The U.S. Economy: Stand by for more worse news

[Schmelzer]

The fact remains you cannot apply kitchen table economics to macroeconomic events and expect. That’s kind of why they are two distinct areas of study, because they are two separate subjects. In fact your denial goes against the tenets of the libertarian ideology to which you claim to subscribe.

Oh, really? Can you give me a reference to libertarian economists who like mainstream Keynesian macroeconomics? The economic theory preferred in libertarian circles is Austrian, and they have very strong prejudices against Keynesianism.

I'm not a supporter of Austrian economics, I prefer David Friedman, but some points of the Austrians are quite reasonable.

The difference to print money is not unimportant. The savings paradox is not unimportant.

You think that these phrases somehow reject my point that differences between micro- and macroeconomics are usually not important?

By the way, this "savings paradox" is usually sold as some difference between micro- and macroeconomics, but it isn't. Simply, consider the smallest imaginable microeconomy - Robinsonian economy. What means "savings" for him? He has no money, even less paper money, thus, savings for him is investment. Into some goods for security, into seeds and livestock instead of eating it, into creating devices which make work easier or losses smaller - in any way, the same thing in macroeconomy is investment. So, what happens macroeconomically if all people decide to invest more? A shift on the market from consumption goods to investment goods. Yes, producers of consumption goods loose - but only as much as the producers of investment goods obtain. Thus, the influence which this redirection has on the market is neutral. But the resulting effect is the same as for Robinson: More investment, with the result that the society as a whole becomes richer. There may be some costs for such a transformation - old firms go down, new firms have first to be build - but this is also quite similar to Robinsonian economics, if Robinson decides to change his way of life, producing something different, he has also some initial problems, has to learn how to do this and so on.

With commodity money, nothing changes. To argue that holding a lot of gold is not really an investment is not really a point - it is consumption of gold. If one saves in paper money backed by some commodities, it is a form of credit, thus, also not different from investment. So, there remains only the case of savings in unbacked fiat money. But fiat money simply do not exist in Robinson economics, and is in its very nature paradoxical, so no reason to wonder about some saving paradoxes related with them.

Gold has no intrinsic value, nor does any other commodity have "intrinsic" unchanging value. Commodities are no guarantee of constant value, just ask any farmer.

Of course, not. But it is a guarantee against the systematic, predictable loss connected with inflation.

The US case in point, in the first decades of the last century inflation in the US reached a zenith of more than 20% while the US currency was backed by gold and silver. The US went off the gold standard in 1972 and we have never seen that kind of inflation since, even with the advent of Keynesian economics (circa 1936) or the oil shocks of the 70's.

Statistics ;-) You have forgotten to mention that the peak was during wartime, and has been compensated by some negative rates after the war. You have also forgotten to mention that gold is one thing, gold backed paper (by a democratic governement) something different.

A commodity backed currency offers virtually no protection from inflation or depression.

Of course, backed only by a cheap state promise, which leads to a gold price of 20$ in 1900 but 35$ in 1970, not really protects against inflation ;-). In this case, only owning real gold helps. No wonder that to own real gold was forbidden some time in the US.

But if one compares with the >1200$ for gold today, 45 years after 1970, I would say it helps at least a little bit against inflation.

Keynesian economics moderates the extremes of the business cycle.

In theory. Which assumes some properties of the political leadership, which remembers fairy tales for sheeple but not political reality.

It does what you claim commodity currencies do. If you had taken a macroeconomics course or opened an economics text, you would know that.

Don't worry, I know the happy ends of fairy tales. Wise politicians do everything in an optimal way.

Hmm, funny, you don’t have a problem with Putin and his cronies cheating.

As long as they don't cheat me, why should I care?

Two, every time you buy something you are redistributing capital. That isn’t any different from what banks do every day.

There are differences, and I bet you know this. Of course, the banking game is subtle, the guys who have invented it were clever guys, and have tried hard to hide the cheating, but it is there. A quite subtle point is that creating money in itself is not yet cheating - cheating is creating money which are not backed. Say, I have a nice income and own a house, and I give out some bonds backed by my property as security. These bonds can play the role of money among people who trust me. As long as the sum of these bonds is less than what my property is worth, this is not cheating. If I issue more than that, I cheat.

Similarly, some part of what the banks do is quite legitimate business, even if it, according to some statistics of the amount of money, counts as creating money. But there is also the other part, where formally the same "creating money" is nothing else than legalized and "regulated" (thus, accessible only to the 1%) version of counterfeiting.

You may argue that I don't know the details of the regulations and therefore this is some suspiction or conspiracy theory or so. But there is the point which is certain, namely that fiat money have no intrinsic value at all, thus, printing them and assigning them, with whatever methods, a value is cheating. The classical scheme is simple - we have the state bank which prints the money, all sheeple are obliged to use them, and if something goes wrong with this state they have no value at all. Here the situation is clear, the counterfeiter is the state bank, other banks, even if forced to use these money, are innocent. In modern banking, this is not that clear. Which does not change the point that all the guys who own fiat money are potential victims of the guys who have really created them, and all fiat money are counterfeit, paper which seems to have some value but do not really have any value. So, what is hidden behind dubious regulations is only the question who really gains all this. Whoever it is, they are from the 1%, thus, in this sense this is not really interesting.

 

[joepistole]

Oh, really? Can you give me a reference to libertarian economists who like mainstream Keynesian macroeconomics? The economic theory preferred in libertarian circles is Austrian, and they have very strong prejudices against Keynesianism.

LOL, YES REALLY. Where did I say or even hint that libertarians like Keynesian economics? That wasn’t the issue. You are moving the goal post. The issue here was you equating microeconomics with macroeconomics saying there was essentially no difference of importance. And that as previously pointed out reflects a profound ignorance of economics.

As previously pointed out in my last post, even libertarians (i.e. the so called Austrians) recognized the difference between macroeconomics and microeconomics but Austrians’ unlike mainstream economists believe macroeconomics is too complex to be understood. Austrians predated “big data” and couldn’t envision “big data” which is today common place.

I'm not a supporter of Austrian economics, I prefer David Friedman, but some points of the Austrians are quite reasonable.
You think that these phrases somehow reject my point that differences between micro- and macroeconomics are usually not important?

Austrians are basically the equivalent of dowsers and fortune tellers. Empiricism is not needed nor wanted in Austrian circles.

And if you prefer David Friedman, well, he doesn’t share your belief that microeconomics and macroeconomics are essentially the same. Nor did he share your distain for Keynesian economics. Friedman used the principals of Keynesian economics but he like many others had some issues with it. Keynesian economics has undergoing a lot of refining over the years. Most economists are now Post-Keynesian Economists. They have built upon and refined Keynes.

It’s interesting to note, now you are now trying to back off your initial claim by conditioning it with the word “usually”. Your economic idol, David Friedman never made that claim, nor would he have ever made that claim. No Austrian would make that claim because Austrian's don’t believe in empiricism and “big data” which is the backbone of modern macroeconomics.

