Ed,
Comments below:
At 21:35 15/10/2011, you wrote:
(KH) It's no use infusing money into the economy
if nothing actually happens -- which is what
Bernanke has been doing for the past two and a
half years to no avail. Being on a gold standard
doesn't impede the creation of new money for
economic change. The greatest economic (and
social) change ever in the history of man took
place in England during the 18th and 19th
centuries when the gold standard operated. A
whole society from top to bottom moved upwards
and for the first time ever an avalanche of
talent was released from the working classes.
(EW)The great social change that took place in
the western world during the 18th and 19th
Centuries was due to tremendous technological
and social change and not due to the gold standard.
It certainly was! Without gold as the basic (most
valuable) currency (and copper and silver as
subsidiaries), the industrial revolution would
never have got started. Large amounts of it had
to be available for investment before innovations
could get off the ground. This was available in
London as a result of international trade with
other countries (where gold was already the
universal trading currency) and also a
considerable flow of landowners' rents and
profits (copper and silver mostly) that was fed
into London via the countryside banks to exchange
for gold (to pay for foreign luxury goods or
skilled artists or industrial development
somewhere else in the country, etc). The other
great European seaports such as Amsterdam,
Hamburg and Stockholm didn't have countryside
banks behind them so this was the reason why the
industrial revolution took off in England many
decades before elsewhere in Europe.
(EW) The cities became industrialized and people
flocked from the countryside into the
cities. As youve pointed out many times, a
vast array of new goods, including consumers
goods, military hardware and social
infrastructure changed the ways in which people
lived, fought and were looked after.
And yes, Bernanke has been infusing money into
the US economy. However, there is a very large
difference between pouring out money letting it
fall where it may and directing that money
toward specific growth inducing purposes.
The current American problem appears in part
to be one of an inability to decide what to do
with money that the Fed can make
available. Politicians are at loggerheads on
this, so much so that very little can
happen. There have also been large shifts in
power in the US over recent decades, and the
question of who decides what the politicians
or the bankers lurks behind the
scenes. Obama has indicated that he would like
to raise taxes on the incomes of the rich, but
its unlikely that hell be able to do it.
I dont think a revival of the gold standard
would be very helpful now. Our current economic
problems, if fixable, require decisions on
questions such as whether the best course of
action is debt reduction or stimulation via the
injection of money into the economy, and, if the
latter, what should be funded and how.
(KH) Since the 1980/90s I think we're into a
completely different ballgame now. But I don't
think we'll be able to see the outlines clearly
until the present currency mess is sorted out.
Keith
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/10/
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