I've been doing some thinking about a few things.
It seems hard to engage some people in a reasonable dialogue, and I believe that has a lot to do with a faulty understanding of a few basics, or maybe just misinformation.
But this will serve as a reference to correct a few of those errors.
In the early days of our republic, there were two main conflicting lines of thought as to what form the government should take. One side was represented by Alexander Hamilton, who believed in a central government that would be strong enough to do the things that we wanted it to do. These were called the Federalists.
The other side was represented by Thomas Jefferson, who believed in a very weak central government. He believed that it was best if government was not strong enough to do everything that we would want it to do. There had been a few excesses of government in his recent memory.
The Constitution was put together by James Madison, and is often referred to as a "Madisonian compromise." Madison was more of a diplomat than an ideologue, and he tried to find a workable middle ground.
The prevailing notion of rights, even to this day, is that of "natural rights;" which basically means that all rights are granted by God and are inherent in man by virtue of his existence. The purpose of the Constitution was to limit the power of government from encroaching on those rights; but it doesn't grant any rights of itself, because it is beyond the capacity of such a document to do so.
So, gridlock was the preferable state of government as envisioned by our Founding Fathers. The idea that government shouldn't do much at all held true through pretty much all of the 19th century, as embodied in the statement, "The government which governs least, governs best."
Of course, the party of Jefferson became something very different under Andrew Jackson, and the Democratic-Republicans became the Democratic Party, the first modern political party in the United States.
Now, as far as the gold standard is concerned, and those who would view anything else with something of suspicion, the issue is really one of the primary use of currency; either for domestic trade (silver), or international trade (gold). But somehow, we keep forgetting about those silver dollars. The issue became quite prominent with the Corn Laws in England, and then hit America about 50 years later.
The United States has quite a bit of silver deposits, but not a whole lot of gold in the ground (the Yukon notwithstanding).
The US dollar was the reserve currency of the world (and still is), and its price was set in gold by the Bretton Woods accord. This periodically modified the pricing of various currencies similar the the monthly fixes you see in the Eurozone. The US backed out of the Bretton Woods accord in 1971; again, because of issues in international trade associated with war.
There are still a few major currencies which are known as "commodity currencies." The value of the Canadian dollar is pretty much determined by the price of oil. The value of the Australian dollar is linked to gold. And for some reason, the Japanese yen tends to follow the S&P 500.
But the gold standard amounts to just one more type of a commodity currency, and all of the fluctuations that go with it.
Which brings me to the free market as the arbitrator of policy.
The market is determined by expectations, not facts. There is a basic premise of analysis that says that we can predict the future to some degree by looking closely at what has happened before. But our view is never quite whole, and thus never quite accurate.
Which is to say that the market is not reasonable in nature. It postures as reasonable, but it's really not. Last week, there were rumors going around about an hour before a meeting of the Fed that influenced the market in some really unpredictable ways. The rumors turned out to be false, and the market reacted to that as well. But facts had very little to do with it. It's all about expectations.
Giving your faith blindly to a thing as unreasoning as the market is incredibly foolish. And I tell you this as a trader whose portfolio has gone up by 22% in the first quarter. So get over it. A football game without any referees is asking for trouble; and if you ask often enough, you're going to get it.
Now, as far as the tea party goes, they are the exact same as the Iraq War protesters; which is to say that they are a bunch of hippies with nothing better to do that create a disturbance, when they could serve their country better by getting a job and taking a bath every once in a while. For some reason, these people (the tea party, war protesters, and other hippies) have nothing better to do than to lollygag all day, and they want to lollygag really loud.
Big deal.
Take a bath, you hippy.
Frankly, I support the efforts to legalize marijuana more than I see lollygagging as any useful activity; at least until they can come up with a way widen the tax base by charging a fee to lollygaggers. All of those hippies are just a bunch of misfits that haven't quite figured out how to work within the system. I still see soldiers in Iraq. I still see my tax money going to waste. And I'm still seeing a bunch of people with nothing better to do than to lollygag all day when they need to go out and get a job and take a bath every once in a while.
That's all for now.
You're welcome to leave your thoughts; but if you feel the need to tell me just how dandy the tea party is, go take a bath and then come back and tell me, you hippy.
