So for whatever reason I was thinking about the gold standard, and I remember either Cobalt or CaptPlanet raising an issue that moving back to the gold standard in an era of cyanide mining (or whatever other modern mining methods old prospectors didn't have the advantage of) pushes people to just loot the planet for some arbitrary substance, which pretty much made the gold standard seem silly in one swoop.
So what then is the ideal way to manage a currency? Who has control over releasing more of it? Should there be a fixed amount or what should govern its growth/contraction?
My naive answer (requiring an ideal world), would be have a system in place where the currency expands exactly in proportion to the amount of growth in GDP. So let's say we're operating on the scale of the whole world, and there are 1,000,000 credits in existence. GDP increases 10% one year, so now there are 100,000 more credits. This way things magically stay constant price, but more expensive goods can be brought to market.
Hypothetically the number in existence would be governed by machine, with some magical black box that accurately calculated growth in GDP. The problem I see is how would new currency be released into the economy without privileging anyone?
How would currency work in anyone else's ideal-but-not-totally-unrealistic world / why is my ideal world naive/silly? Post edited by Puckfist at 3/23/2012 5:07:20 PM
what's up puck you reasonable minded bastard! --------------------------------------------------------------------------------------------
The right is more virtuous than the left. They have twice as many virtues because they have double the standards.
the wierdo i before e, except after...wtf? TeamWarfare Vet
The strength of gold, silver, or any other commodity is it's natural and relative tendency to be inflation resistant. If the currency is backed by a commodity, then the government can only tax and spend so much money, theoretically, all that exists, instead of creating whatever money it wants.
Post edited by Nathan Bedford Forrest at 3/24/2012 2:20:23 AM
_________________
See through the propaganda. Stop empowering and enriching the state by cheering its wars. Set aside the television talking points. Look at the world anew, without the prejudices of the past, and without favoring your own government’s version of things. Be decent. Be human. Do not be deceived by the Joe Bidens, the John McCains, the Barack Obamas and Hillary Clintons. Reject the biggest government program of them all. Peace builds. War destroys.
-Lew Rockwell
Originally posted by: Nathan Bedford Forrest The strength of gold, silver, or any other commodity is it's natural and relative tendency to be inflation resistant. If the currency is backed by a commodity, then the government can only tax and spend so much money, theoretically, all that exists, instead of creating whatever money it wants.
The price of gold has outstripped the cost of goods. A bucket of gold big enough to buy a car in 2000 will buy your 4-5 today. Which is great if you acquired gold in 2000. Stupid to acquire gold today. Because the reverse will happen. That bucket of gold won't even get you half way to that car when it implodes.
Gold's anti-inflation reputation is falsely deserved. It has one, because it has one. Because of its reputation, when there are inflation fears people speculate the price up. Then exclude the inevitable crash when looking at its anti-inflation properties.
Regardless of the crash aspect, not having it move in lock step with the price of goods doesn't jive with this inflation immune reputation. Post edited by Stryk at 3/24/2012 9:38:14 AM
Originally posted by: Puckfist So for whatever reason I was thinking about the gold standard, and I remember either Cobalt or CaptPlanet raising an issue that moving back to the gold standard in an era of cyanide mining (or whatever other modern mining methods old prospectors didn't have the advantage of) pushes people to just loot the planet for some arbitrary substance, which pretty much made the gold standard seem silly in one swoop.
I'm happy someone listens to my reasonable insanity
Check out outdoor cyanide heap leaching pad if you want to see how insane these idiots can get. Their method of destroying the cyanide when they're done is letting it sit in outdoor shallow pools where a fence and netting seems to be an optional luxury to keep animals away. They allow the UV light to destroy the cyanide instead of processing it chemically (which costs more).
There used to be a poster on here whos name I forget, but was a smart dude, that was a big proponent of the Chicago Plan. It would work similar to your idea. Under it there would be a 100% reserve ratio. New money would be released by the government by simply spending it as part of the budget.
Originally posted by: Nathan Bedford Forrest The strength of gold, silver, or any other commodity is it's natural and relative tendency to be inflation resistant. If the currency is backed by a commodity, then the government can only tax and spend so much money, theoretically, all that exists, instead of creating whatever money it wants.
The price of gold has outstripped the cost of goods. A bucket of gold big enough to buy a car in 2000 will buy your 4-5 today. Which is great if you acquired gold in 2000. Stupid to acquire gold today. Because the reverse will happen. That bucket of gold won't even get you half way to that car when it implodes.
Gold's anti-inflation reputation is falsely deserved. It has one, because it has one. Because of its reputation, when there are inflation fears people speculate the price up. Then exclude the inevitable crash when looking at its anti-inflation properties.
Regardless of the crash aspect, not having it move in lock step with the price of goods doesn't jive with this inflation immune reputation.
