A little humor with your pilot analogy.

The pilot feverishly works the controls to stabilize the aircraft. Yet one look at the instrument panel indicates the plane has damaged engines ( from using JMK brand jet fuel) on it’s long descent into the ocean.

Pilot talks to the passenger and says ” ladies and gentlemen please remain calm. Our new TARP jet fuel will give us the lift we need, so fasten seat belts , close all windows and focus on my voice!”

Your model for production and jobs can only be achieved with added national debt, added taxes or inflation.

And efficient production processes in the market does not rely on debt, taxes or inflation. That is a silly assertion.

Production With Savings is a better way.

The period 1866 — 1897 a time of secular deflation was perhaps the greatest ever experienced by the US economy during a period of comparable length. Real GDP grew more more than 4 percent per year, on average, not withstanding the persistent deflation.

Mainstream economists believe constant debasement of money, deficit financing and taxation is the only way to prosperity.

R. Higgs wrote about the bogeyman deflation 37 years ago
The Transformation Of The American Economy, 1865-1914

Robert Higgs is a Senior Fellow of Political Economy for the Independent Institute. He is the 2007 recipient of the Gary G. Schlarbaum Prize for Lifetime Achievement in the cause of Liberty.

Enjoy,

Ray

Gold, as a speculative hedge against perceived perversity, rises and falls with the normal behavior of supply and demand.

The previous high of $850 in 1980 resulted from speculation as much as the new record nearing $1,000 an ounce did this year. This followed more than two decades of trading of gold within a reasonable trading range.

The Middle Eastern conflicts, natural disasters, perceived economic disarray – not to mention a declining, easily available supply of gold, naturally heightened speculation, driving up the price.

Just like the stock market – gold rises because there are more buyers than sellers!

Price stability means prices of goods and resources are stable year to year.

Stable does not mean constant- ask any airline pilot.

While the price of some goods has increased greatly- women’s bras, buggy whips, bottle of coke- you also realize that many goods weren’t around in 1913- AIDs meds, cell phones, PCs, video players. As the economy has grown, these new goods and services have required monetization to come into existence. The bottom line is that the cost in hours worked to get these goods is WAY WAY less than in 1913.

I define net worth as do you, but there are accounting issues- what is Yellowstone Park valued at on the balance sheet? Not to mention US government deficit of $10.6T vs. (per Fed in June) appx. $55T citizen net worth.

But the ultimate source of wealth for our country, like most people, is our earning power. The ability to convert raw materials (sunlight, rain, metals, etc.) into goods and services. And it just seems obvious to me that if you want new laborors, entrepreneurs, and investors to do this, they have to be incented to produce- not watch wealth hoarded and passively increase in value as not enough money is created to support the creative ability of our economy.

And gold can’t increase fast enough, nor does it correlate all that well with economic activity.

That plus the inflation outlook based the Fed’s monetary policy actions lead many to believe that skyrocketing gold prices are in our future.

What puzzles me is the use of some terms and its definitions. So, let me ask some question to get a clarification here.

(1) What is your definition for a money?

My humble proposal would go along these lines:

“A money is the most marketable good in the market”

Because this definition includes any of the other defintions that where given, of which most are an outcome of this one.

Money is a medium of exchange, because it is the name for the most marketable good.

Money is a measure of account, because you can measure the cost of goods by comparing them to there money value rather than to compare them to thousands of other goods.

Because money is nothing that is brought into existence by an authority but by the market, a money can not be implemented by mere will but only by the market – no question, once a good is accepted as money a lot of fiddeling can be done with it like coin clipping and counterfitting.

(2) Why would it be that there is not enough gold to run our economy?

I think this is one of the first arguments being brought against a gold standard. and it is therefor debunked many times.

Gold as a money is a commodity. Its value as a money lies in its acceptance as a medium of exchange. Like any other solid commodity gold is measured by weight. The term dollar in a gold standard market would not be a unique entity, nobody could explain, but rather a measure of weight, say 1/4 ounce of gold.
So, now we could refer to a quantity of gold by saying 10 1/4 ounces or … much easier… 10 dollars.

As the monetary unit is nothing more than a unit to measure weight, it is the same than a meter, a mile, a bushel, a pint or what have you. Did we had to inflate the mile only because we encountered that the sun was millions of miles away? Did any shortage of inches ever appear in the know history? Not as far as I know.

There can never be a reason to have more of a measurment. In fact, the more fixed a stock of a money is, the better. This is the reason why a money usually has rarity as an attribute (beside others).

Because it is rare, it is stable. Wealth stems not from the generation of a money but the production of useful goods.

How useful a good is, is shown in its money equivalent when an transaction occurs. If i can trade my produced good for 10 units of a money, than these 10 units are the measure of its utility or usefulness for others. If the cost to produce the good was less than those 10 units, wealth grew. If it was more, wealth has been destroyed.

Whether the expression of the 10 units is 1 $ or 100000 $ doesn’t make any difference at all. If it would, we could just, by decree, start calling 1 buck a million bucks and be all millionairs at once.

Bottomline, economies do not need more money to grow, they need the production of more useful goods.

The price of those goods are expressed in terms of money, e.g. how many units of the commodity used as a money is needed to buy this good.

If a good is sought after and gets scarcer, the price will rise. If a good gets more plentyful, the price will fall. No need to fiddle with the money at all.

How can the US economy achieve this?

Trough production with savings.

That is why the good faith and credit of the U.S. has been unparalleled.

American Congressional policy – and thus, the will of the people – however has created uncertainty in the minds of American debt holders, including foreign governments.

The questions are serious enough.

Waging yet another war while demanding more and services from the federal government instead of assuming personal responsibility accounts for the escalation of American debt.

Whether the U.S. chooses to further escalate the debt is the people’s choice in a democracy.

President Clinton oversaw annual budget surpluses resulting from a thriving economy, and proceeded to pay down the federal debt in three years by some $355 billion by 2000.

Shortly thereafter, Congress, on behalf of the American people, gave the Bush administration a virtual blank check to wage the Iraqi war.

Congress and the people it represents simultaneously insisted on maintaining and increasing social service expenditures.

From Main Street to Wall Street, it is now time to pay the piper. The present financial crisis may provide the necessary respite to rethink the overall way of life of American society.

That rethinking, more than any prevailing beliefs, must deal with reality and fact, not wistful wishes.

As of Nov 26, 2008 the American taxpayers debt stands at

$10.6 Trillion (govt borrows it on behalf of taxpayers).

Not sure if the figure includes interest payments.
Do we have to pay this back?

Dirk, the best question for last —

How can the US economy create jobs without adding to this enormous debt?

(1) Could you explain how you define Price Stability?

Assets minus Liabilities = Net Worth

(2) What equation do you use to arrive at net worth?