During the late 1800 we had a gold backed dollar. We also didn't have a Federal Reserve. It was the 2nd free banking era. It resulted in the Long Depression. Deflation kept farmers in debt and in poverty for a generation.
There are several problems with a gold or silver backed dollar. If your economy expands, and your currency doesn't, then you have deflation. Deflation would be wonderful if almost everyone had a net savings. But most people are in debt.
The other problem is what if the value of your economy exceeds the value of the gold your currency represents? You get a fiat money by default.
Capitalism has several innate flaws. One is that it naturally creates greater productivity. It doesn't naturally create higher wages. This is important because productivity is the main source of supply and wages are the main source of demand. If an economy is to remain stable, supply and demand must be kept in balance.
If productivity skyrockets, and wages don't, and free markets determine the value of credit (no Fed), then prices crash. When prices crash, businesses go under. This creates a very unstable economy. A whole lot of booms and busts. With a fed, they can "fix" problems occurring in an economy. If productivity skyrockets, wages don't, then they can lower interest rates to make credit more affordable, to shore up the lost demand. The problem with this, is that it creates a big economic bubble.
After the Great Depression until the mid-70's, none of this was a problem. The reason why is because labor was strong enough to always push for higher wages when we had productivity gains. This created 40 years of prosperity where the US became the strongest economy the world had ever seen. Since labor's decline, we've seen a return to the boom and bust cycles of the late 1800's, despite that we have a federal reserve.
By the way, our dollar is tied to something. It's tied to the demand of the dollar. The dollar is in high demand because it's used to trade oil around the world. If Timbucktoo wants to buy oil, they have to trade their money for US dollars, and buy oil on the world market. This means everyone in the world has to have US dollars on hand. A big reason why we went into Iraq is because Saddam wanted to start selling his oil in Euros. If that happened, other oil producers might follow suit.
With oil becoming more volatile as supplies dwindle, we need to rethink this. This is why I think we should quickly move towards bio-fuels, patent the technology, and sell it to the world. With our own patent, we can guarantee that this new bio-fuel will be traded in US dollars, securing the stablility of our currency.
the only way, to ensure our freedom and financial security is to have the dollar tied to something of value... We wouldn't have inflation, or deflation if we had the dollar tied to something... The ONLY way to reclaim stability and not be at the whims of wallstreet and their risky bets is to ensure the dollar is tied to something of value, and not their risky bets..
During the late 1800 we had a gold backed dollar. We also didn't have a Federal Reserve. It was the 2nd free banking era. It resulted in the Long Depression. Deflation kept farmers in debt and in poverty for a generation.
There are several problems with a gold or silver backed dollar. If your economy expands, and your currency doesn't, then you have deflation. Deflation would be wonderful if almost everyone had a net savings. But most people are in debt.
The other problem is what if the value of your economy exceeds the value of the gold your currency represents? You get a fiat money by default.
Capitalism has several innate flaws. One is that it naturally creates greater productivity. It doesn't naturally create higher wages. This is important because productivity is the main source of supply and wages are the main source of demand. If an economy is to remain stable, supply and demand must be kept in balance.
If productivity skyrockets, and wages don't, and free markets determine the value of credit (no Fed), then prices crash. When prices crash, businesses go under. This creates a very unstable economy. A whole lot of booms and busts. With a fed, they can "fix" problems occurring in an economy. If productivity skyrockets, wages don't, then they can lower interest rates to make credit more affordable, to shore up the lost demand. The problem with this, is that it creates a big economic bubble.
After the Great Depression until the mid-70's, none of this was a problem. The reason why is because labor was strong enough to always push for higher wages when we had productivity gains. This created 40 years of prosperity where the US became the strongest economy the world had ever seen. Since labor's decline, we've seen a return to the boom and bust cycles of the late 1800's, despite that we have a federal reserve.
By the way, our dollar is tied to something. It's tied to the demand of the dollar. The dollar is in high demand because it's used to trade oil around the world. If Timbucktoo wants to buy oil, they have to trade their money for US dollars, and buy oil on the world market. This means everyone in the world has to have US dollars on hand. A big reason why we went into Iraq is because Saddam wanted to start selling his oil in Euros. If that happened, other oil producers might follow suit.
With oil becoming more volatile as supplies dwindle, we need to rethink this. This is why I think we should quickly move towards bio-fuels, patent the technology, and sell it to the world. With our own patent, we can guarantee that this new bio-fuel will be traded in US dollars, securing the stablility of our currency.