May 31, 2010

The Metamorphosis (with apologies to Franz Kafka)
— Monty

One morning, as Monty was waking up from anxious dreams, he discovered that in his bed he had been changed into a monstrous gold bug.

One of my abiding fascinations has been with the concept of money. What exactly is money, anyway? Why is gold deemed to be valuable? How is the "value" of money set? Who or what determines what a service or good costs?

These turn out to be vastly complicated questions that have spawned legions of philosophers, statisticians, and economists over the millennia to figure them out. That we continue to have financial crises shows that these philosophers and economists still don't understand the subject as well as they'd like to. I'm not going to go into any kind of detail here on the nature and purpose of money. Many thick, impenetrable books have been written by people far smarter than I about the subject. There have even been some short, readable books written about it: Economics In One Lesson by Henry Hazlitt is a good one. My purpose is more to start in medias res, so to speak, and figure out what "money" is right now to citizens of the United States of America (and other western nations).

If you have some paper money and some change, lay them out in front of you: the paper money on one side, the coins on the other. If you have credit cards, put them in the third pile. Your checkbook (and debit card, if you have one) goes in the fourth pile. If you have hard currency (gold or silver coins), put them in yet another pile. If you own bonds (Treasuries or T-Bills), put them in yet another pile. Stock certficates: another pile. These various piles each represent distinct kinds of "money" that the average citizen makes use of. Yet they are very different.

Let's start with the paper currency. US paper currency is in the form of Federal Reserve Notes (part of a broader class of Bank Notes), and are "legal tender" for all debts, public and private (just like it says on the front of the bill). US currency, like nearly all paper currency in the world today, is fiat currency: that is, it's value is not backed by a hard asset like gold or silver. It's notional worth rests on the "full faith and credit" of the US Government. Its value "floats" according to the economic picture at any given time.

At various times in US history, the US Dollar has been backed by gold and/or silver reserves. For a long time, a US Dollar was directly convertible into gold -- you could give a banker a ten-dollar bill, and he was obliged to give you ten dollars worth of gold. This regime of gold-convertability was a foundation of the post-World War II "Bretton Woods" financial system, and was the main driver behind the resurgence of the world economy after the war. It's also the main reason the US Dollar became the de facto world reserve currency (a status it still enjoys). For a few decades, the US dollar became, for all intents and purposes, synonymous with gold.

In 1971, Richard Nixon, in a move that came to be known as the "Nixon Shock", abolished the convertability of dollars to gold and later abolished the gold-standard entirely. The US dollar thus became a purely fiat currency (fiat from the Latin, meaning "let it be so"). This move was to prevent a run on America's gold reserves by foreign banks, and to allow for the inflation of the money supply to pay for war expenses and ballooning federal entitlement spending. As a result, the United States entered a period of very high inflation combined with low economic growth that didn't end until the early 1980's.

Your paper money has no intrinsic value. It is not backed by any goods or assets beyond the "full faith and credit" of the government. It is, at base, a zero-percent bearer bond, or promissory note.

Let's move on to the pile of coins. If you had made this pile with coins minted prior to World War II, you might with justice call the silver-colored coins "silver" and the copper coins "copper", but that is no longer true. Genuine silver, gold, and copper coins are called specie coins because they intrinsic as well as declared value. Modern US coinage is composed mainly of base metals whose bullion value is far below the declared value (by design). There are exceptions: the US Mint does produce legal-tender coins of pure silver (Silver Eagles) and gold (Gold Eagles). However, these coins are intended for numismatic (coin collecting) and bullion purposes, not as currency (since the value of the metal far exceeds the declared value of the coin). Your pennies, nickels, dimes, quarters, and half-dollars are also fiat currencies in that their declared value is far higher than their bullion value.

Now for the gold and silver pile. If you have any pure gold or silver, you own "hard money". Hard money is not fiat money; it has innate value. The delcared value on my American Silver Eagle coins is $1US, but the bullion value of a 1 oz. coin (as of this writing) is around $19US. A 1oz Gold Eagle coin has a face-value of $50US, but a bullion value of around $1300US (as of this writing). The relative value of precious metals -- gold, silver, platinum, and palladium -- is set by the international market, not by governments.