By the way, this "savings paradox" is usually sold as some difference between micro- and macroeconomics, but it isn't. Simply, consider the smallest imaginable microeconomy - Robinsonian economy. What means "savings" for him? He has no money, even less paper money, thus, savings for him is investment. Into some goods for security, into seeds and livestock instead of eating it, into creating devices which make work easier or losses smaller - in any way, the same thing in macroeconomy is investment. So, what happens macroeconomically if all people decide to invest more? A shift on the market from consumption goods to investment goods. Yes, producers of consumption goods loose - but only as much as the producers of investment goods obtain. Thus, the influence which this redirection has on the market is neutral. But the resulting effect is the same as for Robinson: More investment, with the result that the society as a whole becomes richer. There may be some costs for such a transformation - old firms go down, new firms have first to be build - but this is also quite similar to Robinsonian economics, if Robinson decides to change his way of life, producing something different, he has also some initial problems, has to learn how to do this and so on.

And you think any of that makes sense…seriously? The saving paradox is something good for individuals but on a macroeconomic level it can slow economic growth and in doing so adversely affects savings, because earners have less income due to the economic slowness created by saving rather than consuming. It really isn’t that difficult, nor is it controversial in mainstream economics. I brought this up to show a major difference between microeconomics and macroeconomics which you have repeatedly said doesn’t exist. What is good for an individual may not be good for the larger economy as a whole. The unfortunate bottom line for you is that there are significance between microeconomics and macroeconomics.

By With commodity money, nothing changes. To argue that holding a lot of gold is not really an investment is not really a point - it is consumption of gold. If one saves in paper money backed by some commodities, it is a form of credit, thus, also not different from investment. So, there remains only the case of savings in unbacked fiat money. But fiat money simply do not exist in Robinson economics, and is in its very nature paradoxical, so no reason to wonder about some saving paradoxes related with them.
Of course, not. But it is a guarantee against the systematic, predictable loss connected with inflation.

None of that makes any sense. It’s gibberish. The bottom line is commodity values change every day. Gold isn’t an intrinsic store of value. Just ask any of the people who purchased gold a few years ago selling at 1.9k+dollars an ounce and is now selling at 1.1k and falling, folks like you who thought commodities and gold in particular was a store of constant value.

Statistics ;-) You have forgotten to mention that the peak was during wartime, and has been compensated by some negative rates after the war. You have also forgotten to mention that gold is one thing, gold backed paper (by a democratic governement) something different.

Yeah, statistics and data, stuff you abhor. So now you want to qualify your formerly unconditional statement? You want an exception for war? So is it now your position that gold backed currency prevents inflation except for periods of war? How does that work exactly? Does someone go out and make more gold thereby expanding the monetary supply and cause inflation? By the way WWI ended in 1917, three years before the inflation zenith in 1920 and there were long periods of inflation when the nation was at peace and its currency was backed by gold.
The unfortunate fact again for you is your beliefs are just not consistent with the data.

 

[joepistole]

Of course, backed only by a cheap state promise, which leads to a gold price of 20$ in 1900 but 35$ in 1970, not really protects against inflation ;-). In this case, only owning real gold helps. No wonder that to own real gold was forbidden some time in the US.
But if one compares with the >1200$ for gold today, 45 years after 1970, I would say it helps at least a little bit against inflation.

You think that matters? The January of 1980 gold sold for 850 dollars per ounce. If gold had kept pace with inflation, gold would now be selling for 2, 461.68 per ounce, but that isn’t what gold is selling for today. Gold has never sold for 2,461 dollars per ounce. Today gold is selling for 1,086.90 as of this writing. And as previously noted, gold prices have been in freefall for some time now. So the data, the stuff you so dislike, doesn’t support your belief that gold is somehow immune to inflation or makes a currency immune to inflation. The data clearly shows gold isn’t an inflation hedge. Thirty five years of empirical data says you are wrong.

In theory. Which assumes some properties of the political leadership, which remembers fairy tales for sheeple but not political reality.

No, unfortunately for you, it isn’t theory. It’s empirical data. Since the use of Keynesian economics, there have been fewer recessions, longer periods of growth, and recessions have been shorter. That’s what centuries of data shows.

Don't worry, I know the happy ends of fairy tales. Wise politicians do everything in an optimal way.
As long as they don't cheat me, why should I care?
There are differences, and I bet you know this. Of course, the banking game is subtle, the guys who have invented it were clever guys, and have tried hard to hide the cheating, but it is there. A quite subtle point is that creating money in itself is not yet cheating - cheating is creating money which are not backed. Say, I have a nice income and own a house, and I give out some bonds backed by my property as security. These bonds can play the role of money among people who trust me. As long as the sum of these bonds is less than what my property is worth, this is not cheating. If I issue more than that, I cheat.
Similarly, some part of what the banks do is quite legitimate business, even if it, according to some statistics of the amount of money, counts as creating money. But there is also the other part, where formally the same "creating money" is nothing else than legalized and "regulated" (thus, accessible only to the 1%) version of counterfeiting.
You may argue that I don't know the details of the regulations and therefore this is some suspiction or conspiracy theory or so. But there is the point which is certain, namely that fiat money have no intrinsic value at all, thus, printing them and assigning them, with whatever methods, a value is cheating. The classical scheme is simple - we have the state bank which prints the money, all sheeple are obliged to use them, and if something goes wrong with this state they have no value at all. Here the situation is clear, the counterfeiter is the state bank, other banks, even if forced to use these money, are innocent. In modern banking, this is not that clear. Which does not change the point that all the guys who own fiat money are potential victims of the guys who have really created them, and all fiat money are counterfeit, paper which seems to have some value but do not really have any value. So, what is hidden behind dubious regulations is only the question who really gains all this. Whoever it is, they are from the 1%, thus, in this sense this is not really interesting.

That is just a dump of nonsense. It’s pretty obvious you don’t understand how banks work or the role central banks play in the banking system. It has absolutely nothing to do with counterfeiting. And people aren’t’ forced to use state currency. Depending on the country, trade is often conducted in foreign currencies (e.g. Mother Russia). In the US there is no law that says people must use the US Dollar for trade inside the US. Barter still exists in the US, mostly in isolated rural areas and people who exist on the fringes of society. Currencies are no different from any other commodity. They are bought and sold every market day around the globe. Currencies, like anything else including gold, is only worth what a given seller is willing to sell it for and a given buyer is willing to pay for it at any point in time. It’s that free market thingy which libertarians are supposed to adore.

The issue was fractional banking. There is nothing in a well regulated fractional banking system that can be construed as cheating. But then there is that nasty word again, regulated, which libertarians abhor. Well-regulated banking has worked extremely well by allowing capital to be moved from areas of surplus to areas of demand and growth. And with the advent of well-regulated fractional banking the bank runs and closures which were common in the era of deregulated banking (laissez-faire) and before central banks (i.e. your “state banks”) have virtually disappeared. That has nothing to do with fiat money. And there is nothing counterfeit about fiat money.

 

[Michael]

And people aren’t’ forced to use state currency.

