Why does the currency have to be backed exclusively by gold? Other commodities could be used in addition to gold in order to back it. I think there's a place for credit. Economic growth has benefited from it. But why are Russia, China, and other central banks stockpiling gold? Instead, they could sell their gold, buy other investments and get a return on their investment. The problem is that there's really nothing stopping the US Fed from continuing to monetize the debt. Eventually, that will reduce the purchasing power of the dollar and put the US reserve currency status at risk. Otherwise, we're talking about a free lunch theory. It would be equivalent to someone always being able to get a credit card offering 2X their current credit limit and balance transfers. They could just keep taking out a new credit card, transfer over their existing balance, and never have to work. In reality, that scheme works for a while. Someone doing that is able to enjoy a much higher standard of living for a while vs. if they had to work and rely on cash. But eventually, the game ends. https://www.marketwatch.com/story/watch-out-america-china-and-russia-are-stockpiling-gold-2019-07-29
Japan also went from a completely destroyed, literally nuked, country to one of the top GDP per capita countries in the world, where they remain. That's not a bad place to be, and wouldn't have happened if they had eschewed debt as you seem to suggest they should have. And please realize that reducing the Great Depression to an argument for or against the Fed is really silly. There were a number of factors that both caused and prolonged the Great Depression, attributing it solely to the existence of the Fed is naive on a number of levels and a gross and not terribly accurate oversimplification of a very complicated topic.
Hopefully it's ready in 6 months. I'll make sure to send you a copy. I promise you'll find it interesting.
They made a mistake by shrinking credit instead of expanding it. Just because your surgeon sometimes makes a mistake, you don't throw away the whole profession, do you?
Are you implying that Russia and China are planning to go back to the gold standard? Countries buy and sell gold for a variety of reasons, many related to manipulating their currency value in relation to other currencies. Obviously a country's ability to repay it's debt impacts it's ability to continue to print money and too much debt can cause a country to fall off that cliff with very bad results. That's why many of us are for fiscal responsibility and against the current administration's policy of blowing up the debt as they have. You don't need to abolish the Fed to make politicians more prudent in taxing and spending. Being for fiscal responsibility though is in no way synonymous with being against the fractional reserve banking system. In fact it would be the height of fiscal irresponsibility to destroy the system that's created so much wealth and so dramatically increased standard of living for any kind of asset based monetary system. And again, you've got to have some damn good reasoning on why switching would be both worth the risk and why the system you're switching to is significantly better. So far we've seen neither on this thread. Effectively you're advocating for almost certainly blowing up our economy now because it's possible we might blow up our economy later. You have to do better than that.
Credit, a.k.a debt has been in use longer than the concept of money itself. Barter came before money... IOU 1 cow. Not a standardized unit of measure, and what was a farmer going to accept for payment when he sold one of his cows? Another cow?? In modern times, credit has existed through all times of a "gold standard", price fixing if you prefer. The "fix" did not prevent collapse of the system. Read about Bretton Woods. If you deposit $100 in a bank, the bank will lend out $90 to someone else. Now 2 accounts will show a total $190, where only $100 exists. It does not matter what that $100 is backed with. Now the obvious reply is to restrict the bank lend to say $10, so 2 accounts totaling $110. You had better think long and hard about that before you answer. Oh yea, don't forget politicians propensity to spend rather than reduce: of course with a 10:100 lend limit, they could exempt government spending and let the population deal with austerity, that they can then promise to fix. Oh but wait, government spend ends up in the economy and personal bank accounts. How circuitous of them politicians.
Japan's gross debt to GDP is about 3x higher than it was when their market last peaked over 30 years ago. https://tradingeconomics.com/japan/government-debt-to-gdp Their gross debt to GDP hit a record low in 1980 and it was not that much higher at their market peak. Sorry, but it's not the debt that made Japan a great nation. Their debt exploded after that point and they are no where near the previous peak even 30 years later. A lot of that is due to demographics, but it's basic economics that debt servicing costs suck away investment from more productive uses. As far as the Great Depression, it was mostly WWII that finally pulled the US out of the the great depression. Without the war, it likely would have taken a longer than 25 years to recover. I never said that the Fed caused the Great Depression. But someone else here argued that without Fed, we had market crashes every decade during the 1800s, but with the Fed, only once per century. So if that is a valid argument and not an oversimplification to claim that Fed reduces the amount of market crashes, then one must also consider the duration of the recovery -- why credit the Fed with a reduction in frequency simply based on the the data, but also not attribute to them an increase in severity or time required for recovery by looking at the same data? I suspect a higher rate of growth during the 1800s as well as the civil war fueled more volatility, but I don't have the data to claim that. I asked why are China and Russia stockpiling a mineral or shiny pieces of metal when they could be buying other things that produce a return? Wouldn't buying other assets also boost their currency value in relation to other currencies with the added benefit of providing a return over time? As far as the rest of your post, where did I ever say that fractional reserve banking was fundamentally flawed and a bad idea. I even admitted in my prior post that I saw a use for credit and believe that it has benefited economic growth in the past. The hazard is that I see no limit to debt monetization. You can blame the current administration for expanding the debt which is a valid point, but the national debt almost doubled under the last president, and doubled under the president before him. Both parties want debt. Where I fault the Fed is that they facilitate the debt accumulation by financing it (it's technically the US treasury which finances the debt, but if the Fed is allowed an unlimited balance sheet and is free to buy US treasuries through the secondary market...it's really a distinction without a difference...Ben Bernanke claimed that QE was not debt monetization because the balance sheet would be brought back down after the crisis...that did not happen...we started very slowly down that path, but took a u-turn...so it actually is debt monetization). This is where the proponents of MMT come in -- simply have the Fed buy all the debt issued by the treasury forever. It won't work. It has never worked anywhere else on earth before. It will eventually kill the currency. I could go on about open market operations, but this post is getting long. I'll just say that there might be a hazard to having the Fed control short-term interest rates. There is no natural law or way of knowing what the best Fed Funds rate should be today. A year ago, Powell's guess was very different from his guess today. When rates are kept too low for too long, businesses adjust to them. Accumulating a lot of debt at a low interest rate might turn out to create a problem if that debt ever has to be refinanced at a higher rate. We have seen that happen before. Some believe that the Fed has been settings up that problem for the future...time will tell.
I don't really disagree with any of that except the idea that China and Russia are considering returning to a gold standard, if that's what you're actually even saying there. My point is really along the lines of the Churchill quote, "Democracy is the worst form of government, except for all those other forms that have been tried." Same with our current Fed based economic system, it's got problems but no-one has proposed a better system and a gold standard (although it sounds like you're not really advocating that) isn't it. I'm not a proponents of MMT either, by the way!
In fact, I don't think it's the most competent situation to raise the economy in such an artificial way. In any case, it will only complicate the work with the dollar, but will not affect the situation in the country in a positive way. And in general, let's see, maybe there is a hidden meaning in it as usual, which can be estimated later. But from the fact that the history knows it has never led to anything positive.
You just make things up. Current technological progress is completely independent of monetary policy and would likely happen no matter what monetary system would be in place there is just no evidence for that claim Well, globalization brought some cheap technology into our houses but globalization is also part of progress and would likely happen irrespective of monetary policy regime