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jvalmer
Joined: 06 Jun 2003
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 Posted: Tue Sep 28, 2010 10:43 pm Post subject: |
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| caniff wrote: |
| mises wrote: |
| Good god. It would be so much easier if we cut the shit and used something other than paper as money. We could compete on productivity etc and not on who has the most cheap currency. |
Most likely a stupid question: Does the global supply of gold and silver physically exist in enough of a quantity so that it can be divided up and provide a reasonable alternative to paper money?
I guess I mean, (I was drinking Sam Adams steadily tonite so bear with me) how much gold would I need to buy a snickers bar? And what would be my change if I laid down a fat gold coin? Gold dust poured into my palm?
Somebody help me out here. |
I'd like to know how this can be done too. |
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recessiontime
Joined: 21 Jun 2010
Location: Got avatar privileges nyahahaha
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| Posted: Tue Sep 28, 2010 11:16 pm Post subject: |
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| jvalmer wrote: |
| caniff wrote: |
| mises wrote: |
| Good god. It would be so much easier if we cut the shit and used something other than paper as money. We could compete on productivity etc and not on who has the most cheap currency. |
Most likely a stupid question: Does the global supply of gold and silver physically exist in enough of a quantity so that it can be divided up and provide a reasonable alternative to paper money?
I guess I mean, (I was drinking Sam Adams steadily tonite so bear with me) how much gold would I need to buy a snickers bar? And what would be my change if I laid down a fat gold coin? Gold dust poured into my palm?
Somebody help me out here. |
I'd like to know how this can be done too. |
silver coins just like before? |
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visitorq
Joined: 11 Jan 2008
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| Posted: Wed Sep 29, 2010 12:59 am Post subject: |
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| jvalmer wrote: |
| caniff wrote: |
| mises wrote: |
| Good god. It would be so much easier if we cut the shit and used something other than paper as money. We could compete on productivity etc and not on who has the most cheap currency. |
Most likely a stupid question: Does the global supply of gold and silver physically exist in enough of a quantity so that it can be divided up and provide a reasonable alternative to paper money?
I guess I mean, (I was drinking Sam Adams steadily tonite so bear with me) how much gold would I need to buy a snickers bar? And what would be my change if I laid down a fat gold coin? Gold dust poured into my palm?
Somebody help me out here. |
I'd like to know how this can be done too. |
For a snicker's bar you'd just use metallic coins of much lesser value, such as nickel or copper. But the coins would be based on market value of the metals themselves, not on fiat. The value of a copper penny to a silver or gold coin would be determined by the market values of each metal relative to each other (prices would fluctuate with supply and demand). Physical gold would only be used in large purchases (which is to say, not very often).
Anyway, the original paper money was in the form of receipts, for redeeming gold being stored by people at banks (using these paper receipts as money instead of the physical gold was easy, since it's easier to carry around). It's also easier to rely on paper money stating an exact amount, than to have to carefully measure and weight physical gold during a transaction (gold coins can be shaved etc.). Counterfeit bills are always a problem, but with the latest technology (holographs etc.) there's no reason to stop using paper money. Paper money backed 100% by gold (or any other commodity) is not fiat money.
I've also heard it might be possible to physically imprint trace amounts of gold into each paper bill; although how the exact amount would be verified without some kind of scanning device, I'm not sure. Other than that if you ever wanted to redeem a $5 bill for gold, you'd probably be out of luck (unless you actually wanted a tiny fleck or two sprinkled into your palm). |
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El Exigente
Joined: 10 Sep 2010
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| Posted: Wed Sep 29, 2010 6:52 am Post subject: |
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| recessiontime wrote: |
| jvalmer wrote: |
| caniff wrote: |
| mises wrote: |
| Good god. It would be so much easier if we cut the shit and used something other than paper as money. We could compete on productivity etc and not on who has the most cheap currency. |
Most likely a stupid question: Does the global supply of gold and silver physically exist in enough of a quantity so that it can be divided up and provide a reasonable alternative to paper money?
I guess I mean, (I was drinking Sam Adams steadily tonite so bear with me) how much gold would I need to buy a snickers bar? And what would be my change if I laid down a fat gold coin? Gold dust poured into my palm?