Not to mention there's only a limited supply of gold. Half of that goes to China and India every year. I think you've illustrated what happens when there's a scarcity or an economic concern pushing the price higher. The other side of the coin is what happens when there's a big discovery or even better the governments that hold a shit load of gold decide to dump it on the market. Your 1,600 dollars for an ounce gets pushed down.
Fix the fucking Fed and make metals an alternative currency. I don't think the dollar should be pegged. Spend no more than what we obtain through taxes and save at least 10% of that for a rainy day.
Unfortunately, we have big spenders of other peoples money in Congress these days.
Well a lot of people think they're going to protect their income and savings from inflation by going to gold. There's no reason for the required gold to buy a Blu-ray player for example, to go up and down. Or for what you earn to go down.
The only thing gold standard does is lock our currency which totally fucks us if things go to shit. If things go to shit now, our debt goes to shit with us. If things go to shit under a gold standard, our debt balloons relative to our ability to pay and we'll never get out from it. We probably couldn't even manage the payments and have to default. Post edited by Stryk at 3/25/2012 10:26:07 AM
Originally posted by: Puckfist So for whatever reason I was thinking about the gold standard, and I remember either Cobalt or CaptPlanet raising an issue that moving back to the gold standard in an era of cyanide mining (or whatever other modern mining methods old prospectors didn't have the advantage of) pushes people to just loot the planet for some arbitrary substance, which pretty much made the gold standard seem silly in one swoop.
So what then is the ideal way to manage a currency? Who has control over releasing more of it? Should there be a fixed amount or what should govern its growth/contraction?
My naive answer (requiring an ideal world), would be have a system in place where the currency expands exactly in proportion to the amount of growth in GDP. So let's say we're operating on the scale of the whole world, and there are 1,000,000 credits in existence. GDP increases 10% one year, so now there are 100,000 more credits. This way things magically stay constant price, but more expensive goods can be brought to market.
Hypothetically the number in existence would be governed by machine, with some magical black box that accurately calculated growth in GDP. The problem I see is how would new currency be released into the economy without privileging anyone?
How would currency work in anyone else's ideal-but-not-totally-unrealistic world / why is my ideal world naive/silly?
Because........bankers, who run this country, behind the strings, say it is silly and it would clearly cut into their bottom line.
The rest of us are just too fucking dumb and complacent to question what our overlords tell us........
Look at this load of propagandist drivel for further proof of that.
Among the arguments Bernanke made Tuesday: the gold standard requires us to waste resources by mining gold in Africa and shipping it here, it connects nations' currencies which exposes us to monetary policy in other countries, and it leads to deflation. Bernanke spoke on a lot of topics, but he quickly got a question at the end of the lecture from a student on, you guessed it, the gold standard, and particularly why we've returned to debating the policy. "I understand the impulse but I think that if you look at actual history you'll see that the gold standard didn't work that well and it worked particularly poorly after World War I," Bernanke answered.
Yeah, it's that third world labor rate in Africa and new gold exploration that we need to be careful of.........not hyper inflation, monetizing our debts, and printing money out of thin air.
Did you know that FDR used to set the gold price in this country based off of his favorite lucky number?
One day he raised the price by 21 cents because that was his lucky number, three times seven.
Source: A History of the Federal Reserve: 1913-1951
As if Bernanke's stupidity wasn't bad enough, this is the type of genius mindset that you are up against and the type of guru hindsight you have to contend against when arguing the validity of a fractional banking system and fiat money by a strong centralized bankings system.
People can bitch all they want about OWS.......but this kid had more truth in his speach than anything I have seen coming out of 435 House of Representatives members and 100 Senators this past year.
Originally posted by: Stryk So you're blind to the last 10 years?
Not as blind as you are to the past 100 years.......
Since the Federal Reserve was created, the U.S. dollar has lost well over 95 percent of its value to inflation.
Originally posted by: Stryk The price of gold has outstripped the cost of goods. A bucket of gold big enough to buy a car in 2000 will buy your 4-5 today.
So this is because of what exactly? Because of buyer speculation on gold? Or because the US dollar has lost 4-5 times of it's original value since 2000?
I'd argue a bit of both......but more so the depreciation of the US dollar.
My proof:
The ten year gold index.......
Up a little over 4x in a decade........
The ten year silver index..........
Up a little under 4x in a decade.........
The ten year copper index
Up over 5-6x in a decade.............
The ten year oil price index
Up over 4x in a decade...........
Notice how absolutely nothing commodity based (ie...real) is down over the past ten years? But that isn't exactly news.......that's the entire point of inflation. That is exactly what the FED has been after. That is their intended purpose with "inflation".
This is exactly what non-fiat money subscribers like me are bitching about.