Gold is basically eternal: it doesn't rot or degrade or become corrupted. It is comparatively rare. It is easily worked, and is esthetically very pleasing. This is why humans have from prehistoric times used gold as a form of wealth. It is a very durable value-store. Other precious metals have similar characteristics. Many people prefer this kind of wealth to fiat currencies because of this kind of durability: empires rise and fall, fiat monetary systems come and go, but gold and silver remain. Their prices may fluctuate up and down, but they have never gone to zero (unlike every fiat currency in the history of the world).

Let's move on to the checkbook (and debit card, if you have one). Much of an average American's money never exists in physical form at all (i.e., probably 70% of your yearly income is never in the form of bank-notes or coins or hard assets like gold or silver). Your "money" exists in the form of digital bits in a bank computer system. Your "money" is in turn part of a larger pile of bank "assets" that also do not exist in terms of actual money. When you write a check against your bank account, you are basically issuing a promissory note: a lein against your account, redeemable by the owner of the note. The bank agrees to honor your note, payable in cash or equivalent. But even the owner of the note rarely redeems the note in the form of cash; the redemption is usually electronic, and involves simply decrementing one electronic account (yours) and incrementing another (the redeemer of the note). Very few transactions of this kind actually involve physical money at any point in the chain.

Now for the credit cards. A credit card is actually an instrument whereby you issue debt at a given rate of interest to the lending bank. The bank agrees to buy your debt, and you agree to make periodic payments on that debt (at some predetermined rate of interest plus principal). Your debt is a liability on your ledger and an asset to that of the bank, but it doesn't represent any real money at all: it's the promise of future money to be paid over time. Debt is senstive to overall economic conditions. High interest rate environments punish debtos but reward savers and investors; low interest rates reward debtors but punish savers and investors. Extremes of either kind are very bad, but it's hard to maintain a "happy medium". Credit debt tends to be a very bad kind of debt if done to excess, because over time the interest payments can actually exceed the borrowed principal; indeed, simply making the interest payments on loans can drive some people into bankruptcy. A little credit is not a bad thing; in fact, it's essential. But too much is a road to ruin because it eats up too much future income and retards growth.

If you own bonds (whether government-issued or corporate-issued), you basically own debt: someone else charging something on their "credit card". Your "bond" is a promissory note: a promise to repay a loan at a given rate of interest. When your bond reaches maturity -- which can be as short as a month or as long as thirty years -- you will receive the principal amount plus the negotiated interest rate. The interest rate of a given bond reflects the riskiness of the underlying loan.

Government bonds of various kinds are assumed to have very low risk, and thus tend to have fairly low interest rates: between zero and 5 percent, usually, depending on the kind of bond. Government bonds -- municipal bonds ("munis"), long-term federal government bonds ("long bonds") or short-term bonds ("T-bills") -- are considered very safe investments by both individuals and foreign governments. Much of America's expenses are funded by sales of bonds.

Corporate bonds tend to be riskier than government-issued debt and thus carry higher rates of interest (though some corporate debt is considered nearly as "safe" as government debt). If you are invested in a bond-based mutual fund, as many 401(k)-type plans are), then you are probably invested in the bonds of many Fortune 500 companies. Companies also issue "commercial paper", which is very short-maturity debt that is used to fund day-to-day activities. Banks and other companies are usually the purchasers of this kind of debt. (And a failure to sell commercial paper can rapidly kill a large company, as this is a major funding source.)

Let's move on to your stock certificates. If bonds are basically debt, then stocks represent equity. A stock certificate, or share, is basically a very small portion of a company's total assets (physical plant, assets, liabilities, everything). When you buy stock in a given company, you are making a bet that the company will grow or at least maintain its state. When the company grows, so does the value of your stock; if the company shrinks, so does the value of your stock. Some stock also pays dividends -- if a company makes a profit, the board or owner may decide to distribute that profit to shareholders in the form of additional stock or even cash. (A dividend is to a stock what an interest payment is to a bond, roughly speaking, except that a dividend is not assured.) Stocks tend to be more speculative than bonds -- earnings and profits are not assured. Interest on a bond is guaranteed, but a stock may go up or down depending on market conditions. A stock may appreciate by double or triple, but it may also go to zero. Thus equities are considered far riskier assets than bonds.