Somebody help me out here. |
I'd like to know how this can be done too. |
silver coins just like before? |
Really. VQ, are we that old that no one else remembers using silver dimes and quarters??? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Sep 29, 2010 6:53 am Post subject: |
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| There is enough silver and/or gold to back the currency of every nation on earth. The question is 1) at what ratio and 2) at what price. |
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visitorq
Joined: 11 Jan 2008
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| Posted: Wed Sep 29, 2010 7:26 am Post subject: |
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| El Exigente wrote: |
| recessiontime wrote: |
| jvalmer wrote: |
| caniff wrote: |
| mises wrote: |
| Good god. It would be so much easier if we cut the shit and used something other than paper as money. We could compete on productivity etc and not on who has the most cheap currency. |
Most likely a stupid question: Does the global supply of gold and silver physically exist in enough of a quantity so that it can be divided up and provide a reasonable alternative to paper money?
I guess I mean, (I was drinking Sam Adams steadily tonite so bear with me) how much gold would I need to buy a snickers bar? And what would be my change if I laid down a fat gold coin? Gold dust poured into my palm?
Somebody help me out here. |
I'd like to know how this can be done too. |
silver coins just like before? |
Really. VQ, are we that old that no one else remembers using silver dimes and quarters??? |
Not in my lifetime for sure  anyway, yeah silver would work well too (much more abundant than gold of course). Silver's currently at around $20 per ounce, so an old half dime amount (0.0362 ounce) would only be worth around $0.70. If silver shoots to the moon in the future though (as a lot of investors are predicting) then that same coin would be worth several dollars (if silver ever gets up past $100/oz, a silver quarter would be about $20, and an old silver dollar nearly $80). |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Wed Sep 29, 2010 8:19 am Post subject: |
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The value of gold is not rising, it is the value of the dollar (and the value of other non-backed currencies, fiat, or partially backed but inflated currencies) that is falling.
The day to day fluctuations in the price of gold can actually be plotted as day to day fluctuations in the value of the paper currencies.
When the currencies are convertible into gold, the rate will remain constant forever, with no fluctuation, as long as no additional currency is printed without gold backing.
Finally, no matter how much gold there is, it is enough to back the currency needed. It's just a matter of printing the right denominations of gold backed paper, and the right amount and denomination of gold backed coins. As long as every dollar printed or minted is backed exactly by the required amount of gold, and no money is printed or minted without being backed by gold, then inflation will be zero.
Prices will be determined by supply and demand. The overall price level in a free market economy gradually falls, when there is a fixed ratio, gold backed currency. Howver, this is the result of zero inflation - it is not deflation - it is a falling price level due to productivity gains, and increased supply due to increased savings and investment. Such an environment discourages borrowing and encourages savings. It's a win for all except rich bankers who benefit from socialist driven inflation.
In a free market economy with real money (gold), inflation is zero. |
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OneWayTraffic
Joined: 14 Mar 2005
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| Posted: Wed Sep 29, 2010 5:23 pm Post subject: |
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Ontheway, you're forgetting the effect of the discovery of the new world on the price of gold. There was inflation as the gold supply increased. I'm not saying that this will happen now, but there's at least the hypothetical possibility.
My concern would be more related to the real value of gold, which is less than it's agreed value. Physically Gold is only useful for fillings, electronic components and jewelery. It's agreed value is far higher than that supported by it's real world uses. There's no absolute guarantee that we'll be always willing to pay such high sums for gold, just because it's gold. I'm talking real long term here, who's to say that we'll still be obsessed with the yellow metal in 100 or 200 years? |
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jaykimf
Joined: 24 Apr 2004
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| Posted: Thu Sep 30, 2010 3:58 pm Post subject: |
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Many people seem to think that what makes a gold standard work is that there is backing in the form of gold. The most common argument along these lines is that gold has intrinsic value. Therefore, whenever it (or a representation of it) is used in a transaction, the receiver is getting something of genuine value, not a promise to pay.
In contrast -- this line of reasoning goes -- IOU money such as Federal Reserve Notes, is not in itself worth anything. Such notes can only be passed if others have faith in their worth. If everyone lost their faith in these notes, they would cease to have value in exchange.
This intrinsic value argument, however, does not generally hold. The truth is, gold mostly holds its value based on faith as well. Gold of course does have commercial value. It has always been used for jewelry, for a time in dentistry, and more recently has had industrial uses, such as for electronics. Certain of its chemical attributes (e.g., the fact that it does not oxidize) has made it attractive for such purposes. Hence, it was a convenient commodity to use as money in transactions.
