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In Gold we trust.

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  • Fri, Jul 10, 2009 - 09:45am

    #1

    LogansRun

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    In Gold we trust.

http://www.usagold.com/gildedopinion/pdf/ingoldwetrust.pdf

Excellent info on Gold and where it’s heading.  It’s 55 pages long but if you print it off and read you’ll be very happy.

Cheers!

  • Fri, Jul 10, 2009 - 04:04pm

    #2
    Peak Prosperity Admin

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    Re: In Gold we trust.

I have not read this but I just don’t get where people are coming from with gold.  I understand the notion that gold is somehow "real money,"  but money, itself, is not real.  Money is simply a representation of value (labor value).  So if people buy into the proposition that paper money is not worth anything, how can gold be worth anything more?  Just because somebody says so?  I don’t buy it.

  • Sat, Jul 11, 2009 - 02:27am

    #3
    Peak Prosperity Admin

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    Re: In Gold we trust.

Anarkst,

How would you propose that trade be settled without money?  I am not talking about global trade (though the same rules apply – I just want to keep things simple).  I’m talking about how would you be paid for whatever it is you do (or did in case you’re retired)?

  • Sat, Jul 11, 2009 - 02:54am

    #4
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    Re: In Gold we trust.

[quote=anarkst]

I have not read this but I just don’t get where people are coming from with gold.  I understand the notion that gold is somehow "real money,"  but money, itself, is not real.  Money is simply a representation of value (labor value).  So if people buy into the proposition that paper money is not worth anything, how can gold be worth anything more?  Just because somebody says so?  I don’t buy it.

[/quote]

anarkist – the argument for storing wealth in gold or even returning commerce to a ‘gold standard’ is not a mal considered idea about making an abstraction real so much as a re-centering of the power structure.  Any time you allow one single entity the full legal power to counterfeit currency you run the risk that said entity will take advantage of it.  This allows them to favor themselves and anyone who becomes a primary recipient of currency (which will trade at ‘current’ value until it has circulated enough to depreciate others like it) and creates an unpredictable environment in which to do business.

The advantage of gold is that it takes work to produce and simultaneously has a multi-thousand year history in human culture of being traded as money.  From the perspective of someone trying to navigate the current economic climate, it has a long history of retaining relative value.  From the perspective of a monetary system reformer it primarily takes the power of ‘money’ creation away from the government and reduces their ability to spend without responsibility.

It’s not a perfect solution, certainly, but a lot better than stashing paper in your mattress (though there are few enough paper representations of dollars in the world that they, too, are effectively rare.  If everyone demanded paper for the digits they have in the bank, we’d come several tens of trillions short).

Anyway, hope that helps.

Daniel

  • Sat, Jul 11, 2009 - 05:28am

    #6
    Peak Prosperity Admin

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    Re: In Gold we trust.

Patrick asks:

How would you propose that trade be settled without money?

Good question.  Considering that our entire economic system grew up around the concept of money, things would need to radically change.  But then again, we are witnessing a radical change right now because money was morphed into something even more abstract, credit.  And look what happened there.

 

  • Sat, Jul 11, 2009 - 05:31am

    #5
    Peak Prosperity Admin

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    Re: In Gold we trust.

ivoryjackal writes:

The advantage of gold is that it takes work to produce and simultaneously has a multi-thousand year history in human culture of being traded as money.

Money is simply an abstraction.  But let’s leave that alone for a moment.  Let’s say you wished to use gold or any finite material as money.  You suggest that if you can control the amount of that material, bankers/government would not be able to manipulate the supply of money and therefore de-value your storehouse of wealth.  If the material is indeed finite, and the amount of money needed by the society grows at x rate, what do you do then?  A bit of a paradox. 

Problem number two is that when you decide to allow money to represent labor value, you allow all the wonderful manipulations to occur, which essentially gut the law of supply and demand which should regulate value in the first place.  Paradox number two.

The institution of money, in and of itself, demands several other institutions to do its bidding, the most horrendous of all being banking, where the greatest deceptions take place.  These are, historically, not wonderful human beings, and are the penultimate something for nothing bottom-dwellers.

So, allowing money to represent true value (labor) can not work (very well) and has been one of the greatest con jobs of all time (right up there with, "Please, [fill in the blank], I really do love you!")

  • Sat, Jul 11, 2009 - 06:20am

    #7
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    Re: In Gold we trust.

[quote=anarkst]

You suggest that if you can control the amount of that material, bankers/government would not be able to manipulate the supply of money and therefore de-value your storehouse of wealth. 

