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View Full Version : gold confiscation = credit confiscation?



c1ue
10-09-09, 12:17 PM
Jesse put up an interesting post comparing TARP with the gold confiscation of 1933:

http://jessescrossroadscafe.blogspot.com/2009/01/last-time-fed-devalued-dollar-to-save.html

The article listed notes that the ultimate effect of the gold confiscation was the re-liquification of the banks. Sound familiar?

It also notes that a more fair method for the reflation would have been a pure across the board fiat declaration. Also sound familiar?

The interesting corollary from this is that the New Deal programs were enacted to ease the pain for the 20%+ that were most negatively impacted by this.

Where's the New Deal today?

And even with this - the reflation failed to restart the economy.

The US economy from 1934 to 1939 did nothing until WW II cleared the board: (note the reflation 'should' have jumped the economy by 60% just from denominator action)

http://www.bea.gov/national/xls/gdplev.xls


<TABLE style="WIDTH: 144pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width=192 border=0 x:str><COLGROUP><COL style="WIDTH: 48pt" span=3 width=64><TBODY><TR style="HEIGHT: 63.75pt" height=85><TD class=xl22 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; WIDTH: 48pt; BORDER-BOTTOM: #e0dfe3; HEIGHT: 63.75pt; BACKGROUND-COLOR: transparent" width=64 height=85> </TD><TD class=xl23 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; WIDTH: 48pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" width=64>GDP in billions of current dollars</TD><TD class=xl23 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; WIDTH: 48pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" width=64 x:str="'GDP in billions of chained 2005 dollars">GDP in billions of chained 2005 dollars</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl22 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17> </TD><TD class=xl24 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"> </TD><TD class=xl24 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"> </TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17></TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1929</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>103.6</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>977.0</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1930</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>91.2</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>892.8</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1931</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>76.5</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>834.9</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1932</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>58.7</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>725.8</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1933</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>56.4</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>716.4</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1934</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>66.0</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>794.4</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1935</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>73.3</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>865.0</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1936</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>83.8</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>977.9</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1937</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>91.9</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num="1028">1,028.0</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1938</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>86.1</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>992.6</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1939</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>92.2</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num="1072.8">1,072.8</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1940</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>101.4</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num="1166.9">1,166.9</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1941</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>126.7</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num="1366.1">1,366.1</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl25 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" align=right height=17 x:num>1942</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num>161.9</TD><TD class=xl26 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right x:num="1618.2">1,618.2</TD></TR></TBODY></TABLE>

cjppjc
12-14-09, 12:05 AM
New and improved bot?

FRED
12-14-09, 08:16 AM
New and improved bot?

It's an endless battle!

vinoveri
12-14-09, 09:55 AM
Jesse put up an interesting post comparing TARP with the gold confiscation of 1933:

http://jessescrossroadscafe.blogspot.com/2009/01/last-time-fed-devalued-dollar-to-save.html

The article listed notes that the ultimate effect of the gold confiscation was the re-liquification of the banks. Sound familiar?

It also notes that a more fair method for the reflation would have been a pure across the board fiat declaration. Also sound familiar?

The interesting corollary from this is that the New Deal programs were enacted to ease the pain for the 20%+ that were most negatively impacted by this.

Where's the New Deal today?

And even with this - the reflation failed to restart the economy.

The US economy from 1934 to 1939 did nothing until WW II cleared the board: (note the reflation 'should' have jumped the economy by 60% just from denominator action)

http://www.bea.gov/national/xls/gdplev.xls


So 2010 is analagous to 1934, and we're scheduled to nearly double the GDP in 8 years ....?

jk
12-14-09, 12:04 PM
the economy was growing into 1936. the famous mistake of 1937 was to tighten [fiscally] prematurely because of worry about deficits. this sent the economy back into depression because its growth was not self-sustaining. this is the error that bernanke is determined not to repeat. i'm sure summers is just as aware of the history, and the administration will do its best to keep the stimulus flowing. they will see to it that we explore the other major branch of the decision tree: the inflationary one.

c1ue
12-14-09, 02:57 PM
So 2010 is analagous to 1934, and we're scheduled to nearly double the GDP in 8 years ....?

Only if you can figure out how we get WW III without irradiating the planet.


i'm sure summers is just as aware of the history, and the administration will do its best to keep the stimulus flowing. they will see to it that we explore the other major branch of the decision tree: the inflationary one.

No disagreement here.

The trouble with this analogy is that the true implication isn't addressed: that the US economy was fundamentally and permanently (in the pre WW II period) altered for the worse by the policies leading up to 1929, and was not able to reorient until a World War and the destruction of Europe more or less forced the US into a manufacturing oriented economy.

What this says to me is that stimulus policies won't fix the problem no matter what the extent irrespective of whether the government policies are inflationary or deflationary.

grapejelly
12-14-09, 03:07 PM
the economy was growing into 1936. the famous mistake of 1937 was to tighten [fiscally] prematurely because of worry about deficits. this sent the economy back into depression because its growth was not self-sustaining. this is the error that bernanke is determined not to repeat. i'm sure summers is just as aware of the history, and the administration will do its best to keep the stimulus flowing. they will see to it that we explore the other major branch of the decision tree: the inflationary one.

completely wrong.

Real wages INCREASED early in the Depression due to government programs that raised real wages. This caused employment to DROP further.

More "stimulus" was tried and real wages dropped as a result of high inflation. Eventually real wages fell and employment ticked up again.

Government "stimulus" lowers real incomes by robbing savers and investors of their buying power. It raises the costs of employment and therefore dis-incentivizes entrepreneneurial activity that is responsible for creating most of the new jobs.

If the government weren't paying people to work, these people would be in the private workforce, driving employment costs DOWN until it paid for employers to employ them again.

Since this cannot happen, the employment situation gets worse, and then more government stimulus is tried, and we are in a downward, negative feedback loop.

cjppjc
12-14-09, 07:49 PM
completely wrong.

Real wages INCREASED early in the Depression due to government programs that raised real wages. This caused employment to DROP further.

More "stimulus" was tried and real wages dropped as a result of high inflation. Eventually real wages fell and employment ticked up again.

Government "stimulus" lowers real incomes by robbing savers and investors of their buying power. It raises the costs of employment and therefore dis-incentivizes entrepreneneurial activity that is responsible for creating most of the new jobs.

If the government weren't paying people to work, these people would be in the private workforce, driving employment costs DOWN until it paid for employers to employ them again.

Since this cannot happen, the employment situation gets worse, and then more government stimulus is tried, and we are in a downward, negative feedback loop.

For example the continuation of unemployement benefits for 99 weeks has led many people not "settling" for lower paying jobs.