If Obama had given execs the kind of treatment Larry Summers and the other half of his team wanted (heads on sticks to put it lightly) it would have rocked the investment world and brought much more pain to our economy than many could bear. The American people would have seen justice, but most likely at a substantial cost to the American way of life with ripple (tsunami?) effects seen and felt around the world.
Why anyone would expect Obama to carry through such threats when his staff has mostly been from these very same groups is beyond me. If anything its more like, you guys are going on pikes unless you play ball, here let me connect you to my campaign finance coordinator. Geitner protected his buddies. The real collapse would have been the money available to the various campaigns that eat it up directly or indirectly.
Washington is the one percent, they own Wall Street more than Wall Street owns them. They excuse themselves from insider trading, tax issues, and the like. How are the executives at Fannie and Freddie any different from those at other lending groups? Simple, they have/had better political connections.
Which means that system deserved to crash, die, burn to ashes, and leave us clean ground on which to rebuild.
I'm talking about the fact that the system does not work. It was and is ruining people's lives, and all the bail-outs (which have become systemic) did is prop it up for its few "winners" at the expense of everyone else. Economically speaking, the West is being transformed into Japan: a zombie economy run for zombie banks through zombie companies by ever-more-impoverished workers and propped up at the taxpayers' expense.
There are a number of metals that have much more useful applications than gold. From what I've read, gold's intrinsic value was ultimately a western idea that, again, stemmed from a confidence in it's value. When the Spanish discovered gold in central Mexico, the Aztecs had no idea what they were so excited about -- it had no intrinsic value to them. There's a great discussion of the history of gold as money in "The Ascent of Money"
Computer electronics have more gold per ton than a gold mine, because of golds physical conducting properties.
So gold is needed to make efficient computers, which can again be used to produce real value in terms of production. I think that is fair to call that intristic value.
Gold's value is it's uselessness! It's value is derived from the network effect of other producers willing to trade their services/goods in the future for the gold you have stored.
Currency is for earning and spending. there is no bound to how much currency can be conjured to claim on goods from the real world. When the currency system fails under the weight of debt incurred in that currency - then those holding physical tangible goods will do well against those whose wealth is denominated in an arrangement of 1's and 0's.
Aside from that it's ideal for currency because it's fungible (all gold the same, so exchange is easy), portable (small amount is worth a lot, also easy to melt down into smaller lumps), durable (doesn't rust or rot).
It's a virtuous circle whereby its intrinsic physical properties and luxury status make it a good choice for money/currency, which then gives it a new dimension of value as that idea spreads.
In the absence of other people and their ideas of value, given enough cotton paper I could make clothing or a fire. Given enough gold I could probably make a bludgeoning weapon...
Both have fairly minor value in the absence of shared delusion. And even beyond that, what the hell is 'intrinsic' value? Has the universe decreed that there is a property of matter called 'value'? Like particle spin, or atomic number?
If there is a high demand for fiat money -- observable through a rise in interest rates, a measure of the inter-temporal preference for money now versus later -- the Federal Reserve can print more. If there is a high demand for gold money, at the margins we can produce more, but basically the supply is fixed. This limits the rate at which the real economy can grow.
Many people who favor a return to a "gold standard" do so because they have experienced inflation, but have never experienced a deflation. Deflations in general are more painful than inflations.
I don't believe this is true if you allow speculation and credit in the economy. AFAIK even on the gold standard banks were not required to be able to satisfy every gold-backed bill they distributed out.
Of course, it helps more than having no scarce item would, but if the problem continued then people would eventually shift to trade in something else while conserving their gold-backed currencies to pay government taxes.
Meh.
And gold has been used in jewelry, art, decoration as well as monetary purposes for 1000s of years.
I would expect at the least, American readers to be familiar with the "Continental currency" and its devaluation to 1% of it previous value: http://en.wikipedia.org/wiki/Early_American_currency#Contine...
Indeed, we're all taught in high school about things "not being worth a Continental" during the American Revolution.
This doesn't really disprove my point though. No one believed in the government backing the Continental currency (for good reason as it turned out, the Articles of Confederation later gave way to the Constitution).
You're saying gold is valuable, but again, it's because people give it value. Whatever contribution of value gold makes to our electronics is included in the component cost, you could as well be arguing that plastic, glue, or lithium is intrinsically valuable.
And if we theoretically started finding gold nuggets in every square meter of soil in every home in America then guess what: the perceived value of gold would drop. This has happened throughout history: The Roman Empire switched to using gold coins instead of silver in response to an oversupply of silver being found in their new colonies. The finding of gold in the New World caused prices in Europe to shoot up as a result (people had more gold money to spend but the same amount of goods to buy, so the goods simply became more expensive).
Gold, like _everything else_, is worth exactly what people think it is worth.