Controversial? Whoa... - Page 2

MagnaCentipede · 02-29-2008, 01:50 PM

Personally, no. But it's been an established standard for far thousands of years, which puts it ahead of a 200-year government.

Also, a currency with any backing is better than one with none. A currency on old popcicle sticks at least ensures that there is a stick for every promisary note. That's the whole point of currency -- that it equates to SOMETHING.

Mudshark · 02-29-2008, 01:58 PM

Quote:

Originally Posted by Switchcraft

Is there any reason that you think gold is valuable other than people "say so?"

It's value fluctuates, but (unless some basement alchemist is successful in the near future) it is a *limited* resource. It's the 'limited' part that ensures that gold will always have some value. There are dozens of examples of paper currency that are absolutely worthless today.

Kerostasis · 02-29-2008, 02:27 PM

Given the choice of believing the creator of a conspiracy movie, or believing the official statements of the Federal Reserve, when the question is what sort of federal mandate governs the Federal Reserve, I'm going to go with the Fed. The fact that the movie creator "warns" us that "everyone else you ask will lie to you" doesn't make me want to believe him any more. Doesn't he have every bit as much reason to lie as they do? As much as most of you distrust the government, it isn't known for lieing about its own publicly available regulations.

Birdman1011395 · 02-29-2008, 05:07 PM

Quote:

Originally Posted by Mudshark

It's value fluctuates, but (unless some basement alchemist is successful in the near future) it is a *limited* resource. It's the 'limited' part that ensures that gold will always have some value. There are dozens of examples of paper currency that are absolutely worthless today.

So the exact mechanism that makes gold valuable is not allowed to be used when it is simply money?

Mudshark · 02-29-2008, 07:13 PM

Quote:

Originally Posted by Birdman1011395

So the exact mechanism that makes gold valuable is not allowed to be used when it is simply money?

Sure it is. You know, supply and demand and all that...

The difference is (and I alluded to it in my previous post,) that we have no way to simply create more gold. This isn't true of bank notes. Read up on how the FED creates money to see how this relates directly to the current conversation. This might be a clearer description.

Also, gold will ALWAYS have some value because there isn't just a promise backing it up. To experience this; go to Nigeria and attempt to spend one of these, or go to one of the former Yugoslavian countries and attempt to spend an old school Dinara.

Can you still use these?

I'm not sure... maybe you can still exchange them for 'real' money...?

They still take gold though. Gold is and always will be a resource. Even if anyone could just simply bend down and pick up as much gold up off of the ground as they could carry, it would still have some value. People still make a living selling dirt and water.

A truckload of Biafran bills and $4.25(U.S.) will get you a cup of Starbucks joe.

Switch · 02-29-2008, 08:49 PM

edit deleted, someone already said it.

Gold is finite -- money gets printed x infinity

Switchcraft · 02-29-2008, 10:08 PM

21 June 1999: Gold was $252.90/oz
26 February 2008: $948.90/oz

That seems like a pretty big swing to me. There's no reason to expect that gold would be a "stable" currency.

MagnaCentipede · 03-01-2008, 01:29 AM

Don't ya just wanna slap 'em?

Since the dollar isn't pegged to gold, gold is going to fluctuate like any other trade good, like hogs, oil, and frozen concentrated orange juice.

Since the dollar is fiat, it is highly succeptable to inflation, which means the $ tag on an ounce of gold increases over time.

Since the dollar is unstable and gold is more-stable (we're working with relativity here) people will pay more to convert an unstable asset into a stable asset, which means the $ tag on an ounce of gold increases over time when confidence in the best-wishes behind the fiat $ decreases.

If anything, gold has been losing value over the years, no-matter the nominal dollar value. The world is far more interested in utilitarian metals (Al, Zn, Cu, Ni, et cetera) and energy (in all its forms, oil, gas, frozen concentrated orange juice) than pretty yellow stuff that's really only good for a few things: Book in-lays, electrical contacts, and improving the look of a gangster's smile a little bit.

ScratchMonkey · 03-01-2008, 08:20 AM

The last thread where the Fed came up:

http://www.tacticalgamer.com/sandbox...inflation.html

Yes, gold has intrinsic value, for the same reason oil and other commodities do. It's not just that it's limited in supply. It's used in electronics and jewelry.

But that's not enough to make it useful as money. Gems and oil and grain have been used as money in the past. Gold is also easily divisible (a shortcoming of gems) and easy to carry large values (a shortcoming of oil and grain).

Virtual money (such as the Fed created when it went off the gold standard) is simply a promise of future taxation.

Paper money isn't quite the same thing. Paper money is a token that you hold for future redemption in something of actual value. The Fed's paper money can be redeemed for its virtual money. Similarly, you can hold papers that you can later redeem for commodities, and in principle you could use that paper as money, if the law allowed it.

ScratchMonkey · 03-01-2008, 08:26 AM

Quote:

Originally Posted by MagnaCentipede

Don't ya just wanna slap 'em?

Since the dollar isn't pegged to gold, gold is going to fluctuate like any other trade good, like hogs, oil, and frozen concentrated orange juice.

The trick is to recognize that the dollar is also a commodity, just like hogs and oil. You can turn the math around measure any commodity in terms of the others. So you could hold gold (or hogs) constant and look at how many ounces (or butts) a dollar was worth over time.

