Found this quote today in the China Daily:
He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.
"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.
"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily.
While the other presidential candidates are spending time establishing whether they're pro-life or pro-choice or if 'don't ask don't tell' is a good policy...we have other nations who are not exactly friendly to us deciding whether or not our money should be worth anything.
It goes without saying that the only candidate on top of this issue is...you guessed it...
...Ron Paul.
7 comments:
Yeah, and people say he's a kook for thinking the gold standard was/is important. I just don't get it. Basic economics, people!
i'm willing to go along with the gold standard, and will accept that it is even better.
this is based on the fact that so many, maybe most, of the commentators i most admire speak well of it.
but, explain for me, what the big difference is.
i never studied ecnomics.
The way I learned it is kind of overly complicated. Basically, people need economic systems because everything has value (goods and services) and we need goods and services. It's kind of difficult to be self sufficient. Barter and trading is the most basic economic system you can have. However, it is difficult to cart chickens or goats around with you wherever you go to trade and doing work for people in trade for their work or whatever good they have that you need is a bit time consuming and complex. So, instead we chose to find something of value, something that is not found everywhere and is easy to carry. Gold is valuable mainly because there is a finite amount of it and it is easier to carry than chickens and whatnot. So, the U.S. used to use gold and silver coins for money (other countries did too).
However, even gold is kind of difficult to carry around with you. Our purses would weigh a ton today. So, then the federal government decided that for every dollar printed there would be an equal amount of gold attached to it in a vault. They could not print more paper dollars than the value of gold they had. Then I think they went to a system where they had to have a certain percentage of the value of the gold instead of all of it. Then they quit the gold standard all together.
Basically, the dollar was tied to something of value and that helped it retain value. Now that it is tied to nothing other than the words "legal tender" the worth can be depreciated quickly by printing too much money or by some other country flooding the world with our cash which they have accumulated over a long period of time.
Tracy, correct me if I am wrong or if I do not make sense.
so, in reality, our money is only valuable because the govt says so.
promises, promises...
isnt the whole world generally using fake money like we are?
Esther described it well and you even described the Quazi-Gold Standard that existed still while Kennedy was president.
Most pundits describe Paul's position as a "return" to the gold standard though he's actually for having parallel monetary system to protect middle-class and lower income people from the dollar tanking. So basically people could have federal reserve notes if they wanted or they could carry Gold and Silver as legal tender.
I have many old US Silver Certificates. They look like regular dollar bills but they are in fact a Warehouse Receipt (an expired one in reality) If you turned in the receipt you could turn it in for the wealth it represented in hard assets.
A parallel monetary system could slow the rate of growth in the federal debt by quite a bit. It would contract the economy...the same way cutting up your credit cards may contract your personal economy.
The federal reserve note still has a value but it is not tied to a hard asset but generally it is tied to how the dollar trades as a reserve currency in foreign exchanges.
I find it ironic that while we borrow from China to fight our war we help them buy oil for themselves (thereby making our oil prices higher) and finance their military (which we're supposedly concerned with)
I believe that all countries are using Fiat Currency (fake money)
One reason for Fiat currency to be the norm was the trend to offer bonds for our expansion. This made other countries buy US dollars with the promise of a return on Treasury Bonds. This was better than Gold for some countries because we're our economy requires us to borrow between 1 and 3 billion dollars a day.
This of course it not sustainable and both Federal Reserve Chairmen in the last 20 years have said this over and over.
It used to be when arguing with Progressives (read: Socialists) that you could bring up the inherit unintended consequences of well meaning social programs...now it's easier to rebut their arguments...with one short sentence:
We're broke.
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