patrick.net

shrekgrinch says

A currency being backed by gold is not the same as using gold as a currency. Hence some of your confusion.

Gentle Reader,
Of course you are correct! A gold backed currency is certainly not the same as using gold as a currency. Absolutely.

My confusion is still as robust as it ever was. We can only "back" our currency by allowing redemption in gold upon demand. So, if we want to back it 100%, we will need more the entire world's supply to do so.

That is a lot of Au!

So, we really can't do that, so let us entertain partially backing the currency with gold. Let's say 50% at current prices. So, if someone wants to redeem their Dollar$ for gold, we will give them $500 of Gold for every $1000 paid to us. So, this is a real deal then! We now have $1000 for $500 of Au. We can then go on the open market and get $1000 of Gold and be $500 ahead!

My confusion is no longer vexing me. Now I'm bewildered, and what is causing me that bewilderment is how the math adds up.

It doesn't.

Would someone be so kind as to contact Texas Republican Governor Perry and ask him. He should surely know. He is a Politician and that brilliant performance during that most recent debate gives me confidence that The Guv'nor can come through and enlighten us all.

Perhaps Rep. Ron Paul could fill in for the Guv'nor.

I'm just "all a tingle" with anticipation.

Regards,
Roidy

P.S. Mr. Bernanke is in Texas these past few days. He knows how to do math. His pride on maintaining a 2% inflation target is just doing wonders for our country. Those that have employment and are fortunate enough to actually get a raise can attempt to cope with a 2% annual inflation rate. My employment does not allow an increase at all. I am just loving it from that Bag of Farts. Goddammit! Like the man said, " I can't eat an iphone." Again, I'm handed a fresh, tasty dogshit sandwich on whole wheat and told how natural and healthy it is.

I should say "Idiots!" at this point. I'm having a hard time with it, because I'm beginning to believe that I am the idiot. I am on the receiving end of that motherfucker's horseshit 2% after all. FUCK YOU, BERNANKE!

Actually the real solution would be gold being worth several times what it is today. Using your numbers that would put gold at 7 -62 times it's current value. Or roughly about $12K - $110K per ounce.

Zzyzzx, get ready to get shredded by the lefties for your correct and astute assessment of what the price of gold would have to be priced at. "Paper bugs" will not or cannot understand that a sound currency, backed by gold minimizes war and maximizes freedom.

Fiat currencies lead to war and economic turmoil. There has never been a fiat currency which has survived, never, not one. History is full of examples. But a sound currency and common sense flies in the face of the liberal agenda which is why they go nuts when anyone suggests a sound currency. Our overseers will never accept a sound currency, their lack of morals will not permit it.

Todays book recommendation: When Money Dies, by Adam Fergusson

Todays YouTube recommendation: The Story of Your Enslavement.

Gentle Readers,
I do believe I hear a Political Right call for a Gold Bubble? Gold at $110k an ounce is called a bubble. It will cause a frenzy of mining in any place with any methods available, no one will be able to stop the natural destruction because the DEQ has been "restructured" by the Conservative Right, Roidy's pittance of a retirement saving that had seen NO interest payments for a number of years will vanish, and after all this fun, we will have another bubble collapse.

I'm breathless with anticipation of it.

Regards,
Roidy

Roidy says

The last time I looked, the whole world economic output is about $62trillion.

Economic Output per year? That doesn't sound all that high to me. When I spend $100 in a store on Jan 1st, the store uses the $100 to pay one of there employees a week later, Friday, Jan 6th. The employee spends that $100 at a food store on Jan. 7th, The store in turn used the $100 to pay one of there suppliers on Jan. 9th , the supplier uses that $100 to pay one of there employees who...

My point is you do not need 62 trillion dollars on hand to have 62 trillion dollars of output. The currency get passed from one person to the next. I wager that the entire worlds economy could be run on less then 500 billion dollars of actual physical currency.