[/quote]

I suggested government wouldn’t be able to.  I was really trying to give a bit of an overview – taking you at your word that you really didn’t know what was up about it.  I wasn’t looking to get into the thorny history of fractional reserve banking.  I have some opinions about it which aren’t terribly clear cut, but I have no illusions about the altruism of bankers either.  Any market is probably manipulatable and my general desire would be for real free market money (which seems to default to monetary metals, but allows for trade in tobacco or cattle or any other viable currency if daddy warbucks has hoarded all the gold).  This might mean that non productive people (I’m thinking government) would have to be largely volunteer as taxation would be a tough thing to do (though I’m sure they’d find a way).

[quote=anarkst]

If the material is indeed finite, and the amount of money needed by the society grows at x rate, what do you do then?  A bit of a paradox. 

[/quote]

It’s my understanding that the black death lead europe out of feudalism because it decimated the work force so much that landlords had to compete (bid up) for serfs.  Seems to me a great example of monetary revaluation that works out in favor of the little people (though we’re not speaking strictly of currency here).

I think you probably know the answers, but again, I’ll take you at face value.  If currency supply is finite and population grows, currency will tend to become more valuable per unit.  Not bad unless you’re in debt.  Vice versa (and the problem we have with federal reserve notes) if the supply increases beyond the pace of population growth, it becomes less valuable.  Post peak oil future with shrinking population means gold, per weight, becomes worth less.  I suspect, though, that in such scenario, this would be the least of my worries.

I’m way not smart enough to offer solutions to world economies.  I’m just about smart enough to offer options for local economies, any of which would probably only be possible in a much different future (but isn’t that why we’re here to start with?).  My decision to store a portion of my long term wealth in traditional monetary metals has as much to do with my desire to get out of the Gman’s game as it does with faith in the stuff’s history or future.

Perhaps rather than posing questions that you know the answer to you could let me in on what your thinking is – how do you envision an ideal economy?  locally, globally, I don’t care, just genuinely curious.

Daniel

[edited to finish a thought I’d left undone]

  • Sat, Jul 11, 2009 - 09:37am

    #8
    Peak Prosperity Admin

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    Re: In Gold we trust.

Anark,

I understand your argument and agree that the monetary system is at the heart of most (if not 99%) of humanities evil.  Personally, I think not having a monetary system would be wonderful.

This is the Utopia of the future.

http://thevenusproject.com/a-new-social-design/essay

But we’re not there yet.  And in the mean time, I have to protect my family as best I can.  This means that I have to protect them from the evil that is the Fed/US Dollar/Current Monetary System.  Gold does that.

  • Sat, Jul 11, 2009 - 02:44pm

    #9
    Peak Prosperity Admin

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    Re: In Gold we trust.

Thanks for the info LR, I briefly scanned it, but I’ll make sure to read it when time allows.

I still think gold will not embark on a significant bull run from its current prices, as there are too many people who bought it as a inflation hedge and therefore will abandon their positions in it during the next phase of de-leveraging. Besides, bull markets of this magnitude, never begin in a positive sentiment environment, they always begin in a negative sentiment environment. A plunge to $600/oz gold should flush out the overly-bullish traders and provide a good buying opportunity.

Thanks for the info, you always seem to find unique and valuable perspectives on gold.

  • Sat, Jul 11, 2009 - 03:13pm

    #10
    Peak Prosperity Admin

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    Re: In Gold we trust.

Anark,

[quote]Money is simply an abstraction.  But let’s leave that alone for a moment.  Let’s say you wished to use gold or any finite material as money. [/quote]

Not necessarily… it’s a necessary intermediary that is easily divisible, manageable and uncommon enough to make it "valuable".
Money represents the most logical and appropriate form of exchange available to use at present.
"Radical change" alarms me, because with scarcity of resources, I’d hate to see something like water used as currency.
I have zero faith in utopianism, or general "progreessive" concepts (no offense LogansRun) like the Venus Project. If humans are going to progress, it’ll be through expanse of habitat and spacefaring.
Our own nature precludes any sort of meaningful social changes to truly "modify" our instinctual behavior. If kept on Earth, we’ll continue to replay these same pathetic cycles until the sun burns out. If allowed to conquer space, we’ll play them on different fields, over different resources and they might ultimately become too costly to pursue.

Even if you were to develope a perfect, unitarian and civil society, it’d just be low hanging fruit for sweaty, violent men with AK-47’s.

Precious metals serve in this role as currency, and should provide a fairly safe "net" of "wealth" should our fiat money system fail.

Cheers,

Aaron

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