It doesn't take a mathematician to point out that an average 4x increase, on virtually all commodities, implies that the US dollar has lost almost 75% of its value over the past decade. While the U.S. Bureau of Labor Statistics can say that inflation has only been around 2% this past decade, the real numbers, that we can measure, don't distort reality as much as they do.
Only one decade later 1 US dollars worth of just about any commodity costs us around 4 US dollars today........that is 15% inflation per year (as in every year, for the past ten years to be exact)........not the skewed and manipulated numbers the BLS is putting out.
Originally posted by: Stryk Which is great if you acquired gold in 2000. Stupid to acquire gold today. Because the reverse will happen. That bucket of gold won't even get you half way to that car when it implodes.
I don't disagree that these prices fluctuate on boom and bust speculation cycles. They are clearly evident and visible in any of the other indexes i posted. They have clearly went up and down, back and forth, but the general trend line (taking a linear fit) is still up in every single example.
I'd honestly be interested and intrigued to see if you can find me one commodity that this doesn't work with...........
With that said, your argument assuming that gold will somehow "bust" and get below the cost that you paid for it a decade ago is frankly asinine, because it implies that despite speculatory bubbles, the US dollar has somehow appreciated in value since then.
That's not what the data shows.......any data.......anywhere.....not even the FED could figure out a way to spin that line (because if they could they would have).
I don't disagree with you that it might be, like housing was a few year ago, in a speculation bubble of +/- 50%........but under no condition, that I can unfathomably imagine, looking at the graphs above, or anywhere eles, are you better off holding cash than you were any of these items over the long haul of 10 or more years.
That's the point of inflation, that's the point of the FED, for fucks sake........that's how the US dollar has lost 95% of it's value since the FED was created.
Did you know that from 1775 to 1913 the US dollar increased +13%........but is down -95% over the past 100 years since the FED started fractional reserve meddling?
Originally posted by: Stryk Gold's anti-inflation reputation is falsely deserved. It has one, because it has one. Because of its reputation, when there are inflation fears people speculate the price up. Then exclude the inevitable crash when looking at its anti-inflation properties.
It's anti-inflation reputation is when it is linked to a standard of currency, not when it is pegged to fiat, printed, fake, manipulated, paper money. I hope by now you can characterize the difference between those two very important points.
Originally posted by: Stryk Regardless of the crash aspect, not having it move in lock step with the price of goods doesn't jive with this inflation immune reputation.
It does when you compare and bench the price of goods to the price of gold........it doesn't when you bench it to a continually depreciating and ever more worthless US dollar.
A dollars worth of gold still buys you almost a dollars worth of crude oil one decade later..........from the graph above.
Too bad it costs you over 4x as many fiat dollars to get you either of those two items.......hence the inflation that you are talking about but clearly fail to distinguish between.
This is very similar to the Ron Paul/Bernanke discussion that took place a few weeks ago.
Originally posted by: Stryk Well a lot of people think they're going to protect their income and savings from inflation by going to gold.
It might not solve all of our problems, but it is clearly a 4-5x better hedge than holding cash, or putting your money under your mattress.
Originally posted by: Stryk There's no reason for the required gold to buy a Blu-ray player for example, to go up and down. Or for what you earn to go down.
I agree......only monetary manipulation of fiat money, called inflation, makes any of those items go up and down.
Originally posted by: Stryk The only thing gold standard does is lock our currency which totally fucks us if things go to shit.
Locks our money? How exactly?
This seems to be the biggest misconception and misnomer I have seen with the gold standard. That the US dollar must be 100% backed by gold........
For years America's gold standard was pegged to a fraction of gold (like 10-15%)......and that made for a terrific compromise. Even lower numbers would be possible today (or even other commodities).
Also, the Bretton Woods agreement illustrated that:
Following the end of World War II in 1945, Europe and the rest of the world embarked on a lengthy period of reconstruction and economic development to recover from the devastation inflicted by the war. Although gold initially served as the base reserve currency, the U.S dollar gained momentum as an international reserve currency that was linked to the price of gold.
That is leaps and bounds different than what happened under the "Nixon Shock" period where the US dollar was completely unpegged from gold.......and ever since then our dollar has fallen to shit, our deficit spending has never been higher, and our economic prosperity has moved alongside a debt and borrowing ponzi-schema that only Europe could envy/follow.
On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. As a result, "[t]he Bretton Woods system officially ended and the dollar became fully 'fiat currency,' backed by nothing but the promise of the federal government."[1] This action, referred to as the Nixon shock, created the situation in which the United States dollar became a reserve currency used by many states. At the same time, many fixed currencies (such as GBP, for example), also became free floating.
The only purpose of sound money, commodity backed money, is so that it is tied to something sound and hard to fiscally manipulate by greedy, power hungry, maniacal, central bankers.. It's a lot harder to pull gold out of dirt, or synthesize it in a laboratory, than it is to hammer on a FEDERAL RESERVE key board generating 000000000000000000000000000000's and using the printing paper presses to fabricate new money (by diminishing old money).
