Posted by RodInNS on February 27, 2014 at 21:07:44 from (216.118.158.123):
In Reply to: Re: Bitcoin posted by Bret4207 on February 27, 2014 at 16:03:50:
In essence you're correct that the Fed doesn't answer to anyone... and that was undoubtedly done for a reason... so they couldn't be manipulated by wall street or congress. To say that's it's entirely unaccountable I think is somewhat incorrect. The Fed is established by an act of congress and it's members appointed by the President... so nothing is irrevocable. I'm sure in the real world there's a lot of back and forth between the Fed and the government... Here in Canada... the Bank of Canada is our central bank. It operates in much the same way as the Fed as a private entity... BUT the sole 'shareholder' of the Bank of Canada is Canada's 'Minister of Finance'... so in that sense the bank is directly accountable to the minister. Some would argue that our bank has a better track record than the Fed too :)
In terms of a gold standard... mabey I'd ask you the question of why it matters to you what the dollar is worth in gold? One can make the argument that we need gold as a store of value to back the currency.... and that's not entirely a bad thing... but why does gold have to be the only store of value? When you look at the oil reserves, agricultural capacity, manufacturing capacity, intellectual output, etc of the country.... those all represent a LOT more real world value than was ever held in a vault full of gold. Part of the problems today are a result of the decline in manufacturing and manufacturing capacity.... If you ever listen to Warren Buffett talk about gold... you might find it interesting. Here's the second richest man in the nation and he doesn't own gold... and won't own it. His rationale, if I follow it correctly... he'd rather own a profitable business that's growing, turning over cash that he can use to buy another business that can grow and turn over more cash... rather than have a heap of gold that earns nothing... sits in a vault... looks pretty. Perhaps some day he could sell it and profit on a commodity price swing. I think he did that at one point with silver... so never say never... but he doesn't 'hold' metal as a general rule because it does nothing. I can remember watching an interview where he quite specifically preferred to own 'Nebraska' farm land.... it holds it's value over the long term and in the mean time it turns a profit growing corn... His and Charlie Munger's thoughts on gold and many other things are well worth reading or listening to even if you don't agree with them entirely.
In terms of the debt... I agree with a lot of what you say. Presently, the US situation is out of control. I think the fact that it's out of control is more of an issue than the absolute magnitude of the debt. But realise that there needs to be balance on this front too. Here in Canada our Federal government spent the 90's reining in the defecit, much to a large extent by dumping the cost of services onto the provinces. Having federal debt under control then in part brought about a considerable appreciation in our dollar... and that led to significant hardship in any sector of our economy that relied on exports. We got caught in a wedge where the numerical 'costs' of internally sourced raw materials were still based on a 60 cent dollar, the revenue was received on par and in many cases any manufactured good we required that were imported were still imported at probably more than 20% disadvantage because pricing did not decline with the dollar's appreciation. So... the devaluation of the US dollar is in part what has made your exports start to be more attractive again. If the dollar appreciated.... much less so. Personally I don't think you can really view this subject through an absolutist frame of mind. It's rather abstract by nature...
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