"The post–World War II economic expansion, also known as the postwar economic boom, the long boom, and the Golden Age of Capitalism, was a period of economic prosperity in the mid-20th century, which occurred mainly inwestern countries following the end of World War II in 1945, and lasted until the early 1970s. It ended with the collapse of the Bretton Woods system in 1971, the1973 oil crisis, and the 1973–1974 stock market crash, which led to the 1970s recession."
Economic recovery from the Great Depression and of WWII, a period in which demand for goods and services exploded, many social changes took place. Women filled the labor gap during the war and many happily returned to homemaking while many others remained in the paid labor force but at unequal pay. Race issues began to explode as returning African- and -Asian American military personnel returned home no longer willing to put up with segregation and Jim Crow laws. 1968 Was a dreadful year with riots, sit-ins, marches and protesters of all varieties joining in resistance to unfair laws, policing, and economic segregation.
By 1971, the "Nixon Shock", the unlinking of money from gold, meant money was printed based on nothing. When USA needed money, it was printed. The consequence is volatility.
The Bretton Woods Agreement, a system of monetary management created the rules for commercial and financial relations among the world's major industrial states. In 1971, the USA unilaterally terminated convertibility of dollar to gold, thus ending the Bretton Woods Agreement. Officially, the $ became "fiat currency", backed by nothing more than a promise to pay.
What is unclear is how one can fulfill a promise if there is nothing to back it up. Due to excess printed dollars, and negative U.S. trade balance, other nations began demanding fulfillment of America's "promise to pay" – that is, the redemption of their dollars for gold.
These and other major shifts in policy brought the end to the Golden Age of Capitalism and economic decline continues at an accelerated rate.
John D. OK! OK! OK! Show me where I said I was in love with the gold standard! You don’t need to get your self all riled. And, my dear, sweat fellow, I am not an idiot … well you didn’t say I was an idiot, I did not say I was in love with the gold standard and it is not what I meant.
Now, are you interested in reading what I really meant, even if I didn’t word it according to your notion of acceptability?
Well, I will tell you anyway. A sharp change occurred in early 1970s. Would you agree to that?
I looked up things that were going on politically at that time to see if I could find clues as to why the “Golden Age of Capitalism began its decline. Would you agree the decline started then?
I have no idea whether the gold standard was a good idea or not, Perhaps you can enlighten me, gently, with the tone of a gentleman rather than the bully you reveal yourself to be.
Of course inflation has not been the problem, do you think I am an idiot … oh yes, you already indicated that opinion. I know the difference between Jimmy Carter’s inflation and Richard Nixon’s record. Inflation has not been the problem and is not the problem.
The problem is the Fed prints fiat money. Would you agree with that? If there is fiat money, from where does that money come? Hold on now; don’t say it doesn’t come from the taxpayers! It is taxpayers who work for wages or have small business or working people. Sure the wealthy pay some taxes, but are you going to claim they pay their fair share? Especially when they are the ones who benefit by fiat money.
Inflating the amount of money, spending money for wars, paying higher taxes from the middle class results in the middle class falling behind. Would you agree to that proposition?
You are correct, this had nothing to do with the gold standard, except for instability and wild fluctuations. There are no anchors, no limits put on printing money. You and I can’t print money when we spend more than we earn, but government prints and prints and prints. I don’t know how you interpret fiat money, but to me, printing money, putting out loans to people who can’t maintain the loan payments, foreclosures, homeowners in the street, and interest going to the financials that issued the fiat money, smells like a dead rat in the butter to me.
We could be using sea shells or tulip bulbs for storing value, but look what that gets us into. Money is nothing more than a promise to pay, but who pays? Who benefits? Who has money for retirement? Who has money for education of their kids? Who has money for fine homes, cars, planes, and vacations?
If there is a limited amount of money, and if there are taxation policies that are spread over the entire population, with provisions for the old, young, sick, differently abled, and a growing middle class, then our whole economy benefits. Who benefits when working people have their money sucked out of their pockets and bank accounts. Can 1% of the population get along without workers? Sadly, poor people work for slave wages and the wealthy enjoy benefits of productivity.