Yes they are, Citizens are forced to access fiat currency when they pay their income/labor tax. THAT'S the scam. It allows the State to sell T-Bonds on their Tax Chattel. The T-Bond markets literally dwarfs any other market. Which works out quite nicely given many T-Bonds are sold with maturation dates that come due a generation later - striping them of their prosperity and transferring it to the present. Right now there are 20 year olds rent off their grandparents while at the same time paying off stadiums that were built in the 1960s and demolished in the 1990s that their grandparents enjoyed the subsidized use of. Stadiums their grandkids never saw, let alone made use of. Yet, they're paying on them.

Underpinning the 'value' of fiat currency is the Blue-Klux-Klan and the State's willingness to employ physical violence, even murder, against anyone not willing to pay the State banking thugs who run USA Inc.

But, don't worry.

There's plenty Chattel trapped in Tax-Farm USA Inc to milk - my guess is for decades to come. Because, for now, most of the Tax Chattel are fat, ignorant, functionally illiterate (or nearly so) and have been completely normalized/trained to raise their hand and ask permission to go pee, sit in their assigned desk and accept their role as Consumer Cog in the Great Machine. Plus there's flags, abortions and Terrorists to worry about. All while getting poorer by the day.

History suggests that someday in the future, a "People's People" / demagogue will come along and use the State to usher in the Great National Socialism (Progressivism) and then we'll get something just like the "Great Recession" you like to crap on about only the Cogs'll call this THE 'Great Redistribution'. I'm sure you'll like it. It starts with a 99.99% "Ownership Tax" on SlumLords Oh, and 'Free' Soylent Green for all.

Until then, let's all enjoy the Great Recovery as well as "The" Donald's First poor-attempt-at-Demagoguery Trump Show. Maaany more decades to come of the Great Recovery. In the meantime, let's wave our flag for Hitlary.

 

[joepistole]

Yes they are, Citizens are forced to access fiat currency when they pay their income/labor tax. THAT'S the scam. It allows the State to sell T-Bonds on their Tax Chattel. The T-Bond markets literally dwarfs any other market. Which works out quite nicely given many T-Bonds are sold with maturation dates that come due a generation later - striping them of their prosperity and transferring it to the present. Right now there are 20 year olds rent off their grandparents while at the same time paying off stadiums that were built in the 1960s and demolished in the 1990s that their grandparents enjoyed the subsidized use of. Stadiums their grandkids never saw, let alone made use of. Yet, they're paying on them.

No Michael, if you earn enough income and are required to file taxes, your tax obligation is measured in dollars but you are not required to pay your tax obligation in dollars. Every year the government seizes assets which it sells at auction to pay tax debts. If you want to give the government gold to satisfy your tax obligation I am sure they will take your gold or your cars or whatever other asset you want to use to pay our tax bill. But it will likely cost you more. So if it means that much to you and you want to pay the government more than you owe them just to not use the currency, I say go for it. But I think that sounds kind of silly to most folks.

If you are an employee and earn dollars, then some of those dollars will be withheld from your paycheck. But then if you are earning dollars why do you care? Would you rather the government take some of your assets every few weeks and pay the extra expenses the government incurs because you want to pay your tax bill in dollars? If you don't mind earning dollars then why do care if you pay the government in dollars versus goats?

Underpinning the 'value' of fiat currency is the Blue-Klux-Klan and the State's willingness to employ physical violence, even murder, against anyone not willing to pay the State banking thugs who run USA Inc.

But, don't worry.

There's plenty Chattel trapped in Tax-Farm USA Inc to milk - my guess is for decades to come. Because, for now, most of the Tax Chattel are fat, ignorant, functionally illiterate (or nearly so) and have been completely normalized/trained to raise their hand and ask permission to go pee, sit in their assigned desk and accept their role as Consumer Cog in the Great Machine. Plus there's flags, abortions and Terrorists to worry about. All while getting poorer by the day.

History suggests that someday in the future, a "People's People" / demagogue will come along and use the State to usher in the Great National Socialism (Progressivism) and then we'll get something just like the "Great Recession" you like to crap on about only the Cogs'll call this THE 'Great Redistribution'. I'm sure you'll like it. It starts with a 99.99% "Ownership Tax" on SlumLords Oh, and 'Free' Soylent Green for all.

Until then, let's all enjoy the Great Recovery as well as "The" Donald's First poor-attempt-at-Demagoguery Trump Show. Maaany more decades to come of the Great Recovery. In the meantime, let's wave our flag for Hitlary.

Yeah, yeah, you don't want to pay your fair share of the taxes. I've heard that story before. You expect all the benefits, but you don't want to pay your fair share of the costs of those benefits.

 

[Schmelzer]

The issue here was you equating microeconomics with macroeconomics saying there was essentially no difference of importance. And that as previously pointed out reflects a profound ignorance of economics.

And I have answered that you have forgotten the "usually". So I do not question at all that there are some differences. And not even that in some questions they may be important. (For example, the seriousness of a public good problem increases with the number of the people involved - a problem easily solvable on a small size may appear unsolvable on the large size.)

As previously pointed out in my last post, even libertarians (i.e. the so called Austrians) recognized the difference between macroeconomics and microeconomics but Austrians’ unlike mainstream economists believe macroeconomics is too complex to be understood. Austrians predated “big data” and couldn’t envision “big data” which is today common place.

Their rejection is not only based on all this being too complex, but on some conceptual objections that these data are not even well-defined. Like their rejection of cardinal utility. (Which is wrong, as I have argued in http://ilja-schmelzer.de/papers/utility.pdf based on an old argument from von Neumann). The rejection, out of principle, of interpersonal utility, is a little bit more justified, but also far too rigorous.

Austrians are basically the equivalent of dowsers and fortune tellers. Empiricism is not needed nor wanted in Austrian circles.

That's already unfair. One thing is to reject some part of empirical economics, another one to replace empirical measurements by irrational fortune telling.

Their point is that there are far too much things which can influence empirical data, so that predictions based on economic arguments are more reliable than empirical measurement. Say, the influence of minimal wages on unemployment data. There is an economic argument that, everything else equal, an increase of minimal wages will increase unemployment. But in real economics everything else is not equal. In particular, it is quite reasonable to expect that increase of minimal wages is something which is more probable in boom times than during recession. And the boom, of course, decreases unemployment. Moreover, the unemployment increase will happen only for those living on minimum wages, not in general. Thus, to identify this effect in economic statistics would be a very hard job.

And if you prefer David Friedman, well, he doesn’t share your belief that microeconomics and macroeconomics are essentially the same.

Oh, I don't share it too.

Nor did he share your distain for Keynesian economics. Friedman used the principals of Keynesian economics but he like many others had some issues with it. Keynesian economics has undergoing a lot of refining over the years. Most economists are now Post-Keynesian Economists. They have built upon and refined Keynes.

Hm, I would guess this depends on what you classify as "principals of Keynesian economics" and "use". I do, as well, not follow the Austrians in most of their rejections of mainstream economics "out of principle". So, you could qualify my position in quite similar terms, as "I have some issues with Keynesian economics".

It’s interesting to note, now you are now trying to back off your initial claim by conditioning it with the word “usually”. Your economic idol, David Friedman never made that claim, nor would he have ever made that claim. No Austrian would make that claim because Austrian's don’t believe in empiricism and “big data” which is the backbone of modern macroeconomics.

