patrick.net

As soon as The Wizard answers mine.AdHominem says

The Wizard of Nomo says

But wait. You’ve been trying to convince everyone that gold is the only substance known to man that holds it’s value.

Gold and silver will hold value over the long term (decades). But its value is meaningless in the event of an accidental or orchestrated currency collapse and the chaos or worse that follows. In the event of a total breakdown (which is likely during a Federal Reserve note currency collapse) money will be the least of your concerns. That is the situation I would prefer to avoid. I would hate to see your toilet cleaner come over and clean you out (hint they won’t be after your “money”), after beating you with a pipe wrench.
The Wizard Nomo says

free markets?

You claimed that people calling for a metal backed currency are afraid of the free market. That was YOU! I am still waiting to hear how in your Orwellian false reality forcing Americans to deal in Federal Reserve notes and the Fed’s monopoly over currency and interest rates in the US is a “free market.” Sounds more like totalitarianism in the real world.

Fact: there has never been a time in all of recorded history when gold or silver has been considered worthless.

Fact: over 300 fiat currencies in history have failed and collapsed.

Precious metals have intrinsic value that, throughout history, has been recognized the world over. Fiat paper money has value only in the minds of those that are willing to accept its promissory "value."

RayAmerica says

Fact: there has never been a time in all of recorded history when gold or silver has been considered worthless

That's not true. The dinosaurs did not value gold at all.

When De Gaulle showed up at the gold window to demand payment for his U.S. dollars in 1971, Nixon responded by closing the gold window. Why? Because he feared a run in the exchange of dollars to gold from the world market, exposing the fact that the U.S. currency was only partially supported by gold. Our currency back then was similar to how fractional reserve banking operates today. Only a very small fraction of gold existed to back the dollar. Now we have zero support, only a promise and the printing press that is ready to run 24/7 to "pay" off the huge debt obligations with currency that continues to lose value. How long do you think the financiers of the world will go along with this fraud? The day of reckoning is coming for the U.S. dollar and it is going to be unimaginably ugly.

tatupu70 says

That’s not true. The dinosaurs did not value gold at all.

You really should take this show on the road and get paid for it.

RayAmerica says

Fact: there has never been a time in all of recorded history when gold or silver has been considered worthless.

Ignoring dinosaurs for now, my problem with gold is that it does actually swing wildly in buying power. I was just looking at the graph of the buying power of gold in Ron Paul's book "End The Fed" and it looks like gold varies by a factor of ten in what it can buy. I think that's mostly because gold gets bid up too high during times of uncertainty.

So while gold does not fall to zero, you can still lose your shirt if you're fully invested in gold, and it's near the high end of its historical range.

RayAmerica says

How long do you think the financiers of the world will go along with this fraud?

If the financiers of the world are in on the scheme and benefitting from it, why would they ever want it to end?

RayAmerica says

You really should take this show on the road and get paid for it.

Sorry--bad jokes aside, my question has always been what is the so called intrinsic value of gold? Why do you think gold has some innate value?? Historically, people have valued it because it's pretty and makes good jewelry and adornments. Is that how we want to decide what to use as a currency?

Vicente says

If the financiers of the world are in on the scheme and benefitting from it, why would they ever want it to end?

The financiers I'm referring to are those that expect the U.S. dollar to maintain its value due to fiscal responsibility by the federal government. We are spending at an incredible pace and the big money players of the world know it. We have only four basic options available to pay down our debt: 1) dramatically cut government spending and balance the budget, 2) dramatically raise taxes, 3) continue to borrow enormous sums from foreign sources (currently $3 + Billion per day), 4) monetize our debt via the printing press. I would argue that #1 & #2 will not happen due to the political suicide it would require by our self serving politicians. #3 is more palpable politically because most voters cannot comprehend that their government is basically broke and forced to borrow in order to function. #4 is the most likely scenario because it is the most acceptable to voters that do not have the capacity to understand inflationary economics, i.e. debasing of the currency. When Nixon closed the gold window in 1971, the government literally held its breath, not knowing how the world would react. We have abused our currency since that time and, although we are currently experiencing deflation in some sectors and inflation in others (along with high unemployment, i.e. stagflation), the day is absolutely coming when the excessive amounts of fiat money will finally push inflation into at least the double digits. When the big money players begin to unload their U.S. dollars, we will be forced to raise interest rates in order to attract investments in the dollar. With the economy already weakened while enjoying historically low interest rates, what do you think will happen when interest rates are forced higher?

tatupu70 says

Sorry–bad jokes aside, my question has always been what is the so called intrinsic value of gold? Why do you think gold has some innate value??

