Les Jones

The US has more gold deposits than any other nation but the current amount can only be measured in the hundreds of billions. Our economy is measured in the trillions. Prior to 71 we encountered problems where countries would exchange our currency for large sums of gold, drawing down the reserves.

How could a gold-based currency represent the massive scale of our economy when available stock of gold is so low?

How could we prevent a precious-metals backed currency from being devalued by massive withdrawals of bullion?
[rq=846329,0,blog][/rq]Chris Range´s last blog ..Pre-Raphaelite Gallery

That’s a problem. One method would be to back some fraction of the currency with gold so that there’s some kind of restraint.

I’m not necessarily in favor of a gold standard. There are silly games that the government can do with gold-backed currency, and they can always default on it, as Nixon did.

Thing is, I’m definitely not in favor of a fiat currency with absolutely no limits in printing. Sooner or later your currency becomes worthless.

“How could we prevent a precious-metals backed currency from being devalued by massive withdrawals of bullion?”

You don’t let the bullion leave the reserve.

A currency backed by precious metals that nobody is allowed to withdraw seems to me to be something of a non-sequiter. I agree that currency needs to be backed by something with intrinsic value. Just not sure what that is. Maybe like you say it could be a mix of things.
[rq=866943,0,blog][/rq]Chris Range´s last blog ..Pre-Raphaelite Gallery

A question here, my memory isn’t too good here, but 1) Prior to Ron Reagan, presidents or the executive branch would not spend all funds provided in the budget, in effect the President had a implied line item veto. Kennedy, Ted, sued Reagan and the Supremes ruled that if the money was in the budget it had to be spend, the Executive had no discretion. Since that time out deficits have gotten out of hand. Is my memory even worse than I think it is?

Oh no, no deflation here, citizen. Move along…

Colorado minimum wage to drop to $7.24 as living costs fall (Daily Camera)

Colorado officials have confirmed that the state next year will become the first to lower its minimum wage because of a falling cost of living. The state Department of Labor and Employment ordered the wage down from $7.28 to $7.24. That’s lower than the federal minimum wage of $7.25, so most minimum wage workers will lose 3 cents an hour. Colorado is one of 10 states where the minimum wage is tied to inflation. The indexing is thought to protect low-wage workers from having flat wages as the cost of living goes up. But because Colorado’s provision allows wage declines, the minimum wage will drop because of a falling consumer price index. It will be the first decrease in any state since the federal minimum wage law was passed in 1938.

Except that the inflation definition was changed in the Clinton era to reduce reported inflation. (It’s to the government’s benefit to underreport inflation, because the official CPI figure contributes to Social Security benefit increases, government union contracts, etc.)

That makes the current CPI discontiguous with the chart above because you’re talking apples and oranges.

Using the pre-Clinton methodology for calculating CPI we’re still at 2% inflation, not deflation. See the chart at Shadowstats.com.