No, the "usually" was there from the start, in http://www.sciforums.com/threads/th...r-more-worse-news.105212/page-52#post-3316443 so that it is not a "trying to back off", but a defense against your omission to create a strawman.

And you think any of that makes sense…seriously? The saving paradox is something good for individuals but on a macroeconomic level it can slow economic growth and in doing so adversely affects savings, because earners have less income due to the economic slowness created by saving rather than consuming. It really isn’t that difficult, nor is it controversial in mainstream economics. I brought this up to show a major difference between microeconomics and macroeconomics which you have repeatedly said doesn’t exist.

Of course I think it makes sense, and if it does not make sense, I would like to learn why.

If you think a summary of the conclusions, and to note that "nor is it controversial in mainstream economics" would help me to identify the error in my argument, if there is one, sorry, no, it doesn't. It adds only evidence against mainstream economics, if it considers as uncontroversial things where educated laymen can find counterarguments and you seem unable to identify an error and fall back to a general "this is all nonsense" rejection.

So, again: If I, instead of simply consuming, save, I simply consume different things - be it gold, be it the industry producing investment goods instead of consumer goods. This holds in macroeconomics as well as microeconomics. A shift from consumption of consumption goods to investment goods is a shift, not a slowdown. To focus only on the negative part - less income for consumer good industries - is a simple error in economic reasoning, of the type of the broken window fallacy. This counterargument is, AFAIU, accepted by the mainstream, and the counterargument is to restrict the argument to savings which do not have to form of investment, distinguishing "Enterprise" and "Thrift". But I do not see such a possibility. You can save by buying things which cannot be produced, say, land. But then there is another guy who sells it. If this guy consumes whatever else, then it makes no difference. The other outcome is that this increases the price for land. This favours landowners, disfavours those who have to rent it, but why should it have a negative consequence in general?

The bottom line is commodity values change every day. Gold isn’t an intrinsic store of value. Just ask any of the people who purchased gold a few years ago selling at 1.9k+dollars an ounce and is now selling at 1.1k and falling, folks like you who thought commodities and gold in particular was a store of constant value.

As if I have questioned this triviality.

Yeah, statistics and data, stuff you abhor.

Not at all. Stuff which is useful, even necessary, but which is highly problematic because it can be easily manipulated. And, unfortunately, for many of these macroeconomic data there exist strong political interests to manipulate them.

So now you want to qualify your formerly unconditional statement? You want an exception for war?

No reason. But in a war it is quite typical that relative values change a lot in comparison with peace time.

Moreover, I see a difference between paper money backed by a commodity and the commodity itself. This difference depends on how much you can trust a government. Experience shows consistently that governments lie much more in war time. Thus, one could expect that a difference between the commodity-backed paper prices and commodity prices becomes larger in war time too. (This can be, as well, irrelevant, if one really can, without any problem, really exchange the paper for the commodity. But the probability that in reality this is not that easy, by various bureaucratic restrictions, is also much greater in war times.)

PS, I see "When in 1914 the war came, metallic-money standards throughout the world broke down, and for years people nearly everywhere found themself on widely fluctuating paper money standards", Kemmerer, Gold and the Gold Standard, p.163f

So is it now your position that gold backed currency prevents inflation except for periods of war?

It is certainly not that it prevents price oscillations - because prices of commodities oscillate as well. There may be also systematic price changes, if the technology of production of the commodity changes, or new gold deposits are found. As well it does not prevent political market manipulations. But it somewhat decreases the risc of systematic loss of value do to money printing (inflation in the sense used by Mises). But given that a government can every day stop the backing or change the rate, it does not completely prevent this.

Does someone go out and make more gold thereby expanding the monetary supply and cause inflation?

People collect gold to have something for hard times. Wars, and the time after the war usually too, are hard times. Thus, people in these times tend to sell gold to buy what they need to survive. And, then, don't forget that states can print unbacked paper money even if they are officially yet backed.

By the way WWI ended in 1917

No, in November 1918. For the US, it started 1917.

 

[Schmelzer]

You think that matters? The January of 1980 gold sold for 850 dollars per ounce. If gold had kept pace with inflation, gold would now be selling for 2, 461.68 per ounce, but that isn’t what gold is selling for today.

Pure accident that you have choosen 1980, if one looks at http://goldprice.org/gold-price-history.html one can see that this was a completely accidental choice. Why not simply start your statistics from Nixon's start signal with 35 dollar? And if you start your statistics with an extremal high, why not ending it at least with another extremal high?

Gold has never sold for 2,461 dollars per ounce. Today gold is selling for 1,086.90 as of this writing.

So what - 1086 to 35 in comparison with the 1 to 1 of the dollar is a quite good approximation of getting rid of losses by inflation. Except you think a factor of 2.4 (based on starting your computation with an accidental peak) matter, while a prevented loss of a factor 30 does not matter at all.

No, unfortunately for you, it isn’t theory. It’s empirical data. Since the use of Keynesian economics, there have been fewer recessions, longer periods of growth, and recessions have been shorter. That’s what centuries of data shows.

This is the kind of data which I consider as suspicious. What counts as "use of Keynesian economics"? I would also suspect a general trend to more positive statistics based on the pure interest of politicians in obtaining better data. Such a constant pressure predictably leads to modifications in statistics. Once accepted, they will remain. But if you provide a link to such a statistic, I would take a look at it. (if open access, of course).

It has absolutely nothing to do with counterfeiting.

It will never be named counterfeiting, like taxes will never be named robbery, by etatists.

And people aren’t’ forced to use state currency. Depending on the country, trade is often conducted in foreign currencies (e.g. Mother Russia). In the US there is no law that says people must use the US Dollar for trade inside the US.

If you try to create a replacement, you end in jail. "On March 18, 2011, von NotHaus was pronounced guilty of "making, possessing, and selling his own currency"" https://en.wikipedia.org/wiki/Liberty_Dollar

Currencies are no different from any other commodity. They are bought and sold every market day around the globe.

Except that almost all states force their citizens to use their currency. With quite different methods, of course. Sometimes even owning other currencies is forbidden. Often bank accounts can be only in the currency. Whatever.

The issue was fractional banking. There is nothing in a well regulated fractional banking system that can be construed as cheating. But then there is that nasty word again, regulated, which libertarians abhor. Well-regulated banking has worked extremely well by allowing capital to be moved from areas of surplus to areas of demand and growth. And with the advent of well-regulated fractional banking the bank runs and closures which were common in the era of deregulated banking (laissez-faire) and before central banks (i.e. your “state banks”) have virtually disappeared. That has nothing to do with fiat money. And there is nothing counterfeit about fiat money.

I give promises which - in the case of a bank run - cannot hold. Such a promise is a cheat. Regulated cheating remains cheating. Point.

If thieves and cheaters "regulate" themself, that means, if they don't take too much, so that it may go unnoticed, the probability to be catched decreases. But the cheaters remain cheaters in this case too. Then, of course, if a bank which is "too big to fail" can be sure that, in case of a bank run, the central bank will give short term credits, the public becomes aware of this too, therefore decreasing the danger of bank runs. But that means only that the losers are not the citizens who have put their money to this particular bank, but all citizens, via taxation.