Gold has a history of value, whereas fiat currency has a history of eventual failure. Gold is relatively scarce due to the difficulties related to mining, making it limited in its supply. Throughout history, including antiquity, gold has always been in demand and low in supply. Whereas, the supply of fiat money can easily be expanded via the printing press. For example: printing a million dollar note takes the same effort as does printing a single dollar bill. Politicians know this, and love the flexibility this gives them in literally "buying" votes with their fiat currency purchased social programs. The voters are temporarily fooled by inflation in the early stages because they are deceived into thinking that they themselves are becoming wealthier because their assets appear to be "increasing" in value. What is actually happening is inflationary forces are diminishing the value of the dollar while seemingly increasing the value of assets related to it. The real estate bubble is a perfect example of an excessive amount of money chasing too few properties, driving the prices abnormally high. Gold, because it is limited in supply, cannot be utilized in this manner, precisely why the politicians hate it.

Prior to becoming the “Maestro” of the Fed, Greenspan understood these principles and wrote about them. Here’s an example of what he believed before he became the most reckless Fed chairman in history:

“Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.”

Pretty amazing quote by the man that expanded the fiat money supply more than any Fed chairman in history!

RayAmerica says

Gold has a history of value, whereas fiat currency has a history of eventual failure. Gold is relatively scarce due to the difficulties related to mining, making it limited in its supply. Throughout history, including antiquity, gold has always been in demand and low in supply.

So--if I understand your answer correctly--you like gold because throughout history people have liked to make jewelry out of it. That makes it a good currency? Oh, and it's relatively scarce too. What if people's tastes changed and we no longer wanted to make jewelry out of gold? Would gold still have value then? After all, there are lots of scarce materials that don't have great value.

Why not diamonds? It at least is far more portable than gold.

AdHominem says

Gold and silver are hard currency, which cannot be debased except by fraud.

Simply not true. You just pull the coins out of circulation and remint them. Ever since coinage was invented governments have been debasing their hard currencies. You need to read more history. Here is a brief article on the subject.
http://www.campaignforliberty.com/blog.php?view=6085
For anyone with a more scholarly bent here is a pretty well researched article on debasements http://www.google.co.nz/#hl=en&q=history+of+currency+debasements&meta=&aq=f&aqi=g2&aql=&oq=&gs_rfai=&fp=bb66be834872d4aa

So your continued reference to "sound currency" doesn't make much sense. Very few hard currencies survived all that long either. Coins were constantly be reminted. Financial collapses happened regularly under gold/silver standards. The great depression happened when most of the world was on the gold standard including the US.

I'm not per se defending fiat currency, but pointing out the the gold standard is far from a panacea.

bob2356 says

oins were constantly be reminted.

That is so true. This is why a dollar must be defined as a specific amount and purity of metal. You may remember me saying that earlier?

I think that’s mostly because gold gets bid up too high during times of uncertainty

Yeah, like when people are afraid the fiat "dollar" or government might collapse. In either case gold is highly desirable to many people. Of course if everyone already owned gold or their currency was gold backed, these spikes and volatility would be avoided. No need to resort to panic gold buying when your currency is "as good as gold!" (even better if it IS GOLD!)

In fact the "value" of an ounce of gold was about $20 from 1786 to 1933. -Gold standard years and quite a nice run don't you think?
The value of an ounce of gold was $35 from 1934 to nearly 1971 -Bretton Woods quasi gold standard years up till failure due to unbridled deficit spending without remorse/willingness to repay: to fund Vietnam and the New Deal. Nixon made his official FU and up yours to the world by closing the gold window and officially declaring the world America's bitch.
Since 1971 the value of the dollar has floated and this has caused the "volatility" in the gold market. If we had a gold backed dollar like in 1933 before FDR confiscated them and started to mess things up, we would still have a $20 double eagle (nearly one ounce of gold) in circulation. So you see it is the Federal Reserve note "dollar" that is volatile, not gold.

