What happened to all of the doom and gloom economic threads?

[unregistered]

 

[4est_4est_Gump]

Anytime you have the power to create your own money there is a risk others will laugh at it. This is why we need an independent Fed (sorry Ron, I want someone other than Congress controlling our money supply). But gold doesn't solve that problem, unless you own all of it. Russia, China, South Africa... all have huge reserves. THEY could devalue a gold-based economy just like the Fed printing more paper money could.

How did that work for Spain when the discovered the silver mines of South America?

If that is true, then why is one of the main counter arguments that we don;t have enough gold in the world to supply our needs?



I read somewhere that 1/7th of the world's gold is owned by married Indian women...

 

[4est_4est_Gump]

Especially when economic reality isn't good enough, and you think you can amend economic law with wishful thinking.

Then beggars will ride!



(And kings will beg!)

 

[unregistered]

 

[JohnnySavage]

Not if the ratio of gold to currency was controlled by statute, and the notes were redeemable in gold.

Russia, China and South Africa don't care so much about our statutes.

 

[JohnnySavage]

How did that work for Spain when the discovered the silver mines of South America?

If that is true, then why is one of the main counter arguments that we don;t have enough gold in the world to supply our needs?



I read somewhere that 1/7th of the world's gold is owned by married Indian women...

All money is nothing but a place-marker to make trade more convenient. You trade dollars, Euros, gold, silver, glass beads, sea shells, etc for something else. It doesn't matter what that place marker is, it only matters that people have confidence in what they can trade it for.

 

[4est_4est_Gump]

All money is nothing but a place-marker to make trade more convenient. You trade dollars, Euros, gold, silver, glass beads, sea shells, etc for something else. It doesn't matter what that place marker is, it only matters that people have confidence in what they can trade it for.

We all understand that.

But, as we see in the commodities market, it is much easier for people to have faith in something than it is for them to have faith in nothing.

That's one of the lessons of the Wizard of Oz.

Seeing what's behind curtain #1...

 

[unregistered]

 

[4est_4est_Gump]

Russia, China and South Africa don't care so much about our statutes.

But they are not total economic idiots...

Now, our Democrat Party is proving to be that.



Ancillary: South Africa did not liberate the mines and flood the markets with diamonds.

 

[JohnnySavage]

Russia and China are not printing our dollars. The object is to impose discipline on the Fed. The point is a gold standard where the ratio of gold to dollars is required by law and those dollars are redeemable for whatever the statute requires, leaves the power in the hands of the market, not in the hands of government. If the government tried to inflate, the market (the citizen) could redeem his dollars for gold, thus reducing the ratio of gold, thus preventing the government from further inflation by imposing the discipline of the law onto the government.

One of us has a gross conceptual error here, and I'm fully willing to admit that it may be me.

But... you are saying we need a standard where there is a certain ratio of gold to dollars. Assume we have a ton of gold, and tie that to X number of dollars. Ok?

Now Russia comes along and dumps another ton of gold on the world market. Wouldn't the dollar's value be cut in half?

 

[unregistered]

 

[4est_4est_Gump]

Russia and China are not printing our dollars. The object is to impose discipline on the Fed. The point is a gold standard where the ratio of gold to dollars is required by law and those dollars are redeemable for whatever the statute requires, leaves the power in the hands of the market, not in the hands of government. If the government tried to inflate, the market (the citizen) could redeem his dollars for gold, thus reducing the ratio of gold, thus preventing the government from further inflation by imposing the discipline of the law onto the government.

The market inflated and those closest to the inflation (Wall Street) did pretty well.

Now those of us who can take part in the the inflation (401Ks and such) can get some benefit, but the working stiff on the edge is losing spending power and getting "edgy" about it...

You need monetary stability, not the quick fixes we see being employed by the "independent" Fed, who from time to time gets called to Washington DC to be worked over by two branches of the government with the power to change the rules on a political whim.

 

[JohnnySavage]

But they are not total economic idiots...

Now, our Democrat Party is proving to be that.



Ancillary: South Africa did not liberate the mines and flood the markets with diamonds.

We need to go on the diamond standard! They are a girl's best friend.

 

[4est_4est_Gump]

One of us has a gross conceptual error here, and I'm fully willing to admit that it may be me.

But... you are saying we need a standard where there is a certain ratio of gold to dollars. Assume we have a ton of gold, and tie that to X number of dollars. Ok?

Now Russia comes along and dumps another ton of gold on the world market. Wouldn't the dollar's value be cut in half?