For average people, the above instruments represent their "money". Yet very little of an average person's wealth exists as paper currency or coins. And a very small percentage of Americans actually hold assets in "hard" money: gold, silver, or specie. An average American's wealth, at any given time, rests almost entirely on a shared trust between the citizen, the banks, and the government. We trust our banks to issue currency and redeem promissory notes; we trust the government to maintain the value of the national currency. The banks and the government trust us to live within our means and to pay off our debts.

At base, though, all trust resides in the ability of the government to maintain stability of the economy. The past several months has strained this trust-relationship to the breaking point. Everyone, from individual citizens to the government itself, has spent far beyond its means. The world is awash in debt, with an dwindling market of buyers willing to purchase that debt at rates the borrowers can afford. The fiscally prudent -- the savers and investors -- have been brutally manhandled by zero-percent interest rates and constant "gaming" of financial markets by large banks and soverign governments. There is going to be a huge pressure on the Federal Government in coming years to pay off these debts with new money rather than by imposing austerity on the citizens -- in other words, by printing money. Inflation.

In the low-trust environment which seems to be looming, many people -- including Yours Truly -- are beginning to wonder if it would be wise to impose some discipline on the world economy. One of the ways of doing this is to "short" fiat currency and go "long" on hard money like gold, silver, and other precious metals, or on commodities. I'm not an alarmist -- not yet, anyway -- but I have begun to build a little cache of precious metals. And I don't mean in terms of "gold certificates" or shares in a gold ETF, either: I mean real, actual metal.

I'm seeing a nation and a world full of people who seem to believe that monstrous debts can be run up indefinitely with no day of reckoning. It's possible that they are right...but I suspect not. In keeping with my "hope for the best, prepare for the worst" theory of the world, I'm buying some gold and silver. Not a lot. I'm not dumping all my investments into bullion. But I have become concerned enough to put a significant amount of my assets into money that the federal government has no control over.

It was a wake-up call for me, to realize how little of my money was actual money. I'm being forced to trust people (the government, the banks) whom I consider to be fundamentally incompetent and rather stupid for my own wellbeing. That doesn't sit well.

*NOTE: I am not by any means a financial expert, so if I have made a mistake in the essay above, I'd appreciate it if the brainy Morons would put me some knowledge.

Links on what money is, and how we got where we are:
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Bretton Woods
"The Nixon Shock"
Fiat Money
Hard Currency
Commodity Money
Banknotes
Legal Tender
Governments and Money

Posted by: Monty at 08:19 AM | Comments (326)
Post contains 2417 words, total size 15 kb.

1 How does Cousin Floyd fit into all this?

Posted by: Waterhouse at May 31, 2010 08:31 AM (u+34p)

2 I understand it and you better have it, bitch.

Posted by: Ol' Dirty Bastard at May 31, 2010 08:32 AM (8WOM0)

3 I wouldn't go too far into gold Monty. Gold is a hedge and the best it can ever do is break even.  It is far too late to "invest" in gold now as the major price increases have already occurred.

We are at a point now where one of two things are going to happen. We will either recover from this financial mess after the communists are ousted from DC or we will collapse utterly. If we recover the price of gold will fall.

If we collapse the rest of the world is likely to collapse as well.  In that event gold is not going to do any good. You can not eat gold and you can not use it for defense. While true you could melt it and cast it into bullets but that would be some damn expensive bullets.

Posted by: Vic at May 31, 2010 08:34 AM (6taRI)

4 One morning, as Monty was waking up from anxious girly dreams, he discovered that in his bed he had been changed into a monstrous gold bug pup tent.

Posted by: conscious and supports Israel 100% at May 31, 2010 08:36 AM (YVZlY)

5 Monty, you are better off learning poetry, jokes, and stories that will amuse your Warlord and in doing so keep you alive and well fed.

Posted by: eman at May 31, 2010 08:36 AM (kgGdn)

6 I owned a Fiat Currency once. 2-litre 4-cylinder with overhead cams; disc brakes on all 4 corners; five-speed syncromesh gearbox. It handled well, and the chicks loved it, but it wasn't very reliable. It  must have been made of some kind of particularly low-grade Italian steel because one day I woke up to find a large pile of rust in the driveway where the car had been.

Posted by: Waterhouse at May 31, 2010 08:37 AM (u+34p)

7

Monty, do you happen to have the Cliffs notes version of what you posted above? I'm a moron for chrissakes, it'll take me days to read that.

