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Old 11-29-2019, 09:43 AM
 
9,440 posts, read 4,163,462 times
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Quote:
Originally Posted by Garthur View Post
The term "currency" means a current form of value. Gold is not currency, it is considered real money.

On another point, for those that thing the dollar would never collapse, they must have blinders on. Since the dollar was taken off the gold standard it has been collapsing. Todays dollar is only worth 2 cents compared to the dollar just a few decades ago.
Gold coins archaic and new are certainly currency.

Gold bullion is not easily or commonly used as money.
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Old 11-29-2019, 09:45 AM
 
9,440 posts, read 4,163,462 times
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Quote:
Originally Posted by fishbrains View Post
So what? Why should I trade my labor or assets for an oddly colored, non-tarnishing chunk of metal? I am only doing so because other people are willing to take that chunk of metal and give me labor or assets for it in turn. How is this inherently different from a paper currency?

You also have the problem of value. Is an ounce of gold worth one hour of labor? 10hours? 100 hours? Can an ounce of gold buy 10 jars of peanut butter? 1000 jars? 5000 jars? All value is agreed on in some manner, by fiat if you prefer that term. It isn’t inherent in the chunk of metal.

What about when you don’t have enough gold to equal the value of everything else? According to https://www.statista.com/statistics/...gold-reserves/, the US has a bit over 8000 tons in its gold reserve, which is worth about $11 billion. More info can be found here: How Much Gold Reserves Does The U.S. Have? - KELSEY'S GOLD FACTS

So, $11 billion. That isn’t much. It is enough to purchase:

2 1/2 NFL teams https://www.forbes.com/nfl-valuations/list/, or;
0.0067% of Manhattan real estate https://www.citylab.com/life/2018/04...-worth/558776/, or;
A bit over 1% of Amazon.com....

I think you get the idea. There simply isn’t enough gold to use it as a base for currency. There is too much stuff, with too much value, for gold to have any utility here.

Everything, including precious metals, is only valuable because we agree it is.
My point was that gold's intrinsic character gave it value as money in the far past. As you say, today gold is fiat, and the intrinsic character has little to do with its value. Except for jewelry and some collector coins.
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Old 11-29-2019, 10:03 AM
 
Location: Western Washington
9,683 posts, read 8,874,508 times
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Quote:
Originally Posted by Hoonose View Post
My point was that gold's intrinsic character gave it value as money in the far past. As you say, today gold is fiat, and the intrinsic character has little to do with its value. Except for jewelry and some collector coins.
My point is that gold has no intrinsic value. It’s value is what we assign to it.

Jewelry is more valuable than bullion because it is pretty, sentimental, takes more labor and skill to produce, and may be antique. Collector coins are similarly valuable because of their history, their guarantee of purity, and their mystique.

Aesthetic value, sentimentality, skill, history, etc are all attributes that we, as humans, have arbitrarily assigned to things.

Gold has value only as far as humans want it to do something with it. Many other things have similar value. Buildings, food, clothing, artwork, fuel, roads, animals, economic activity, ... The American dollar is backed by these things, and maintains its value as a token representing these things. Gold maintains its value because it is pretty, and is a token representing pretty.

Putting a currency on the gold standard only has the effect of creating a very hard, very low cap on the amount of currency, which acts as a very hard, very low cap on economic activity.

Throughout history precious metals have been used as currency. When people lost confidence in the government for a variety of reasons (including debasing the currency), they started to hoard the good currency. This is why we find coin hoards throughout the ancient world from t8me to time. Inevitably hoarding currency has led to a decline in trade, which has led to an economic crash.

It is the lack of trade due to restrictions on currency that is the problem. Putting the dominant global currency on the gold standard simply isn’t possible.
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Old 11-29-2019, 10:18 AM
 
Location: Living on the Coast in Oxnard CA
16,164 posts, read 27,369,918 times
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Lets say that you are debt free, own your home outright, have resources where you can survive without money, can work or trade something of value for food and water.

If the money fails will the services of the Government fail? Will the water get shut off? Will the utilities fail?

Is there some kind of projection on how bad things can get?
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Old 11-29-2019, 10:33 AM
 
Location: Living on the Coast in Oxnard CA
16,164 posts, read 27,369,918 times
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Quote:
Originally Posted by fishbrains View Post
My point is that gold has no intrinsic value. It’s value is what we assign to it.

Jewelry is more valuable than bullion because it is pretty, sentimental, takes more labor and skill to produce, and may be antique. Collector coins are similarly valuable because of their history, their guarantee of purity, and their mystique.

Aesthetic value, sentimentality, skill, history, etc are all attributes that we, as humans, have arbitrarily assigned to things.

Gold has value only as far as humans want it to do something with it. Many other things have similar value. Buildings, food, clothing, artwork, fuel, roads, animals, economic activity, ... The American dollar is backed by these things, and maintains its value as a token representing these things. Gold maintains its value because it is pretty, and is a token representing pretty.

Putting a currency on the gold standard only has the effect of creating a very hard, very low cap on the amount of currency, which acts as a very hard, very low cap on economic activity.

Throughout history precious metals have been used as currency. When people lost confidence in the government for a variety of reasons (including debasing the currency), they started to hoard the good currency. This is why we find coin hoards throughout the ancient world from t8me to time. Inevitably hoarding currency has led to a decline in trade, which has led to an economic crash.

