Asset value reset?

[farming101]

Even at a 20 percent plus recent haircut, stock valuations still remain too high . . . This is a train-wreck from central bankers spoon-feeding investors artificially over the past decade.

I have some investments that are down in value 25% since Feb 20 and I feel fine. I must be a farmer. Welcome to volatility

[Austrian Economics]

So in that case, growth becomes limited by the reserves of, and arbitrary value of gold instead. Trading one problem for another.

Quantity of gold in existence is not a problem. The fact that it exists as a well known and transparent quantity is actually an advantage. It has the best stocks to flow ratio of any commodity. That is why it evolved as money.

Growth is not limited by the quantity of gold. In the 19th century, almost all world trade was financed by about 150 tons of gold in the London Gold Exchange.

What limits growth is the ability of politicians to erect barriers to business innovation and development. Take away those barriers and growth will soar.

What also limits growth is the burden of the welfare state. Politicians don't like gold money because it puts a firm brake on spending. No more "free" stuff for the masses. There's no magical "third way" here. Either you institute sound money and stop the welfare state or the division of labor slams into reverse, as it is doing right now, and you wind up with total economic collapse.

[Austrian Economics]

Existing Canadian Gov't debt is 1.54 trillion. World gov't debt is 69 trillion.
Gov't has to sell assets? What assets? Who will buy the assets and with what? What will the gold that the Gov't has to buy be priced at keeping in mind that some estimates are that there is about 165,000 tonnes of gold in the world and that there has only been about 190,000 tonnes ever mined. What percentage of the world's gold could the gov'ts buy? How much an ounce would they have to bid to get it? Notice I said bid. Or will the gov't force individuals to sell it the gold it needs and put a self determined value on it?

Stopping the current levels of spending is the key. After that, your taxes will be levied mostly for the purpose of purchasing gold at whatever price gold holders will accept. Convert existing debt into long term bonds with interest and principle payable in gold. When a gold bond is paid off, the debt is extinguished. Fiat cannot do this.

The alternative is total societal collapse. You cannot have 80% of the population on welfare. The other 20% will simply stop working before long.

[farming101]

Stopping the current levels of spending is the key. After that, your taxes will be levied mostly for the purpose of purchasing gold at whatever price gold holders will accept. Convert existing debt into long term bonds with interest and principle payable in gold. When a gold bond is paid off, the debt is extinguished. Fiat cannot do this.

The alternative is total societal collapse. You cannot have 80% of the population on welfare. The other 20% will simply stop working before long.

This will need to be enforced. No one will do it willingly
https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102

[Austrian Economics]

This will need to be enforced. No one will do it willingly
https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102

You misunderstand FDR's intentions. His order was not intended to save the currency, but rather to destroy it. Holders of gold were forced to become creditors to the central bank, so that FDR could force down the rate of interest to very low levels to finance his runaway spending plans. The result was the Great Depression.

If we return to gold, governments need to purchase their gold honestly, trading whatever assets they have to obtain it. If they attempt to seize it, the economy will lock up completely.

[farming101]

You misunderstand FDR's intentions. His order was not intended to save the currency, but rather to destroy it. Holders of gold were forced to become creditors to the central bank, so that FDR could force down the rate of interest to very low levels to finance his runaway spending plans. The result was the Great Depression.

If we return to gold, governments need to purchase their gold honestly, trading whatever assets they have to obtain it. If they attempt to seize it, the economy will lock up completely.

That is why I asked Gov't has to sell assets? What assets?

[Austrian Economics]

That is why I asked Gov't has to sell assets? What assets?

Land, military bases, port facilities, pipelines, office buildings, shares in companies that they now own. Government will have to be about 10% of the size it is now. Either that or the economy implodes. There is no other option.

[agstar77]

Reality will set in. Maybe the excess of the last 50 years will be trimmed. We are a fat society literally.

[Rareearth]

Reorganization at that magnitude would normally be suicide for govt.

I don’t think there is enough pain and suffering yet where people’s survival instincts kick in. If the government did stop all spending and people know they are on their own then it could happen, “the great reorganization “

Guess I should go buy bullets and liquor as well.

My grandma was the best preppier !

