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Written by Brian Domitrovic
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Thursday, September 22, 2011 |
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As presidential candidates debate whether Social Security is a "Ponzi scheme," it is worth noting what a deal Social Security purports to be. Whatever you put in, you get back plus inflation and a little interest. That’s the government’s guarantee.
And yet what if money never lost its value, if there were no such thing as inflation? If you saved money, on retirement, you’d get your savings back plus inflation (in this case zero) and interest – the same deal as Social Security.
And yet because inflation is such a Read more |
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Written by Brian Domitrovic
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Thursday, September 08, 2011 |
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When Richard Nixon took the dollar off gold in 1971, the hope was that this move would free up monetary policy to focus all its energy on combatting unemployment. In lieu of price stability, the nation would get jobs, the argument ran.
With the gold link gone, however, further objectives aside from unemployment-fighting soon came up for consideration. As environmental regulations exploded in the 1970s, the Fed released extra money so that corporations could finance their compliance. In the 1990s, as business executives Read more |
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Written by Brian Domitrovic
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Tuesday, May 10, 2011 |
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"Mexico's Central Bank Buys 100 Tons of Gold," ran the headlines last week. Isn't that interesting. For years in the United States, the go-to term for a currency that's next to worthless has been "peso." Now here are the masters of that very currency passing on the dollar and accumulating its most formidable substitute, gold. Touché.
Back in the 1980s, one of the Mexican presidents kept saying he would defend the peso "like a dog." When that didn't work out, as Robert L. Bartley of Wall Street Journal fame liked to point Read more |
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Written by Brian Domitrovic
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Thursday, March 24, 2011 |
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Trade wars are coming back from the dead. Donald Trump is talking about scuttling free trade arrangements as he contemplates a presidential run. It’s fair to ask why so much manufacturing in the US has been abstracted to places like East Asia. The decline of trade barriers is not the reason; the failure to return to fixed exchange rates and gold convertibility are at fault.
There is no reason why major countries with similar low inflation rates should not have their currencies trade at fixed rates of exchange. After all, Read more |
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Written by Brian Domitrovic
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Monday, January 31, 2011 |
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There’s another fact-defying entry from Paul Krugman. His blog post from January 30 is titled, “Recessions Under the Gold Standard,” and the text manages to undermine both terms in that title. A total of one recession is adduced, that surrounding the panic of 1893, which as they used to teach in school, came about specifically because the US had recently balked at the gold standard and permitted the mass monetization of silver. No “recessions” plural and no gold standard.
You’ve got to look under a lot of rocks to Read more |
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