However, once its use as money became widespread, the demand for gold for monetary purposes far outstripped its demand for non-monetary uses. As a result, much more of it was mined and refined than would have been the case just to satisfy the demand for it in jewelry and electronics. If there were no demand for gold as store of wealth (i.e., potential monetary use), its value would fall precipitously. Consequently, in terms of intrinsic value, gold is remarkably like paper money: its current value much exceeds its value for non-monetary purposes; it maintains this value only because people have faith that it will continue to be useful for transferring wealth; were this faith to collapse, its value would as well.
Actually, the strength of a gold standard largely derives from the feature of "redeemability". The commitment to redeem a note for gold at the option of the holder regulates the issuance of paper currency. If an issuer injects too much paper money into the economy, such that prices begin to rise relative to gold, holders will redeem it for gold, and slow down the expansion of the money supply. Similarly, too slow a growth in the money supply can reduce prices, making it worthwhile to turn gold in for money, and to mine and refine more gold because of its increased buying power.
The problem with gold (and other commodities) as a monetary standard is that there is no guarantee that gold stocks will grow at rates necessary to keep prices stable. Historically, new discoveries of gold have generated substantial inflation. At other times, failure of the stock to grow fast enough caused prices to fall. This is compounded by various innovations that may allow the economy to get by on less base money, such as the growth of crediting and debiting accounts.
While the dollar in 1929 was very close to the same purchasing power that existed in 1800, its value fluctuated much in between, rising to twice its 1800 buying power in 1850, depreciating 12% just a few years later, falling again around the turn of the century and rising to nearly 2 1/2times its 1900 value in 1920.
The biggest problem came when the public began to have doubts about the redeemability of the currency. In those periods there was a rush to convert to gold, and a shrinkage of the total money supply was the result. The effort to stay on the gold standard during the period 1931-1933 was a big reason for the severity of the great depression. Shrinkage of the money supply was only stopped after the United States abandoned its commitment to stay on a gold standard.
The 1933 abandonment of gold marked the true end of the gold standard for the United States. What followed was only a shadow of a true gold standard. Lacking public redeemability, the biggest virtue of a gold standard -- discipline -- was lost. Redeemability in official transactions did not prove to be much a restraint on monetary policy. The United States expanded its money supply at a rate that eventually made it impossible to use gold even in international transactions. By 1968, the United States had de facto stopped using gold. Actions in 1971 and 1973 made the changeover official; all links to gold were cut.
Essentially, abandonment of gold did not lead to expansionary monetary policy and inflation, rather, expansionary policy and inflation forced the abandonment of gold. Gold convertibility does provide a discipline, at a cost. But it is a discipline that only works if a country has the will to submit to it, in which case, it may very well be able to discipline itself without gold. |
http://home.hiwaay.net/~becraft/FRS-myth.htm#hd23 |
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alljokingaside
Joined: 17 Feb 2010
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| Posted: Wed Oct 13, 2010 3:19 pm Post subject: |
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hello,
this might be a ...dumb question, but
a) how would someone go about purchasing gold for market rates?
b) how would someone go about selling gold? wouldn't gov. agencies raise an eyebrow if you went into the bank carrying a wagonload of gold? you know, like they'd do for safecrackers and pirates? |
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Junior
Joined: 18 Nov 2005
Location: the eye
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| Posted: Sat Oct 23, 2010 8:16 am Post subject: |
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| Cici88 wrote: |
| Ha ha. My gold is held in a vault |
Doesn't the cost of storing it in a vault exceed any gain in value you may have gotten in the first place?
Btw if there is a global catastrophe and everyone is desperate, food and water will be more edible than various shiny metals. |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Tue Nov 09, 2010 2:14 pm Post subject: |
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Roubini: Why a Gold Standard Won't Work
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| "A fixed exchange regime, even if it is not a gold standard... That world just doesn't work. Because in that world, monetary policy by definition instead of being countercyclical becomes procyclical," Roubini told NetNet. "Suppose you have a fixed exchange rate regime...It just exacerbates the business cycle." |
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Panda
Joined: 25 Oct 2008
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| Posted: Tue Nov 09, 2010 10:45 pm Post subject: |
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| However, once its use as money became widespread, the demand for gold for monetary purposes far outstripped its demand for non-monetary uses. As a result, much more of it was mined and refined than would have been the case just to satisfy the demand for it in jewelry and electronics. If there were no demand for gold as store of wealth (i.e., potential monetary use), its value would fall precipitously. Consequently, in terms of intrinsic value, gold is remarkably like paper money: its current value much exceeds its value for non-monetary purposes; it maintains this value only because people have faith that it will continue to be useful for transferring wealth; were this faith to collapse, its value would as well. |
Words.
