5 ms·

Trump is meeting with an ex-bank CEO who wants to return to the gold standard

8 points by MollyR 10y ago

MollyR 10y ago
Does anyone know what this means to vc funding in the valley ?
- yuhong 10y ago
  I think a lot of the VC funding probably ultimately comes from the increased credit that was allowed when Bretton Woods were abandoned.
- dragonwriter 10y ago
  Ending independent central banking in the US would probably destroy the credibility of US Government securities as an investment vehicle, which might in the short term make more money available in private markets. OTOHnot it's probably bad for any kind of investment in firms actually substantively tied to the U.S., and probably best for firms in the kitchen design of it distress expected to do well in a period of international political instability, not most tech startups (though some might do well.) Then again, this kind-of talk doesn't mean he'll be appointed, or confirmed, or that his past stated policy preferences will make it into law.
ender89 10y ago
Holy crap, the ceo wants to get rid of the fdic, which is like the best protection against the sort of mass market crash (and runs on the bank) that caused the great depression.
- adam419 10y ago
  And our current status quo of rampant and reckless monetarism is what causes such severe crashes and volatility. (Not necessarily advocating getting rid of fdic) It's also far less preposterous when you read the next sentence where he advocates banks have a 20% capital reserve requirement.
  - yuhong 10y ago
    I think back when the Great Depression happened it was a US trade surplus which eventually ended. US now have a trade deficit and has been since around the 1970s.
    - ArkyBeagle 10y ago
      The laws of double-entry accounting being what they are, there is no "trade deficit" - the difference is made up mostly in financial services.
      - dragonwriter 10y ago
        A trade deficit has a well-defined meaning, and describes a thing that does really exist. It must, of necessity, be offset by a net capital flow from the partner with the surplus to the one with the deficit (usually, in the form of increased foreign ownership of firms and property in the country with the deficit.) It's can't be made up for in financial services, because trade in services, including financial, are included in the calculation of the deficit or surplus.
        ArkyBeagle 10y ago
        But in a post-Bretton-Woods US, it amounts to financial services - or what ever it is that Wall Street does.
        dragonwriter 10y ago
        No, it amounts to assets, either financial or concrete (e.g., real property). And there's nothing special about the "post-Bretton Woods US". Financial assets are not the same thing as financial services.
        ArkyBeagle 10y ago
        Not all financial assets are in real property. I'd call assets that are not real property pretty much an artifact of the financial services industry. I don't mean just fees. Your usage is much more precise. I invoked Bretton because Truman was running around trying to get as much of the finance industry for the US during Potsdam and thereafter. Bretton Woods was roughly the same time frame.
- ArkyBeagle 10y ago
  He wants to end the Fed outright, which is how we avoided a total disaster in 2008-9. But this is mostly because Bernanke, who is a student of the Depression was somewhat listened to. The various scenes in "Too Big To Fail" where Bernanke speaks seem to have actually happened. To the limit of a narrative movie's ability to tell such a story, it looks pretty close. And WHAT volatility??? We're so stable we're hidebound.
  - adam419 10y ago
    Um, please do not confuse economic growth with volatility. We've had enormous volatility, especially in forex and debt markets.
    - ArkyBeagle 10y ago
      Point taken. I was thinking more of the sort of volatility which is related to Fed policy or to the sort of banking that the FDIC is relevant to.
  - dragonwriter 10y ago
    The Fed (Federal Reserve) and the FDIC are separate things, and he wants to get rid of both, plus move back to a gold standard (which is another separate thing; the Fed existed for a long time with the gold standard.)
    - ArkyBeagle 10y ago
      Yessir - I was drawing that from the article. His principle thing seems to be "end the Fed" and the FDIC thing was presented as a secondary consideration in the article.
adam419 10y ago
Since I know many here are much more inclined towards rigorous arguments, I highly highly recommend you read George Gilder's free book supporting something like a gold standard told through the lens of an information theory of money: https://americanprinciplesproject.org/economics/new-george-gilder-book-the-21st-century-case-for-gold-a-new-information-theory-of-money/ https://americanprinciplesproject.org/economics/new-george-g...
WheelsAtLarge 10y ago
No, the FED is not going away. Unfortunately it's human nature to do anything it can to create a financial panic. We like to buy when all are buying and sell when all are selling. When everyone is selling and no one wants to buy prices tend to collapse at a faster rate. The only way to stop it is to have a buyer of last resort, that's one of the most important functions of the FED. If the FED goes away we'll see some very nasty crashes. Congress knows that and won't let any one administration change its role. One of the reasons people want to get rid of the FED is that they encourage markets to act recklessly because the FED is there to save the day when the panics start. But the problem is that there will always be panics and finding a buyer of last resort every time makes for a very unstable market and it limits its growth since the general risk is perceive as higher. Thrump wants lots of changes but going back to the gold standard or getting rid of the FED will not happen during his administration.

