Utah to reinstate Gold as a currency?

[ARealConservative]

Bank runs are caused by sudden increased demand for currency. That currency can be either gold or gold-backed fiat currency.

bank runs are only problematic when the run exceeds the reserve. it has nothing at all to do with the currency, it has to do with fundamental issues with fractional reserve banking, and has proven to occur with pure fiat systems as well. the common denominator is the fractional reserve system. I can't believe you are arguing something this simple

 

[ARealConservative]

And production alone doesn't guarantee "increase wealth". Producing at a loss decrease wealth.

straw man.

I said you have to produce something to profit. I didn't say everyone that tries to profit by producing, succeed.

 

[nonpareil]

bank runs are only problematic when the run exceeds the reserve. it has nothing at all to do with the currency, it has to do with fundamental issues with fractional reserve banking, and has proven to occur with pure fiat systems as well. the common denominator is the fractional reserve system. I can't believe you are arguing something this simple

If you understand cause and effect, the lack of any bank runs right now would seem to contradict the statement that it is "caused by fractional reserve banking" completely.

The cause of a bank run is the sudden increased demand for currency, whether it be in the form of gold, gold-back currency (the two that is relevant to disputing your point) or fiat currency (which happens much less frequently in a system with a good central bank).

It shows that demand for gold were volatile even before "it’s value was priced in fiat currency", contrary to your claim.

You can refuse to believe whatever you want, but you have gotten something "this simple" wrong, so I'm going to state what's factually right.

 

[ARealConservative]

If you understand cause and effect, the lack of any bank runs right now would seem to contradict the statement that it is "caused by fractional reserve banking" completely.

The cause of a bank run is the sudden increased demand for currency, whether it be in the form of gold, gold-back currency (the two that is relevant to your disputing your point) or fiat currency (which happens much less frequently in a system with a good central bank).

It shows that demand for gold were volatile even before "it’s value was priced in fiat currency", contrary to your claim.

You can refuse to believe whatever you want, but you have gotten something "this simple" wrong, so I'm going to state what's factually right.

bank runs in this country were solved when government protected individual assets. We had a hell of a lot of bank failures last year, without government assurances, we would of had a hell of a lot of bank runs.

 

[nonpareil]

straw man.

I said you have to produce something to profit. I didn't say everyone that tries to profit by producing, succeed.

Actually you said:

there will always be an incentive to produce because that is how you increase wealth.

If you want to revise what you said then fine.


And it's equally wrong to say that "you have to produce something to profit". You can also profit from investing, without you having to produce anything at all.

 

[nonpareil]

bank runs in this country were solved when government protected individual assets. We had a hell of a lot of bank failures last year, without government assurances, we would of had a hell of a lot of bank runs.

That doesn't say anything to the points in my post.

And "government protected individual assets" is broad and seems to show a lack of understanding of the issue of banking. There weren't runs on commercial banks because deposits up to $100k (recently increased to $250K) are insured with the FDIC.

 

[ARealConservative]

you really are embarrasing yourself

Bank run - Wikipedia, the free encyclopedia

read something before you keep inserting a foot in your mouth

Actually you said:




If you want to revise what you said then fine.


And it's equally wrong to say that "you have to produce something to profit". You can also profit from investing, without you having to produce anything at all.

this isn't a revision at all. no where did I say that everone that produces makes money. I tried to explain that deflation will not stop people from producing goods because that is the only way that someone will grow their wealth. even my kids know it is a risk/reward situation.

and investment is simply you putting money on someone else that is producing something. again, not fundementally different so it doesn't counter what I am trying to explain to you.

 

[ARealConservative]

List of bank runs - Wikipedia, the free encyclopedia

this post is more for those not lost by the simple things

here is a list of bank runs in the last 20 years. I guess these were also caused by gold because it's gold, not fractional reserve lending that creates the risk of bank runs.

 

[nonpareil]

you really are embarrasing yourself

Bank run - Wikipedia, the free encyclopedia

read something before you keep inserting a foot in your mouth

If you are so very great, why have you not explained point by point what I have written that are wrong? It's all there in black and white. And please actually provide evidence for your position, because I would like to see it defended. I'll wait for it.

this isn't a revision at all. no where did I say that everone that produces makes money. I tried to explain that deflation will not stop people from producing goods because that is the only way that someone will grow their wealth. even my kids know it is a risk/reward situation.

and investment is simply you putting money on someone else that is producing something. again, not fundementally different so it doesn't counter what I am trying to explain to you.

I have quoted what you said from your own post. If you claim it means something different, then that's your prerogative.

So far you have explained absolutely nothing to me. You have not shown yourself to know very much about economics.

 

[nonpareil]

List of bank runs - Wikipedia, the free encyclopedia

this post is more for those not lost by the simple things

here is a list of bank runs in the last 20 years. I guess these were also caused by gold because it's gold, not fractional reserve lending that creates the risk of bank runs.

Where have I said that bank runs "were also caused by gold because it's gold, not fractional reserve lending that creates the risk of bank runs" or anything close to it?

I said bank runs are caused by sudden increased demand for currency, be it in the form of gold, gold-backed currency, or fiat currency. Do you actually understand what that means?

What is that list supposed to prove exactly?

 

[ARealConservative]

If you are so very great, why have you not explained point by point what I have written that are wrong? It's all there in black and white. And please actually provide evidence for your position, because I would like to see it defended. I'll wait for it.

I can only lead a horse to water. you happen to be drownding in that water.