Posted by: Blazer at May 31, 2010 08:39 AM (t72+4)

8 That was a pretty good explanation of the intrinsic difference between "money" and "currency". Kudos. Having said that, the Full Faith and Credit ain't what it used to be since the commies took over.

Posted by: rawmuse at May 31, 2010 08:42 AM (pjZ+1)

9 You can not eat gold and you can not use it for defense. I've heard that, but you can't eat paper dollars either. Money isn't food, but money buys food (along with other necessaries). I am more confident in the purchasing power of hard money than I am of federal reserve notes over the long term. There was a time in America during the colonial period when our money supply was almost exclusively made up of foreign coins: Spanish, Flemish, English, French, Italian. It actually worked pretty well because the market enforced a fair exchange rate. Things only went to shit when the colonial government started issuing fiat currency. ("Bad money always drives out good money", or Gresham's Law.) Frankly, what I'd like to see is the money supply going private. There are few drawbacks, and many benefits, to a privatized money supply.

Posted by: Monty at May 31, 2010 08:42 AM (O3eFQ)

10 I thought the money supply was already private; Federal Reserve notes.

Posted by: rawmuse at May 31, 2010 08:44 AM (pjZ+1)

11 Frankly, what I'd like to see is the money supply going private. There are few drawbacks, and many benefits, to a privatized money supply. Posted by: Monty iMoney? McMoney? MontyBucks?

Posted by: eman at May 31, 2010 08:44 AM (kgGdn)

12

That's a really long post.  Are there any hobos in it?

Posted by: Cicero at May 31, 2010 08:45 AM (QKKT0)

13

One morning as Monty was waking up...

Aren't you Monty?

Posted by: rdbrewer at May 31, 2010 08:45 AM (AqzCg)

14 Good Job, Monty.

Thanks

Posted by: Retired Geezer at May 31, 2010 08:46 AM (5qacG)

15 Hey how much are my skittles and unicorn dung worth?

Posted by: Libtard at May 31, 2010 08:47 AM (4XzsU)

16 All this talk about money...blah....blah...blah... In my communist utopia money will be obsolete. (although you better hang on tight to your rice and bean ration cards)

Posted by: B. Obama at May 31, 2010 08:47 AM (uKraB)

17

Here's what's cool about gold.  Since it basically never disappears, the gold you've got on your finger could have adorned an Inca temple.

That's what's cool about gold.  Next question, please.

Posted by: Cicero at May 31, 2010 08:47 AM (QKKT0)

18

One morning, as Monty was waking up from anxious dreams, he discovered that in his bed he had been changed into a monstrous gold bug.






Monty, you wouldn't be Will Folks by chance would you?

Posted by: Blazer at May 31, 2010 08:47 AM (t72+4)

19 psst, Monty: it's "lien" not "lein"

Posted by: chemjeff the whispering grammar Nazi at May 31, 2010 08:47 AM (Gk/wA)

20 MontyBucks Now there's an idea.... MontyBucks, the official banknote of the AoSHQ Nation! Redeemable for Val-U-Rite Vodka, Cheez-Its, and "factory second" clothing at fine retailers near you! Backed by the full faith and credit of Morons everywhere.

Posted by: Monty at May 31, 2010 08:48 AM (O3eFQ)

21 I think that there is a very important part of "wealth documentation" in the West that has been overlooked, of recently.  In the end, contracts are the truly important pieces of paper in Western civilization.  More important than the currency.  More important than anything.  If the currency fails, that is a problem for the daily operation of the nation, but wealth is tied up in assets and contracts that establish the ownership of such assets.  That is where the true stability of society comes from.

Even worse than the current failing of our fiat currency, then, is the fact that the sanctity of contracts has been shit all over.  That is truly destabilizing.  Without the sanctity of contracts, our society is truly and deeply fucked.  But, our SCOTUS was happy to let this America-hating, criminal junta in Washington shit all over the concept of a contract in the Chrysler/GM fiasco, along with that insane ex-post facto yelping about the AIG bonuses (that the despicable, lying scumbag dems had insured in their criminal Porkulus).  Those events were far, far worse than the daily denigration of our currency and making a mockery of our monetary system.

In the end, even if the currency disintegrates, there are contracts establishing ownership and obligations.  Without those contracts having force ... there is NOTHING.  Nothing, at all.

Posted by: progressoverpeace at May 31, 2010 08:48 AM (Qp4DT)

22

Without those contracts having force ... there is NOTHING.  Nothing, at all.

