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re: The Time Table for the Dollar
Posted on 12/3/12 at 5:38 pm to TheHiddenFlask
Posted on 12/3/12 at 5:38 pm to TheHiddenFlask
quote:
Because they are.
What makes them a lunatic? What if they just prefer to allows markets to operate freely? Is that lunacy?
quote:
I think that it is (nearly) a necessary thing in a developed economy.
Why?
Posted on 12/3/12 at 5:52 pm to WikiTiger
quote:
What if they just prefer to allows markets to operate freely?
If markets operate freely they will mean revert but the volatility would be much higher. For example, if you didn't have inflationary controls price levels would rise uninhibited and banks would be laggards in raising interest rates. Eventually your exports would plummet and labor would be laid off in mass. Price levels would plummet and exports would eventually rise, the problem is capacity would be shaved too highly because of the dramatic swing. These dramatic swings damage confidence which damages the economy and the entrepreneurial spirit.
The only difference between a free market economy and a free market economy with a central bank is the latter smooths out the swings both ways, which in turn actually allows the economy to grow more by mathematical compounding (an asset that goes up 6% then down 4% is worth more than an asset that goes up 60% and down 40%).
quote:
Why?
See the above. A developed economy has a massive amount of resources and labor involved, and volatility in these situations leaves a lot of uncertainty for the livelihoods of a lot of people. The market will correct itself but a smoothing mechanism can be very valuable if used correctly.
Posted on 12/3/12 at 8:03 pm to WikiTiger
quote:
What makes them a lunatic?
Their complete and total disregard for economic good in the pursuit of robbing the federal government of power. I am very similar to you as far as beliefs go, but, taking power from the federal government for the sake of them having less power is dumb. Someone has to control the currency, and I would rather it be the finest economists in the world than a few gold producers.
quote:
What if they just prefer to allows markets to operate freely? Is that lunacy?
Please explain a system that is more free than the one we have.
quote:
Why?
Because allowing your economy to be ruled by a random shiny metal will cause random movements that can be very harmful to the economy and tends to generate currency policy that causes recessions to be more frequent and much more painful.
If you were setting up a government and someone were to tell you that you could control 2 of the 3 following options, which one would you choose?
1) Fixed Exchange Rate
2) Sovereign Monetary Policy
3) Free Capital Flow
Which ones would you choose?
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