why the 1% hates the gold standard

Posted by salta 7 years, 2 months ago to Economics
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The last chart in the article, and the short paragraph after it, say everything.
SOURCE URL: http://thecrux.com/must-see-chart-shows-why-the-1-hates-gold/


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  • Posted by fivedollargold 7 years, 2 months ago
    The Federal government became addicted to inflating its way out of deficit spending. Of course, this will only work so long. With the present Regime hellbent on spending and Yellen & Company unwilling to raise interest rates, something has to give. Having a nest egg in some form of gold can't be a bad thing, unless of course, Dear Leader goes all FDR and starts confiscating it.
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    • Posted by $ jlc 7 years, 2 months ago
      Are gold sales registered in some manner? How would one know what to confiscate from whom? Does jewelry count, or is it exempt?

      Jan
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      • Posted by $ blarman 7 years, 2 months ago
        Yes, Gold purchases of a certain amount (as in for investment purposes) have to be registered, as in most cases they don't allow you to store it at your home, but force you to keep it in a "safe location" - ie a Federally-insured and monitored facility.

        Also, it should be noted that FDR instituted a provision whereby the government can forcibly confiscate all gold after a certain date from individuals' holdings. So if you're going to hoard it for apocalyptic trade, get it from coin shops and such.
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  • Posted by scojohnson 7 years, 2 months ago
    Not much to see here... the 1% prior to the 1930's were the robber barons which essentially controlled monopolies on raw materials and transportation. By the 1930s, there was growing competition and automation demanded more people - then of course WWI and WWII hit and pounded the wealthy pretty hard with taxation...

    Going off the gold standard, may have had an impact... but by 1984 the stock market also went on a run that essentially lifted the US economy by 500 - 600%.

    These days, the spending power of just the federal government's revenues are far more than the size of the entire economy in the 60's I would think.

    I'm not a fan of inflation, but I'm saying there are a heck of a lot of factors that go into that time period and not just the affect of a single action.

    The erosion of the lower & middle class has been much more greatly impacted by the US not being "the world's economy" anymore as we were in the 60's & 70's. You have to realize, all of Asia and Europe were decimated in WWII. Heck, China wasn't even out of the dark ages yet in the 1970s.

    I love it when someone takes something that has little more than a placebo affect and holds it up to be "the smoking gun" without mentioning the other 15,000 variables.
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    • Posted by 7 years, 2 months ago
      Agreed, there are of course many factors. But the devaluation of currency through inflation is foundational, and has a knock on effect on everything else. It is also a wealth tax which has greater effect on the "lower & middle class" than on the wealthy.
      The fact that the devaluation accelerated rapidly after 1971, is one of the most significant of the many factors.
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      • Posted by scojohnson 7 years, 2 months ago
        So, a phenomenon of the 21st century though is how we can produce money out of essentially nothing - be it either just printing it (because we are the de facto fiat currency in the world) or technology would be another good example. Before, you needed some kind of raw material as input into finished goods... now, we can put in labor with little or nothing else, and in the case of services performed for consumers, or developing software, there isn't a 'feeder' industry at the bottom of the socio economic scale.

        For building a car, a lot of people work in a lot of smaller / less-skilled businesses making valves, pumps, hoses, belts, etc. For software, no one except the software developers get paid (and maybe the landlord on the building). I think that, more than anything else is creating the wealth gap.
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        • Posted by CircuitGuy 7 years, 2 months ago
          "I think that, more than anything else is creating the wealth gap."
          Yes. I think creates a grave danger of making people embrace socialism or other bad ideas.

          I think you're hinting at increased return on capital with your comments on currency, and then pointing out lower labor costs. It creates great conditions for selling bad ideas (e.g. socialism, isolationism, etc).
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          • Posted by LetsShrug 7 years, 2 months ago
            Are you actually implying you think socialism is a bad idea?? You can't promote it and then say you're against it. Being in favor of bo and of obamacare is being in favor of socialism. You can't have it both ways.
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          • Posted by scojohnson 7 years, 2 months ago
            Correct. We see the phenomenon of kids going to college to 'follow their heart' rather than critically looking at the supply and demand for labor and skills, and figuring that if they get a degree, they get a job. or maybe they didn't want the math/physics/chemistry homework.

            Nonetheless, there isn't a problem in the economy, many skills are in double-digit vacancy percentages. And I don't think there is a 'skills gap' either. We have a problem where the skills and studies people choose to develop don't line up with the needs of industry and the economy so they wind-up in low paying low-skilled jobs, and blame the economy for their woes and suddenly think it would only be "fair" if others give them what they studied/worked/earned.
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            • Posted by CircuitGuy 7 years, 2 months ago
              I agree wholeheartedly with all of that.
              "blame the economy for their woes"
              Yes, the economy is us serving one another in exchange for money. It's not some magical thing that's messing with people.

