Ron Paulstradamus

[Pliny]

What really popped the housing bubble was its extreme extent.

What popped it was there was no one left to buy the glut of new housing at sky high prices. Once that occurred, even low interest rates or sub-prime mortgages couldn't entice buyers. Even the encouragement of Barney Franks couldn't find new buyers.

Housing prices went to levels that the resulting mortgage payments, even with extremely low interest rates, were out of control. My payment, on a $230,000 principal mortgage with a 15 year amortization, is about $1800 per month. That works well.

When you multiply that by about three, the required income to service that kind of debt and the property tax payments that go with it zoom to around $400,000 to $500,000 a year. There are truthfully not many people who can handle those payments. I know I couldn't.

Any my municipality has lots of houses still in the $1,000,000 range. Not mine, but others.

That, in a nutshell, is what the housing bubble is about. House prices will have to come down much further to solve the problem. No politician, Democrat or Republican, wants to face that truth.

In order for housing prices to come down you have to take "money" out of the economy, horrible...gulp... deflation, and Obama has just kept pumping the supply so far and maintaining low interest rates. Result inflation and high unemployment = stagflation.

[maple_leafs182]

You don't live in many/any states.

Okay, but that still does not change the fact that the Fed has a monopoly on the currency.

Good luck with that...there is just not enough upside action for my taste. Remember, I come from a time when gold peaked at over $2000 inflation adjusted US dollars (1980).

Gold was $35 in the 70's, now it is around $1500. I am young so it makes sense for me to keep my savings in a metal rather then dollars. Dollars lose too much value over a long period of time. I think that process is accelerating too.

Politicians call for lots of things....the financial world is bigger than America.

Yes, I think ending Central Banks is one of the most important things we need to do. I would rather live in a place where other people shared that view.

[ToadBrother]

Yes, I think ending Central Banks is one of the most important things we need to do. I would rather live in a place where other people shared that view.

Because things worked out so well under the gold standard.

[GostHacked]

Because things worked out so well under the gold standard.

And how is it working so far without a gold standard? It's not just affecting the US.

[ToadBrother]

And how is it working so far without a gold standard? It's not just affecting the US.

Overall, I'd say it's worked out considerably better.

[bush_cheney2004]

Okay, but that still does not change the fact that the Fed has a monopoly on the currency.

This is by design. The Federal Reserve System is actually the USA's third and most successful central bank, so the "monopoly" is not always forever.

Gold was $35 in the 70's, now it is around $1500. I am young so it makes sense for me to keep my savings in a metal rather then dollars. Dollars lose too much value over a long period of time. I think that process is accelerating too.

That's fine, but if you buy gold at the peak only to lose your young shorts, then don't say you haven't been warned.

Yes, I think ending Central Banks is one of the most important things we need to do. I would rather live in a place where other people shared that view.

Good luck with that...only a few nations lack a central bank. Not many people are willing to jump off the cliff with you.

Edited June 24, 2011 by bush_cheney2004

[dre]

And how is it working so far without a gold standard? It's not just affecting the US.

Lets see... most rapid period of economic growth, and technological and human advancement and progress. Life expectency is through the roof, less people in poverty world wide.

The internet probably wouldnt even exist yet if we had been making transactions with gold coins for the last 70 years.

[Pliny]

Lets see... most rapid period of economic growth, and technological and human advancement and progress. Life expectency is through the roof, less people in poverty world wide.

All that despite going off the gold standard.

The internet probably wouldnt even exist yet if we had been making transactions with gold coins for the last 70 years.

Yes. We would probably have gone back to living in caves.

[ToadBrother]

Good luck with that...only a few nations lack a central bank. Not many people are willing to jump off the cliff with you.

I wish these guys would get over it. The gold standard is dead dead dead. No modern industrialized nation is going to go back to it.

[maple_leafs182]

This is by design. The Federal Reserve System is actually the USA's third and most successful central bank, so the "monopoly" is not always forever.

Why were the first two abolished?

That's fine, but if you buy gold at the peak only to lose your young shorts, then don't say you haven't been warned.

Deal.

