No, just no. That is horrible economic thinking. What you said doesn't even make sense. Deflation means your economy is stronger? So if we destroyed every single dollar in the economy but one, our economy would be at its strongest point? No, that's insane. It just means that the dollar is worth our entire productivity. Now deflation is bad because it incentivizes saving over spending. In a consumer oriented economy likes ours (or every developed nation), consumption is everything. When consumption falls, the entire economy takes a hit. This is why the Fed targets 2% inflation. Because 1: It creates a buffer for deflation, and 2: inflation incentivizes spending, improving the economy in the short term. It doesn't help that deflation usually occurs during an economic downturn, further hurting the economy. On a related note, do you know what caused the Great Depression? Many countries had so much money in supply that they were no longer supported by gold, the US included, so they all underwent a period of deflation to keep on track with their gold reserves. The problem was that they all did this at nearly the exact same time, creating a huge slump in consumption. This devastated the foreign markets for US industries, causing an economic downturn for us, which spread just about everywhere. This paper by the National Bureau of Economic Research indirectly talks about it here: http://www.nber.org/papers/w16350  
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  34. Hans Smirnov It was cheaper because it was very highly subsidized by the state. Granted, it's still subsidized, but not to as big of a degree as it used to be. This forced colleges to get more of their revenue through tuition payments from their students. The government subsidies also became based on the retention rate and amount of students a college had, so colleges started trying to attract more students through marketing, which increases their expenses even more. In this case I'm putting public works projects with marketing. It's not greed, just them trying to stay in the black.
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  35. Reigh Freuden And you have the authority to make such a claim because...... Astrophysics also uses speculation when the Big Bang Theory and such were created, but they are also founded in empirical evidence. In fact the evidence is so great that now astrophysicists know the events after the Big Bang, the relative time period of said events, and so much more.
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  36. wles mana Someone gets it! I'd shake your hand if I could, sir! 
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  37. TIL I'm a slave because some random guy on the internet is an expert on economics and monetary systems.
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  38. Depends on what you mean by devalued. If you're talking inflation, of course, but it's in such small amounts that it doesn't really matter in the short run. In comparison to other currencies, the dollar is actually pretty strong. Even if it were weak though, that's not a bad thing. China has been constantly devaluing their currency, though in recent months they've started going back on that policy.
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  39. There's two different question so I'll try to answer them both. What stops the Federal Reserve from printing so much money? Well, they're what's known as a government organization. Basically their day to day activities aren't directly influenced by the government. This means that they don't have to cater to the needs of the government when printing money and instead get to print what they feel is right (usually targeted at 2% inflation). It should also be noted that the Federal Reserve itself doesn't benefit from the printing of currency, so they have no incentive to print bucket loads besides reaching the 2% inflation target. As for how it retains it's value, that depends on the current money in supply and how quickly the money changes hand (velocity). To simply explain it, think of a business that produces 100 widgets a given quantity of it being demanded in its first year of operation. The second year though, the Federal Reserve prints a bunch more currency, so now money is more freely available. This means that the consumer also has more money to spend with, so more people will be demanding the widgets at the given price. With more demand, the business is able to increase it's price of the good. Now think of this scenario for every single business in the US. This rise in prices (and wages) is what's known as inflation, and determines the value of the dollar in our domestic economy.
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  40. KaiGonGinn They were printing a lot of money through quantitative easing, but that ended in 2014. They've lessened up on that since.
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  41. Antilli First, no single family owns the Federal Reserve. The chairman and board are appointed by the president and approved by the Senate. Second, the Federal Reserve doesn't keep any of their revenue. Instead it's given as remittance to the Treasury. Bottom of page four on their financial statements (https://www.federalreserve.gov/monetarypolicy/files/combinedfinstmt2015.pdf) show that they had a revenue of about $99 billion before remittance, and then a net loss of $17 billion after the remittance. Yes, they actually lost money. Finally, unless you think taxation is theft, this is nowhere even close to theft, especially since the supply of money isn't the only thing that decides inflation, but the speed of the circulation of money does also. If my dollar ends up in 20 transactions by the end of the day compared to last year where it was only in one, then the inflation rate has increased. So would you then be stealing from yourself? The government has no part in that part of inflation after all. Well, besides stemming it if it gets too bad.
