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 Replies: 44 / Views: 4,587 |
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Valued Member
United States
112 Posts |
I believe Texas, Arizona and Utah already have or are planning gold and perhaps
silver depositories. These will serve to break the lock the Fed has on issuing
our currency and create competition. Eventually, as state issued gold and or silver backed
money holds its value better than the Fed "dollar" against inflation more
and more people may want to hold and use them.
Also, I believe in world history there has never been an instance of the world
reserve currency being "devalued" until after reserve status is lost and a currency
crises ensues... (or visa versa)
The value may raise and fall against other currencies and commodities like it does
now influenced by economic conditions and interest rates.
The states I mentioned before are at least positioning themselves to be able to
protect their residents from the reckless amount of debt we have amassed in the
event that the world loses faith in our currency.
I have read nothing about the creation of a "new dollar" backed by gold and
equivalent to 100 greenbacks in current value. I would love to know more about
this topic.
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Pillar of the Community
Canada
5253 Posts |
It is all very well to talk about "gold-backed currency", but nowadays most transactions are electronic. It is not like there will be a lot of shifting of metal discs all of a sudden.There would have to be some serious thought about how this would work. If everyone who had the banknotes suddenly wanted the gold, the system would rapidly collapse. An economic system cannot work if everyone converts their wealth and puts it in their mattress. Stability and confidence is more of a priority, in my opinion, than a gold standard. After all, right now anyone of us can get small amounts of gold at the current price of $1200, so in that sense paper IS convertible to gold.
If your $50,000/ year salary suddenly became $500 gold, what would your mortgage/ car payment be in that new system?
And don't forget that if actual coins were circulated, they would wear and it would cause the gold to gradually disappear.
These are just a few random thoughts. It deserves a well-researched paper to discuss the implications.
Edited by oriole
02/04/2017 7:01 pm
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Valued Member
United States
112 Posts |
The thinking behind the depositories is the states will issue paper money "backed" by their
gold depository holdings.
While at the same time letting gold and silver be used to pay debts at current value.
No more of this "50 dollar" denominated eagle really worth $1245...
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Rest in Peace
United States
233 Posts |
I thought that Milton Friedman put this all to bed decades ago when he explained that the money supply must increase at the same rate that the economy grows, much like the way your blood supply must increase as your body grows.
If the money supply grows more slowly, the economy is choked.
If the money supply grows more quickly, you get inflation.
Since a perfect match is unlikely, 'we' have opted for a 2% inflation target to be sure that the money supply never restricts the economy.
Tying the value of the currency to any 'fixed' asset is a recipe for economic stagnation because it ties the size of the economy to the size of that asset.
The idea that some sort of collapse (social, economic, moral) will lead people to abandon the use of money is silly; consider, from our lifetime, Cambodia, Rwanda, South Sudan, or the above-cited Zimbabwe.
We like to joke that memory is the second thing to go.
Well, for sure, the use of money is the last thing to go.
Cheers,
/s/ ikeyPikey
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Valued Member
United States
112 Posts |
Friedman missed that the demand for money is as important as the supply...
I agree that for any inflation to be sustained it must be accommodated by increases in the money supply. But the current attempt at a "2% inflation target" using phony inflation numbers and hedonic "adjustments" is a farce, as is our current "economy."
The fed has been forcing the rate of interest below its market rate thereby expanding the money supply which then artificially stimulates the economy. It will end in tears.
In collapse it seems that whatever is currently being used as money, stops being used as money and other things replace that "money" be it other currencies, cigarettes, booze etc.
Finally, in all of your examples Cambodia, Rwanda, South Sudan, Zimbabwe when the paper went bad I bet people living there wished they had some "metals."
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Rest in Peace
United States
233 Posts |
Quote:
... Friedman missed that the demand for money is as important as the supply ... The overseas demand for US Dollars is exactly why we have been able to greatly expand the money supply without significant domestic inflation. The eco-system has gotten larger and, frankly, domestic inflation is about the only way to know if we are over-doing it. Quote:
... using phony inflation numbers ... Arguments over every macro-economic metric - how to measure GDP, how to measure price levels, how to measure unemployment - have raged in all of the 49 years since I took my first course in economics. Calling them 'phony' debases the public space. For the uninitiated: One example is whether/not the price of housing should be included in the month-to-month 'inflation' reports, because people do not move that often ... therefor, most people's cost of housing is, in the short term, always stable and, therefor, any change in house prices means little/nothing to their monthly budget. Q/ Should we include housing prices in the month-to-month inflation index, or not? Quote:
... In collapse it seems that whatever is currently being used as money, stops being used as money ... Only in the (post-apocalyptic) movies. To repeat: Cambodia, Rwanda, South Sudan, Zimbabwe ... Cheers, /s/ ikeyPikey Edited by ikeyPikey
02/04/2017 11:25 pm
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Valued Member
United States
112 Posts |
How about this, in collapse they keep adding more and more zeros to the money as it buys less and less (because no one wants it) until finally they stop using the current iteration or back it with something real?
These collapses have occurred as you well know.
Our economic numbers are fabricated to achieve political ends. Take a look at shadow stats if you wish.