Good luck with that...only a few nations lack a central bank. Not many people are willing to jump off the cliff with you.

Most nations are full of tyranny.

[maple_leafs182]

I wish these guys would get over it. The gold standard is dead dead dead. No modern industrialized nation is going to go back to it.

I think if we legalize competition and weren't forced to use a fiat currency, the people would naturally migrate towards a gold or silver standard. People don't like being paid in money that loses value over time.

Lets see... most rapid period of economic growth, and technological and human advancement and progress. Life expectency is through the roof, less people in poverty world wide.

The internet probably wouldnt even exist yet if we had been making transactions with gold coins for the last 70 years.

We calculate growth in the economy buy measuring it using GDP. That is terrible way to measure economic growth, with a fiat money system, the supply of dollars has to grow in order to be able to service the existing debts. The GDP has to go up.

You are wrong to attribute advances in technology to fiat money rather then human ingenuity. Technology will always evolve no matter what form of money we use.

What has happened in our fiat money system is the banks and the corporations they support have grown so large that they now control the fate of the world. The poorer are getting poorer while the richer are getting richer. Open your eyes, look at what is happening around the world, there are wars, uprisings, austerity measures, nations going bankrupt, banks collapsing, millions losing there houses, you can't chalk this up as a success.

[bush_cheney2004]

Why were the first two abolished?

They were not abolished...their charters were not renewed.

Deal.

There are now dozens of ads enticing suckers to buy gold at high prices....ever wonder why?

Most nations are full of tyranny.

Fiat currencies are not tyranny.

[bush_cheney2004]

.... Open your eyes, look at what is happening around the world, there are wars, uprisings, austerity measures, nations going bankrupt, banks collapsing, millions losing there houses, you can't chalk this up as a success.

Your gold standard pipe dream isn't going to change any of that. Gold standard games actually helped to exacerbate the effects of Great Depression. Why don't you mail a copy of The Creature from Jekyll Island to the US Congress?

[maple_leafs182]

They were not abolished...their charters were not renewed.

Fine, why were there charters not renewed...What did Andrew Jackson think about Central Banks?

There are now dozens of ads enticing suckers to buy gold at high prices....ever wonder why?

Really, I've seen more ads telling people to sell there gold.

Fiat currencies are not tyranny.

They are in my books.

"That paper money has some advantages is admitted. But that its abuses also are inevitable and, by breaking up the measure of value, makes a lottery of all private property, cannot be denied. --Thomas Jefferson

[maple_leafs182]

Your gold standard pipe dream isn't going to change any of that. Gold standard games actually helped to exacerbate the effects of Great Depression. Why don't you mail a copy of The Creature from Jekyll Island to the US Congress?

I blame the cheap credit of the 1920's on the great depression.

I also never said gold is perfect.

[bush_cheney2004]

I blame the cheap credit of the 1920's on the great depression.

I also never said gold is perfect.

Perfection isn't even the point....worshiping at the alter of Ron Paul's retrograde policies would only ensure a repeat of the past.

[dre]

I think if we legalize competition and weren't forced to use a fiat currency, the people would naturally migrate towards a gold or silver standard. People don't like being paid in money that loses value over time.

We calculate growth in the economy buy measuring it using GDP. That is terrible way to measure economic growth, with a fiat money system, the supply of dollars has to grow in order to be able to service the existing debts. The GDP has to go up.

You are wrong to attribute advances in technology to fiat money rather then human ingenuity. Technology will always evolve no matter what form of money we use.

What has happened in our fiat money system is the banks and the corporations they support have grown so large that they now control the fate of the world. The poorer are getting poorer while the richer are getting richer. Open your eyes, look at what is happening around the world, there are wars, uprisings, austerity measures, nations going bankrupt, banks collapsing, millions losing there houses, you can't chalk this up as a success.

People don't like being paid in money that loses value over time.

Its just as bad for currency to gain value over time. The important part isnt whether the value goes up and down its whether or not its predictable and stable. Wild swings in the value of currency in either direction will destroy the economy.

And the reality is that the US dollar has been more stable than gold over the last hundred years.