Yes, productivity has fed, housed, clothed, educated us very well, but do you think it is because the wealthy have used the money to create wealth or is it the person who grows the food, builds the houses, makes the clothes and educates our young? We have what we have because there have been incentives for people to work for a living wage, and because they had access to money for inventing and producing things.
Are you suggesting we go back to feudal Europe? What exactly are you claiming here?
You say our food is diverse; diverse for whom?
You say our medical care is superior; superior for whom?
You say our entertainment is more diverse, diverse for whom?
You say our information is more readily available; do you believe the information we receive over corporate media is free of propaganda. This simply is not true.
I remember pre-WWII very well. I remember using cardboard in our shoes when holes developed. I remember the entire family involved in growing food and preserving it. I remember jobless men who lived off the ten cents a shirt earned by the women of the family. I remember hobos stopping by the kitchen door asking for food in trade for work. I remember women gathered around a quilting frame making quilts out of old coats, and making children’s coats out of adult coats. Oh yes, I remember it well. Never enough money, always under threat of unplanned and unmanageable problems, always the possibility someone would get an infection or injured or disabled. Conflicts between adults under a lot of stress, kids crying under the table or in the closet. Violence rampant, life was hard and no amount of listing all the things we have now that we didn’t have then justifies our present situation. Let me assure you, not everyone has access to these benefit.
Furthermore, you have no business writing to me in your tone. I expect an apology.
Joan, I take great issue with one thing you said (just setting you up!): we have been educated "very well"? Nuh-uh! As far as education goes, we have not kept up, our education system is the pits, we are falling way behind the rest of the industrialized world, and this only benefits the super-rich who can afford private schools for their offspring while our public schools produce weaker competition, which serves only to consolidate the power of the plutocrats. Until they can no longer use and abuse the general populace, that is. So short-sighted, but what do they care?
Jedi, you stated that so powerfully and correctly. The effect of weakening public schools has dreadful consequences. This issue is really worth a fight. Thanks for focusing on it.
I beg your pardon! If you can't participate with evidence of your claim there is no need to participate at all.
Joan, for what it's worth-
Our food is mostly corn, soy, and wheat based. Except meat and dairy, which also come largely from corn, soy, and wheat. There is a type of diversity - zillions more products in the grocery story than before, but it's mostly manufactured from the same few products, with a sprinkling of other stuff. As for source diversity, there are only a small # of remaining food and ag companies that dominate the field.
Our medical care quality is in the " top50 nations". Right behind Costa Rica, as I recall, and just barely ahead Cuba. It costs more than any other nation in the world, several times as much. Oh, here it is. We're 37! Rah! We're behind, Morocco, Dominica, Cyprus. Expenditure as % of GDP is behind onlly Marshall Islands, and ahead of TImor, Micronesia, Kiribati..... tiny, poverty stricken nations.
Information is there, I think, via internet, but the "signal-to-noise-ratio" is mind boggling. Sorting out the golden needle of actual useful information in the massive haystack of misinformation and fluff, is a major challenge. I would add, misinformation from religionists dominates the political field. I expect North Carolina to have a new constitutional amendment by the end of the day, sponsored by the catholic church and promoted by backward protestants
Im no economic theorist. Seems to me unfettered communism was an abysmal failure. So was unfettered capitalism, fascism, and unfettered monarchy. A system of checks and balances seems to me better, and no reason to let robber barons take it all. I think the US economy as it stands is currently unjust.
Sentient, I share your opinion about "US economy as it stands is currently unjust". And thanks for help with data. You information is valid and reliable and necessary to make the point of the conditions in our country. We could be doing so much better in so many ways. I would like to be able to say our country has the best health care, education, opportunity for everyone, but it would be denying reality.
Sharing gardening ideas with you and others makes so much sense. Thirty-eight years ago I took out a thicket of volunteer horse chestnuts, maples and weeds uncut for several years. I turned it into a vegetable and fruit garden. I shall have to get out the old photo album and scan in some of those old scenes. When the children grew up, I started to turn the back yard into a sanctuary. I am now returning to fruits and vegetables, but between shrubs and trees.