But chaos.

Posted by: Cicero at May 31, 2010 08:50 AM (QKKT0)

23

MontyBucks

How much is that in Stanley Nickles?

Posted by: Stanley Hudson at May 31, 2010 08:50 AM (HPsbD)

24 What is the X-Change rate on Schrute Bucks?

Posted by: Dwight K. Schrute at May 31, 2010 08:51 AM (HPsbD)

25 progressoverpeace: That's a very good point. Rule of law is an absolute necessity for a functional market economy, and enforcement of contract law is a critical part of that. But the GM and Chrysler bailouts were pretty much a repudiation of that idea -- contract law seems to be whatever Uncle Sam says it is these days.

Posted by: Monty at May 31, 2010 08:53 AM (O3eFQ)

26 S&H greenstamps.

Posted by: TC at May 31, 2010 08:53 AM (4XzsU)

27 Yeah I have to agree with Vic on this one: don't buy gold.  It's pointless, except maybe on a nice watch or something.

If you are worried about the national economy collapsing, then it's going to take everyone down with it and neither gold nor dollar bills nor credit cards nor stock certificates will save you.

So if you really think that the world is coming to an end, learn a skill and buy supplies.  Those might actually do things for you.  Gold?  Not so much.

Posted by: chemjeff at May 31, 2010 08:53 AM (Gk/wA)

28 And I have always wondered why people find gold so fascinating, as opposed to some of the other elements.  Why not iridium?  It is rarer and prettier.  You'd think iridium would have displaced gold by now as the commodity of Chicken Little investors.

Posted by: chemjeff at May 31, 2010 08:54 AM (Gk/wA)

29 Monty, do you happen to have the Cliffs notes version of what you posted above? Your money isn't really money.

Posted by: Monty at May 31, 2010 08:54 AM (O3eFQ)

30

I have about 15% of my savings in gold and silver but if the US ever becomes insolvent it isn't going to be near enough to survive until, well I don't know what the until would be.

I suspect the country would turn into a lawless country with people taking what they want or need by force. So if you have a box of gold or a box of food you should also have a box of bullets and a rifle to protect it.

Posted by: robtr at May 31, 2010 08:54 AM (fwSHf)

31 Vic's basically right. With high inflation, gold's pretty good if you get in near the bottom. And get out at the top. Otherwise, eh.....you break even or lose money. However, if you want to have something for complete societal breakdown, look into a big-ass load of silver dollars. They're much more useful for day-to-day barter or exchange. That or the gold penny-weights that are used for jewelry casting, etc. The next two election cycles will pretty much determine what happens to the U.S. economically. God help us all if the Republicans don't get it or can't win big enough to reverse Obama's/Dims damage. That said, I don't think the time to panic is yet. November will tell a lot of the tale.

Posted by: naturalfake at May 31, 2010 08:55 AM (I49Jm)

32 So if you really think that the world is coming to an end I don't think that's the scenario. Rather, gold is a hedge against ruinous hyperinflation. Think hyperinflation, not Road Warrior societal breakdown. (And anyway, I have it on good authority that The Humongous will accept gold in trade for moldy bread and ten minutes alone with a wasteland chick.)

Posted by: Monty at May 31, 2010 08:56 AM (O3eFQ)

33 Isn't it curious that a perfect counterfeit isn't counterfeit?A murder is a murder, even if it remains undetected. Why isn't the same true for counterfeit currency?

Posted by: Bugler at May 31, 2010 08:57 AM (VXBR1)

34 I've heard that, but you can't eat paper dollars either.

If I felt like we we truly going into total collapse I would be buying food NOW, not harboring gold to buy it after the collapse.

Once the collapse occurs the only thing that will buy food or keep it in your possession is blood and lead.

This is a good site as they still have inventory:

http://tinyurl.com/5z3gsy

Posted by: Vic at May 31, 2010 08:57 AM (6taRI)

35 I have to agree with progressoverpeace about the importance of contracts.  Even if you abandon paper money, and sign a contract with someone that promises to  exchange goods or services for gold, the government can now come in after the fact and unilaterally rewrite the terms of that contract in favor of those in political power. 

It was the contract that gave birth to the European Renaissance in the depths of the Dark Ages, even though their money was still based on precious metals.  Unless we restore the enforceability of contracts, I fear a new Dark Age may be upon us.