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  42. Neoliberalism isn't a thing in economics.
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  43. No, it's valuation is caused by the demand for goods and services. If you increase the supply of money, more money becomes readily available for consumers, so the demand for goods is pushed up. This causes a rise in prices to meet this increased demand. This rise in prices (and wages) is what's known as inflation.
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  44. The Hunter x Hunter 2011 Dickriding Association That's because the petrodollar isn't a thing. 
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  45. It's not really revisionist; it's just history.
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  46. The gold standard is a flawed system and there are better ways to keep governments from spending too much money, especially since governments did that anyway. I seem to remember the US had huge debts after the Revolutionary War, the South during the Civil War, Britain after the 7 Years War, and France after the American Revolution too.
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  47. Charles Shell Fixing the principle agent problem involved, creating a non-partisan technocratic institution similar to the Federal Reserve to be the sole creator of any government budgets, fix Social Security and Medicare in the US as they eat up 60% of our budget, etc It should be noted that the government SHOULD be running a deficit right now in terms of mainstream economic thinking as we are in a recovery. Also, the problem with the gold standard is the periods of intense inflation and deflation involved. It is commonly believed by economists that the Great Depression was started by one of these deflationary periods (http://www.nber.org/papers/w16350)
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  48. I'd say you're more wrong than right. First, we didn't supply everyone fighting. In WW1 we supplied the Germans a teeny bit in the beginning as the British blockade wasn't fully up yet and there are a lot of German Americans in the United States, but during WW2 we gave absolutely no support to the Axis powers. Furthermore, the downfall of the US is only a downfall relative to the rest of the world. After World War 2 the only other developed area in the world was left completely devastated and several huge economic powers were now in shambles. Because of this and the boost in production from the US becoming the "Arsenal of Democracy" they rose to have about 40% of the total world GDP in 1945. Of course the ruined nations wouldn't be ruined forever and, with some help from the US through the Marshall Plan, quickly got their economic infrastructure back in shape. Of course as their economies improved, the US' share of World GDP shrunk. It's a similar story for other nations like Japan and South Korea. Both nations were hurt by WW2 and both nations still had a ways to go in economic development after WW2. During the post war period, both nations saw huge exponential growth. Then there's the sleeping giant nations like China which have started developing too. All the while the US economy has been growing at a steady pace though (http://ritholtz.com/wp-content/uploads/2011/03/RealGDPperCapita.png). If I were to sum everything I just said up, I'd say it all has to do with the basic concept of the catch-up effect. Undeveloped and developing nations experience a lot more growth in GDP than developed nations as, well, developed nations can't develop much further, so the US was bound to lose its huge share of world GDP no matter what it did.
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  49. It's not tied to oil. Zimbabwe also uses the USD, does that mean we're tied to the Zimbabwean economy?
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  50. Yeah, our inflation in the US is lackluster too. The Fed targets about 2% inflation every year and we don't even get that (http://blogs-images.forbes.com/trangho/files/2015/09/US-Inflation-Rate-1940x1182.png).
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  51. Why would Keynes be mentioned? Besides being a representative of Britain in the Bretton Woods system, I don't remember him being mentioned much in terms of the gold standard.
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  52. No it's not as the money isn't empty.
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  53. No it's not. It's worth so much because it's an incredibly stable currency, especially after WW2.
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  54. Eternal Dao Lord Cabral That's because the oil producing nations just like using the dollar. Even before the US went into formal negotiations to get OPEC and such nations to adopt the dollar, they were already using it.  As shown here (http://www.bis.org/publ/rpfx13fx.pdf), 87% of currency exchange trades are done in the dollar. It's just an easily available, stable currency attached to a nation with a huge economy.