On a side note.......Sadly this is something that even our own idiotic Treasury can't figure out how to do anymore.
If things go to shit now, our debt goes to shit with us. If things go to shit under a gold standard, our debt balloons relative to our ability to pay and we'll never get out from it. We probably couldn't even manage the payments and have to default.
Very fair point.......that's why the central banks see deflation as being so scary. It not only cuts into their profit margins to print money, distribute money, and make interest off that money.......but it also deincentizes speculatory buying on margin/credit.
Since that is about all our country has left going for it.......like a big crony capitalism/corporatism casino crap shoot.........they sure as hell don't want to rock their boat.
So instead, we just go further into debt. Inflation continues to far outpace yearly adjusted salaries (by double digit APR). The average American sees ever escalating costs, but continually reduced spending ability. The cost of living goes up as their standard of living goes down.............Nobody will ever retire........nobody working 9-5 will ever get ahead........but, heh, Wall-Street is still gambling away full speed ahead.
Woot, woot...........Keep on a-going until the creditors stop lending, people stop buying our T-bills, our credit rating goes to shit, and our only recourse is hyper inflation Zimbabwean Weimar Republic style.
And that, ladies and gentlemen, or lentlemen........is all I have for the night and I will step off my soap box.
Anyone feel free to chime in.........not just Stryk.....because I am desperate to find sound reasons to not go to sleep angry at the FED for fucking the working masses, with a hidden and entirely unjust tax, so that they can continue to lend new diminished money to Wall-Street speculators.
If the buying power of the US dollar falls in half..........but the stock market doubles........what did you make over the course of your lifetime?
The answer: Jack fucking squat........
Once you smell some of the shit, you begin to smell all of the bullshit premises that our country currently subscribes to.
Good God, Mockery. I come back to this thread and find you've not only taken my cause, but far outweighed my knowledge of it as well as my willingness to type so much about it.
Originally posted by: Stryk
Originally posted by: Nathan Bedford Forrest The strength of gold, silver, or any other commodity is it's natural and relative tendency to be inflation resistant. If the currency is backed by a commodity, then the government can only tax and spend so much money, theoretically, all that exists, instead of creating whatever money it wants.
The price of gold has outstripped the cost of goods. A bucket of gold big enough to buy a car in 2000 will buy your 4-5 today. Which is great if you acquired gold in 2000. Stupid to acquire gold today. Because the reverse will happen. That bucket of gold won't even get you half way to that car when it implodes.
Gold's anti-inflation reputation is falsely deserved. It has one, because it has one. Because of its reputation, when there are inflation fears people speculate the price up. Then exclude the inevitable crash when looking at its anti-inflation properties.
Regardless of the crash aspect, not having it move in lock step with the price of goods doesn't jive with this inflation immune reputation.
Uh, what Mockery said.
Post edited by Nathan Bedford Forrest at 3/26/2012 10:20:59 AM
_________________
See through the propaganda. Stop empowering and enriching the state by cheering its wars. Set aside the television talking points. Look at the world anew, without the prejudices of the past, and without favoring your own government’s version of things. Be decent. Be human. Do not be deceived by the Joe Bidens, the John McCains, the Barack Obamas and Hillary Clintons. Reject the biggest government program of them all. Peace builds. War destroys.
-Lew Rockwell
Gold standard is flawed. Won't work long term _______________________________________________________________
"If guns kill people then spoons make us fat!"
I'm so fucking tired of trying to have honest discourse with people who either can't, won't, or are unwilling to elaborate their fucked up and clearly broken belief systems beyond circularly self justifying idioms.
It's not what you think you know, what you have heard, what others have told you, it is what you can logically explain through a deductive reasoning that matters in my world.
I am not exactly the smartest person, I'm not always right, I know I am wrong far more often than I am correct, but when it comes to politics, economics, and macroeconomic/geopolitical policies I can't help but feel like I participating in a movie that I have seen before.
Gold standard won't work.......it doesn't have electrolytes. Electrolytes are what economies crave.
If the dollar is backed by gold, does that mean the value of the dollar fluctuates based on the price of gold?
What happens to all the currencies that are backed by the dollar?
What happens to the dollar when geo-political risks drive the price of gold higher.
What is to stop country's with vaults full of gold from manipulating the market?
That was a nice post you made Mockery, but I think you need to re-read it. The problem is the Fed, not the dollar being backed by gold. I don't think gold allows our policy makers any room for helping the economy if needed. As you illustrate, the question is when should the Fed help the economy and how much should it help. Clearly, they have intervened way too much. Their policy decisions are broken, not because the dollar isn't backed by gold, but because they are crooks.
I'm not sure how we can have a Fed without corruption, but that is the problem.
It's probably as good an indicator as any.
