Gold Over $800 Per Ounce

Off Topic Politics & World Issues
101

[quote]LIFTICVSMAXIMVS wrote:
Zap Wrote:
If there were no inflation the economy would be stifled due to limited money supply. It is likely the better production methods would not have been put into effect.

I don’t think so. Man by his nature is in constant refinement of his condition. He always seeks greater wealth. Wealth is production.

Imagine being stranded on a deserted island with no means for trade. You would have to be self-sufficient. Your standard of living – wealth – would be your ability to produce. This does not change even with the ability to trade. Money, which you earn for your labor, is a proportion of your productivity.
[/quote]

Exactly. Man seeks to expand wealth. A money supply pegged to a pile of metal will not work. The money supply needs to expand!

102

[quote]rainjack wrote:
orion wrote:
That is exactly the point. You cannot multiply it as you please.
Hence a rock hard currency. The natural order of things would be a slight constant deflation each. The pie would still grow and the dollar would slowly and steadily increase in value.

Like Zap you are confusing the pie with the fork that is used to divide it, which is a horrible analogy btw.

The pie should be the value derived from the exchange of goods and services.

What does gold - or any natural resource - have to do with that, unless you are specifically trading for said resource?

Everyone wants the dollar tied to a precious metal, but I don’t see any other country lining up to do it with their currency.

Just smells funny to me.

[/quote]

The Austrian idea is (as in Austrian economics) is that money is a good like anything else. In order not to have to barter you choose something people are likely to want in the future, that is easily divisible and yet extremely durable and rare.

A rare metal is almost ideal, therefore gold and silver moneys evolved.

So if those currencies seem to be the natural order of things and all fiat currencies in history have failed, the question should rather be:

Why paper money?

Cui bono? Not the public that´s for sure.

103

[quote]Zap Branigan wrote:
Headhunter wrote:
…

“Money is the material shape of the principle that men who wish to deal with one another must give value for value.”
— Ayn Rand

Money is not given value by theft or by looting. Money is made possible only by men who produce. Men produce only on the supposition that they can trade their product fairly and honestly. If the means of trade are degraded by counterfeiting and the use of fiat money, then trade is NOT being done fairly and honestly. We then have a society that becomes less fair and less honest. Hello to our modern world…

The Rand quote is nothing but an attempt to redefine money from what it is to what she wishes it to be.

Money is not permanent. It is subject to entropy and decay like the rest of the universe.

Can someone show me otherwise?[/quote]

We do not need to because money is an abstract idea and therefore NOT subject to decay or entropy.

If you look at the Byzantine Empire the moneys purity was strictly enforced by the Emperor and it was basically stable for hundreds of years and the East Roman Empire lived, while the West Roman Empire died.

Monies were allways gold and silver so that their value would stay the same, you are assuming that what you know is the natural order of things when it is a historic abberation.

What you call entropy is the 21st centuries version of coin clipping or shaving, it´s not the universe, it is people doing it.

104

[quote]rainjack wrote:
Headhunter wrote:
In 1900, a $20 gold piece probably got you a nice new suit and dinner in a nice restaurant. I suspect that at $840 today, you could get a decent suit and a dinner in a nice restaurant. The $20 piece would actually sell for more, due to numismatic reasons. But the idea is the same.

No it won’t. A $20 gold piece is only worth 20 bucks. You would have to cash in the gold piece for it’s current cash value to get the suit and dinner.

People make the assumption that no inflation is good, or that it has only happened since we left the gold standard.

Inflation is not a bad thing.

[/quote]

Oh yes it is, like any form of theft.

105

[quote]Zap Branigan wrote:
You guys still have not answered my question. The reason is because there is no answer.

Money, like everything else must decay. There is no free lunch. You cannot stockpile money and expect it to have the same value in 50 years.

If you artificially link money with a fixed commodity like gold you will artificially stifle natural inflation (money decay or entropy) and you will end up paying a horrendous price due to the scarcity of money. See the Great Depression.

Fiat money works. A gold standard cannot in a large economy. That is the reason no one uses a gold standard!

[/quote]

Thats a lot of assumptions.

Care to back thatup with anything?

106

[quote]Zap Branigan wrote:
LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
Money, like everything else must decay. There is no free lunch. You cannot stockpile money and expect it to have the same value in 50 years.

Not true. If instead of paper money you had to actually carry gold and there were the same inflation rates we have seen do you honestly think that it could be sustained?

Imagine going from having to pay 1 oz of gold to having to pay 20 oz of gold then having to pay 400 oz of gold for the same items due to inflation. The laws of supply and demand would not allow this.

Paper is not money. Money is a commodity that originates in the market as a desirable exchange item. Travel back in time and try to give paper to someone for a chicken and you’d get laughed at.

Wow. You just don’t get it. Money decays just like everything else. The main method of its decay is inflation.