I don't know how I can make it any more easier for you. I crushed your ridiculous notion that bank runs are a product of the gold standard by showing proof they still occur.

as for the other part, you said "there would there would no incentive to manufacture goods since the raw material you pay for today will be selling for less when you finish the goods. "

I tried to explain that people would still have the incentive because that is how wealth is increased.

it's as simple as that. if you disagree, and think people will simply shut down and not try to earn money in a times of deflation, then it's simply a matter of you refusing to drink the water.

 

[ARealConservative]

Consumer Price Index (Estimate) 1800-2008 | The Federal Reserve Bank of Minneapolis

here is an example of deflation being the predominate trend in the 1800's.

 

[Kushinator]

so the dollar isn't fluctuating, it's the gold?

hahahahahaha.

If you look at the relative valuation across all baskets off goods, you will come to the conclusion that gold is much more volatile than US dollars.

Would you call it a bubble?

 

[ARealConservative]

This is not true. Demand for gold was very volatile even when it was the currency (and later when its value was fixed with fiat currency), it manifested itself as bank runs. That is part of the reason for the failure of the gold standard. This is particularly severe at the beginning of the Great Depression which is why countries that took itself off the gold standard the quickest saw a less severe and shorter period of recession.

I will offer one retraction. I did misunderstand your position. you did not claim gold was the cause of the bank runs, so that was one mistake of mine.

the rest of this post is an example of correlation not implying causation. all countires handled the outset differently. We handled it the worst because Hoover and FDR were idiots.

 

[ARealConservative]

If you look at the relative valuation across all baskets off goods, you will come to the conclusion that gold is much more volatile than US dollars.

Would you call it a bubble?

the value of gold is directly tied to the volatility fo the dollar. more so then any other commodity.

 

[Kushinator]

Where have I said that bank runs "were also caused by gold because it's gold, not fractional reserve lending that creates the risk of bank runs" or anything close to it?

I said bank runs are cause by sudden increased demand for currency, be it in the form of gold, gold-backed currency, or fiat currency. Do you actually understand what that means?

What is that list supposed to prove exactly?

When has the FDIC not honored their insurance on a deposit?

 

[Kushinator]

the value of gold is directly tied to the volatility fo the dollar. more so then any other commodity.

So your original statement was incorrect. Compared to dollars gold fluctuates in many standard deviations more than..... debt based fiat?

 

[ARealConservative]

Where have I said that bank runs "were also caused by gold because it's gold, not fractional reserve lending that creates the risk of bank runs" or anything close to it?

I said bank runs are cause by sudden increased demand for currency, be it in the form of gold, gold-backed currency, or fiat currency. Do you actually understand what that means?

What is that list supposed to prove exactly?

it was supposed to prove this to be false

the lack of any bank runs right now would seem to contradict the statement that it is "caused by fractional reserve banking" completely.

 

[ARealConservative]

So your original statement was incorrect. Compared to dollars gold fluctuates in many standard deviations more than..... debt based fiat?

only by taking my original statement out of context.

gold's volatility is a fairly new trend - and caused by the volatility of peoples faith in fiat.

 

[nonpareil]

I can only lead a horse to water. you happen to be drownding in that water.

I don't know how I can make it any more easier for you. I crushed your ridiculous notion that bank runs are a product of the gold standard by showing proof they still occur.

as for the other part, you said "there would there would no incentive to manufacture goods since the raw material you pay for today will be selling for less when you finish the goods. "

I tried to explain that people would still have the incentive because that is how wealth is increased.

Except it doesn't always increase as you have acknowledged. In Deflationary conditions, demands fall, prices fall. Producers can cut prices to entice customers to buy their products but there will come a point when to do so will be unprofitable. So many businesses fails. So I repeat again: which is why deflation is seen as a bad thing.

it's as simple as that. if you disagree, and think people will simply shut down and not try to earn money in a times of deflation, then it's simply a matter of you refusing to drink the water.

Did I say that "people will simply shut down and not try to earn money in a times of deflation"? Do you just read words that are not there?

Those who can make money will still do, but in an environment of falling prices, that becomes harder to achieve.

 

[nonpareil]

it was supposed to prove this to be false

the lack of any bank runs right now would seem to contradict the statement that it is "caused by fractional reserve banking" completely.

Is there a bank run right now?

Do you understand "cause and effect"?

 

[ARealConservative]

Did I say that "people will simply shut down and not try to earn money in a times of deflation"? Do you just read words that are not there?

you said their would be no incentive.

not less. you said none. no incentive to manufacture goods in times of deflation is what you said.

 

[nonpareil]

I will offer one retraction. I did misunderstand your position. you did not claim gold was the cause of the bank runs, so that was one mistake of mine.

the rest of this post is an example of correlation not implying causation. all countires handled the outset differently. We handled it the worst because Hoover and FDR were idiots.

It may not be a direct causation but by limiting the ability of the Federal Reserves to expand the money supply, it prolonged and worsened the Depression. That's why I said it's "part of the reason for the failure of the gold standard". I didn't claim that the Gold Standard is the cause of the Great Depression either. Meltzer detailed how the determination of the Presidents of the Federal reserve banks to hold on the gold standard led them sometimes to tighten money supply instead of expanding it to the extended that was needed.

 

[nonpareil]

When has the FDIC not honored their insurance on a deposit?

I don't think it has happened. But what does that have to do with anything?

 

[nonpareil]

you said their would be no incentive.

not less. you said none. no incentive to manufacture goods in times of deflation is what you said.

I said:

If that's the case, there would no incentive to manufacture goods since the raw material you pay for today will be selling for less when you finish the goods.

But I can see how that can be interpreted to say that the condition applies to all cases instead of some cases. My mistake for being unclear.