Baseball Cards Price

What is hard for people to understand when it comes to the Federal Reserve?

Here is an analogy. If a million Mickey Mantle baseball cards were created by Topps. The cards would be worth nothing and no one would be able to trade the cards for expensive items as what is usually done with valuable sports cards. The FED does this when it increases the supply of money. It prints money that is backed by nothing and as a result the value of a dollar drops as prices go up. Given that banks and defense contractors are the first to get the money the average person see's no increase in salary but only see's that they can't afford anything. Gold on the other hand is limited in supply and because it cannot be artificially created( Yes, a person can paint things gold but it isn't real) Federal government can never have out of control spending. This is why defense contractors do not want the FED to go away. The FED is a failure. We have out of control spending, deficits, high gas prices, and high health care prices. We didn't have these problems with the Gold standard. Edward, it was NOT settled. Why do we have these economic problems if it is settled? Thomas D, why would it be late to go back to the gold standard?

Public Comments

1. The gold standard was a failure. Everyone knows that.
2. THE CURRENT economic CRISIS WAS CAUSED BY THE HIGH COST OF "credit default swaps" DUE TO enormous deficits CAUSED BY WARS. which restricted Feds ability to extend credits!! please read the article(link) by Japan's highest currrency official!! US currency is likely to lose its value ever faster in a few month, as a concern of the bailouts, after Bush spent all our reserves in the war!! The fed reserve claims to have 575 billions cash available for rescue plans, Yet, the Chinese and Japanese Gov claim they should have 1 trillions USD each reserved with Fed.. Now, they are asking the US gov to re pay the interests on money borrowed in Japanese and Chinese currencies due to the fact that USD is rapidly losing its value. The US government needs to borrow at least US$1 trillion in the coming year, excluding the US Treasury's $700 billion plan to bail out the financial and other industries, said Kazuo Mizuno, chief economist in Tokyo at Mitsubishi UFJ Securities Co, a unit of Japan's largest publicly traded lender by assets. That amount is likely to grow as the US government continues to rescue failed parts of the economy and has to raise more debt - that is, issue government bonds, or Treasuries - to fund such rescues. China on November announced its sweeping economic stimulus package valued at about 4 trillion spending on its infrastructure, which will requires money from US reserves, putting more pressure on the value of USD. http://morbidsymptoms.blogspot.com/2008/11/end-of-dollar-as-reserve-currency.html http://www.moneyweek.com/investments/can-china-and-japan-save-the-us-dollar.aspx Since 2004, when the amount of the government bond issuance reached an annual average of $400 billion, 94% of US government bonds have been purchased by China and Japan. "There is no wonder the dollar will weaken," said Eisuke Sakakibara, Japan's former top currency official and now a professor at Waseda University. "The dollar now looks strong for a technical reason. The money the US financial firms had invested in the world is being repatriated into the homeland, causing dollar-buying. But once this conversion into the dollars is done, the currency will head south," Sakakibara said at a forum in Tokyo on Sunday.One measure of the increased concern at the ability of the United States to finance its enormous deficits in the future is the rising cost of credit default swaps bought as protection of Treasury debt. These traded near a record high on Tuesday, with benchmark 10-year contracts on Treasuries increased to 42 basis points, or 0.42 percentage points, from around 20 in early September. The contracts have also risen from below two basis points at the start of the credit crisis in July 2007. Japan holds the world's second-largest foreign reserves, totaling about $1 trillion, following China, which has about $2 trillion in forex reserves, most of them in USD.
3. I think it is a little late to go back to the gold standard, but you are right about deficit spending lowering the value of the dollar in real terms. What we really need is to get government spending under control. EDIT: It is a little late because to go back to it we would have the shrink the amount of money available. Also with gold being traded as a commodity these days the wild fluctuations in gold, almost 5-10 percent some days would lead to a very messy currency market.