And it has something to do with fiat money. With fiat money, the state bank is always able to support all banks with paper in the case of such a bank run.

 

[Schmelzer]

I wrote: "So what - 1086 to 35 in comparison with the 1 to 1 of the dollar is a quite good approximation of getting rid of losses by inflation", referring to the 35$ official price at the time of the end of the Gold standard. But what means the dollar was backed by gold at this price? It seems, not what one would expect - if you want to have gold, you go with your dollars to the bank and buy gold for this price.

"During those intervening decades, gold lived a kind of strange dual existence as a half state-controlled, half free market-driven money-commodity, a situation that Nobel Prize economist Milton Friedman called a “real versus pseudo gold standard.”

The origin of this cumbersome duality was the post-war two-tiered system of gold pricing. On the one hand, there was a new monetary system that fixed gold at $35 an ounce. On the other, there was still a free market for gold. The $35 official price was ridiculously low compared to its free market variant, resulting in a situation in which IMF rules against dealing in gold at “free” prices were circumvented by banks that surreptitiously purchased gold from the London market."

https://www.lewrockwell.com/2015/07/marcia-christoff-kurapovna/are-gold-markets-dysfunctional/

So, a "gold backed" dollar who is "gold backed" in such a way that there is an official price but nobody can really buy gold for this price, and has to go to a free market where gold is sold for a much higher price, can certainly not prevent anything.

 

[pjdude1219]

Oh, really? Can you give me a reference to libertarian economists who like mainstream Keynesian macroeconomics? The economic theory preferred in libertarian circles is Austrian, and they have very strong prejudices against Keynesianism.

I'm not a supporter of Austrian economics, I prefer David Friedman, but some points of the Austrians are quite reasonable.

which is why libertarians are always so wrong about economics. and the chicago school isn't really all that better than the austrian. while far more intellectual sound as it actually reliant on sound principles rather than unproven axioms it remains just as flawed as the austrian school. it has the same rigidity and again focus on theories meeting ideological needs rather than practical observances of economic reality


also it should be noted that friedman education was not in economics but in the natural sciences. his Phd is in theoritical physics. but than again the libertarian movement always has had contempt for experts that had the knowledge to prove them wrong

 

[joepistole]

I wrote: "So what - 1086 to 35 in comparison with the 1 to 1 of the dollar is a quite good approximation of getting rid of losses by inflation", referring to the 35$ official price at the time of the end of the Gold standard. But what means the dollar was backed by gold at this price? It seems, not what one would expect - if you want to have gold, you go with your dollars to the bank and buy gold for this price.

"During those intervening decades, gold lived a kind of strange dual existence as a half state-controlled, half free market-driven money-commodity, a situation that Nobel Prize economist Milton Friedman called a “real versus pseudo gold standard.”

The origin of this cumbersome duality was the post-war two-tiered system of gold pricing. On the one hand, there was a new monetary system that fixed gold at $35 an ounce. On the other, there was still a free market for gold. The $35 official price was ridiculously low compared to its free market variant, resulting in a situation in which IMF rules against dealing in gold at “free” prices were circumvented by banks that surreptitiously purchased gold from the London market."

https://www.lewrockwell.com/2015/07/marcia-christoff-kurapovna/are-gold-markets-dysfunctional/

So, a "gold backed" dollar who is "gold backed" in such a way that there is an official price but nobody can really buy gold for this price, and has to go to a free market where gold is sold for a much higher price, can certainly not prevent anything.

Well now you are just dumping shit again in order to obfuscate. Contrary to your assertion gold hasn't been a protection from inflation. Gold didn't prevent inflation when it was used to back currency (e.g. 1920). And it did hasn't been a protection from inflation as an investment. It's that data thingy again. The facts, the evidence is just not consistent with your beliefs. It's a simple matter of fact.

To help you out a bit, for foreign central banks, US currency was fully exchangeable for gold up until 1973 at rates set by fiat, for individuals it was not. In 1933 gold currency ownership was made illegal in order to prevent hoarding and better manage The Great Depression. Prior to 1933 US currency could be exchanged for gold by anyone and gold currency was in circulation.

Two, were you not the guy who just a few posts ago was complaining about how the regulated price of gold could be used because it didn't reflect market conditions or values? Wow, what a turnaround.

 

[Schmelzer]

Well now you are just dumping shit again in order to obfuscate. Contrary to your assertion gold hasn't been a protection from inflation. Gold didn't prevent inflation when it was used to back currency (e.g. 1920). And it did hasn't been a protection from inflation as an investment. It's that data thingy again. The facts, the evidence is just not consistent with your beliefs. It's a simple matter of fact.

Let's repeat myself:

Of course, backed only by a cheap state promise, which leads to a gold price of 20 in 1900 but 35 in 1970, not really protects against inflation ;-). In this case, only owning real gold helps. No wonder that to own real gold was forbidden some time in the US.
But if one compares with the >1200$ for gold today, 45 years after 1970, I would say it helps at least a little bit against inflation.
...
It is certainly not that it prevents price oscillations - because prices of commodities oscillate as well. There may be also systematic price changes, if the technology of production of the commodity changes, or new gold deposits are found. As well it does not prevent political market manipulations. But it somewhat decreases the risc of systematic loss of value do to money printing (inflation in the sense used by Mises). But given that a government can every day stop the backing or change the rate, it does not completely prevent this.

So, I would say you have won another great victory against your strawman.

To help you out a bit, for foreign central banks, US currency was fully exchangeable for gold up until 1973 at rates set by fiat, for individuals it was not. In 1933 gold currency ownership was made illegal in order to prevent hoarding and better manage The Great Depression. Prior to 1933 US currency could be exchanged for gold by anyone and gold currency was in circulation.

Thanks, I have already thought where to look for this fact, but given that I had already found the Liberty dollar I was too lazy.

So, "Currencies are no different from any other commodity", except that having gold was some time forbidden and coining a new gold-backed currency is forbidden even today. Nice. "Currencies are no different from any other commodity", like the commodity opium, or so?

Two, were you not the guy who just a few posts ago was complaining about how the regulated price of gold could be used because it didn't reflect market conditions or values? Wow, what a turnaround.

No. But you seem to think that a regulated gold price and a gold backing is the same, or so. Funny. A regulated gold price is an obligation for other people. A gold backing is an obligation of the state, to give to everybody who wants it for dollars the corresponding amount of gold. A price regulation could be changed whenever one likes, in every directions, and doing it in direction of the free market price (whatever this is) would be positive. Decreasing the amount of gold given for a dollar would be, instead, a broken promise, which the state can only do because he has the monopoly of crime. So, being in favour of gold backing but against regulation of the gold price are nicely compatible things.

 

[iceaura]

The mysticism surrounding gold, apparently because it's shiny and very durable, has greatly complicated the governance of it and the governance of economies in general (Spain never recovered from its discovery of the huge gold and silver deposits of its colonial empire, apparently because the government mistook gold for something of "intrinsic worth"). My favorite solution is that of Lycurgus of Sparta, who simply declared a different metal - specially quenched iron, not shiny at all - the currency standard.