Imagine keeping a chicken for 40 years or even 40 days without adding any extra work to it (food etc.). It is not worth the same. It is worthless. Money is the same way! There is nothing magic about money that lets it transcend the laws of nature.

The gold standard cannot work long term. Value of gold is based on speculation and has little to do with anything.[/quote]

The next round of baseless assumptions noone gets but you?

Money dos not decay. It shouldn´t.

Its whole purpose was and is to store value for Christs sake.

107

[quote]Zap Branigan wrote:
LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
Stop using talking points and think for yourself. Gold is a metal. It can be used as a form of money but it is not money!

Chickens can be used as a form of money!

The point is that they are a commodity and carry a value in that people want them. You could use chickens as money and it would be more stable than paper until avian flu killed them.

You cannot inflate or deflate gold…or any other earth element for that matter. That is why gold WAS used as money. It originated as a desirable good in the market place and is divisible into smaller units.

Why should paper have natural inflation but not gold?

Gold is a metal. It is not goods and services. You really are not thinking this through.

Money is a representation of goods and services. It is not gold. When gold was the standard people had to barter to get around it.

When governments started issuing paper backed by gold the scarcity of money created the great depression.

Gold is not money.

Gold is not money.

Gold is not money.[/quote]

Uneducated assumptions vs 3.0.

108

[quote]Headhunter wrote:
Zap Branigan wrote:
LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
How many weeks labor did it take to earn a suit then? How many weeks now?

Labor does not set value since by definition production is measured by the good being produced. To earn a suit it takes as long as it takes to produce that same suit – maybe one per hour by primitive methods though I am not sure.

If there were no inflation the suit would be cheaper today because production methods have made the supply greater. A good hand made suit would still be expensive, and indeed they are.

If there were no inflation the economy would be stifled due to limited money supply. It is likely the better production methods would not have been put into effect. The limited money supply may even cause deflation. People would default on loans because they are paying a higher price than the current value. Banks would go out of business. People would jump off roofs. Banks would not be able to fund the people that develop superior production. All because the money supply is artificially limited because someone decided that a yellow metal is the means to trade.

Money represents goods and labor. If you stockpile goods and labor without any further attention it will decay. This is what inflation is. This is a natural law. Entropy exists. Unless you add energy into a system things fall apart. You keep avoiding this!

Entropy is a physical process. Money is an abstract concept, and people attach the concept to a physical entity. A physical entity may decay; a concept cannot.

Does the concept of ‘table’ decay if an individual table rots and falls apart?

[/quote]

Amen!

109

[quote]Zap Branigan wrote:
Headhunter wrote:
Zap Branigan wrote:
LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
How many weeks labor did it take to earn a suit then? How many weeks now?

Labor does not set value since by definition production is measured by the good being produced. To earn a suit it takes as long as it takes to produce that same suit – maybe one per hour by primitive methods though I am not sure.

If there were no inflation the suit would be cheaper today because production methods have made the supply greater. A good hand made suit would still be expensive, and indeed they are.

If there were no inflation the economy would be stifled due to limited money supply. It is likely the better production methods would not have been put into effect. The limited money supply may even cause deflation. People would default on loans because they are paying a higher price than the current value. Banks would go out of business. People would jump off roofs. Banks would not be able to fund the people that develop superior production. All because the money supply is artificially limited because someone decided that a yellow metal is the means to trade.

Money represents goods and labor. If you stockpile goods and labor without any further attention it will decay. This is what inflation is. This is a natural law. Entropy exists. Unless you add energy into a system things fall apart. You keep avoiding this!

Entropy is a physical process. Money is an abstract concept, and people attach the concept to a physical entity. A physical entity may decay; a concept cannot.

Does the concept of ‘table’ decay if an individual table rots and falls apart?

Money represents physical goods and labor. It is not abstract. You still have not addressed it. You keep trying to redifine money so the laws of nature don’t apply. They fact that you have to do this to make the system you support work should tell you that your system will only work in fantasy land.[/quote]

Ok, then the killer question for you.

IF money decays all by itself and that is the natural order of things why does the Fed constantly have to expand the money supply?

Can you take away the Feds interference and still have inflation of that magnitude?

If not, why not, if money is subject to entropy?

Next lesson:

Songs are not influenced by gravity!

110

[quote]Zap Branigan wrote:
LIFTICVSMAXIMVS wrote:
Zap Wrote:
If there were no inflation the economy would be stifled due to limited money supply. It is likely the better production methods would not have been put into effect.

I don’t think so. Man by his nature is in constant refinement of his condition. He always seeks greater wealth. Wealth is production.

Imagine being stranded on a deserted island with no means for trade. You would have to be self-sufficient. Your standard of living – wealth – would be your ability to produce. This does not change even with the ability to trade. Money, which you earn for your labor, is a proportion of your productivity.

Exactly. Man seeks to expand wealth. A money supply pegged to a pile of metal will not work. The money supply needs to expand![/quote]

Why?