It's not that gold was rising, but that the dollar was plummeting. (As you say, gold has actually declined.)

Mudshark · 03-01-2008, 01:30 PM

Quote:

Originally Posted by ScratchMonkey

Similarly, you can hold papers that you can later redeem for commodities, and in principle you could use that paper as money, if the law allowed it.

This is exactly what the original version of paper money was. When it was tied to gold that commodity was the gold itself. Previous to that, the bank notes could be tied to all kinds of commodities, but more often than not, the bank notes themselves served as payment.

The difference now is that the commodity that the dollar is tied to is debt. Specifically, the national debt. The bank can give a dollar bill because somewhere, someone owes a dollar. In this case, those people that owe the dollar are the American taxpayers as a whole. If the national debt were paid tomorrow, the bank would need to find some other commodity to back it's money with...

Quote:

Originally Posted by Federal Reserve Bank of San Francisco

If the U.S. Treasury were to pay off the national debt (see Dr. Econ, August 2000 answer, "What would be the likely effect of completely paying off the public debt?" http://www.frbsf.org/education/activ...2000/0009.html), then the Fed would have to acquire assets other than Treasury securities to hold in its portfolio. Is that possible? Again, let me quote from Purposes and Functions:

In theory, the Federal Reserve could provide or absorb bank reserves through market transactions in any type of asset. In practice, however, most types of assets cannot be traded readily enough to accommodate open market operations. For open market operations to work effectively, the Federal Reserve must be able to buy and sell quickly, at its own convenience, in whatever volume may be needed to keep the supply of (bank) reserves in line with prevailing (monetary) policy objectives. These conditions require that the instrument it buys or sells be traded in a broad, highly active market that can accommodate the transactions without distortions or disruptions to the market itself.3

So, while it might be possible in theory for the Fed to purchase precious paintings, it may not work well in practice.

http://www.frbsf.org/education/activ...2001/0103.html

02-29-2008, 01:50 PM	#16 (permalink)
MagnaCentipede Join Date: May 2007 Posts: 1,957	Re: Controversial? Whoa... Personally, no. But it's been an established standard for far thousands of years, which puts it ahead of a 200-year government. Also, a currency with any backing is better than one with none. A currency on old popcicle sticks at least ensures that there is a stick for every promisary note. That's the whole point of currency -- that it equates to SOMETHING. __________________

02-29-2008, 08:49 PM	#21 (permalink)
Switch Join Date: Mar 2007 Location: NJ Posts: 1,238	Re: Controversial? Whoa... edit deleted, someone already said it. Gold is finite -- money gets printed x infinity __________________ \|TG\|Switch Better known as: That noob who crashed the chopper. That noob who ran over the mine. That noob who TK'd me with a sniper rifle. That noob who hit that APC at 300m with light AT! Our APC...

02-29-2008, 10:08 PM	#22 (permalink)
Switchcraft Join Date: May 2003 Location: New York, NY Age: 31 Posts: 1,096	Re: Controversial? Whoa... 21 June 1999: Gold was $252.90/oz 26 February 2008: $948.90/oz That seems like a pretty big swing to me. There's no reason to expect that gold would be a "stable" currency.

03-01-2008, 01:29 AM	#23 (permalink)
MagnaCentipede Join Date: May 2007 Posts: 1,957	Re: Controversial? Whoa... Don't ya just wanna slap 'em? Since the dollar isn't pegged to gold, gold is going to fluctuate like any other trade good, like hogs, oil, and frozen concentrated orange juice. Since the dollar is fiat, it is highly succeptable to inflation, which means the $ tag on an ounce of gold increases over time. Since the dollar is unstable and gold is more-stable (we're working with relativity here) people will pay more to convert an unstable asset into a stable asset, which means the $ tag on an ounce of gold increases over time when confidence in the best-wishes behind the fiat $ decreases. If anything, gold has been losing value over the years, no-matter the nominal dollar value. The world is far more interested in utilitarian metals (Al, Zn, Cu, Ni, et cetera) and energy (in all its forms, oil, gas, frozen concentrated orange juice) than pretty yellow stuff that's really only good for a few things: Book in-lays, electrical contacts, and improving the look of a gangster's smile a little bit. __________________

03-01-2008, 08:20 AM	#24 (permalink)
ScratchMonkey Join Date: Aug 2005 Location: San Pablo, California Posts: 4,565	Re: Controversial? Whoa... The last thread where the Fed came up: http://www.tacticalgamer.com/sandbox...inflation.html Yes, gold has intrinsic value, for the same reason oil and other commodities do. It's not just that it's limited in supply. It's used in electronics and jewelry. But that's not enough to make it useful as money. Gems and oil and grain have been used as money in the past. Gold is also easily divisible (a shortcoming of gems) and easy to carry large values (a shortcoming of oil and grain). Virtual money (such as the Fed created when it went off the gold standard) is simply a promise of future taxation. Paper money isn't quite the same thing. Paper money is a token that you hold for future redemption in something of actual value. The Fed's paper money can be redeemed for its virtual money. Similarly, you can hold papers that you can later redeem for commodities, and in principle you could use that paper as money, if the law allowed it. __________________

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