[AlbertaFarmer5]

Land, military bases, port facilities, pipelines, office buildings, shares in companies that they now own. Government will have to be about 10% of the size it is now. Either that or the economy implodes. There is no other option.


The alternative is total societal collapse. You cannot have 80% of the population on welfare. The other 20% will simply stop working before long.

[/QUOTE]

This is where we differ. As much as I despise big government, and all of the disincentives, inefficiencies and confused market signals it creates, I think in an era when almost no resources are limiting economic growth and human prosperity, we can actually have our cake and eat it too. But it will require a complete rethink of how we fund everything, and how we compensate those who are willing to innovate, take risks, and create wealth, while still providing for those who can't won't or don't( right now, we have promoted most of those types up to their level of incompetence in pretend government jobs, and punished the productive to pay for them, we'd all be better off if they sat at home on welfare...) . I don't know what that looks like, but physically it is possible, and given the quantum leaps in technology, efficiencies, automation etc. it will be necessary, not everyone needs to work to have healthy growth. But those who are most capable and willing need to be given every opportunity to do so, with the rewards being equally unlimited to motivate them, given the much easier choice of sitting at home playing video games.

Almost need two parallel systems. None of this was possible at any other time throughout history, since it took every ounce of human labor and ingenuity just to meet our basic needs, that is no longer true, but we continue to measure economic success by full employment, rather than by productivity.

[Rareearth]

Infrastructure I agree is our best investment, remember that word “sustainability “ won’t here that for a while now.

Prosperity vs entitlement this will be a battle.

[farming101]

Land, military bases, port facilities, pipelines, office buildings, shares in companies that they now own. Government will have to be about 10% of the size it is now. Either that or the economy implodes. There is no other option.

Here is the 2017-18 federal budget revenue and expenditure. Could you comment on what would change by cutting Gov't size by 90% and how that would impact the sectors in the country that at this time rely on government funding. thanks

[Austrian Economics]

Here is the 2017-18 federal budget revenue and expenditure. Could you comment on what would change by cutting Gov't size by 90% and how that would impact the sectors in the country that at this time rely on government funding. thanks
[ATTACH]5737[/ATTACH]

Most sectors currently relying on government funding will not get any, for the most part. Military, police, courts, roads. That's about it. The light blue pie slice gets shrunk to about the size of the dark blue one and that constitutes the whole budget.

Within a couple of years, they won't be getting funding in any case. We can either achieve this with deliberate planning or just let the whole system implode on its own and we wind up like Zimbabwe.

Medical care: buy insurance if you can find it
Pensions: most are insolvent so the best that can be done is to liquidate them
No bailouts or subsidies for any business whatsoever.

The most useful changes will be non-budgetary. Remove barriers to business development like carbon taxes, minimum wage laws, hiring quotas, permitting and occupational licensing laws. These are mostly under provincial jurisdiction.

[farming101]

Most sectors currently relying on government funding will not get any, for the most part. Military, police, courts, roads. That's about it. The light blue pie slice gets shrunk to about the size of the dark blue one and that constitutes the whole budget.

Within a couple of years, they won't be getting funding in any case. We can either achieve this with deliberate planning or just let the whole system implode on its own and we wind up like Zimbabwe.

Medical care: buy insurance if you can find it
Pensions: most are insolvent so the best that can be done is to liquidate them
No bailouts or subsidies for any business whatsoever.

The most useful changes will be non-budgetary. Remove barriers to business development like carbon taxes, minimum wage laws, hiring quotas, permitting and occupational licensing laws. These are mostly under provincial jurisdiction.

Zimbabwe's system did not implode on its own. It was policy. Something that is an inherent failing of every government that has ever existed.
Is there an example of a successful government financial system such as you suggest operating anywhere in the world right now?

[Austrian Economics]

Zimbabwe's system did not implode on its own. It was policy. Something that is an inherent failing of every government that has ever existed.
Is there an example of a successful government financial system such as you suggest operating anywhere in the world right now?

None in the world right now. That's the problem. The very idea of honest money and the notion that debtors should honor their debts is very unpopular. People want lots of free stuff because they actually believe that it's free. Now they are finding out that it is not.