As to communism, socialism, and capitalism, I visited 32 nations of the world talking to women about their lives under different political systems, their education, health care, work opportunities, child care, elder care and family violence. Women face formidable challenges around the world and we need to be able to take a stand, just as people of non-anglo heritage, or homosexuals, or oppressed people wherever they show up. It is tough to do it alone, but today's A/N messages have given me reason for hope. We are not alone in our challenges and we can gain support and strength from each other.
John, we've had our problems in the past so I'd like to keep things as cordial between us as possible. No need having irrational discussions with insults hurled back and forth. So I will do what I can to keep this discussion on objective and rational. That said, calling another person's ideas "pure idiocy" achieves the opposite goal. And since you personally called me out on doing the same thing to another's ideas in a separate thread, I think you should censor your comments to meet with your own ideas of how rational discussions should progress. Let's keep it clean, people!
I'm actually inclined to agree with you, John, as to the usefulness of the gold standard. Given my ignorance on the subject, though, this amounts to little more than nothing. But I'm just here for a good argument.
I am a fan of Volcker, so far as I am not ignorant. But I couldn't tell, are you as well?
Since you don't think inflation is the problem, do you mind explaining what you do think the problem is?
As for measuring "wealth", I do not agree with your assessment. A college degree, for one thing, would almost guarantee you a job 30 years ago. Not true today. Some things are easier to come by today (entertainment for sure, information... depends on what kind of information I think, and not so sure about the rest), some things today are perhaps harder to come by (a job with retirement and health benefits, for example?!).
So I don't know about this link between the gold standard and wealth, but one thing is clear to me anyway - the rich are taking a bigger and bigger slice of the pie, and making things harder on everyone else. You may argue with me on that point all you want, but you'll have a hell of a time talking me down from that point (i.e., don't waste your breath, or mine).
Well stated. To compare the values of a finiteless piece of paper/plastic, with a staunchly limited natural resource is ridiculous. If the money is based on nothing it is worth nothing.
Most economists recognise this simply by the law of supply and demand. Value is determined by rarity. Paper money is in unlimited supply, so the value is near worthless, gold the opposite. To base an economy on a worthless object makes absolutely no sense. unless. unless. it were uncapitalisable... ie only worth it's trade value, but not bankable, sort of like those old sea shells, bah, that could never happen! But that's the point of a viable economic system really, the currency should not be bankable. That is what makes trade of limited currencies valuable, no single individual could possibly physically collect enough of the currency mass to control the market, but this is what virtual money has achieved... :(
Oooh, fun! I see I've joined an interesting discussion indeed! First of all, the pic you have posted is B-E-A-yootiful! I've already saved it to my computer. I haven't yet looked at the links, nor read the responses which are sure to please, but thanks for posting this and I will try to jump in when I have the chance. Thanks again!
Thanks for starting this very interesting discussion. I’d like to add my two cents.
In my opinion, the gold standard was a really bad idea a century ago and an even worse idea now. History shows us that countries, like Great Britain and several Scandinavian countries, that left the gold standard early in the Great Depression experienced economic recoveries much faster than did countries that stuck with the gold standard longer or never abandon it. Interestingly, China (whose currency was linked to silver during the Great Depression) didn’t really suffer as traumatically as did Europe and America. To be sure, the relative weakness of China’s economy and the isolationist policies of its government at that time had something to do with the fact that the Depression didn’t hit China as hard but this is still an interesting point.
The main reason fiat monetary systems are better than are monetary systems based on one specific fungible commodity is that when monetary systems experience too much linking the collapse of those monetary systems is much more easily accomplished; for example, many economists believe that countries, like Grease, have had a much more difficult time recovering from their economic crisis because they are part of the Euro. The theory goes that if Grease was still using the Drachma the government would be able to reduce the value of the drachma by printing more currency; thus, reducing the value of its debt and the amount of money needed by the nation and its people to pay their bills.
Since Grease is using the Euro, though, the country cannot unilaterally act to reduce the value of its currency. That reality has forced Grease to have to pay back its debt and continue incurring expenses through the use of a currency that is largely controlled by the very healthy German economy. Since Greek citizens are struggling greatly the country of Grease is having an impossible time raising nearly the amount of money it needs to pay back its debts and meet its daily expenses. So, it pays its bills and its debt continues rising. The only way the Euro will survive in the long run is if healthy participants, most notably Germany, prop up Grease, Spain and the rest of the Euro participants poised to default.