And youre not supposed to keep large ammounts of currency as savings. It doesnt matter if youre paid in currency that loses value over time. 50 years ago a nickel might have bought you dinner but you only made 30 cents an hour. What REALLY matters is how much labor you are ultimately exchanging for that meal.

I think the reason you guys are so mad about currency is because you dont know what it is, or how to use it. Its simply a transactional medium, nothing more. Its not meant to be a permanent store of wealth. You should only ever have enough of the stuff at any one time to facilitate pending transactions. You are free to take that currency on payday, and make a spot transaction for gold, realestate, or anything you want. Less than .001% of my net worth is paper money.

[Bonam]

People don't like being paid in money that loses value over time.

Which people are those? I certainly don't mind being paid in dollars. If you are concerned about the value of your money over time, put it into a savings account, which generally pays slightly higher than the inflation rate, so your money will retain its value over time. Or, if you prefer gold or any other commodity, buy that. It is widely available. There are also stocks, bonds, futures, real estate, and many other kinds of investments which are all available to any individual who wants to preserve or grow their wealth over time, with varying levels of risk, from essentially zero risk to high risk investments.

We calculate growth in the economy buy measuring it using GDP. That is terrible way to measure economic growth, with a fiat money system, the supply of dollars has to grow in order to be able to service the existing debts.

GDP growth is usually measured in constant dollars, FYI. Real GDP in the US has grown nonstop (with a brief blip during the great depression) over the 20th century.

You are wrong to attribute advances in technology to fiat money rather then human ingenuity. Technology will always evolve no matter what form of money we use.

That is generally true, but sufficiently misguided social/economic systems can certainly stifle, stop, or even reverse, technological progress.

Open your eyes, look at what is happening around the world, there are wars, uprisings, austerity measures, nations going bankrupt, banks collapsing, millions losing there houses, you can't chalk this up as a success.

The wars are smaller and have fewer casualties than ever. The uprisings are mostly against brutal regimes that richly deserve being risen against. Austerity measures are necessary in nations that have long ignored economic realities and overspent public money. You should open your eyes, and see that more and more of the world's people are rising out of poverty, gaining a higher standard of living, getting access to better food, shelter, education, and healthcare, than ever before in history. You can't call this anything but success.

[ToadBrother]

I blame the cheap credit of the 1920's on the great depression.

And what about the many other things scholars and economists blame for the Depression? Why pick that one out of the pile? Seems like cherry picking to me.

I also never said gold is perfect.

No, it certainly is not, and it certainly did not prevent 1929 or the ensuing crises. It's time to stop living this Paulite faerie tale. No one is going back to the gold standard.

[jbg]

What popped it was there was no one left to buy the glut of new housing at sky high prices. Once that occurred, even low interest rates or sub-prime mortgages couldn't entice buyers. Even the encouragement of Barney Franks couldn't find new buyers.

I don't totally agree. Part of what drove prices up in both the late 1980's bubble and the more recent bubble was the advent of 0% downpayment loans. During the 1980's bubble these were driven by S & L's who were sellingoff the paper; in the more recent bubble by securitization. In both cases the "lender" did not care if the borrower could repay. The borrower, on the other hand also did not care about ability to repay since if the price went up he retained the profit and if the price went down the lender ate the loss. This created a situation where there was no reality check on prices. I benefitted personally from this by being able to buy in 1992 at a price about 20% lower than the late 1980's peak,

In order for housing prices to come down you have to take "money" out of the economy, horrible...gulp... deflation, and Obama has just kept pumping the supply so far and maintaining low interest rates. Result inflation and high unemployment = stagflation.

Housing prices have come down. Way down. The inflation in the system doesn't always raise all prices. In fact, in this situation, the "velocity" of money has been reduced enough that inflation has not, with the exception of gasoline, certain foodstuffs, the stock market and gold, kicked in yet.

[maple_leafs182]

Perfection isn't even the point....worshiping at the alter of Ron Paul's retrograde policies would only ensure a repeat of the past.

I disagree.

[maple_leafs182]

Perfection isn't even the point....worshiping at the alter of Ron Paul's retrograde policies would only ensure a repeat of the past.