Soon the world may decide America is the bitch, and abandon us and our worthless "dollars" all together.

Put it another way The Federal Reserve note "dollar" is a giant ponzi scheme. You don't want to be dependent on them when the ponzi scheme collapses.

source http://www.measuringworth.org/datasets/gold/

Yeah, the world will stop using those dollars that they have in their foreign currency funds. That'll show us! Why, if they do that we'll have no choice but to...uh, what again? Stop selling us products and destroy their own economies?

Or they could stop loaning us money and stop buying treasuries - OOPS.

Todays book for non-reading, uneducated individuals: Economics in One Lesson, by Henry Hazlitt.

BTW - I would LOVE to get suggestions on books to read with other viewpoints. Any ideas? Hahahaha.

Adho - right on target !!! "They" can't stand it... good job in pointing out reality.

Here's an article for you Abe:

http://www.guardian.co.uk/business/2010/apr/12/gold-gordon-brown-sell-off

And an excerpt:

Yet the irony is that, in the world economy, gold has never meant less. A century ago, during the final years of a flourishing gold standard, every major unit of currency in the world was simply a promise for a certain amount. The central banks could not issue money unless they had the gold somewhere to back it up, so currency held its value well – sometimes too well, because if gold supplies did not keep pace with economic growth, it caused deflation, wage cuts, and a general economic drag.

In 1949, according to Green, around 75% of all the gold that had ever been mined was being held inside one building, Fort Knox in Kentucky (which Auric Goldfinger, 15 fictional years later, failed to destroy). But the economist John Maynard Keynes famously regarded the gold standard as a "barbarous relic", and it did not survive the money printing of the two world wars – being gradually replaced by today's free-floating system, where currencies hold their values because central banks promise to make sure they do. There is still gold in vaults, but very little.

"It's a drop in the ocean," says Stephen King, HSBC's chief economist and author of Losing Control: the Emerging Threats to Western Prosperity. "[Gold] doesn't really matter very much these days for the running of the global economy."

But centuries of attachment to gold do not fade so quickly, as the prime minister has found. And some people, often known as "gold bugs", continue to argue that this magic metal is a natural store of value, or that its movements are the only way of reading what the world is up to.

"It's something, I think, that people don't often understand," says King. "They seem to think that gold is special, because it's shiny or whatever. But the truth of the matter is that gold is valuable [only] because people believe it to be valuable."

Tatu - you are exactly RIGHT !!! You said: "In the world economy, gold has never meant less". That is precisely why the world economy is in shambles. Countries around the world got OFF the gold standard after the Untied States did BECAUSE they could not economically keep pace with America who could now "print money out of thin air".

Now, less than four decades later, the world economy, and its collective citizens are paying the price. This would not be happening if every country in the world had remained ON the gold standard. That would have REQUIRED financial discipline, something politicians don't have. Politicians cannot buy votes having financial discipline.

Unfortunately, I believe you'll find this concept too easy to understand - therefore you'll disagree. BTW, any book recommendations ??

Honest Abe says

Now, less than four decades later, the world economy, and its collective citizens are paying the price. This would not be happening if every country in the world had remained ON the gold standard. That would have REQUIRED financial discipline, something politicians don’t have. Politicians cannot buy votes having financial discipline.

What would not be happening? The US ran deficits where it was on the gold standard.

Honest Abe says

BTW, any book recommendations ??

Sorry--forgot to answer that. I gave you book recommendations awhile back. Not surprisingly, you didn't like them.... I'm guessing that you only read stuff that agrees with your warped belief system.

Honest Abe says

“It’s something, I think, that people don’t often understand,” says King. “They seem to think that gold is special, because it’s shiny or whatever. But the truth of the matter is that gold is valuable [only] because people believe it to be valuable.”

That's the key takeaway from the article for you Abe...