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  55. Sarcasmitron Sorry, you knew the US military would be after you for doubting the dollar. 
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  56. In the far far future the dominant currency might be the yuan, but we have a lot of time before that happens. Also the USD will always hold a semi-dominant position just like the euro does now.
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  57. When other people are fighting it sure, but not when we ourselves are.
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  58. No, the oil producing countries basically decided to trade in dollars themselves because dollars were extremely stable.
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  59. The petrodollar isn't a thing. Yes, most oil producing nations sell oil using the dollar, but that isn't abnormal. 85% of all foreign exchange transactions are done through the dollar as it's such a stable currency.
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  60. No, that's not true at all. First, we did find chemical weapons in Iraq. The New York Times even reported it here :http://www.nytimes.com/interactive/2014/10/14/world/middleeast/us-casualties-of-iraq-chemical-weapons.html?hp&action=click&pgtype=Homepage&version=HpSumMediumMediaFloated&module=second-column-region®ion=top-news&WT.nav=top-news&_r=1 with CNN having a similar article. Second, oil is traded using dollars because the oil producing nations wanted it that way. The dollar is the most abundant and stable currency on the planet. Even before OPEC officially adopted the dollar they were already trading in it. Heck, there's even a term for a US dollar being used outside of the US because it because so dominant after WW2 (http://www.investopedia.com/terms/e/eurodollar.asp). It's other worth noting that 86% of foreign exchange trade are done in the US dollar (http://www.bis.org/publ/rpfx13fx.pdf). It's almost like the dollar is a really stable and useful currency that nations love to use for its reliability. Also, as the US is one of the biggest importers of oil, by pegging their currency to the dollar and devaluing it, the oil producer nation gets a big boom to their exporting industries.
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  61. No, the only reason oil producing countries trade in USD is because it's incredibly stable. As proof 85% of foreign exchange trades involve the dollar, showing how much people value it for it's availability and stability.
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  62. Sigh, you have learned nothing from this series.
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  63. England, is that, like, the capital of this UK country?
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  64. Deus Blackheart Ha I was just trying to ruffle your feathers a little bit. Don't worry.
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  65. Deus Blackheart Now that I did not know. The more you know, I guess. 
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  66. The gold standard wouldn't stop war (it didn't stop WW1 after all) and it would only limit monetary policy responses governments can perform during an economic downturn as evidence by most of the Great Depression.
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  67. Wrong. Petroleum has litter to do with the value of the dollar. 95% of foreign exchange trades around the world are performed using the dollar. Only a small fraction of these relate to petroleum.
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  68. The point is that no one ever follows the gold standard to begin with, and, as economists realized, the gold standard didn't really do anything but act as an unnecessary hinderance. There is nothing different from our monetary system today when compared to eighty years ago besides the fact that the markets decide at what value currencies trade with each other. Otherwise our monetary policy institutions can act more freely, and our currency valuations are more stable over the long run.
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  69. You really like your conspiracy theories don't you? You realize 95% of foreign exchange trades involve the dollar right? It's not some random conspiracy that the Middle East trades their oil in the dollar. It's because the dollar is an easily abundant currency that is not regulated and whose value is recognized by everyone, making it the perfect currency for foreign trade. Other currencies like the euro and pound-sterling are plentiful enough to achieve this, China's currency is too heavily regulated (they have a different value for their currency depending on its use). It also helped that the US was their biggest customer at the time, so they already had plenty of dollars for already selling their oil. Otherwise you just talk more aobut how the US is controlled by banks, which is a bit ignorant. First, the Federal Reserve is considered a private entity within the US government as, while their day-to-day activities are handled in house, they still face oversight by the government, like how their chairman and board of governors is appointed by the President of the US and approved by the Senate, or the aforementioned remittance to the Treasury in my other comment. Furthermore, the Fed isn't even made up by mostly bankers, but economists and researchers. This is because they are supposed to conduct monetary policy, not handle typical operations of a commercial bank.
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