All money is fiat money, in a sense. It's worth what one can buy with it.

 

[Michael]

No Michael, if you earn enough income and are required to file taxes, your tax obligation is measured in dollars but you are not required to pay your tax obligation in dollars.

So, according to you, a kid born in 1990 who is working in 2015, is "obligated" to pay for a stadium that was built in 1960 and demolished in 1989. Explain to me where the 'obligation' comes from.

very year the government seizes assets which it sells at auction to pay tax debts.

Yes, Joe. The State steals private property and sells it at auction. And?

If you want to give the government gold to satisfy your tax obligation I am sure they will take your gold or your cars or whatever other asset you want to use to pay our tax bill.

Nope. You have to pay in USD. You cannot wheel a barrel of potatoes over to the IRS.

But it will likely cost you more. So if it means that much to you and you want to pay the government more than you owe them just to not use the currency, I say go for it. But I think that sounds kind of silly to most folks.

No one 'owes' the Government anything. In North Korea, the Government forces it's Citizens to produce a particular amount of food and then steals that food (at the point of the gun). North Koreans do not OWE their government ANYTHING just because it provides them with substandard services. It's simply dumb luck those humans had the misfortune of being born in that area of land at this time in history. The EXACT SAME logic applies to the USA government and IT'S Citizens/Tax Chattel as well. You do understand the Government had to alter the US Constitution to make taking money from laborer's legal?

No one has a problem paying their way Joe.
Use the road - pay the toll.
Use city water - pay for it.
Use electricity - pay for it.
Use the internet - pay for it.
Use the bus - pay for it.
Use some gasoline - pay for it.

It's pretty simple Joe.

Being FORCED to pay for a stadium that you never saw, let alone used, does not mean you 'owe' the government any more than you 'owe' a mugger your wallet. You will PAY the government for the T bonds it sold on your labor 50 years ago - just like you'll pay a mugger. Because if you do not, then you'll be shot. And you'll pay in fiat currency.

The government, of course can print as much fiat currency as it wants to. Income tax is about control of its Chattel. Influencing what you can and can not do by giving you a "Tax Break" when you do what it wants and Taxing you when you do things it doesn't want you to do, or determining how much what you do is worth by controlling what it's measured in, and of course the implicit violence you will face to ensure you use it's fiat currency to pay for the privilege of working. This gives the government immense control over it's Tax Chattel.

If you are an employee and earn dollars, then some of those dollars will be withheld from your paycheck. But then if you are earning dollars why do you care? Would you rather the government take some of your assets every few weeks and pay the extra expenses the government incurs because you want to pay your tax bill in dollars? If you don't mind earning dollars then why do care if you pay the government in dollars versus goats?

Maybe you missed the point. Violence against innocent humans is what ensures the value of the fiat USD. Fiat means by decree. Well guess what Joe. The ONLY people allowed to make things happen by Decree are the people who hold the guns. Thus, the real power of the government is the BlueKluxKlan and they alone ensure you pay your 'fair share' which is whatever the State decides you owe it. Meaning the State can safely sell T Bonds to the Chinese on you and your kids labor, give that money to the richest 0.1% and the crony corporations they own, and you and your children will pay the Chinese or be shot in the head.

Yeah, yeah, you don't want to pay your fair share of the taxes. I've heard that story before. You expect all the benefits, but you don't want to pay your fair share of the costs of those benefits.

Oh, I'm sure you have. As a matter of fact, the FOUNDING of the country was by people who 'Didn't want to pay their 'fair-share' of tax. This nation was BUILT on not forcing innocent people to pay a labor tax!

How pathetic the USSA has become.

Anyway, you and your kind are a broken record, heard to repeat again and again across history. And, history strongly suggests this will end with you being 'taxed' (one way or another) of most everything you own. You know, that whole 'redistribution' by force you support. So, if that day should come in your lifetime, just remember your own words. You owe everything you have to "society", so if the government takes it all, that's only fair. And think about this Joe, there are more Millenials than Baby's. All it takes is one internet meme and you'll see Redistribution the likes not even your self-indulgent generation enjoyed. Just one. Could happen any time. Let's see what happens as the Millenials come to terms with how much their grandparents have stolen from them. I'll expect you waving our stupid flag for the IRS when they come to clean house

LOL

 

[Michael]

The mysticism surrounding gold, apparently because it's shiny and very durable, has greatly complicated the governance of it and the governance of economies in general (Spain never recovered from its discovery of the huge gold and silver deposits of its colonial empire, apparently because the government mistook gold for something of "intrinsic worth"). My favorite solution is that of Lycurgus of Sparta, who simply declared a different metal - specially quenched iron, not shiny at all - the currency standard.

All money is fiat money, in a sense. It's worth what one can buy with it.

Your favourite solution is a person who decided to murder people who didn't want to use his idiotic idea of money (quenched iron)? You think immoral violence is the preferred solution to that of morally derived natural money? Well, you are a Statist so that only makes sense.

People used gold and silver because they worked extremely well as stores of value over thousands of years. That said, people also used cowrie shells and even large rocks. As a matter of fact, for most of history, most people didn't use anything at all. Gold and silver was generally only used to trade with armies and unknown people. Most societies (common even today) just make a mental note of a debt that is owed. People who want everything transacted in dollars, I find, are often lonely people with shallow friendships. Which may indicate they lack the ability to empathise deeply and thus fall back on using something they deem objective to measure something very subjective.

Anyway, unlike natural money, fiat currency die out when the immoral force used to maintain the 'fiat' aspect to the "value" the ruling government assigns to it ends. Often because the subjective nature of value is IMPOSSIBLE to capture objectively and can only be approximated by money. Perhaps in that way fiat currency eventually undermines itself. China's experiment with fiat currency is still being felt in China to this day. From bad to worse, to far worse to crony-capitalism.

 

[joepistole]

Let's repeat myself:
So, I would say you have won another great victory against your strawman.

And I would say you apparently don’t know what a straw man is.

Thanks, I have already thought where to look for this fact, but given that I had already found the Liberty dollar I was too lazy.
So, "Currencies are no different from any other commodity", except that having gold was some time forbidden and coining a new gold-backed currency is forbidden even today. Nice. "Currencies are no different from any other commodity", like the commodity opium, or so?

Well I hate to break it to you, but yeah currencies are a commodity. As previously stated they are traded across the globe daily. Now why you think the US restriction on gold currency ownership between 1933 and 1973 is relevant is a bit perplexing. That practice ended in the 1973 and the US currency along with most currencies has floated. It’s only worth what people are willing to sell and buy it for at any given moment, just like any other commodity, with this one exception, official currencies are managed by a central bank in order to prevent wild price swings. That’s why you rarely see wild price swings in the currency markets. Central banks of large well run economies are quite capable of managing their currency.