The beauty of gold is that it goes into other uses, therefore manufacturing and jewelry prices would undergo a price deflation benefitting the consumer.

 

[4est_4est_Gump]

We need to go on the diamond standard! They are a girl's best friend.

Well, then a mixed commodity basket because as we know, she needs gold too...

"No huggin'
"No kissin'
"Till I get a weddin' ring!"




"Don't hand me no lines and keep your hands to yourself!"

 

[JohnnySavage]

The beauty of gold is that it goes into other uses, therefore manufacturing and jewelry prices would undergo a price deflation benefitting the consumer.

The rappers will be thrilled.

 

[JohnnySavage]

Well, then a mixed commodity basket because as we know, she needs gold too...

"No huggin'
"No kissin'
"Till I get a weddin' ring!"




"Don't hand me no lines and keep your hands to yourself!"

So why not just use something simpler... like a dollar!!!! Brilliant!

Don't need a shovel to dig it up.

 

[Soiled_Raven]

Now Russia comes along and dumps another ton of gold on the world market. Wouldn't the dollar's value be cut in half?

Until the Russian gold comes into Reserve through taxation, the U.S. Reserve cannot issue additional scrip against it.

The market price of goods would naturally go up, hurting those who have no gold for a time, but as taxation took more gold into the U.S. reserve, the prices would stabilize and more scrip could be issued against the new reserves.

 

[JohnnySavage]

Until the Russian gold comes into Reserve through taxation, the U.S. Reserve cannot issue additional script against it.

The market price of goods would naturally go up, hurting those who have no gold for a time, but as taxation took more gold into the U.S. reserve, the prices would stabilize and more script could be issued against the new reserves.

I have no idea what you are talking about.

 

[unregistered]

 

[4est_4est_Gump]

So why not just use something simpler... like a dollar!!!! Brilliant!

Don't need a shovel to dig it up.

Because people lose confidence in it and go to RMB...

Chinese are the world's leaders in paper expertise; have been for centuries...



Then, you depend on them. Like the way Germany and France fucked Greece with the Euro...

Greece is getting them back.

Not good.

 

[4est_4est_Gump]

The rappers will be thrilled.

They'd be all smiles!

 

[Soiled_Raven]

I have no idea what you are talking about.

An outside entity cannot easily devalue a gold based system as long as gold is a permitted currency, all they can do purchase goods for gold.

The only way they can debase the currency is to mix their gold with other metals,or attempt to issue false scrip.

Adding more gold to the system, only increases the wealth in the system, which is why gold mining did not ruin the economy of the world and why the conquest of Mexico by Spain, enriched Spain until they squandered the gold on other ventures.

 

[JohnnySavage]

Yes

All I'm saying is to go back to the system that served us well for over a hundred years, from the founding of the country to 1913. Establish the definition of what a dollar is in terms of gold, and write a statute that carves the ratio into rock, make the dollar redeemable in gold, thus putting a stop to the official inflation of our money.

You can read Rothbard's analysis here for free:

The Case for a 100 Percent Gold Dollar

http://mises.org/daily/1829

There is no commodity that has enough value to cover the size of the US economy, not to mention allowing the US market to be the dominate one in the world - which is exactly the same situation as with the dollar. The US economy is much larger then the actual amount of physical currency in existence.

In a global economy, money is represented by 1s and 0s in computer networks. That's the way it is. We can never go back to 1850 because the world is too big, and too small at the same time.

Money is nothing but a concept and only needs confidence to back it. Gold, or any other physical representation of money would have no benefit and would only slow down the system. Money, has gone from a very simple concept when the Jews started using it, to a very complex concept in our modern global economy. I think the Fed has done a good job balancing a whole bunch of competing interests.

 

[JohnnySavage]

An outside entity cannot easily devalue a gold based system as long as gold is a permitted currency, all they can do purchase goods for gold.

The only way they can debase the currency is to mix their gold with other metals,or attempt to issue false scrip.

Adding more gold to the system, only increases the wealth in the system, which is why gold mining did not ruin the economy of the world and why the conquest of Mexico by Spain, enriched Spain until they squandered the gold on other ventures.

You are talking about a closed economy. We live in a global economy where everyone competes for goods and services in a multitude of currencies. If the United States is paying Saudi Arabia an ounce of gold for 10 barrels of oil, and Russia floods the market with gold - the gold we are paying Saudi Arabia is less valuable and they would demand more of it.