Step - Why is it better to elect a person with no private sector experience?

@ Gobble:

Frankly, I'm a little out of my depth when it comes to making a specific proposal for phasing out fiat currency in favor of a precious metal standard. That task is best left to people with more formal training in Austrian economics. But I can see the writing on the wall that fiat currency will eventually result in hyperinflation and that inflation is a de facto regressive tax. As a possibility, the US government could establish a fixed rate of exchange between paper currency and troy ounces of gold, silver, and platinum and update that exchange rate at regular intervals. I will also point out that the key advantages of a precious metal standard include the impossibility of inflation and long-term stability of prices.

@ Jamiet

"This is what's called a "fiat currency". You don't need to explain this to most Europeans, since the Euro, and British Sterling, are fiat currencies as well - they are not based on the value of a precious metal either. This has been the case in the USA for over 40 years.

It's not entirely accurate to say "the only reason that US dollars have value is because the Federal Reserve says so". In actual fact, the reason they have value is because the Federal Government declares that the money issued by the Federal Reserve has value - *and* because the American public (and the many others who trade using Dollars) believe this to be true."

I'm familiar with the term "fiat currency"; I used that term in my previous post. Do you agree that fiat currency-induced inflation is a de facto regressive tax? Poor people tend to have all of their money in paper currency, which is the worst affected by inflation. Rich people have their money in assets that are not directly affected by inflation, such as commodities and precious metals.

@Gunfighter: Tilting at windmills will never win elections. Is it any wonder that many people look at Libertarians askance?

Austrian economics is a joke.

Most of the world is in poverty. Because they don't embrace Liberty and Capitalism.

The Constitution protects us from socialism

Socialism is an economic system. The Constitution doesn't prescribe any such system. The three letters "-ism" are nowhere to be found. Yep, out of touch with reality.

JK - Socialism is an economic system that fails every time it is tried "I think they've made the biggest financial mess that any government's ever made in this country for a very long time, and Socialist governments traditionally do make a financial mess. They always run out of other people's money. It's quite a characteristic of them. They then start to nationalise everything, and people just do not like more and more nationalisation, and they're now trying to control everything by other means. They're progressively reducing the choice available to ordinary people." Margaret Thatcher

That has zero to do with your statement about the Constitution.

My god, he's not just advocating for a gold standard, but a fixed exchange rate as well.

You *do* realize that it was the gold standard and fixed exchange rates that caused the Great Depression, right? Well, not caused, but were a major contributing factor.

And this coming from goldfinger! The man with the Midas touch!

@BOG: "Step - Why is it better to elect a person with no private sector experience?"

I did not say this. You haven't been around on the forum for too long but you already have a long history of putting words in my mouth, and it's not just me it seems.

Step - Regardless of my history here, please answer the question. "Why is it better to elect a person with no private sector experience?"

I have no answer because I don't think it's better to elect a person with no private sector experience.

Private sector experience isn't a huge consideration for me, but in general I actually think it's a pre if you've actually done something for a living :-)

I might as well ask you why it would be better if we all converted to Islam..

BOG: "Why is it better to elect someone with exclusively private sector experience?" You seem to be advocating this position.

Steep - Everything we have that is good comes from the private sector. Computers. Cars. Cell phones. Food, Energy, clothing. Why do you support big government?

The origins of the high tech industry is exclusive to government research projects.

BOG, you really don't have a clue.

@ Jeff Kuta

"Austrian economics is a joke."

Keynesian economics is a bigger joke.

@ goldfinger

"You *do* realize that it was the gold standard and fixed exchange rates that caused the Great Depression, right? Well, not caused, but were a major contributing factor."

No, a credit bubble propagated by the Federal Reserve caused the Great Depression, along with fractional reserve banking (which should be illegal too). Although suspending the gold standard and illegally confiscating all privately held gold "ended" the Depression in the sense that the economy temporarily/artificially recovered, I maintain that ending the precious metal standard was not worth the consequences.

Keynesian economics are NOT sustainable in the long term (in any case, military Keynesianism ended the Depression, not social Keynesianism). Inflation is NOT sustainable.

I will openly admit that the gold standard has its drawbacks, but I maintain that it is a preferable alternative to government control of the economy and the very real possibility of hyperinflation. Hyperinflation is an economic death sentence. The only real downside of a precious metal standard is that you get panics every once in a while.

With a precious metal standard, there is an upper limit to the amount of wealth any nation can accumulate which is the amount of those metals on the planet. This zero-sum game creates conflict and necessitates war over resources. Those who hoard precious metals can manipulate those who do not have them.

The world has rightfully moved on from currency backed by precious metals. Only gold bugs and conspiracy theorists "seriously" advocate a return to that type of monetary system.

@Gunfighter - but do you know what caused the credit bubble? In economics you must look beyond the US.

In the 1920s, France and the USA were hoarding gold supplies in excess of the size of their economies - to the point where almost a third of the world's gold supply was in French banks, and another third in the US. This caused an expansion of credit supplies in each of the countries due to the mechanics of the gold standard. The alternative was hyperinflation, which you so fear. Meanwhile England refused to lower its fixed exchange rate, causing a large recession there. Keynes wrote a paper on it, which became very influential later. It's only when England came off the gold standard and adjusted their exchange rate in 1933 that it began to recover. I believe Roosevelt took us off the gold standard the same year.

Hyperinflation happens in countries with fixed exchange rates or gold standards. A country with a fiat currency, central bank and floating exchange rate should never have hyperinflation.

As for the "occasional" panic, they happened about every ten years on the dime. The one before the Federal Reserve Act (1906?) Necessitated a bailout of the *entire economy* by JP Morgan, because no one else - not even the government - had the money to do it. That's unacceptable. It also couldn't happen today because even Bill Gates doesn't come close to JP's wealth.

@gunfighter: Tell me which Austrian school theories have been experimentally demonstrated to work.

Fractional reserve banking is a necessary part of banking: The purpose of a bank is to match people with excess cash, and people who need cash. There are billions of people with small sums of money that they don't really need right now, and billions of people who need large sums of money to do something big. What the bank does is essentially be a middle man. It basically pools up the small deposits and lends them at an interest to the people who need big loans, taking a cut in the process.

If you don't allow fractional reserve banking, then only the rich can afford to lend the millions you need to purchase houses and build businesses, and there aren't enough people with those sums of money to make the world go round.

JK "The Constitution doesn't prescribe any such system. " The constitution promotes Liberty and Individual freedom. Which is the anti-thesis of socialism. Socialism is 3 wolves and a sheep voting on whats for dinner.

That's democracy, actually...

Theoretically, a benevolent dictatorship is the best way to run society. The hard part is making sure the dictator stays benevolent.

"promote the general welfare"

TrP - "That's democracy, actually.." Please point to a democracy that exists in the real world. Where people vote on laws. Where people are in charge, not representatives.

Gobble "Theoretically, a benevolent dictatorship is the best way to run society." As long as I'm in charge, I agree with you.