No. But you seem to think that a regulated gold price and a gold backing is the same, or so. Funny. A regulated gold price is an obligation for other people. A gold backing is an obligation of the state, to give to everybody who wants it for dollars the corresponding amount of gold. A price regulation could be changed whenever one likes, in every directions, and doing it in direction of the free market price (whatever this is) would be positive. Decreasing the amount of gold given for a dollar would be, instead, a broken promise, which the state can only do because he has the monopoly of crime. So, being in favour of gold backing but against regulation of the gold price are nicely compatible things.

Now that is a straw man. What did I write that would lead a reasoned person to that conclusion? The unfortunate fact for you is that US currency was backed by gold right up until 1973. The US Dollar was backed by gold right up until that point. Foreigners could exchange their dollars for gold.
A currency is backed by gold, if it backs it up with gold and the US did that until 1973. That is the unpleasant fact for you; along with the fact the US had periods of hyperinflation before the restrictions on gold currency ownership were imposed. In 1808 the US had a 9% inflation rate and there were no restrictions on gold currency ownership back then. And if you look at European history, you will find the same thing, periods of hyperinflation while on the gold standard. You believe in myths.

Here is the unfortunate bottom line for you, your argument that gold provides some sort of protection from inflation is just not born out by centuries of data. Even before FDR imposed restrictions on gold currency ownership when there were no restrictions on gold ownership the US had periods of hyperinflation (e.g. 1920). The unpleasant fact for you is centuries of data shows you are wrong.

 

[joepistole]

So, according to you, a kid born in 1990 who is working in 2015, is "obligated" to pay for a stadium that was built in 1960 and demolished in 1989. Explain to me where the 'obligation' comes from.

LOL, ok another straw man. Do you have a real life example of this or did you just make it up like you usually do?

Yes, Joe. The State steals private property and sells it at auction. And?

You claimed you couldn't pay your taxes in anything but US Dollars and by God that was tyranny! I just pointed out, you were wrong.

Nope. You have to pay in USD. You cannot wheel a barrel of potatoes over to the IRS.

Why not? Are you disabled? What's stopping you from carrying a barrel of potatoes to the IRS? Now whither the IRS will accept your potatoes is another story because potatoes are a perishable good. But if you took your gold or your Euros or you new car down to the IRS and offered them as payment for your taxes. They would accommodate you. They do it all the time. Now you might not, probably will not, get the price you want for those goods. But, hey, it's your choice. Just because the IRS will not take a perishable good in exchange for your tax debt, it doesn't mean you are forced to pay your tax obligations in dollars. People do so because it is cheaper and more convenient to satisfy their tax obligation in dollars.

No one 'owes' the Government anything. In North Korea, the Government forces it's Citizens to produce a particular amount of food and then steals that food (at the point of the gun). North Koreans do not OWE their government ANYTHING just because it provides them with substandard services. It's simply dumb luck those humans had the misfortune of being born in that area of land at this time in history. The EXACT SAME logic applies to the USA government and IT'S Citizens/Tax Chattel as well. You do understand the Government had to alter the US Constitution to make taking money from laborer's legal?

No one has a problem paying their way Joe.
Use the road - pay the toll.
Use city water - pay for it.
Use electricity - pay for it.
Use the internet - pay for it.
Use the bus - pay for it.
Use some gasoline - pay for it.

It's pretty simple Joe.

Being FORCED to pay for a stadium that you never saw, let alone used, does not mean you 'owe' the government any more than you 'owe' a mugger your wallet. You will PAY the government for the T bonds it sold on your labor 50 years ago - just like you'll pay a mugger. Because if you do not, then you'll be shot. And you'll pay in fiat currency.

The government, of course can print as much fiat currency as it wants to. Income tax is about control of its Chattel. Influencing what you can and can not do by giving you a "Tax Break" when you do what it wants and Taxing you when you do things it doesn't want you to do, or determining how much what you do is worth by controlling what it's measured in, and of course the implicit violence you will face to ensure you use it's fiat currency to pay for the privilege of working. This gives the government immense control over it's Tax Chattel.

Maybe you missed the point. Violence against innocent humans is what ensures the value of the fiat USD. Fiat means by decree. Well guess what Joe. The ONLY people allowed to make things happen by Decree are the people who hold the guns. Thus, the real power of the government is the BlueKluxKlan and they alone ensure you pay your 'fair share' which is whatever the State decides you owe it. Meaning the State can safely sell T Bonds to the Chinese on you and your kids labor, give that money to the richest 0.1% and the crony corporations they own, and you and your children will pay the Chinese or be shot in the head.

Oh, I'm sure you have. As a matter of fact, the FOUNDING of the country was by people who 'Didn't want to pay their 'fair-share' of tax. This nation was BUILT on not forcing innocent people to pay a labor tax!

How pathetic the USSA has become.

Anyway, you and your kind are a broken record, heard to repeat again and again across history. And, history strongly suggests this will end with you being 'taxed' (one way or another) of most everything you own. You know, that whole 'redistribution' by force you support. So, if that day should come in your lifetime, just remember your own words. You owe everything you have to "society", so if the government takes it all, that's only fair. And think about this Joe, there are more Millenials than Baby's. All it takes is one internet meme and you'll see Redistribution the likes not even your self-indulgent generation enjoyed. Just one. Could happen any time. Let's see what happens as the Millenials come to terms with how much their grandparents have stolen from them. I'll expect you waving our stupid flag for the IRS when they come to clean house

LOL

Ok, that's your standard fantasy rant. You want the right to be a deadbeat and not pay your share of the tax bill. Taxes are how communal obligations are paid. It's how roads are built and maintained. It's how security is provided and property ownership is protected.

 

[Schmelzer]

And I would say you apparently don’t know what a straw man is.

And I would say you apparently don’t know what a straw man is. So what?

Well I hate to break it to you, but yeah currencies are a commodity. As previously stated they are traded across the globe daily.

Opium too. So what is your point?

Now why you think the US restriction on gold currency ownership between 1933 and 1973 is relevant is a bit perplexing.

It is a particular nice method to steel gold from the people, replacing it with paper which can be made worthless whenever the government decides.

That practice ended in the 1973 and the US currency along with most currencies has floated.

But the guy who has created the Liberty Dollar is in prison. For using this commodity for pressing nice coins and selling them.

Another guy has created Libertyreserve-Dollars for the internet. He is also in prison. And the US has stolen the money from all people who have bought some libertyreserve dollars.

I wrote "No. But you seem to think that a regulated gold price and a gold backing is the same, or so."

Now that is a straw man. What did I write that would lead a reasoned person to that conclusion?

Hm, let's see. I read:
"Two, were you not the guy who just a few posts ago was complaining about how the regulated price of gold could be used because it didn't reflect market conditions or values? Wow, what a turnaround."
So, you think I have made a turnaround. So, "complaining about how the regulated price of gold could be used because it didn't reflect market conditions or values", you think is something like the opposite of what I propose in the last posting. Thus, on the one hand, we have "complaining" about a "regulated gold price" is the opposite of what I propose - thus, being in favour of the regulated gold price would have to be something similar. The closest thing to supporting something similar to a "regulated gold price" is that I have made some claims that a gold-backed currency is - with some limitations - useful for preventing losses by inflation. Thus, it is quite reasonable to think that I'm in favour of a gold-backed currency. Then, if you think above things are at least quite similar, it would make sense to talk about a "what a turnaround".