8 points by MollyR 10y ago

MollyR 10y ago

Does anyone know what this means to vc funding in the valley ?

yuhong 10y ago
I think a lot of the VC funding probably ultimately comes from the increased credit that was allowed when Bretton Woods were abandoned.
dragonwriter 10y ago
Ending independent central banking in the US would probably destroy the credibility of US Government securities as an investment vehicle, which might in the short term make more money available in private markets. OTOHnot it's probably bad for any kind of investment in firms actually substantively tied to the U.S., and probably best for firms in the kitchen design of it distress expected to do well in a period of international political instability, not most tech startups (though some might do well.) Then again, this kind-of talk doesn't mean he'll be appointed, or confirmed, or that his past stated policy preferences will make it into law.

ender89 10y ago

Holy crap, the ceo wants to get rid of the fdic, which is like the best protection against the sort of mass market crash (and runs on the bank) that caused the great depression.

adam419 10y ago
And our current status quo of rampant and reckless monetarism is what causes such severe crashes and volatility. (Not necessarily advocating getting rid of fdic) It's also far less preposterous when you read the next sentence where he advocates banks have a 20% capital reserve requirement.
- yuhong 10y ago
  I think back when the Great Depression happened it was a US trade surplus which eventually ended. US now have a trade deficit and has been since around the 1970s.
  - ArkyBeagle 10y ago
    The laws of double-entry accounting being what they are, there is no "trade deficit" - the difference is made up mostly in financial services.
    - dragonwriter 10y ago
      A trade deficit has a well-defined meaning, and describes a thing that does really exist. It must, of necessity, be offset by a net capital flow from the partner with the surplus to the one with the deficit (usually, in the form of increased foreign ownership of firms and property in the country with the deficit.) It's can't be made up for in financial services, because trade in services, including financial, are included in the calculation of the deficit or surplus.
      - ArkyBeagle 10y ago
        But in a post-Bretton-Woods US, it amounts to financial services - or what ever it is that Wall Street does.
        dragonwriter 10y ago
        No, it amounts to assets, either financial or concrete (e.g., real property). And there's nothing special about the "post-Bretton Woods US". Financial assets are not the same thing as financial services.
        ArkyBeagle 10y ago
        Not all financial assets are in real property. I'd call assets that are not real property pretty much an artifact of the financial services industry. I don't mean just fees. Your usage is much more precise. I invoked Bretton because Truman was running around trying to get as much of the finance industry for the US during Potsdam and thereafter. Bretton Woods was roughly the same time frame.
ArkyBeagle 10y ago
He wants to end the Fed outright, which is how we avoided a total disaster in 2008-9. But this is mostly because Bernanke, who is a student of the Depression was somewhat listened to. The various scenes in "Too Big To Fail" where Bernanke speaks seem to have actually happened. To the limit of a narrative movie's ability to tell such a story, it looks pretty close. And WHAT volatility??? We're so stable we're hidebound.
- adam419 10y ago
  Um, please do not confuse economic growth with volatility. We've had enormous volatility, especially in forex and debt markets.
  - ArkyBeagle 10y ago
    Point taken. I was thinking more of the sort of volatility which is related to Fed policy or to the sort of banking that the FDIC is relevant to.
- dragonwriter 10y ago
  The Fed (Federal Reserve) and the FDIC are separate things, and he wants to get rid of both, plus move back to a gold standard (which is another separate thing; the Fed existed for a long time with the gold standard.)
  - ArkyBeagle 10y ago
    Yessir - I was drawing that from the article. His principle thing seems to be "end the Fed" and the FDIC thing was presented as a secondary consideration in the article.

adam419 10y ago

Since I know many here are much more inclined towards rigorous arguments, I highly highly recommend you read George Gilder's free book supporting something like a gold standard told through the lens of an information theory of money: https://americanprinciplesproject.org/economics/new-george-gilder-book-the-21st-century-case-for-gold-a-new-information-theory-of-money/ https://americanprinciplesproject.org/economics/new-george-g...

WheelsAtLarge 10y ago

No, the FED is not going away. Unfortunately it's human nature to do anything it can to create a financial panic. We like to buy when all are buying and sell when all are selling. When everyone is selling and no one wants to buy prices tend to collapse at a faster rate. The only way to stop it is to have a buyer of last resort, that's one of the most important functions of the FED. If the FED goes away we'll see some very nasty crashes. Congress knows that and won't let any one administration change its role. One of the reasons people want to get rid of the FED is that they encourage markets to act recklessly because the FED is there to save the day when the panics start. But the problem is that there will always be panics and finding a buyer of last resort every time makes for a very unstable market and it limits its growth since the general risk is perceive as higher. Thrump wants lots of changes but going back to the gold standard or getting rid of the FED will not happen during his administration.