The Gold Standard

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  • Fri, Aug 31, 2012 - 03:15pm

    #11

    ralfy

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    Government? Most of total

Government? Most of total money supply isn’t created by government or central banks but by commercial banks, and much of it consists of numbers in accounts.

The rest of your post is utter nonsense, especially equating 1 oz to trillions of dollars. Yeah, let’s hope that no one wants to have a dollar exchanged for gold! *-)

Fiat money systems creating inflation at will? More nonsense! Only around 3 pct of total money supply in the U.S. consists of FRNs, bills, and coins.

Giving the government the power to take over? You’ve got to be kidding me. Don’t you know? Washington works for Wall Street. Why do you think we got into trouble in the first place? Government intervention? He he, yeah, right!

 

  • Sun, Sep 02, 2012 - 08:16am

    #12

    gyrogearloose

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    Missed some points…

 

You suggested there is not enough gold, at  say 1 oz per person.

I queried that if you want to use dolars instead of gold, how many dolars per person is needed.

So again how many dolars per person is the “right” amount per person $1,    $10,000 or $ 10000000000000

.

Opps  suddenely have to go… will be a while before I get another time slot for this

Cheers Hamish

 

  • Tue, Sep 11, 2012 - 03:54pm

    #13

    ralfy

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    gyrogearloose wrote:You

gyrogearloose wrote:

You suggested there is not enough gold, at  say 1 oz per person.

I queried that if you want to use dolars instead of gold, how many dolars per person is needed.

So again how many dolars per person is the “right” amount per person $1,    $10,000 or $ 10000000000000

Opps  suddenely have to go… will be a while before I get another time slot for this

Cheers Hamish

The catch with a gold standard is that it works both ways, i.e., you can have your currency redeemed. From what I remember, that was taking place before 1971, which is probably one reason why the U.S. moved away from it. Like you, the U.S. was probably assuming that the dollar was solid and that no one would want to have their dollars redeemed.

That’s right: how many dollars do you think a person needs? And that’s for a lifetime, right? That will be price of one ounce of gold?

And what happens when population or consumption goes up, such that more dollars will be needed?

 

  • Tue, Sep 18, 2012 - 06:04am

    #14

    gyrogearloose

    Status Gold Member (Offline)

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    Deflation is good

 

 

ralfy wrote:

Like you, the U.S. was probably assuming that the dollar was solid and that no one would want to have their dollars redeemed.

 

Actually I assume the opposite, that dollars are not solid, and want to hold as few dollar demoniated assests as practically possible. This is in line with Chris Martensons thinking…..

 

ralfy wrote:

That’s right: how many dollars do you think a person needs? And that’s for a lifetime, right? That will be price of one ounce of gold?

(snip some lines)

And what happens when population or consumption goes up, such that more dollars will be needed?

No. I always assumed the discussion was about the total money supply, expressed in units per person.

People keep on saying the price of gold…. Try and think of it this way, how many USD will an oz of gold buy. In 1920 the answer was 20 USD

Today the answer is 1720 USD.

And here in lies a hint of the answer  your last line I quoted of you. As the economy grows, things priced in dollard will fall.

“people will argue that there is not enough gold. They are wrong: it is a matter of price because gold is infinitely divisible. They will argue not being able to expand the quantity of gold faster than current rates of extraction is deflationary. It is true that in the long run prices expressed in gold will fall; but it is an error to assume that falling prices are a deterrent to consumption, as anyone in the consumer electronics industry will tell you. The origin of this mistake comes I believe from a reductio ad absurdum of the economic effects of a sharp reduction in the money quantity.”

Central banks, Governments and economists fear deflation.

I like deflation. Reason is I am a saver by nature, do not buy unless I have savings. In a deflationary environment, my savings are able to buy more of any given item. People who borrow to live beyond their means are crushed by deflation, and are often forced to sell assets to repay debt at ‘fire sale’ prices.

In times like these cash is king.

Cheers Hamish

 

 

 

  • Thu, Sep 20, 2012 - 02:11am

    #15

    ralfy

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    gyrogearloose wrote:Actually

gyrogearloose wrote:

Actually I assume the opposite, that dollars are not solid, and want to hold as few dollar demoniated assests as practically possible. This is in line with Chris Martensons thinking…..

That is why a gold standard will not work.

