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 Replies: 28 / Views: 2,689 |
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Rest in Peace
United States
9104 Posts |
Until 1972, PM backed all currencies to some degree, from the £ sterling (silver) to currencies backed by USD, in turn backed by gold.
That means at least half the lifetimes of just about all of us, and all the lifetimes of many, we've lived with unbacked (fiat) money. Simply because it was "always that way", we view it as "normal".
It also means that for 6000+ years, money meant PM. When PM was removed, everything went to pot. Every time.
I suggest we should be looking at the period 150 times as long for guidance, not just what we're most familiar with.
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Pillar of the Community
United States
1450 Posts |
I couldn't agree with you more!
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Pillar of the Community
United States
3077 Posts |
bring back the gold and silver standereds
but I was talking about this at the local coin shop today and they couldnt wrap there head around the concept the dollar is suppose to be a unit of weight not a unit of paper and how would spot price effect the purchace power
and another comment they said was "bad money chases out good money" that kinda confused me and they went on about hoarding that turned into the copper cent discussion and ended up w/ me buying a buffalo copper round (i know a PT Barumn moment)but this shop has always delt square w/ me so if it hepls pay the rent ...
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Pillar of the Community
United States
842 Posts |
Hey! I like my fiat money. It is worthless garbage in my eyes, so basically everything I "buy" is free! And with it I can buy real money!  |
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Pillar of the Community
United States
3077 Posts |
i too have been stacking real money as well
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Pillar of the Community
United States
564 Posts |
I don't think we will ever be on a pm standard again because of the large debt our country has. The more inflation the dollar has the less actual value the government owes. Also with a currency pinned to a pm the currency can change in value a great deal. Look at the silver and gold market and how it can move up and down 10% easy. Having "flat" currency is the same as holding pm in the sence that you have to have a buyer who will accept it at a price. If silver and gold were worth less than our current currency we would not be talking about this. That's just my 2 cents.
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Rest in Peace
 United States
9104 Posts |
Gresham's Law ("bad money chases out good money") says people will hoard good money and spend bad money. If I owe you a quarter, and the law says a clad quarter is the same as a silver one, I'll spend the clad and keep the silver.
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Pillar of the Community
United States
3670 Posts |
As far as going back to pre 72 standards, two years before I arrived....
The video you posted of the engineer the other day, did he not say that the amount of gold known to exist compared to the amount of currency in circulation now world wide is less than one percent?
And if silver is in such short demand as the engineer also pointed out, we sure can't afford to divide out another large slice of the pie on the overall amount of silver mined each year, to be shared between all the industry's who all have huge silver demands of their own already....
I guess what I am saying, is it even possible to go back to that standard worldwide speaking, as there just is not enough gold and silver to do so....
But, we are still a ways off from a one world currency/government I would think, so what about just say for the USA for example or a smaller country, could it still be feasible?
Edited by Silverhawk74
06/12/2011 01:25 am
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Rest in Peace
United States
9104 Posts |
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Bedrock of the Community
Australia
21786 Posts |
Germany, after the First World War, had to pay war reparations in gold marks. Gold was drained out of Germany and the personal life savings of the German population was wiped out, because the circulating currency could no longer be backed by gold.
That set the social conditions in place, for the rise of Hitler to power in 1933.
If there is no gold backing, the only way the currency can be backed is if the total production value of the population (Gross National product), is large enough to to keep every one paid enough to pay their own bills and for the national interest bill to be paid also. Otherwise, the country will default on it's debts. Unemployment has to be kept low enough for this to happen. Both the U.S. and Chinese Governments know this.
With the rapid development of the Chinese economy, one wonders if it is growing too fast, and sudden instability in employment of the Chinese population comes about. That would create a major crisis in China, and chain react into the World economy.
The interest bill on the $13 trillion debt in U.S. has been bought in bonds by the Chinese. If they had not bought that debt, the U.S. would not be able to pay for the imported goods that the Chinese make and need to keep their economy going.
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Pillar of the Community
United States
1064 Posts |
I do have have a question on how the PM would tie to 'money'; for example, I often go for weeks w/o spending even a bit of actual 'currency' - my paycheck goes to checking/savings via EFT, I buy pretty much EVERYTHING with a credit card (doesn't seem to be any low-amount limit anymore, i.e. Dunkin Donuts takes 'em, parking meters, gas pumps, supermarket 12-or-less line...), all my bills are paid online or auto-withdrawal from checking, and then I pay my credit card online. Plus, I only write a few checks a year. It's becoming a currency-less economy, at least for me. Weren't the PM's releated to the 'printing' of monies?
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Pillar of the Community
United States
564 Posts |
You do understand that your credit card uses real money to pay the store and you pay your credit card off with real money. Even though you see it as a number on a screen it is the same as a stack of bills.
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Rest in Peace
United States
9104 Posts |
Under fractional reserves, banks can create money. Example: You sell $100,000 of gold you mined, put the $100,000 in the bank. Bank has to hold 10% in reserve, lends $90,000 to a guy to buy a house. Seller of the house deposits $90,000. Bank has to hold $9,000, lends $81,000 to a business for inventory. The people that sell the inventory put the $81,000 in the bank. Etc ad nauseum. What started out as $100,000 deposit is now $100,000 in the first guy's account, $90,000 in the house seller's account, and $81,000 in the accounts of the inventory sellers. Total $271,000. What's actually sitting in the bank is $27,100 in reserves, plus $72,900 in deposits that haven't been lent out (yet). The bank has $271,000 in liabilities (the money the bank owes depositors), and a fraction of that, $100,000, in cash. In effect, it "created" $171,000. If the gubmint raises the reserves, the bank can lend out less money in each step. Less money lent out = less interest earned. Once the bank lends out more "rounds" of money, they eventually get to where the only money they have must be held as reserves. They can't lend more money until they get some loan repayments, or you mine and sell another $100,000 in gold. Unless the gubmint steps in and hands them a billion dollars and says, "here, use this wisely". "Banksters" (rhymes with gangsters) and "wisely" should rarely be used in the same paragraph. That's why we're in the mess we're in. The gubmint gave the banks billions by buying mortgages on overpriced property from them, but people can't afford the mortgage payments, which is the money the bank needs to get back to make new loans. edited to correct some math that most readers wouldn't catch anyway.  Edited by biggfredd
06/12/2011 12:37 pm
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Pillar of the Community
United States
1064 Posts |
Quote:
You do understand that your credit card uses real money to pay the store and you pay your credit card off with real money If by 'real money', you mean cash currency, I would say no, when I pay my credit card bill, or VISA pays Walmart, I'm guessing it's EFT transfers, same as I use, same as Paypal uses. I'm guessing cash is a small part of all this. |
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Pillar of the Community
United States
564 Posts |
$100.00 us paid by visa, paypal exc. Is the same thing as cash. They are both worth the exact same thing.
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Pillar of the Community
United States
1064 Posts |
I'm not saying they're not the same thing, or REPRESENT the same thing. I'm asking how PM backs up 'money' that only exists in transactions, where no actual printed currency changes hands.
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Replies: 28 / Views: 2,689 |
Posted 06/11/2011 11:08 pm