One can, of course, err about this, this is what I have indicated by "seem to" and "or so". But the arguments I have provided show that one can be in favour of a gold-backed currency, but against a regulated gold price. So, it is unjustified to suggest a turnaround if somebody would have in one posting argued against gold price regulations and in another one in favour of a gold-backed currency.

A currency is backed by gold, if it backs it up with gold and the US did that until 1973. That is the unpleasant fact for you; along with the fact the US had periods of hyperinflation before the restrictions on gold currency ownership were imposed. In 1808 the US had a 9% inflation rate and there were no restrictions on gold currency ownership back then. And if you look at European history, you will find the same thing, periods of hyperinflation while on the gold standard. You believe in myths.

Sorry, but 9%, even 20%, is not hyperinflation. This is within the range of price oscillations for single commodities. If it is really gold-backed, there will be other years with negative rates. For hyperinflation, the German wikipedia mentions more than 50% monthly rate (13000% per year) as a widely accepted criterion.

BTW, to name quite irrelevant numbers "unpleasant facts for you" sounds nicely, but is nothing but an empty soundbyte.

Here is the unfortunate bottom line for you, your argument that gold provides some sort of protection from inflation is just not born out by centuries of data. Even before FDR imposed restrictions on gold currency ownership when there were no restrictions on gold ownership the US had periods of hyperinflation (e.g. 1920). The unpleasant fact for you is centuries of data shows you are wrong.

Some sort of protection it gives. Not against usual price oscillations, which you have decided to name "hyperinflation". This is something one could prevent using some basket instead of a single commodity. And, of course, one can never be sure that states do not stop backing their currency, completely or partially. But it helps against hyperinflation.

 

[Billy T]

Stateline analysis shows that in all 50 states, the percentage of “middle-class” households—those making between 67 percent and 200 percent of the state’s median income—shrunk between 2000 and 2013. The change occurred even as the median income in most states declined, when adjusted for inflation. In most states, the growing percentage of households paying 30 percent (the federal standard for housing affordability) or more of their income on housing illustrates that it is increasingly difficult for many American families to make ends meet.

Go to link and hover pointer over any state of the map there for state-by-state details. For example, Minnesota's middle-class population dropped from 52.9% in 2000 to 48.9% in 2013; Nevada's middle class fell from 53.6% to 48.8%; and Georgia, which had a middle-class-identified population already below 50% (at 49%), fell almost 5% to 44.2%.

BTW, Pew is one of the US's most accepted independent research organization.

 

[Billy T]

A March 19 study revealed the percentage of American middle-class households dropped in every state between the years 2000 and 2013. In other words, households with earnings between 67% to 200% of their respective state's median income (thereby qualifying them as "middle class") fell during that period.

5 Facts that Prove the U.S. Middle Class Is Shrinking:

No. 1: Wages have been stagnant for decades.
The United States has experienced generally stagnant wages while high-earning individuals keep making more and more annually. On Jan. 6, the Economic Policy Institute (EPI) released data showing that in 2007 (the last year before the Great Recession), "the average income of the middle 60% of American households was $76,443. It would have been $94,310, roughly 23% (nearly $18,000) higher had inequality not widened ...

No. 2: The worker-to-productivity ratio is grossly unbalanced. Wage growth stagnation has stemmed from a growing wedge between overall worker productivity – the improvements in the amount of goods and services produced per hour worked – and the pay (wages and benefits) received by a typical worker. ... With the exception of a few years in the late 1990s, compensation for the majority of working Americans fell behind overall productivity – by a lot. Between the years 1973 and 2013, hourly wages for a worker in a nonsupervisory position rose just 9%. However, productivity during this time rose a whopping 74%. {Billy T notes part of this is due to automation increasing the productivity per worker. I.e. capital is replacing labor.}

No. 3: Middle-class workers' heads are just above water. According to a Feb. 20 article from Yahoo! Finance, 76% of middle-class workers are living paycheck to paycheck. Meanwhile, many of these same middle-class Americans are carrying an average debt load of $84,000 – an increase of 161% from 1992. This personal debt increase has helped create a two-class society in America: "poor" and "wealthy."

No. 4: Lower-class wages fell, upper-class wages rose. While middle-class wages have remained stagnant, lower-class workers earn less every year.
Between 1979 and 2013, the hourly wages of low-wage workers fell 5%, according to the EPI. In contrast, the hourly wages of high-wage workers rose 41%.
While the wages of middle-class workers did rise 6%, this increase occurred at just .02% each year. Furthermore, according to the EPI, "this wage growth, in fact, occurred only because wages grew in the late 1990s when labor markets got tight enough – unemployment, for instance, fell to 4% in 1999 and 2000 – to finally deliver across-the-board hourly wage growth."

No. 5: People don't know how to refer to their financial status. According to a statement made by Dennis Gilbert, a professor of sociology at Hamilton College, to The New York Times on May 11, "people are looking for some way to say, 'I recognize I'm a little below the middle.'" That's because many people don't really know their financial "label" anymore. 51% of Americans identify as middle or upper-middle class, according to Gallup on April 28. That compares with an average of 60% who identified the same way in polls conducted from 2000 through 2008.

As more "buying power" shifts to small fraction of the population* an economy based on consumer demand, like the US's was with 70% of broad based demand, there is trouble ahead, except for companies that get most of their earnings from exports as ever more are doing.

Many younger readers of the above, unfortunately already know they probably will not be as wealthy as their parents were. To make ends meet, the wife must work for pay, not just in the home as mom did. They know the purchasing power taxed away from them by Social Security, will never be equally returned, etc. etc.

Most are also too ignorant and aphetic to revolt. I.e. elect Bernie Sanders POTUS, instead of wall street-connected Clinton.

* The ultra rich can only eat three meals per day, drive one car at a time, wear one set of cloths, watch one TV, bowl in one bowling lane, etc. Yes they can own more than one TV, more than one car and suit, etc. but they do not replace the buying of the masses.

 

[iceaura]

No one has a problem paying their way Joe.
Use the road - pay the toll.
Use city water - pay for it.
Use electricity - pay for it.
Use the internet - pay for it.
Use the bus - pay for it.
Use some gasoline - pay for it.

The only way anyone has ever found to actually obtain electricity, water, bus service, roads, internet, gasoline, internet, etc, is to set up a government to establish the necessary infrastructure and have everybody pay taxes to support said government infrastructure.

No taxes, no government, no city water etc. It's pretty simple, as you say.

Sorry, but 9%, even 20%, is not hyperinflation. This is within the range of price oscillations for single commodities

It is quite a bit higher than the range of money, or "fiat money" as you like to call it. It is, as you note, normal for commodity bartering. Commodities trading is famous for its high risk and instability.

This is something one could prevent using some basket instead of a single commodity.

Make the basket large enough and varied enough for stability in (say) one's mortgage payment, and you will have regular money again - a fiat currency (the US dollar is backed by the US GDP, a very large and diverse - and hence as stable as possible - basket of goods).