If we went on a gold standard again
- Thread starter Ricter
- Start date
Why do you think there is enough gold to even go on a gold standard?
Quote from OPTIONAL777:
Why do you think there is enough gold to even go on a gold standard?
Well, it would be largely just a symbol of value, so a flake alone could be worth a basket of groceries, or a tank of gas, that kind of thing, no? Just like the old days, picking little grains of gold dust out of a jar with tweezers!
Well, there are a lot of fallacies about gold. Rather than retype an answer to some questions I got from another forum, I'll just paste what I wrote here. Some of this may seem a little out of context, (again I was answering questions on another fourm):
Unfortunately, the maker of that film is mistaken in some very critical areas. He believes that some type of expansion of the money supply is needed for increased trade, while in fact the exisiting supply will always fill the need in that each unit of real money will be worth more over time. You may use more of it or less of it, to trade all the goods in a society - but the quanities of it are irrelevant. In addition, he is mistaken as to how real money (versus fiat money) comes about naturally. - - As a quick illustration - - in barter you need to find someone who wants what you have to trade. If youre a Brussel Sprouts farmer and want shoes, you have to find a shoemaker who wants a bunch of brussel sprouts. That could be tough. - - So instead you trade your brussel sprouts for another good that a lot of people need - - say butter. Youre not going to use all the butter, just use it as 'a medium of exchange' to trade with others. You trade the butter to the shoemaker, and he uses it to trade for things he wants. - - Over time, the two commodities most desired to fill this function are gold and silver. So people acquired ounces of these precious metals, just like they would acquire ounces of butter - - - to use for trade. That is the true source of Real money. It has real value (in the case of gold & silver, they can be used to make jewelry that people desire). Money is not pieces of paper, or 'credits' or anything else made out of thin air. - -Only this kind of real commodity money escapes being manipulated and causing a crash over the long term. (In addition, the film makers points that gold coins can be shaved or diluted with other metals,but this isn't a reason not to use it. In the past, those offering coins of high quality and purity (with those milled edges you see on coins today to prevent shaving) were in high demand. Like with any commondity product, - people will seek those of quality. And, given the US dollar fiat currency has been devalued 95% from the time of the creation of the Fed in 1913, the film makers argument against gold & silver on this point is uninformed. - -
The film maker is also mistaken as to the function of interest. Interest is the cost of giving up the use of resources now (which people generally prefer) - - in exchange for getting a little bit more in the future. And its not true that 'because of interest' the bankers would always end up with all the money. In fact, if I loan someone my real commodity money (gold for example) and that person uses it to buy equipment that he can use to produce more on farm or in factory - than the amount of goods available to everyone increases. The interest for borrowing my gold and compensating me for not using it now, will be paid with the person I loaned it to also benefiting, as will all the people that will enjoy the greater amount of goods produced from the investment. - - In a Real money (gold & silver) economy ,real money is loaned out - - - not the fraud money created out of thin air of the current fiat system. This real money from out of real savings, is used to expand the amount of goods available to everyone. Under this system in the 1800s, the U.S. experienced a time of wonderful prosperity.
If you or anyone else would like to learn more about money here's an excellent reference by IMO, one of the greatest and most readable economists in history, Murray Rothbard:
http://mises.org/money.asp
If you look further on the Mises Institute website there are also videos and audios available for free. Regards, - -
Unfortunately, the maker of that film is mistaken in some very critical areas. He believes that some type of expansion of the money supply is needed for increased trade, while in fact the exisiting supply will always fill the need in that each unit of real money will be worth more over time. You may use more of it or less of it, to trade all the goods in a society - but the quanities of it are irrelevant. In addition, he is mistaken as to how real money (versus fiat money) comes about naturally. - - As a quick illustration - - in barter you need to find someone who wants what you have to trade. If youre a Brussel Sprouts farmer and want shoes, you have to find a shoemaker who wants a bunch of brussel sprouts. That could be tough. - - So instead you trade your brussel sprouts for another good that a lot of people need - - say butter. Youre not going to use all the butter, just use it as 'a medium of exchange' to trade with others. You trade the butter to the shoemaker, and he uses it to trade for things he wants. - - Over time, the two commodities most desired to fill this function are gold and silver. So people acquired ounces of these precious metals, just like they would acquire ounces of butter - - - to use for trade. That is the true source of Real money. It has real value (in the case of gold & silver, they can be used to make jewelry that people desire). Money is not pieces of paper, or 'credits' or anything else made out of thin air. - -Only this kind of real commodity money escapes being manipulated and causing a crash over the long term. (In addition, the film makers points that gold coins can be shaved or diluted with other metals,but this isn't a reason not to use it. In the past, those offering coins of high quality and purity (with those milled edges you see on coins today to prevent shaving) were in high demand. Like with any commondity product, - people will seek those of quality. And, given the US dollar fiat currency has been devalued 95% from the time of the creation of the Fed in 1913, the film makers argument against gold & silver on this point is uninformed. - -
The film maker is also mistaken as to the function of interest. Interest is the cost of giving up the use of resources now (which people generally prefer) - - in exchange for getting a little bit more in the future. And its not true that 'because of interest' the bankers would always end up with all the money. In fact, if I loan someone my real commodity money (gold for example) and that person uses it to buy equipment that he can use to produce more on farm or in factory - than the amount of goods available to everyone increases. The interest for borrowing my gold and compensating me for not using it now, will be paid with the person I loaned it to also benefiting, as will all the people that will enjoy the greater amount of goods produced from the investment. - - In a Real money (gold & silver) economy ,real money is loaned out - - - not the fraud money created out of thin air of the current fiat system. This real money from out of real savings, is used to expand the amount of goods available to everyone. Under this system in the 1800s, the U.S. experienced a time of wonderful prosperity.