              " 'follow their heart' rather than critically looking at the supply and demand for labor and skills "
              Yes. People can follow their heart AND look critically at the market. If their heart is in art and industrial design, Apple is showing there's more value in that than in circuit boards and software. Even though US is far from perfect, there is still amazingly opportunity to live a decent life on a low wage while pursuing a dream, if that's what you desire.
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              • Posted by scojohnson 7 years, 2 months ago
                I guess I was thinking more of the types that choose to major in Social Work or something, get a master's at a prestigious university, go in debt $200,000, then chase a $35,000 / year county job and think they are super-smart for doing that.
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                • Posted by CircuitGuy 7 years, 2 months ago
                  Yes. The time to think about how they'll pay off that debt is *before* they borrow it.

                  Our kids are 6 and 4. They will have plenty of money, but I will not let them go to school just b/c it's like grade 13 comes after grade 12. I will pay the penalty to get that money out of the 529 if they have a well-thought-out business plan or if they have a job with an apprenticeship and want to use their college money to pay cash for a house. College is so important, but it's not the panacea it's held out to be.
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  • Posted by fivedollargold 7 years, 2 months ago
    Period of inflation and exportation of our industrial base began after leaving the gold standard, which should also be factored in. Fivedollargold is obviously interested in this topic.
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    • Posted by 7 years, 2 months ago
      Yes, inflation is the key.
      It transfers value from all people, not just taxpayers (but mainly from lower income earners), towards government and the very wealthy.
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  • Posted by plusaf 7 years, 2 months ago
    Groovy chart, kids... and calling the last chart the key one is, even for NPR, a nice case for post hoc, ergo propter hoc, ain't it?

    ONE key marker on that graph?: Nixon kills the Gold Backing?

    Just MAYBE there were other key turning points somewhere along the way? Include total workforce union membership percentage as another line?

    Hell, I joined the workforce in 1968 and left it in 2002... and there were some interesting inflection points and crossovers around THOSE two dates, too!

    Anyone up to blame ME for the shape of those two lines on that Key Graph?

    Piffle!
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  • Posted by wiggys 7 years, 2 months ago
    You just can't use gold or silver for that matter as a medium of exchange so why own it as a hedge against inflation.
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    • Posted by $ allosaur 7 years, 2 months ago
      I can just see myself talking like a pirate while I plop down a bag of gold as the down payment on a car.
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      • Posted by CircuitGuy 7 years, 2 months ago
        I paid for my current car with a stack of C-notes, clipped together in sets of ten. It was a pretty big company; I was shocked how they dropped agreed immediately to take much less once it was sitting on the table. This would have been easier if it had been a stack of 1 oz gold coins.

        I'm not good at doing the pirate voice, though.
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        • Posted by $ allosaur 7 years, 2 months ago
          I'll remember how you bought a car.
          Gold coins? I think the dealership boss would say
          to go sell the coins and come back with cash.
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          • Posted by CircuitGuy 7 years, 2 months ago
            I'm sure you're right. Even cash transactions are looked at as suspicious now.
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            • Posted by $ allosaur 7 years, 2 months ago
              Tell me more about buying that car with C-notes. You say they came down on the cost.
              Did you pay for the entire car with cash?
              Did they report the serial numbers on the bills to anyone before the trade was made?
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              • Posted by CircuitGuy 7 years, 2 months ago
                Cost was $5,000 out the door. They wanted $5700. He went back and talked to the manager behind a window for 5 min and came back saying he'd go down to $5400. I laid the $5k on the table and offered it if it would cover all taxes and fees. They shouted, DONE! Yes! So obviously he was authorized to go that low. They asked if I could give them a check, but I said all I brought was the cash. They worked up all the numbers. It came to $5120. I told them I wouldn't be able to buy it b/c I only brought $5,000. They reworked the figures to come out to $5,000. I watched two employees count it together. I didn't notice them recording serial numbers. Everything about the transaction was above-board and legal.

                This wsas six years ago, and amazingly the car runs well and doesn't look like an older car, even though it is.
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  • Posted by philof 7 years, 2 months ago
    the one problem with a Gold standard is, the banks and 1% would hoard it. And money would be scarce. One option could be money based solely on Government income. This would require the reduction of Fed Reserve notes by "real" money over time. Anything is better then the HIT we are going to take shortly!
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  • Posted by johnpe1 7 years, 2 months ago
    when I was a kid, I took a dollar bill into a bank and
    asked for gold in exchange. . they looked at me
    like I was from another planet. . it was 1960. -- j

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  • Posted by $ Temlakos 7 years, 2 months ago
    The key to the problem is: correctly identifying the professions of the top one-percent. They are the very central bankers who set up the system, going clear back to the Bank of England at the time of William and Mary.
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  • Posted by woodlema 7 years, 2 months ago
    I was looking at the charts, and I do not see the correlation of Gold Standard vs. the 90% or the 1 %.

    Their charts are a decade off from the rise. I think I would look at the Governments Banking regulations. THEN do a correlation.
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