Fiat money can't work, the maths isn't there to support it.

I think the reason you guys are so mad about currency is because you dont know what it is, or how to use it. Its simply a transactional medium, nothing more. Its not meant to be a permanent store of wealth. You should only ever have enough of the stuff at any one time to facilitate pending transactions. You are free to take that currency on payday, and make a spot transaction for gold, realestate, or anything you want. Less than .001% of my net worth is paper money.

I understand how fiat currencies works, I don't hold on to mine.

Wages never keep up with inflation.

[bush_cheney2004]

Fiat money can't work, the maths isn't there to support it.

Fiat money works just fine as long as people continue to have faith and confidence in its value.

The "math" takes care of itself.

[ToadBrother]

Fiat money can't work, the maths isn't there to support it.

Perhaps you could expand this. Explain the "maths" for us, please.

[Pliny]

Which people are those? I certainly don't mind being paid in dollars. If you are concerned about the value of your money over time, put it into a savings account, which generally pays slightly higher than the inflation rate, so your money will retain its value over time. Or, if you prefer gold or any other commodity, buy that. It is widely available. There are also stocks, bonds, futures, real estate, and many other kinds of investments which are all available to any individual who wants to preserve or grow their wealth over time, with varying levels of risk, from essentially zero risk to high risk investments.

Those are indeed options that exist in the current ponzi scheme and will reap you great benefits. As you know all the participants in a ponzi scheme will forward the benefits. Of course we know where they end up - in the toilet.

If you do not think there is any comparison between our economy and a ponzi scheme I suggest you make the comparison. We are near the end of this ponzi scheme and you will, by the sounds of it, live to see it collapse. It will be a very exciting time for you and for others a matter of life and death.

Of course, we cannot return to a gold standard and no investor in any ponzi scheme would suggest a problem even exists in the grand scheme of things. All is well. In the normal Ponzi scheme, if you can manage to extract yourself from it before the collapse you have done well. Unfortunately, with a fiat currency there is no way for many to even detect a problem let alone extract themselves from it, what with a predilection to keeping the masses uninformed and a public education not being of much benefit.

GDP growth is usually measured in constant dollars, FYI. Real GDP in the US has grown nonstop (with a brief blip during the great depression) over the 20th century.

The GDP growth being measured in dollars of any sort is the problem. But how else are we going to measure it? It would be impossible to levy taxes if we didn't measure it and that is the problem constant dollars. Of course, it is all mathematically formulated. The hula hoop and Elmo have great effects upon the GDP but are of little economic value. However, GDP measured in dollars shows great improvement.

Perhaps we should measure GDP in happiness and tax that.

That is generally true, but sufficiently misguided social/economic systems can certainly stifle, stop, or even reverse, technological progress.

You are saying then that our current system has in no way "stifled, stopped or even reversed", technological progress? Perhaps it has just diverted it?

Certainly, we would be in a different place technologically had we been on the gold standard could you perhaps outline how technology would have suffered or perhaps maybe been improved under a gold standard?

The wars are smaller and have fewer casualties than ever. The uprisings are mostly against brutal regimes that richly deserve being risen against. Austerity measures are necessary in nations that have long ignored economic realities and overspent public money. You should open your eyes, and see that more and more of the world's people are rising out of poverty, gaining a higher standard of living, getting access to better food, shelter, education, and healthcare, than ever before in history. You can't call this anything but success.

The wars being smaller and having ferwer casualties is certainly a reason to continue having wars.

Wealth was never created by governments - only the industry of the people create wealth and better living standards. Saying "success" is because we have a fiat currency is an illusion. Those people with better food, shelter, education and healthcare (public education and public healthcare I would dispute as being better than they could or would have been had the gold standard been kept)face a very uncertain future. One that could turn tyrannical. Hard economic times tend to create instability.

What we need is to find someone else to invest to keep the growth going - as with any Ponzi scheme. And growth is necessary to maintain revenues for growing government liabilities, the entitlements it has promised it's citizens and the smaller wars with less casualties which are incidentally more expensive than older wars in constant dollars.