Roidy says

I Googled "Total value of gold in the world" and got an answer of between $1trillion and $9trillion depending upon which Pontificating Internet Asshole you want to believe.

United States gold holdings are 8,133.5 tons of gold. At the price of gold per oz of $1787.85, this would give the total United States reserves worth 463 billion dollars. Of course the GNP for the United States is somewhere between 12 to 14 trillion dollars so you don't have to worry about having enough to run the worlds economies, just the United States economy. For 463 billion gold backed dollars to "fund" the economy, each dollar would have to be exchanged (Used to buy or sell) 30 times a year. Which is roughly once every 2 weeks.

It's ridiculous to think we can back currency with gold anymore.

For some reason people still buy this nonsense.

There's just not enough gold for it, interest rates and economic growth create more money than the finite amount of gold we have in the planet.

Plus... gold's worth is also in our mind. Gold is abundant, yes a great metal capable of some wonderful things, but it doesn't produce anything.

You'd have to make gold really really really expensive to back currency.

Money is created in computer servers, let's keep it that way.

TechGromit says

My point is you do not need 62 trillion dollars on hand to have 62 trillion dollars of output.

Gentle Reader,
That is exactly the point. If you have $62 Trillion in total output that is based in US Dollars, then you will need the same amount of gold to back that currency. A gold-backed dollar means "payment in gold upon demand." Otherwise, you do not have a gold backed currency.

This isn't a hard thing to understand. You have been sold on this as a fix to our problems with our society, government, and economy.

It isn't.

Regards,
Roidy,

P.S. I am refraining from exercising the usual lack of rules rule in Outside.

Nomograph says

Before you start off on another stupid victim rant about how you are "enslaved", why don't you actually try thinking for yourself and answering some questions?

That would be a first for ha. Why are you asking this silly question?

Roidy says

TechGromit says

My point is you do not need 62 trillion dollars on hand to have 62 trillion dollars of output.

Gentle Reader,
That is exactly the point. If you have $62 Trillion in total output that is based in US Dollars, then you will need the same amount of gold to back that currency

So your suggesting that if I make 50k a year and spend 49k on products and services over the course of the year, the federal government has to not only have enough gold backed currency on hand to cover the 49k I spent but all the other people who took in that 49k and re-spent it over and over.

That kind of like requiring the government to have enough money on hand if everyone, everywhere decided to sell everything they owned tomorrow. Real estate, cars, furniture, clothing, food, what ever.

As I said before, the same dollar is exchanged from person to person, and business to business, all through out the year. You need to have enough gold on hand to back that dollar, not the sum of the exchanges the dollar totaled up over the year.

You obviously do not grasp the concept of the Gross National Product. As for the outside comment. I never lower myself to name calling and flame wars. Feel free to call me what ever you want.

Nomo, can you mentally go back to 1970, only about 40 years ago...not long in the big picture. America worked just fine before we came off the gold standard.

Hahaha, your stupid quote: "do you think the rest of the world will magically value gold at exactly the price point you tell them to?" First of all your liberal mentality is exposed in that you want to tell others what price point gold should be at. And secondly, in case you don't know, you can exchange gold in any country, for an equal amount of their currency, at the value of gold that day...set by the FREE MARKET. The free market (as in freedom,) a cooperative network of willing buyers and willing sellers. The free market and freedom - things despised by commie, socialistic, power hungry, controlling, manipulative, bleeding heart idiots.

If you would only spend some time reading books you would learn a lot. Try reading this one: Capitalism and Freedom, by Milton Friedman.

The gold standard is coming whether you like it or not.

People aren't going to stay in a monetary system rife with corruption, and there isn't a thing the government can do about it, other than delay it with laws. It will become a black market if they force it to become one.

The Federal reserve simply creates money out of thin air, and they buy stuff with it, with the money they created. It's that simple. The only people keeping money in cash are the stupid people that still have faith in this system.