Also, I personally think as the dollar is falling and Chinese RMB is rising, as well as China is becoming the biggest economy in the world ( not knowing how soon but its a trend), China would definitely want to possess more gold... ( this is what the UK and the USA did when they were(are) the No.1 economy in the world) ....
Buying gold is a good investment at this moment... |
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visitorq
Joined: 11 Jan 2008
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| Posted: Wed Nov 10, 2010 3:40 am Post subject: |
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| Panda wrote: |
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| However, once its use as money became widespread, the demand for gold for monetary purposes far outstripped its demand for non-monetary uses. As a result, much more of it was mined and refined than would have been the case just to satisfy the demand for it in jewelry and electronics. If there were no demand for gold as store of wealth (i.e., potential monetary use), its value would fall precipitously. Consequently, in terms of intrinsic value, gold is remarkably like paper money: its current value much exceeds its value for non-monetary purposes; it maintains this value only because people have faith that it will continue to be useful for transferring wealth; were this faith to collapse, its value would as well. |
Words.
Also, I personally think as the dollar is falling and Chinese RMB is rising, as well as China is becoming the biggest economy in the world ( not knowing how soon but its a trend), China would definitely want to possess more gold... ( this is what the UK and the USA did when they were(are) the No.1 economy in the world) ....
Buying gold is a good investment at this moment... |
Except most of the gold is already in the vaults of Western banks, where it will most certainly stay. China holds about 1/20th the amount of gold as the Euro-zone and US combined. This is essentially why China is, and has been since it first opened up, a captive market. China produces all the cheap consumer goods (ie. clothing, foodstuff, plastic extrusion knick-knacks etc) for the West (sending gargantuan sized container ships for Wall Mart to offload) and receives a whole bunch of green paper in return. All the West needs to do to pull the rug out from under China is default on its foreign dollar debt. Naturally this would have a severely negative impact on the US economy in the short term, but a new gold backed currency could then be issued to replace the old dollar (or more likely the US dollar would be pegged to a new 'global' currency issued by the IMF/World Bank, which is controlled by the Western banking establishment). China, however, would be stuck with all its worthless US dollar paper reserves (over $2 trillion and counting, which its own fiat currency is pegged to) and the whole Chinese economy would collapse.
http://www.research.gold.org/reserve_asset/
Coupled with the fact that China's government is repressive and corrupt beyond measure (the reason China must import or steal its technology, including military, from the West, just as the Soviet Union did), there is basically no way China will ever surpass the West... |
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Panda
Joined: 25 Oct 2008
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| Posted: Wed Nov 10, 2010 4:19 am Post subject: |
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| visitorq wrote: |
Except most of the gold is already in the vaults of Western banks, where it will most certainly stay. China holds about 1/20th the amount of gold as the Euro-zone and US combined. This is essentially why China is, and has been since it first opened up, a captive market. China produces all the cheap consumer goods (ie. clothing, foodstuff, plastic extrusion knick-knacks etc) for the West (sending gargantuan sized container ships for Wall Mart to offload) and receives a whole bunch of green paper in return. All the West needs to do to pull the rug out from under China is default on its foreign dollar debt. Naturally this would have a severely negative impact on the US economy in the short term, but a new gold backed currency could then be issued to replace the old dollar (or more likely the US dollar would be pegged to a new 'global' currency issued by the IMF/World Bank, which is controlled by the Western banking establishment). China, however, would be stuck with all its worthless US dollar paper reserves (over $2 trillion and counting, which its own fiat currency is pegged to) and the whole Chinese economy would collapse.
http://www.research.gold.org/reserve_asset/
Coupled with the fact that China's government is repressive and corrupt beyond measure (the reason China must import or steal its technology, including military, from the West, just as the Soviet Union did), there is basically no way China will ever surpass the West... |
You just pointed out the saddest truth...I don't understand the green paper obsession of my government, we have so little gold(1% of our foreign exchange reserve vs. ~10% of that in Europe) ...with the american currency keeps devaluing, soon those green paper will be cheaper than toilet paper...maybe China can still buy some gold, but with the gold prize at $3000/oz?
So..hold your gold tight. |
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