Posted by: Siergen at May 31, 2010 08:57 AM (jMQcx)

36 I have it on good authority that The Humongous will accept gold in trade for moldy bread and ten minutes alone with a wasteland chick.)

Posted by: Monty at May 31, 2010 01:56 PM (O3eFQ)

Maybe we should be stocking up on gasoline.

Posted by: robtr at May 31, 2010 08:59 AM (fwSHf)

37 Elementary economics, I guess, but I suppose its shocking how many individuals DON'T know all this stuff.

For Monty, if you're concerned about currency erosion, you don't have to buy gold (or silver or any other metal).  Pretty much **ANY** hard asset (guns and/or ammo, cars, real estate, etc) can be expected to retain its value come currency implosion.

The only advantages to precious metals are that they are a. more portable (in terms of wealth/unit weight), and more universally accepted globally.

But come a true global apocalypse, you're going to have a hell of a time actually "spending" bullion.



Posted by: looking closely at May 31, 2010 08:59 AM (6Q9g2)

38 #7

That **IS** the "Cliffs notes" version.

In short, paper money is only as good as the gov't backing it, but gold has a pretty good historical record of never going to zero.


Posted by: looking closely at May 31, 2010 09:01 AM (6Q9g2)

39 Monty, do you happen to have the Cliffs notes version of what you posted above? I'm a moron for chrissakes, it'll take me days to read that.

In Max Max Beyond Thunderdome, there were a few unfortunates down in the bowels of the dome shoveling pigshit.

Tag, you're it.

Posted by: Additional Blond Agent at May 31, 2010 09:02 AM (SHKl9)

40 One thing that I think influences people on the need to buy gold, diamonds, etc during unsettled times is what went on in Europe in the 30s.  A lot of "smart" people sold their stuff and bought gold and diamonds.

The difference then was that people were buying gold and diamonds as "portable wealth" so they could flee Europe to a safer and more stable location.

If there is no safer or more stable location where that gold will have value then it does no good.

Posted by: Vic at May 31, 2010 09:02 AM (6taRI)

41 3 If we collapse the rest of the world is likely to collapse as well.  In that event gold is not going to do any good. You can not eat gold and you can not use it for defense. While true you could melt it and cast it into bullets but that would be some damn expensive bullets.
----------------
If we get into a situation where you need to melt your gold into bullets, I don't think "expensive" will mean what you think it means.

And don't forget that you can always beat it into jewelry to entice the local warlord's woman over into your teepee. Thus, it's intrinsic value.

Posted by: Anachronda at May 31, 2010 09:05 AM (LD+ZJ)

42 I hate apostrophes.

Posted by: Anachronda at May 31, 2010 09:05 AM (LD+ZJ)

43 The only advantages to precious metals are that they are a. more portable (in terms of wealth/unit weight), and more universally accepted globally. I agree, really. Gold and silver benefit from having thousands of years of history as value-stores, but they're not the only ones (or even the best ones, in the modern age). A privatized, asset-backed currency regime would solve a lot of the boom-bust problems in the capitalist/mercantilist countries, I think. Government monopoly over the issue of currency almost always leads to debasement and inflation of the currency; privatization would remove that tendency. It would also lead to a fairer and more transparent valuation of assets, I think.

Posted by: Monty at May 31, 2010 09:06 AM (O3eFQ)

44 Good read, Monty.  More people should endeavor to learn these things.

Have to disagree with Vic also, I think your covered the eating and the defense.  Only time will tell on everybody's predictions, but I think gold has a way to run as an investment and cannot be beaten as a safe haven.

As an investment goes, gold outpaced all other investments for the last ten years, and when you value it in terms of inflation (devaluation against the dollar) it has maintained very well.

What Monty is getting at here is what happens with a major dollar or worldwide currency collapse, what if nobody will accept your dollars?

One note Monty, assets into money that the federal government has no control over.  FDR outlawed and confiscated personal gold, unfortunately, a bank safe deposit box is not the place for gold if something like that happens again.

Posted by: Guy Fawkes at May 31, 2010 09:07 AM (7VvJB)

45 "Full faith and credit of the US government" means, inside the US at least, "full force and power of the US government." FDR banned the ownership of gold coin and bullion. Paper money was devalued against gold. Gold clauses in contracts were invalidated *retroactively*, and the Supreme Court upheld this action.

