U.S. Mint suspends sales of almost all gold and silver coins

Martinghoul · Jul 15, 2009

Quote from endsongs:

Gold was used for thousands upon thousands of years as money or to back money. It has only been the last 30 years or so that gold hasn't been used to back "money" in any form. How would you say the only 30 years of gold-free fiat "money" have gone?

I'd say pretty well, all things considered, wouldn't you?

I'd give some data to support my claim (there's been research on world GDP dating back hundreds of years; things of that nature), but I think the nihilists here will deny that any of it is meaningful.

Landis82 · Jul 15, 2009

Quote from Anaconda:

Or are you arguing serious deflation. Have you checked money supply figures? Or did you completely miss the memos about central banks printing stimulus moneys at an alarming rate.

Criticizing precious metals for being finite is borderline idiocy. That's like stating "I want my money supply to be infinite". One would feel right at home in Zimbabwe with that mentality.

Ummm... have you checked the Fed's balance sheet lately?

http://www.federalreserve.gov/releases/h41/Current/

kxvid · Jul 15, 2009

Quote from Ivanovich:

So a population growing by leaps and bounds will be forced to rely on a monetary source that is finite?

That'll work out well.

Well has the current system worked out well? Just look at the increases in national debt since the US left the gold standard. Look at all the booms and busts created by lending cheap fiat money. Look at the wars made possible through fiat money debt instruments (T Bills) without raising taxes on the populace.

Ivanovich · Jul 15, 2009

Quote from Martinghoul:

Pls calm down

You've stated the first rule of lesson in never engaging a gold bug in any discussion about precious metals. Let him rant.

zdreg · Jul 15, 2009

Quote from Anaconda:

Ok this is pointless if you honestly believe that. A precious metal money standard has never existed, it's just theory.

Unbelievable.

it is like people saying that true communism never existed in russia as an excuse for what took place under communism the murders and tortures of millions of people.

peilthetraveler · Jul 15, 2009

Quote from kxvid:

Well has the current system worked out well? Just look at the increases in national debt since the US left the gold standard. Look at all the booms and busts created by lending cheap fiat money. Look at the wars made possible through fiat money debt instruments (T Bills) without raising taxes on the populace.

Worked out great. Before we left the gold standard a man could earn enough money to support his wife and kids. Today, a man & a wife both working can barely pay their mortgage even without kids. I shudder to think what would happen in another 30 years or so.

endsongs · Jul 15, 2009

Quote from PragmaticIdeals:

Unforunately, neither of the arguments in this thread are convincing.

Allowing privatized banks and central banks to manipulate the money supply at whim and create asset, price and credit bubbles (and then get bailed out after doing so) is clearly non-optimal.

Likewise, a gold standard is unfeasible for plenty of reasons:

1) Inefficient to allocate resources toward digging a rock out of the ground, which would then dilute the rocks of everyone else... Imagine if scientists could create gold in a lab.

2) Secular demand factors can drive the price of gold (i.e., how badly your wife wants that new necklace)

3) It is true that, over certain time horizons, market and structural inefficiencies can cause excess inflation or unemployment and these social welfare issues can be effectively mitigated through money supply manipulation.

---

All that being said, I think the best solution would consist of:

a) A fiat monetary system,
b) Disallowing banks to create credit out of thin air and fuel inflation/asset bubbles due to the natural conflict of interest between society's wellbeing and private profit maximization.
c) Allowing a government-supervised institution to manipulate the money supply within a narrow band (i.e., no more than +/- 2-3%)

PragmaticIdeals, your theory would work except for a little 5 letter word - greed. The more money the financial firms make, the more money invested in them. Also, bonuses are tied to company profits, so these companies are going to play with fire until the bubbles the gov't let them create burst. Then, the gov't will give them bailouts they use for bonuses and cash hoarding. Once the economy picks up, they use the saved cash to initiate more bubbles that uninformed investors will bandwagon into. See how GS stock jumped 10% at the faintest sign of the economic recovery?

Martinghoul · Jul 16, 2009

Quote from kxvid:

Well has the current system worked out well? Just look at the increases in national debt since the US left the gold standard. Look at all the booms and busts created by lending cheap fiat money. Look at the wars made possible through fiat money debt instruments (T Bills) without raising taxes on the populace.

Sorry, are you saying that all these nasty things (increases in national debt, booms and bust, wars, etc) cannot or are less likely to happen under the gold standard?

I would humbly beg to differ. You really wouldn't have to go far to find a plethora of counterexamples.

achilles28 · Jul 16, 2009

Quote from Ivanovich:

So a population growing by leaps and bounds will be forced to rely on a monetary source that is finite?

That'll work out well.

Legalize competing currencies.

Let market forces decide which vehicle is best for store of wealth.

What could possibly be wrong with that?

Anaconda · Jul 16, 2009

Quote from Landis82:

Ummm... have you checked the Fed's balance sheet lately?

http://www.federalreserve.gov/releases/h41/Current/

http://www.nowandfutures.com/key_stats.html

Just one of many sites which you can find that will re-constitute M3. Shadow Stats probably does the best job.

But then, most of this is common sense with the trillion dollar bailouts.