It is the lack of trade due to restrictions on currency that is the problem. Putting the dominant global currency on the gold standard simply isn’t possible.
From Investopedia:

"From a elemental perspective, gold is the most logical choice for a medium of exchange for goods and services. It is abundant enough to create coins, but rare enough that not everyone can make them. It doesn't corrode, providing a sustainable store of value, and humans are physically attracted to its color and feel.

Societies, and now economies, have placed value on gold, thus perpetuating its worth. It is the metal we fall back on when other forms of currency don't work, which means it always has some value as insurance against tough times."


Gold maintains its value because it does not corrode like buildings, food, clothing, artwork, fuel, or roads. Gold doesn't cost you money to maintain like animals. Gold is easier to trade than economic activity. Most trades people don't want to trade their service for a service that they don't need now or ever. They will trade for gold though. They know that they can trade the gold for a service that they do need.

The fact is that someone may value the clothes they are selling or the food that they are selling, unless I value them I am not going to offer them much of anything. If they need my service I will want something that I value or that I know someone else will value. Gold had done that for thousands of years now and wil continue to do that for thousands of years to come.
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Old 11-29-2019, 10:55 AM
 
Location: Western Washington
9,683 posts, read 8,874,508 times
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Quote:
Originally Posted by SOON2BNSURPRISE View Post
From Investopedia:

"From a elemental perspective, gold is the most logical choice for a medium of exchange for goods and services. It is abundant enough to create coins, but rare enough that not everyone can make them. It doesn't corrode, providing a sustainable store of value, and humans are physically attracted to its color and feel.

Societies, and now economies, have placed value on gold, thus perpetuating its worth. It is the metal we fall back on when other forms of currency don't work, which means it always has some value as insurance against tough times."


Gold maintains its value because it does not corrode like buildings, food, clothing, artwork, fuel, or roads. Gold doesn't cost you money to maintain like animals. Gold is easier to trade than economic activity. Most trades people don't want to trade their service for a service that they don't need now or ever. They will trade for gold though. They know that they can trade the gold for a service that they do need.

The fact is that someone may value the clothes they are selling or the food that they are selling, unless I value them I am not going to offer them much of anything. If they need my service I will want something that I value or that I know someone else will value. Gold had done that for thousands of years now and wil continue to do that for thousands of years to come.
Sure, gold has some properties that we value. I do not deny that. I will point out that the ability to coin it is irrelevant. Most currency is not actually exchanged in physical form any longer. We use credit cards, wire transfers, and the like. I spend tens of thousands of dollars in electronic form annually, but probably only a few hundred in cash. The ability to coin is obsolete.

My point is that even those properties are relatively arbitrary. I cannot eat gold, use it for shelter, or clothe myself with it. In Maslow's Hierarchy, gold doesn't even rate. It is merely a proxy for some amount of the other things.

There are threads scattered throughout CD with people singing the praises of a currency backed by precious metals while at the same time denigrating fiat currency. All currency is fiat currency, and proponents who want to limit the amount of currency to the value of some sort of precious metal are delusional. It simply isn't possible.
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Old 11-29-2019, 11:02 AM
 
Location: Nebraska
1,918 posts, read 2,377,734 times
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Quote:
Originally Posted by Hoonose View Post
Gold coins archaic and new are certainly currency.

Gold bullion is not easily or commonly used as money.
I used to think the same as you, 30 years ago. But, I've had time to research it and realize that I was grossly wrong.

US stamped gold coins are official US money according to the treasury. In most states, sales tax isn't applied to gold acquisition because it is consider an asset transfer from the dollar to Gold.

BTW, technically Gold IS money and the dollar is currency. Our culture has transpose the 2 meanings to be the same.
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Old 11-29-2019, 11:12 AM
 
10,703 posts, read 4,971,514 times
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Quote:
Originally Posted by Garthur View Post
On another point, for those that thing the dollar would never collapse, they must have blinders on. Since the dollar was taken off the gold standard it has been collapsing. Todays dollar is only worth 2 cents compared to the dollar just a few decades ago.

So what? What matters is not just how much an individual dollar is worth but also how many of them do you have? Who has more money - the one with ten dollars or the one with 200 nickels? There are 2000x more dollars in circulation today than there were 100 years ago.
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Old 11-29-2019, 11:17 AM
 
10,703 posts, read 4,971,514 times
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Quote:
Originally Posted by fishbrains View Post
Gold has value only as far as humans want it to do something with it. Many other things have similar value. Buildings, food, clothing, artwork, fuel, roads, animals, economic activity, ... The American dollar is backed by these things, and maintains its value as a token representing these things. Gold maintains its value because it is pretty, and is a token representing pretty.

That's the part that many don't get. If you're tied to a "gold standard" then the sum value of all other things can only equal the sum value of all gold. Which is ridiculous. Rather than being tied to a single commodity, fiat currency is tied to everything.
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Old 11-29-2019, 11:19 AM
 
3,896 posts, read 3,615,022 times
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About 10 years ago the Wall Street Journal published an editorial by an economist arguing for a return to the gold standard, that is a return to the gold-backed dollar.

He argued that gold had a stabilizing effect that would reduce fluctuations in the dollar's value, and would soften and limit economic recessions.

This was before the age of Bitcoin, which seems like a Ponzi scheme, but who knows, perhaps it will emerge as a major currency eventually. Seems like cryptocurrency is really based on computer processing throughput, which is constantly changing. Whereas, gold is a static thing that is generally increasing in value.

A number of years ago, my brother started buying gold, and he now has tremendous value in gold. A very solid investment, like all of his investments. I like to joke that everything he touches turns to gold...literally!
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