TechGromit says

Economic Output per year? That doesn't sound all that high to me. When I spend $100 in a store on Jan 1st, the store uses the $100 to pay one of there employees a week later, Friday, Jan 6th. The employee spends that $100 at a food store on Jan. 7th, The store in turn used the $100 to pay one of there suppliers on Jan. 9th , the supplier uses that $100 to pay one of there employees who...

My point is you do not need 62 trillion dollars on hand to have 62 trillion dollars of output. The currency get passed from one person to the next. I wager that the entire worlds economy could be run on less then 500 billion dollars of actual physical currency.

http://en.wikipedia.org/wiki/Velocity_of_money
The velocity of money (also called velocity of circulation) is the average frequency with which a unit of money is spent in a specific period of time. Velocity associates the amount of economic activity associated with a given money supply. When the period is understood, the velocity may be presented as a pure number; otherwise it should be given as a pure number over time. In the equation of exchange, velocity of money is one of the variables claimed to determine inflation.

Nomo, hahaha, you make me laugh. You say "I hold wealth in the form of numerous free market investments".

And yet you despise capitalism, the free market, sound money, war, equal opportunity, etc. You appear to be the typical liberal in that whatever you state is 180 degrees opposite of the truth.

Todays book recommendation Currency Wars, by James Rickards

Roidy says

Gentle Reader,

This guy is the Forum Whisperer.

Gentle Readers,
The velocity of money is more than covered by the current US supply of gold? There are a number of definitions for the VOM. You can take your pick. We have a $14 Trillion dollar economy. Depending upon which Pontificating Internet Asshole you wish to believe, the VOM is between 2 and about 9. Let's be optimistic and say it's 9. This means we will need $1.5 trillion of Gold to cover the VOM. We have less than 20% of that in gold.

147.2 million ounces * $1778.9/ounce = $261 billion.

I really don't get this. In fact, what I need is a good, solid, no horseshit explanation of how we can have a gold backed dollar.

I'm sorry, but I've not heard anyone who can explain.

Now, that being said, I've reviewed the fire control aspects of my home defence plan. I cannot last a full 1st term of either Nut-hatch Right or Loony Left Administration. I can last until the midterm elections.

I hope Ammo-R-Us delivers.

Regards,
Roidy

P.S. I'm watching "No End In Sight" about 'W's and the neocons conduct of that glorious struggle in Iraq. Remember our wars? I do not find much in the way of Obama appealing anymore. Still, this crap started way before him. It can get worse and 'W' and his gang are a prime example of "The Wrong Stuff." Of course, Larry Summers, Turbo Tax Timmy, Christine Romer, and The Bernanke are 'O's version of that. I'll refrain from my usual comments about their parentage, sexual practices, marital choices, etc. It's all too depressing to contemplate.

P.S.S. Maybe I could have a write-in for APOCALYPSEFUCK's Two Headed Shit Baby.

Roidy says

147.2 million ounces * $1778.9/ounce = $261 billion.

I really don't get this. In fact, what I need is a good, solid, no horseshit explanation of how we can have a gold backed dollar.

I'm sorry, but I've not heard anyone who can explain.

Well let me start. The 147.2 million ounces of gold your quoting is the gold just in Fort Knox, and does NOT represent the total gold supply the United States holds. The Federal Reserve Bank in New York holds Far more. While it's true not all of the gold in the New York vaults belongs to the United States, a good part of it does. As I stated before United States gold holdings are 8,133.5 tons of gold. At the price of gold per oz of $1787.85, this would give the total United States reserves worth 463 billion dollars. For 463 billion gold backed dollars to "fund" the United States economy of 14 trillion dollars, each dollar would have to be exchanged (Used to buy or sell) 30 times a year. Which is roughly once every 2 weeks. I believe this is very doable.