Quote:

No. I always assumed the discussion was about the total money supply, expressed in units per person.

It has always been so, and my argument about population and increasing demand stands. Those are two more reasons why a gold standard won’t work.

Quote:

People keep on saying the price of gold…. Try and think of it this way, how many USD will an oz of gold buy. In 1920 the answer was 20 USD

Today the answer is 1720 USD.

It will not be enough to maintain the global ecoomy. That is why a gold standard won’t work.

Quote:

And here in lies a hint of the answer  your last line I quoted of you. As the economy grows, things priced in dollard will fall.

It’s the other way round due to increasing population and resource demand.

Quote:

“people will argue that there is not enough gold. They are wrong: it is a matter of price because gold is infinitely divisible. They will argue not being able to expand the quantity of gold faster than current rates of extraction is deflationary. It is true that in the long run prices expressed in gold will fall; but it is an error to assume that falling prices are a deterrent to consumption, as anyone in the consumer electronics industry will tell you. The origin of this mistake comes I believe from a reductio ad absurdum of the economic effects of a sharp reduction in the money quantity.”

Gold is not infinitely divisible for painfully obvious reasons. Try redeeming a dollar when an ounce of gold reaches tens of thousands of dollars.

Quote:

Central banks, Governments and economists fear deflation.

Most of total money supply isn’t created by central banks.

Quote:

I like deflation. Reason is I am a saver by nature, do not buy unless I have savings. In a deflationary environment, my savings are able to buy more of any given item. People who borrow to live beyond their means are crushed by deflation, and are often forced to sell assets to repay debt at ‘fire sale’ prices.

Until you run out of savings. In which case, you rely on your income to replenish depleting savings, but income level goes down during deflation. The returns on your savings also goes down. At some point, unemployment may also take place. Meanwhile, production goes down, and for some industries, it will be very difficult to bring that back online quickly.

Thus, it’s not only “people who borrow to live beyond their means” that are “crushed by deflation.” The economy itself is affected by such.

Quote:

In times like these cash is king.

Cheers Hamish

Cash is always king in such times, but that’s not the point. What you want is the eventually return to long-term production with slight inflation. That’s the only way for your savings to grow, but that requires avoidance of peak oil. That, of course, won’t happen.

That’s why a gold standard won’t work.

 

 

  • Sat, Sep 22, 2012 - 02:13am

    #16

    gyrogearloose

    Status Gold Member (Offline)

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    an oops in thereby me

Quote:
Quote:

And here in lies a hint of the answer  your last line I quoted of you. As the economy grows, things priced in dollard will fall.

It’s the other way round due to increasing population and resource demand.

Opps by me there   meant to say ‘things priced in gold will fall in price’.

 

 

ralfy wrote:
gyrogearloose wrote:

Actually I assume the opposite, that dollars are not solid, and want to hold as few dollar demoniated assests as practically possible. This is in line with Chris Martensons thinking…..

That is why a gold standard will not work.

Gold standard where tokens representing an amount of gold have historically failed as more tokens are produced than gold exists…..

 

 

 

ralfy wrote:

Gold is not infinitely divisible for painfully obvious reasons. Try redeeming a dollar when an ounce of gold reaches tens of thousands of dollars.

Well OK  gold is not infinitly divisible, can’t cut an atom in half….. but today I could buy a cheap cellphone for 0.5 of a gram of gold, and I have some pockect scales that measure in1/00 of a g. In past history, small change was handeled by silver, so that same cell phone would be brought for about 50g of silver ( might be out on those numbers, but they hold well enough for illustrative purposes ), then if you want to buy a single sweat, copper coins have served well too……

 

The amount of currency in the economy could be considered a means of ‘measuring’ relative share of the economy at your disposal. How much currency there is is “irrelavent”

As a child I could buy the chapest iceblock got 5 cents, today it is $2 and  1,2 and 5 cent coins are no longer legal tender. so roughly there is 40 time as much money floating around today as in my childhood. How has this helped the economy ?

 

Opps  have to go, dont get much time on net

Thought for you, who should decide how much money the economy need to function ?

 

Cheers Hamish

 

  • Sat, Oct 06, 2012 - 08:31pm

    #17

    ralfy

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    The money needed will

The money needed will obviously be more than the amount of gold available globally, i.e., at 150,000 metric tons.

 

 

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