Nomograph says

Honest Abe says

gold . . . gold . . . gold . . . gold . . . gold

Goods and services, Abe, goods and services. That’s what makes the world go round. People who are easily distracted by shiny objects don’t get very far.
Gold is a fiat currency. Don’t you realize that secret Obama government labs have figured out how to transmogrify other metals into gold using a particle accelerator linked to a flux capacitor? Did you know that diamonds are actually worthless as well? Beware of shiny objects, no matter how pretty they look.

Goods and services become hard to deliver in an environment where someone is able to siphon off goods and services from the productive sectors of the economy with a printing press. It's not the fact that it's shiny, it's the fact that no one is counterfeiting it.

RayAmerica says

Prior to becoming the “Maestro” of the Fed, Greenspan understood these principles and wrote about them. Here’s an example of what he believed before he became the most reckless Fed chairman in history:
“Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.”

Nomograph says

And you trust the government to not periodically “redefine” the dollar/gold relationship? You sure trust Big Brother much more than I do. I, for one, would NEVER store my wealth in a government-run program.

And yet you want these same guys to run healthcare? Hypocrite much? You are starting to sound like a "truther" or conspiracy theorist. Where is your Tinfoil hat?

tatupu70 says

Honest Abe says

Now, less than four decades later, the world economy, and its collective citizens are paying the price. This would not be happening if every country in the world had remained ON the gold standard. That would have REQUIRED financial discipline, something politicians don’t have. Politicians cannot buy votes having financial discipline.

What would not be happening? The US ran deficits where it was on the gold standard.

Yes but we also had collateral to repay our debts, the currency was backed by gold. Right now we have mortgaged our currency and leveraged to extreme but there is nothing to back it up.

On a gold standard, when we borrowed money, if worse came to worse the lender could call our loan and demand payment in gold. Today, they have no such recourse. The chickens are coming home to roost. And we wonder why there is shit everywhere? The gold standard was the only thing keeping government and corporations somewhat financially honest.

Nomograph says

I suppose most people would consider this a good thing.

If you call living in a false reality of money grows on trees and "deficits don't matter" while racking up debts that you can't repay a good thing... Then "God Bless America!" Maestro, print a couple dozen more trillion please!!

OK, why not print and distribute a couple of million dollars to each tax-payer, you know, kind of like saying "thank you" for your loyal support of the system. That would stimulate the economy without giving tax-payer dollars to the banksters, right?

Nomograph says

AdHominem says

If you call living in a false reality of money grows on trees and “deficits don’t matter” while racking up debts that you can’t repay a good thing… Then “God Bless America!” Maestro, print a couple dozen more trillion please!!

Dick Cheney and Ronald Reagan said “deficits don’t matter”, not me, but I suppose defaulting is marginally better than physically shipping our gold off to China.
Personally, I live within my means and have no debt. Why should my gold be shipped off to China to pay for someone else’s granite counter tops?

Your education was paid for by deficit spending Dr. GI Bill. If anybody's gold should go to China, why not yours?

That being said, most of our "debt" is not owed to China, but rather to the Fed.

Granite counter tops ??? How about MILLIONS for bridges to no-where, MILLIONS for airports without passengers, HUNDREDS of MILLIONS for NON STOP "porkulus" projects, BILLIONS for government handouts in exchange for votes and likely TRILLIONS for unnecessary military intervention around the world. Very little of this would be happening if America had a sound currency, a dollar backed by something of value that could NOT be created out of thin air - get it???

(I'm quite sure those without personality disorders will understand).

Honest Abe says

How about MILLIONS for bridges to no-where?

Don't make Sarah wear her frowny face!

"We need to come to the defense of Southeast Alaska when proposals are on the table like the bridge, and not allow the spinmeisters to turn this project or any other into something that's so negative," Palin said in August 2006, according to the Ketchikan Daily News.

http://www.nysun.com/editorials/the-obama-dollar/86943/

"This is a time when we need a national conversation about the dollar. What is it? What did the Founding Fathers think it was? When they used the word “dollars” twice in the Constitution but did not deem it necessary to provide a definition, what did that tell us? In fact, the historical record is clear. The constitutional dollar was — and is — 416 grains of standard silver, or 471 ¼ grains of pure silver, the same amount of silver as is in a coin known then, and now, as the Spanish Milled Dollar. What were the Founders thinking when they decided to use, in granting to Congress the power to “coin money and regulate its value,” the same sentence in which they also granted Congress the power to fix the weights and measures?"

