The Giant Pool Of Money. Implications

I've never understood why people think paper money that is backed by an equally useless and much heavier element is somehow better. You can't eat silver. You can't build a house with it. You can't water your crops with it. You can't clothe your children with it. What practical use does silver have that paper money does not, other than making pretty shiny things?And if you think that there was no inflation when the dollar was backed by silver or gold, think again. Why don't you compare prices between 1964 and 1914. Using the inflation calculator here $3.20 in 1964 was the same as $1.00 in 1914. Yep, inflation even with currency backed by gold and silver.

Judging from the graph, the economy was less stable while on the precious metal standard. One of the advantages of being off a gold/silver standard is that it is easier to manipulate the economy to prevent big swings in inflation/deflation. In my notoriously uninformed opinion, if we were still on a gold standard the current recession may have turned into this generation's Great Depression.

Did you see the graph in message #99? It was quite obvious that hyperinflation was much more common while the dollar was on a precious metals standard than when it was pulled off that standard.

It fluctuates through the entire graph. The difference is that the fluctuations are less severe after the dollar was removed from the precious metal standard. Hyperinflation was much worse when the dollar was on a precious metal standard. That is what the graph shows.Also, there are several spikes on that graph that are many times worse than current inflation rates, and these spikes occurred when we were on a precious metal standard. The most stable inflationary periods are seen during periods when we were off of the precious metal standard, the exact opposite of what you are claiming.

The power is with Congress. They oversee the Federal Reserve and approve appointments. The whole point of having the Federal Reserve is to create a buffer between politics and policy. Those that run the Federal Reserve are focused on improving the economy instead of getting re-elected. If interest rates become a political football instead of sound policy then the economy can only worsen. Before income taxes the government raised money through tariffs. This greatly increased the price of imported goods. If you think income tax is bad, just wait until those cheap imported goods are no longer cheap. This will shift the tax burden more heavily towards those with the lowest incomes, to those who are least able to pay taxes. On top of that, trying to produce these cheap goods in the US will only lead to reduction of wages making the problem even worse. Taxes have to come from somewhere. It seems to me that the best system is to tax people based on their ability to pay tax. That is what an income tax is.As to the size of government, it is not the size that is the problem. It is the effectiveness of government that needs to be fixed. If your tax dollars provide something of value then that is a tax dollar well spent. It doesn't matter how large the government is if those tax dollars produce valuable resources. For example, let's say that 30% of income goes to taxes and 10% of your income goes towards paying for health care. If the government created an effective health care program that required your taxes to go from 30% to 35% you would actually have more money in your pocket.Your last suggestion is perhaps the worst one of all. You really need to study your history on this one. Some of the worst labor and environmental conditions existed prior to government regulation. If you want to return to the days where people were paid in chits that had to be spent at the company store then forgive me for not sharing your vision of the future.

You would actually need to make that point in order for me to ignore it. The US dollar is the globe's currency. You would have a tough time finding any currency right now that is going to weather the next 10 years better than the US dollar. This is why China adopted the US dollar as their currency and not the Euro or any other currency. They aren't stupid.

Imagine if we backed our currency with diamonds. The Russians would have us by the balls. They have been sitting on mountains of diamonds for decades now, as have the big diamond cartels. All they would need to do to crash the US economy would be to dump the diamonds into the market. The US dollar could lose half of it's value in the matter of a few days.

What I never understood is what good gold will do you in a global catastrophe. You can't eat it. It's actually pretty heavy, so it's hard to pack around. You can't build a shelter with it. Maybe you could make bullets out of it, or hit someone over the head with a smaller sized ingot, but that's about the best use I can find for it. At least paper money has the advantage of being lighter.Pound for pound, I think I would invest in whiskey if the world is really going down the pooper.

I'm no expert, but it seems to me that there is a strong correlation between a strong middle class and equitable distribution of income. The Shift from Equitable to Inequitable Growth After 1980: Helping the Rich Has Not Helped the Not-So-Rich | An Economic Sense Those halcyon years where the working class and middle class did pretty good? Those were the years where income was spread around a lot more than it is now. The problem with our current trickle down economy is the gusher going upwards.

It would appear to me that it is the top 1% that need to contribute to the working class, not the middle class. Instead of taking home massive profits, perhaps they could offer better wages and hire more people.

That is a fact that still puzzles me. A majority of blue collar workers vote for a political party that actively works against those same blue collar workers.

How does that attitude result in the largest economic inequality seen in decades? Why?

That doesn't really address the question I was asking. Previously, you said:"That's the attitude that got us into this situation: The other guy should pay."How does pushing for more economic equality result in more inequity?If we pursue peace with a foreign country, will that attitude cause war? If we have the attitude that we should feed hungry people, would more people go hungry? There used to be a lot less inequality, and there was a thriving middle and working class during those years.Why not return to a time with strong unions that aren't continually busted by the mega-rich backed by their conservative Republican lackey's? Why not raise the minimum wage so that people can actually live off of it? Why not increase subsidies for health care so that the working class isn't pouring such a large percentage of their income into health care?According to you, pushing for these things will only make economically inequality worse. Why?