111

[quote]rainjack wrote:
Headhunter wrote:
This is false. The United States dramatically inflated its money supply to help the British. The British had instituted welfare and wanted to keep inflating to pay for it all. The US agreed to inflate so gold would not flow out of Britain. We had then a very speculative stock market bubble. Economic History 101.

Currency was backed by gold back then.

You say pegging currency to gold prevents inflation.

You just contradicted yourself.

If the gov’t can create new currency at will even when said currency is backed by gold, what incentive is there to go back on the gold standard?

[/quote]

They all agreed to inflate together to prevent one nation (the USA) from accumulating all the gold, which would have weakened and caused a run on the pound. It was our way of propping up the British, allowing them to inflate more.

This caused a widespread bubble, which popped in 1929.

Actually, the money end and the stock crash had a lot more to do with the end of British hegemony. Things usually go crazy when the hegemon falls, until someone else steps in to run things. Germany tried it and got beat down by the Soviets and the USA.

112

I am done. No one has addressed my argument in the least.

You go ahead and think money and gold are some magical concept that violates all laws of nature. You obviously refuse to even give thought to it. You are merely regurgitating talking points.

Have fun in your fantasy land.

I prefer the real world and it seems like every other nation that uses fiat money agrees with me.

113

[quote]Zap Branigan wrote:
I am done. No one has addressed my argument in the least.

You go ahead and think money and gold are some magical concept that violates all laws of nature. You obviously refuse to even give thought to it. You are merely regurgitating talking points.

Have fun in your fantasy land.

I prefer the real world and it seems like every other nation that uses fiat money agrees with me.[/quote]

I have.

Several times.

You just choose to ignore it.

It is just that where I bring arguments and historic examples you can easily research for yourself ,you think drawing assumptions out of your ass will do the trick.

That would work in a lot of areas, but not in this one.

114

Maybe next time those “Paulbots” say something you do not understand you might consider that a degree in engineering is not the end all and be all of economic knowledge.

I am considering opening a thread on bridge building.

My inner structural engineer wants out and I remember building stuff in a sand box.

115

Just fo shits and giggles a few arguments pro inflation just to show that it can be done:

  1. Inflation forces people with money to either invest it or spend it. If they just hide it under their mattress it gets worth less and less.

One could say that inflation is good for the economically active and slowly takes the non-players off the field.

  1. Collective wage negotiations like in Western Europe make wages sticky, i.e they cannot be lowered below a mandatory minimum.

Inflation however leads to a constant devaluation of money, so while nominal wages stay the same, their real value constantly drops.

That leads to at least some flexibilty in wages, even in semi socialist Western Europe.

Without that mechanism the basic unemployment in WE would be even higher.

There are of course other arguments for inflation, I just happen to think that they are BS and these are of course only the benefits of a low inflation, high inflation is an economic nightmare.

116

My gold is $300 an O

117

[quote]belligerent wrote:
My gold is $300 an O[/quote]

It must be that sticky hydro shit.

118

[quote]LIFTICVSMAXIMVS wrote:
belligerent wrote:
My gold is $300 an O

It must be that sticky hydro shit.
[/quote]

The Canadian good stuff?

119

[quote]orion wrote:
LIFTICVSMAXIMVS wrote:
belligerent wrote:
My gold is $300 an O

It must be that sticky hydro shit.

The Canadian good stuff?
[/quote]
you better believe it!

For those with slightly lower standards and a brother-in-law with questionable allegiances you can find it in the States for $100.

120

[quote]orion wrote:
Zap Branigan wrote:
I am done. No one has addressed my argument in the least.

You go ahead and think money and gold are some magical concept that violates all laws of nature. You obviously refuse to even give thought to it. You are merely regurgitating talking points.

Have fun in your fantasy land.

I prefer the real world and it seems like every other nation that uses fiat money agrees with me.

I have.

Several times.

You just choose to ignore it.

It is just that where I bring arguments and historic examples you can easily research for yourself ,you think drawing assumptions out of your ass will do the trick.

That would work in a lot of areas, but not in this one.
[/quote]

I have asked several times why no country pegs to gold. You have yet to answer that question - “it makes governments rich” crap not withstanding.

I am as anti-big gov’t as the next guy, but you of the Major Burns crowd make little sense when you are talking to anyone but yourselves.

HH has contradicted himself at least once without so much as a cursory, “oops” from him.

You have your nose so far up the US economy’s ass that you can’t even offer a decent reason as to why, if the gold standard is so wonderful, the Euro is still pegged to the dollar.

Wanna know the quick, easy reason why you guys are even posting? Because the dollar is weaker than it’s been in almost 30 years. Most of you were not a twinkle in your daddy’s eye yet. Every time the dollar slides and gold makes a move - the gold standard whiners show up. The disappear as soon as the dollar starts coming back.

It is cyclical. It will come back around. It always has. It always will.

Kids these days.