Lastly, the mindset of the average person makes a system, like the gold standard, impossible. Since citizens around the world still want everything for nothing there is no way governments could function without the ability to print money when it’s really needed. In a better world governments would tighten their belts and citizens would not view the paying of taxes as akin to being assaulted. If that world ever comes to fruition it’s possible that governments will start using the printing of new currency as the last resort it should be. Sadly I don’t see that day as coming for a very long time. In America it won’t happen until the entitlement programs really go bankrupt and people are forced to live with the serious consequences of their selfishness.
Hey Jonathan! A thoughtful response. A few things though. Firstly, Greece is spelled G-R-E-E-C-E. Just a heads up.
Secondly, that was interesting about China being on a silver standard, thanks!
Third, you are right about Greece being on the Euro, and you make a lot of other good and interesting points as well.
The only thing I would take issue with is your supposition that entitlement programs are what is making America bankrupt. Were the two wars an entitlement program? Perhaps that depends on your definition of "entitlement program" though! :-) Or the tax cuts for the super-wealthy? Entitlement programs per se are not the problem (and excuse my following rant if this is not entirely what you are saying, as I can see you have a pretty good mind and you also mention not seeing taxes as some sort of assault, as Libertarians do). The biggest problem as far as I can see it is that the rich want to own this country and keep its general populace around as slave labor only. They can afford to send their kids to private schools, so why should they pay taxes which go towards improving our public schools? They can afford private transportation, so why should their tax dollars go to improving public transportation? And so on, ad nauseum. Our society is becoming more and more fundamentally unjust; the rich get richer and the poor get poorer, but the rich don't want to be a part of the solution, they just want to have tax exemptions and a powerful military and police force to protect their wealth. What we need is a balanced approach, with restraint being shown both by the privileged and the under-class. But austerity is not the answer.
I regret confusing the issue of gold standard and Great Depression. It was not my intent, nor did I say I wanted to return to it. I did say and do believe going off a standard allows money to be printed that is based on nothing more than a promise to pay. That is fine as long as USA is stable, but like the Twin Towers, vulnerable.
As to the Greek debt, have you wondered why Greece is indebted? and to whom? and what/who encouraged them to take on debt? Perhaps it was pure foolishness, but perhaps not. I don't know and would like to know. What are the factors, attitudes, values, that enabled Greece to became so indebted?
A good book on this subject is "Shock Doctrine" by Naomi Klein.
Traveling all through Europe and eastern Europe, and Asia, it became a real hastle to manage currency. A credit card worked much better and I sympathize with people of those areas, going into the global economy, wanting to make transactions easier. The changes to Euro present formidable challenges and create opportunities for theft and fraud.
A sidebar, I was in Berlin before the Wall came down. In west Berlin, very active shops and cafes with customers from all over the world who ate at sidewalk cafes with musicians wandering around. Buildings, freshly painted, with flowers everywhere, healthy trees and green grass made the mood of the city very festive.
Crossing at Check-point-Charlie I entered east Berlin. Bullet holes pocked buildings, the only color was a dreadful blue that must have been the only color available, but buildings crumbled, people had frowns on their faces and many looked down, making no eye contact. The restaurant personnel seemed angry to be serving me and the food was lousy. Trees looked grey, not green and lawns were dead. No music, no happy sounds. This one city, divided by a wall, same air, same soil, same water. The only difference was political.
When people speak well of communism I know they have never been to a communist country. When people speak ill of socialism I know they have never been to a socialist country.
As to austerity to recover from the recession/depression, I think that is just foolish. How can people who are economically stressed to the max, be more austere? From where did the wealth come? What role did capital play in creating wealth? What role did labor play in creating wealth? Wealth isn't printing money to pay for wars and accumulation of grand mansions, fine cars, expensive jewelry, and exciting vacations. Wealth comes from people with capital investing in people of labor working together to make life better: schools, health care, infrastructure, care for the disabled and elderly and children.
Oh! and by the way, my son tells me I misspelled sweat when I intended sweet. Well, we haven't found anyone perfect yet, have we!