Robber Barons? Or Real Money - Gold

I read this article that talks about the golden age of Robber Barons: American industrial age from 1861 to 1901.

http://finance.yahoo.com/taxes/article/108963/bring-back-the-robber-barons

The article suggests that the market entrepreneurs find ways to create jobs that others, particularly politicians do not see.

1861 to 1901 was remarkable for something else. We had a sound money system that was based on gold. Entire world used gold, a relatively honest monetary system. If we look at the 19th century stock market charts, we see that the fluctuations measured in real money are less. The market seems to be more stable.

FED was created in 1913. After the FED was created, we had violent fluctuations in the markets. Great Depression era, 1929 to 1940s was huge fluctuation, down and up. Similarly 1970s, when measured in real money was a huge decline in stock prices, as bad as Great Depression. And since 1999, Gold-DOW has lost more than 80% and is becoming as bad as Great Depression. Here is Gold-DOW chart:

http://www.tradingstocks.net/html/gold_dow_vs_nominal_dow.html

During 1861 to 1901 period, we had beneficial price deflation because as productivity increased, price of goods and services have fallen where as life style has improved. This is the opposite of what we are having now. FED targets 2% inflation. Prices rise faster than wages and the life style of Americans are going down.

I think one can argue that a sound money system that better respects people's hard earned money encourages honest work, encourages entrepreneurship. On the contrary, an economy based on trading paper, making gambling bets and winning at others expense is doomed to fail, as mentioned here:

http://kondratieffwinter.blogspot.com/2010/02/death-of-capitalism.html

Thus, my point is that the society and the social mood at aggregate is responsible for picking one way or the other. By tolerating the FED, by allowing the banks to create money out of thin air:

http://www.tradingstocks.net/html/banks_create_money.html

and by trading paper instead of producing real value, by borrowing and investing on granite counter tops we enslave ourselves to the Barons of Wall Street. The real entrepreneur spirit will not flourish under these conditions.

It is not the Robber Barons who make things better. It is the social mood itself who creates the right conditions so that these Barons can come forward and succeed. Here is how the social mood drives the markets, the economy, politics and the culture:

http://www.tradingstocks.net/html/socionomics.html

According to socionomic theory, the cycles of social mood define the booms and busts in the economy. The market declines first as the social mood turns sour. This is why earnings are good at the market top and bad at the bottom.

Similarly, in the midst of bad news and earnings, as the social mood improves, the market starts to rally. Just like we did back in March 2009.

These fluctuations in social mood define whether Robber Barons will be back or not. Not the other way around. If the market starts selling of now, expect more job losses, more housing crash, terrible earnings. When things look the darkest, it will be the bottom, and we will start climbing out of the depression. Then we may have the Robber Barons appear again. But we have not seen that dark bottom yet:

http://www.tradingstocks.net/html/near_bottom.html

Ultimately, as part of the change, we need to overhaul our monetary system to use sound money that keeps it's value and respects the people's effort to earn it. We need to shrink the financial sector that lives off of commissions from the real economy. We cannot have 30% of the population shuffle money around and rely on the production of others to create value. Real economy cannot carry the interest burden that is being charged to sustain the life style of fat cat bankers. We need gold, we need deflation. We don't need the FED, we don't need the bankers. They are a burden on us to carry. Usury was forbidden for good reason.