If not, the United States also holds Silver and Platinum reserves as well they could be used to back the dollar as well, although a quick search, I can't find any numbers to value the US holdings of other metals. And if were going to toss Silver and Platinum into the mix, why not add other federal government holdings into the mix. The United States government has direct ownership of almost 650 million acres of land, almost 30% of all the territory in the United States. While some of it is nearly worthless (anyone want to build a condo on the side of a sheer granite mountain?) some of it is quite value with oil, coal, lumber and other reserves.

Gentle Readers,
I just can't get past the fact the gold, silver, platinum, etc are metals. We can get more by mining either the earth or the sea. If we have our currency backed by gold, then we would have problems with expanding when we needed to, contracting when we needed to, and it would cause us to have a strong currency in relation with the rest of the world. I don't know about you, but I'm just about China'ed to death. The only real reason that China is beating us up is the low value of their money in relation to ours and about 1.3 Billion mouths to feed. Not to mention that our VOM would become static more or less.

What if everyone wanted to get gold or silver or platinum at once? Yes, there really could be a run on the bank. We would not have enough to back the currency if that scenario.

Oh what was that? There would never be a run on the dollar? Ok, I guess that's right. Like houses will never decline in value? Remember Lil' Stevie Forbes when he said "There is no housing bubble and there'll never be one."

That snooty little shit stain should go get a real job. Not to be too direct about it.

Speaking of shit stains, I hear Newt is front runner now. Isn't this the guy that had to resign from his position as House Speaker? It looks like he is now up to his arse in Fannie and Freddie.

Now, it looks more and more like the wankstains in the Eurozone are waiting for us to bail them out.

Yeah, right. Fuck you, Germany.

Regards,
Roidy

P.S. (_*_) and a hearty Fuck You to Monihan.

Roidy says

I just can't get past the fact the gold, silver, platinum, etc are metals. We can get more by mining either the earth or the sea. If we have our currency backed by gold, then we would have problems with expanding when we needed to, contracting when we needed to, and it would cause us to have a strong currency in relation with the rest of the world.

Er what? Civilization has been based on Silver and Gold as currency for thousands of years, mining it and expanding the "money" supply the entire time.

As for expanding and contracting the economy, this is done by the Federal Reserve raising and lowering the cost of borrowing by adjusting interest rates, not by removing or adding currency into the economy.

Currencies fluctuate against each other on a daily bases. There are benefits and liabilities to a Strong Currency, just as there are for a weak currency.

Roidy says

What if everyone wanted to get gold or silver or platinum at once? Yes, there really could be a run on the bank. We would not have enough to back the currency if that scenario.

And exactly How is that different from today? Weather the current system stays in place, or we back our currency with gold or land or porn (and there a lot of porn on the internet) the same exact thing would happen in a bank run. Changing how currency is backed isn't going to make it any more stable or unstable to bank runs. There isn't enough money in the banks or the entire federal reserve today to meet everyone's demand for there money if they all wanted it back at the same time

TechGromit says

Er what? Civilization has been based on Silver and Gold as currency for thousands of years, mining it and expanding the "money" supply the entire time.

Gentle Readers,
This just doesn't make sense. How do we compare civilizations from the musty past with what we are today? It would be akin to comparing a Civil War operating room with todays operating room. Oh, both conduct surgery for sure. Still, I would rather have today's techniques.

... and if we did have a "gold-backed" dollar that would be payable on demand, why wouldn't China make a raid? Don't they have $2 Trillion dollars on tap, so to speak? North of $2 trillion, even?

Sounds like a gawd awful disaster we don't have to have.

No, I still think the math doesn't add up. Now I KNOW the problems that could cause are not worth it.

Regards,
Roidy
P.S. Did the Seven Dwarfs (Perry, Newt, Cain, etc. etc) dump their meds? That is the only explanation I can come up with. Assbags.

Roidy says

This just doesn't make sense.

I give up, I attempted to reason with you logically. I officially give up trying to convince you of a gold (or other assets) backed Dollar is possible.