Trump proposes returning to the gold standard.

a reply to: eNumbra

ask kadaffi?

oh wait.... :-(

originally posted by: Aazadan

originally posted by: enlightenedservant
Are you forgetting that we still pay interest on the national debt every year, regardless of whether we have a surplus, deficit, or balanced budget? I feel like you're not factoring those yearly interest payments into your equations.

Interest is irrelevant. It's a tiny percent of the budget. As long as you include the interest in the budget you will easily inflate your way out of it. Most of our debt is also financed at a very low interest rate right now which makes this solution particularly attractive.

We're paying at least $310 billion a year on interest for the national debt right now (HERE). It's roughly 8.4% of the $3.65 trillion in spending we did in 2017 and almost 10% of the $3.2 trillion in total receipts we had in 2017 (both found here). And that's with the low interest rates you're referring to.

So let's look at your hypothetical for a second. Let's pretend that we pass a balanced federal budget this year and then keep a balanced budget for the next 20 years. At the end of those 20 years, we'd still owe a $21 trillion national debt and we would've paid an additional $6.2 trillion in interest on that debt. Your hope is that inflation would've jumped enough over those 20 years so that the $21 trillion wouldn't look so bad. But that's completely ignoring the $6.2 trillion in interest payments over that time period.

I simply don't see how you can say that the interest payments are irrelevant here.

originally posted by: ScepticScot
I agree it wouldn't work, it was your clain that the dollar is already effectively backed by gold that was wrong.

My point was that the dollar is backed by something better than gold. It's backed by the faith that it can buy something, that something can be gold. On a pure gold standard it's backed by faith in gold alone, so if the gold market crashes so too does your economy. The dollar is currently backed by every commodity, it can get you as much gold as you want, or it can get you anything else you desire, with no middleman exchange.

originally posted by: enlightenedservant
So let's look at your hypothetical for a second. Let's pretend that we pass a balanced federal budget this year and then keep a balanced budget for the next 20 years. At the end of those 20 years, we'd still owe a $21 trillion national debt and we would've paid an additional $6.2 trillion in interest on that debt. Your hope is that inflation would've jumped enough over those 20 years so that the $21 trillion wouldn't look so bad. But that's completely ignoring the $6.2 trillion in interest payments over that time period.

Inflation over 20 years at 3.5% would be about a 51% reduction in the effective size of that debt. 50% of 27 trillion is 13.5 trillion, that's still less than 21 trillion now. Additionally, if you pay it down at 500 billion/year you're still paying 3.1 trillion in interest over that time. The interest just isn't significant compared to having a good financial plan.

originally posted by: Aazadan

originally posted by: ScepticScot
I agree it wouldn't work, it was your clain that the dollar is already effectively backed by gold that was wrong.

My point was that the dollar is backed by something better than gold. It's backed by the faith that it can buy something, that something can be gold. On a pure gold standard it's backed by faith in gold alone, so if the gold market crashes so too does your economy. The dollar is currently backed by every commodity, it can get you as much gold as you want, or it can get you anything else you desire, with no middleman exchange.

I think you have it backwards. Faith in the dollar? How about no alternative to the 'dollar'? Hence, money laundering into gold by investors. Less and less faith in that Federally unbacked dollar, more and more in gold, silver...anything but the dollar.

a reply to: Aazadan

LOL Why are you assuming 3.5% inflation over 20 years? Over the last 20 years, we've had a whopping 1 year with inflation at or above that rate and 9 years under 2% (HERE). We haven't had inflation over 2.11% for 7 years.

a reply to: Aazadan


At the moment it looks like this.As long as the market is up, its acting as a sponge, because their is nowhere else for money to live and give a return on investment. Its acting like a risky bank at the moment. As long as its stable and keeps going up all is ok. If their is a run on the market where something starts a panic, and investors start to withdraw, the trading desk at the Fed will come and prop the bonds, and the shares back up. It's too big to fail. Under this scenario the investors will run to safety, traditionally they will bye P.M's which will put their price up. The share market will still look good but will only have government money in it, but it will be inflated cash with a buying power diminished by how much gold and silver have revalued. How does that one sound?

originally posted by: Aazadan

originally posted by: enlightenedservant
So let's look at your hypothetical for a second. Let's pretend that we pass a balanced federal budget this year and then keep a balanced budget for the next 20 years. At the end of those 20 years, we'd still owe a $21 trillion national debt and we would've paid an additional $6.2 trillion in interest on that debt. Your hope is that inflation would've jumped enough over those 20 years so that the $21 trillion wouldn't look so bad. But that's completely ignoring the $6.2 trillion in interest payments over that time period.

Inflation over 20 years at 3.5% would be about a 51% reduction in the effective size of that debt. 50% of 27 trillion is 13.5 trillion, that's still less than 21 trillion now. Additionally, if you pay it down at 500 billion/year you're still paying 3.1 trillion in interest over that time. The interest just isn't significant compared to having a good financial plan.

Having 3.5% inflation for 20 years would be a lot more damaging to the economy than the 20 trillion debt is.

originally posted by: ScepticScot
Having 3.5% inflation for 20 years would be a lot more damaging to the economy than the 20 trillion debt is.

The way we calculate CPI which determines inflation rates is keeping the on paper inflation rate down, but in terms of purchasing power (the old way CPI was calculated) it's been higher than 3.5% for decades now.

originally posted by: TheConstruKctionofLight
a reply to: Krazysh0t
If "smart" makes you feel better that you are not actually "slaving" day in day out to the system good luck to you.

I don't "slave" to the system. I've figured out how to get enjoyment out of life while also having a steady career. Is life stressful and money one of the biggest stressers? Yes, but that doesn't mean you can't enjoy your hobbies or now how to make it count.

Keep your head in the sand - all bubbles burst eventually. History attests to the simple fact.

I am under no illusions that the current economic bubble that Trump just super charged with his tax cuts will be ending (probably even sooner now thanks to Trump's idiotic economic theory, but that's another story), but I'm not talking about today's economic climate. I'm talking about the economy/monetary supply in general. And if you think THAT is a bubble then you don't know what an economic bubble is, but I'm giving you the benefit of the doubt in that you were talking about the current economic times and just confused my meaning.

History is more than just the last few years you know? Well unless you belong to the "Last Thurdasyism" religion.

Is something BIG related to U.S. Currency, supposed on happen on March 30, 2018?

a reply to: carewemust

I guess we'll just see tomorrow, won't we?

Of course USA will return to the gold standard if the petrodollar gets into serious trouble. The dollar will then be backed up by gold, my guess is that $50 000 will be backed up an ounce of gold.

Guys, the time for the gold standard has passed a long time ago, it is useless now. It is proposed as a distraction to get our attention away from the real problem (the corrupted financial system) and the real solution, which is the blockchain technology. Cryptocurrency is the only way to get rid of the centralized corporation controlled central bank. We dont need to go back to a different type of centralized banking. There will be no difference whatsoever!!!

originally posted by: eNumbra
What happened to the last president who wanted to return to the Gold standard...

He was executed in public.