Just because someone copies another article nearly verbatim doesn't change the argument. Keep trying to spend those lumps of silver at the grocery store, though, I'm sure it'll do you a lot of good.

Who was that mystery man arguing for the gold standard with no forum name?

AdHominem says

What were the Founders thinking when they decided to use, in granting to Congress the power to “coin money and regulate its value,” the same sentence in which they also granted Congress the power to fix the weights and measures?”

Because money, whether it's in the form of shiny metals or colorful paper or polymer bills, varies in value depending on what any given person at any given time is willing to exchange for it. To me the phrase "coin money and regulate its value" sounds a lot like a fiat currency whether it's gold, silver, pretty gems, or pieces of paper.

Again, gold and silver are only worth what someone is willing to exchange to obtain either substance. They have no other real "value" than that as money. They are tokens just like the papers and coins we carry now are tokens. "Value" is purely a psychological concept attached to material things.

simchaland says

money, whether it’s in the form of shiny metals or colorful paper or polymer bills, varies in value depending on what any given person at any given time is willing to exchange for it.

simchaland says

Again, gold and silver are only worth what someone is willing to exchange to obtain either substance. They have no other real “value” than that as money. They are tokens just like the papers and coins we carry now are tokens. “Value” is purely a psychological concept attached to material things.

So which is it simcha? As you noted, the constitution clearly says that Congress has the power to coin money and regulate its value. But then you pull a 180 on us. You would instead have us believe that money's value is a "psychological concept," and as such it is "what any given person at any given time" believes that determines the value of money. Sounds like you are VERY conflicted. You pay lip service to the constitution and then attempt change the definition of what value is in the very same post.

To me however it is quite simple. The constitution refers to a dollar as not an abstract psychological concept, but rather a concrete and definite store of value, being a specific amount and purity of silver. Silver is a store of value because it represents a relatively scarce resource and one whose replacement value is roughly equal to the labor/investment it would actually take to actually replace it. That is all we as supporters of sound currency are seeking, that we follow the constitution and use a sound money.

Nomograph says

Nor is CBO’s basic premise that inflation always outpaces wages correct; in fact it is almost never correct, which is why they always fall back on the singular extreme example of Weimar Germany...Facts trump ideology every time.

You have been misquoting others on this board consistently, and now you are just making shit up. This is a new low for you.

In any inflationary period that I have ever read about, wages did not keep up with prices. Either you can provide an example of the contrary, or you can gracefully admit that you are wrong...again.

lol, i truly doubt the dollar is the reason we have technological advance.. it may increase economic opportunity, what makes technological advances possible is economic opportunity, and the intelligence and education of those who have access to the economic opportunity, patents probably play a much larger role, i noticed alot of new advances after the allies divided up Germanys monopoly on over 50% of all existing patents after WW2

AdHominem says

The constitution refers to a dollar as not an abstract psychological concept, but rather a concrete and definite store of value, being a specific amount and purity of silver.

Now you've just moved on to making shit up. The constitution never mentions any specific amount or purity of silver, or anything else, for the value of the dollar. Your entire argument up to this point was that there was an implied value (a spanish dollar, a specific number of grains of silver) that was well known at the time. Now you're saying that the constitution has this "concrete and definite store of value"?

CBOEtrader says

You have been misquoting others on this board consistently, and now you are just making shit up. This is a new low for you.
In any inflationary period that I have ever read about, wages did not keep up with prices. Either you can provide an example of the contrary, or you can gracefully admit that you are wrong…again.

What is your definition of an inflationary period? Any time period with inflation--or does it have to be over a certain percentage?

AdHominem says

The constitution refers to a dollar as not an abstract psychological concept, but rather a concrete and definite store of value, being a specific amount and purity of silver.

Yes---please post the part of the Constitution that mentions the exact amount and purity of silver. I'd like to see that.