Overseas demand for our dollar is due to the dollar being the reserve currency of the world. It is good to see we agree on this point. If anything were to upset our reserve status it could unleash the inflation genie.
Edited by TroyWhite
02/05/2017 10:14 am
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Pillar of the Community
Australia
7096 Posts |
There are alternatives to using the USD as a reserve currency such as the Yuan or Renminbi and if that was to happen it would pretty much signal the collapse of the USD.
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Bedrock of the Community
United States
17884 Posts |
Quote:
Also, I believe in world history there has never been an instance of the world
reserve currency being "devalued" until after reserve status is lost and a currency
crises ensues... (or visa versa) Well how many world reserve currencies have there been? I mean OFFICIAL world reserve currencies. Has there been any besides the US dollar? Quote:
If your $50,000/ year salary suddenly became $500 gold, what would your mortgage/ car payment be in that new system? 1/100th what they are now. Any such revaluation would have to include a provision that all prices and contracts currently in place would undergo the same revaluation. The revaluation doesn't really change anything, it just lets you use smaller numbers. Quote:
And don't forget that if actual coins were circulated, they would wear and it would cause the gold to gradually disappear. That was true back before 1933 when gold coins were in circulation as well. |
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Valued Member
United States
112 Posts |
Quote:
There are alternatives to using the USD as a reserve currency such as the Yuan or Renminbi. Right now the yuan or renminbi is not ready for a proper free market and cannot be the reserve because they are pegging it to a basket of currencies that includes the dollar. If they remove the peg and let it freely float it may cause markets to gyrate. Quote:
Well how many world reserve currencies have there been? Portugal, Spain, Netherlands, France, Great Britain, USA. Every 100 years or so the reserve current reserve has lost that status. Every transition was a period of great suffering marked by economic hardships, revolutions, and wars... Quote:
Any such revaluation would have to include a provision that all prices and contracts currently in place would undergo the same revaluation
It tends to be a bit more messy than this. It is a very interesting subject, and we are living in interesting times. |
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Rest in Peace
United States
233 Posts |
Quote:
... in collapse they keep adding more and more zeros ... These collapses have occurred as you well know ... We all remember the pictures of the Weimar guy with the wheelbarrow-full of banknotes on his way to buy a loaf of bread. But it was a wheelbarrow-full of banknotes, not gold or silver trinkets. Quote:
... There are alternatives to using the USD as a reserve currency such as the Yuan or Renminbi ... Q/ What central bank, in what country, is going out of their way to hold Yuan or Renminbi? Quote:Quote:
... Well how many world reserve currencies have there been?... ... Portugal, Spain, Netherlands, France, Great Britain, USA ... Every one of the 'reserve currencies' on that list (except the last) was at all times convertible to metal. The vagaries of trade may have resulted in banks holding balances of these different currencies from time-to-time, but the idea that bankers held balances of French Francs in the 1700s in the same way that bankers the world over hold American Dollars today is, well, fanciful. Currencies were different. Banking was different. This seems like a good time to point-out that the very term "reserve currency" is a construct that has no meaning beyond "the foreign currency bankers currently prefer to hold". It is not a matter of law, except insofar as individual countries might dictate policy to their central banks. In fact, it is fair to say that the term 'reserve currency' did not exist prior to 1955. Cheers, /s/ ikeyPikey  |
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Rest in Peace
United States
233 Posts |
. The Good Life Under The Gold Standard:Quote:
... In the early 1850s, there was much economic prosperity in the United States, to a major extent stimulated by the great amount of gold discovered and mined in the California Gold Rush, which greatly expanded the money supply. By the mid 1850s, the amount of gold mined began to decline, which caused western bankers and investors to become wary. Eastern banks became cautious with their loans to the west ... Quote:
... The sinking of the SS Central America contributed to the panic of 1857, as New York banks were awaiting a much-needed shipment of gold. American banks did not recover until after the civil war ... https://en.wikipedia.org/wiki/Panic_of_1857 ... The Panic of 1857 https://en.wikipedia.org/wiki/SS_Central_America ... The SS Central America Cheers, /s/ ikeyPikey |
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Valued Member
United States
112 Posts |
Quote:
This seems like a good time to point-out that the very term "reserve currency" is a construct that has no meaning beyond "the foreign currency bankers currently prefer to hold".
The reserve currency is the currency that the World prefers to use to conduct trade. Our dollar is used by many nations when they conduct trade among themselves. Our reserve status has been called an "exorbitant privilege." |
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Pillar of the Community
United States
4085 Posts |
I'd want to be on the gold standard if I lived in a gold house too.
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Valued Member
United States
112 Posts |
Quote:
American banks did not recover until after the civil war .. . Cut to today, after nearly destroying the global economy in 2008, 2009 American Banks and Bankers received bonuses! Their bad decisions cost millions of lost jobs and homes. They have recovered quickly with all the free money "created" for them out of thin air and handed out to them and their friends at no cost. Free money for them, and no interest on our savings for us, for years. Next, they want to abolish money itself. Ask yourself how will you collect coins if money itself is made electronic? Or will the hobby die off as we die off? |
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Posted 02/04/2017 6:49 pm