If you or anyone else would like to learn more about money here's an excellent reference by IMO, one of the greatest and most readable economists in history, Murray Rothbard:
http://mises.org/money.asp
If you look further on the Mises Institute website there are also videos and audios available for free. Regards, - -
To add just a little bit more - - it has also been suggested that people could use 100% gold debit cards to make purchases and this would provide the capacity to use any weight measure of gold that was convenient. Of course they could withdraw the full sum of their card in gold at any time. - - The argument against gold 'because there's not enough' or 'you'd have to carry it around' has been refuted for many, many years. (In addition, remember that silver fills the role of being convenient as a medium of exchange in smaller transactions.)
To those truly interested, check out the link. If youve made up your mind and only come to the forum to attack those who have another view - - - oh well
To those truly interested, check out the link. If youve made up your mind and only come to the forum to attack those who have another view - - - oh well
This would not help if someone counterfeited the coins and placed a bit of tungsten in it. Archimedes Principle wouldn't help as well as gold has a similar density to tungsten
Here is an excerpt from an article:
''There are now reports of fake 400 oz gold bars in Oct. of this year. The report from Hong Kong said that the bars were gutted and had tungsten inside instead. The finger was first pointed at the Chinese for making the fake bars. The Chinese have pointed the finger at the Clinton Administration for the problem. Saying that they gold plated tungsten blanks and sold them on the open market. Many of these fake bars might possible be in the GLD ETF holdings! Nice way to hide them!!''
http://caps.fool.com/Blogs/ViewPost.aspx?bpid=294048&t=01008235959352716176
Tresor - - Thats just not very practical. Tungsten is extremely hard to machine,and is a very expensive metal. There are electrical conductivity differences, and of course it can be detected chemically. The main concern was more with large gold bars than with coins because of the machining difficulties with the latter. There are ways to detect the differences however. - - Its a fascinating subject worth looking further into if youre interested.
The question is often put "Could some guy in China substitute tungsten for gold in a coin or a bar ?"
Its kind of amusing though. The dollar has been devalued to around 5 cents compared to its value when the Fed was established in 1913. If that aint fraud, what is ? Regards, - -
The question is often put "Could some guy in China substitute tungsten for gold in a coin or a bar ?"
Its kind of amusing though. The dollar has been devalued to around 5 cents compared to its value when the Fed was established in 1913. If that aint fraud, what is ? Regards, - -
Yes, I agree ! If I were lost in the woods, the sun was quickly going down, and it looked like I was facing hypothermia if I didn't get a fire started a.s.a.p. - - - I'd rather have paper money for tinder than gold !
That's one instance where that paper would actually have some real value. (Ive actually been in that situation for real, BTW. - I knew where I was though. - - Petroleum jelly soaked cotton balls work even better as tinder than Federal Reserve Notes.)
A fiat currency system in conjunction with a properly run central bank is simply the most practical and viable monetary system.
Of course, the libertarian ideologues on this forum don't agree. They'd sell their mother for an American Gold Eagle. I'll gladly take my presumably worthless paper money and purchase something that I really need.
Of course, the libertarian ideologues on this forum don't agree. They'd sell their mother for an American Gold Eagle. I'll gladly take my presumably worthless paper money and purchase something that I really need.