Posted by: ManeiNeko at May 31, 2010 09:07 AM (TiE76)

46 Pretty awesome shit right here.  I'm very very impressed.

Posted by: Truman North at May 31, 2010 09:08 AM (FjC5u)

47 11 iMoney? McMoney? MontyBucks?
-------------
Beenz. The '90s called and they want their dotcoms back.

Posted by: Anachronda at May 31, 2010 09:08 AM (LD+ZJ)

48

Okay, scratch that last post. 

If you have some paper money and some change, lay them out in front of you: the paper money on one side, the coins on the other.

Dude, what are you talking about?  Who the hell has bills?  What am I, Richie Rich or some shit?

Posted by: Truman North at May 31, 2010 09:09 AM (FjC5u)

49

If you are worried about economic collapse...learn a valuable skill set that will enable your survival. 

If you have to invest in something, land sufficient to survive on, weapons and ammo to protect it and yourself.  Learn to grow your own foods, and how to preserve them.  Learn how to raise animals to feed yourself and others. 

In a worst case scenario, I'll take a Chicken over a Ingot of almost anything but lead!.

Posted by: garrett at May 31, 2010 09:09 AM (HPsbD)

50 Kaffff-kaaaaaaa! (Kirkified). In all seriousness though that story made me almost give up in all literature. I hate the asshole friend of Kafka who published his works instead of burning them like Kafka asked. And I'm someone who measures their book collections in square footage.

Posted by: AFlyingSquirrel at May 31, 2010 09:11 AM (Y0O08)

51

Go with silver, not gold.

Gold may go up (but probably down in the long term), but if\when the shit hits the fan, are you gonna drop an ounce of gold for 20 lbs. of bean and 20 lbs. of rice so your family won't starver for the next month?

Better to part with 2 ounces of silver - ~$38.00 - than even 1\10 oz. gold - ~$150.00.

Silver is also set to go much higher in the mid term. Historically, the gold to silver exchange ratio has been about 15 to 1. It's currently something like 65 to 1.

Either gold will dramatically go down, silver wil go up, or they will both meet in the middle.

My bet is them meeting in the middle price wise.

I think it was sometime in the 80's that silver was up to around $50.00 per ounce. Just saying.

Posted by: theBman at May 31, 2010 09:11 AM (Ub8OU)

52 FDR outlawed and confiscated personal gold, unfortunately, a bank safe deposit box is not the place for gold if something like that happens again. Which is a good reason to buy hard assets with cash, and store them on your own premises. Uncle Sugar can only confiscate it if he knows you have it.

Posted by: Monty at May 31, 2010 09:11 AM (O3eFQ)

53 29 Your money isn't really money.
-----------------
RON PAUL!

(sorry; it just slipped out. don't know where it came from)

Posted by: Anachronda at May 31, 2010 09:11 AM (LD+ZJ)

54

Your money isn't really money.



I knew I should have converted my dollars into cubits when I had the chance.

Posted by: Blazer at May 31, 2010 09:14 AM (t72+4)

55

learn a valuable skill set that will enable your survival. 

Always a need for us. We'll be just fine.

Posted by: ladies employed in the oldest profession in the world at May 31, 2010 09:15 AM (+IAM2)

56 All your money are belong to us, bitches...

Posted by: The Chinese at May 31, 2010 09:18 AM (YVZlY)

57 Feel pretty safe having rural farm and ranchland, at least you can grow your own food, keep a few mama cows, goats, chickens.  Can trade food for booze and whatever else I need.

Posted by: beerologist at May 31, 2010 09:18 AM (r2UKM)

58 Where's Kratos, he had a word for this. I can't remember what it is though.

Posted by: robtr at May 31, 2010 09:19 AM (fwSHf)

59 Gold and silver has another advantage over other investments if it rises, heh, taxes, shhhhh.

I agree that if you buy gold as a safe haven (economic collapse), you should buy the lower weight, 1/10th oz, etc.

Anybody truly interested (and paranoid) should study the Argentine collapse, gold chains and jewelry were more accepted than coins because few people could value the coins or "give change".

Posted by: Guy Fawkes at May 31, 2010 09:20 AM (7VvJB)

60 55

learn a valuable skill set that will enable your survival. 

Always a need for us. We'll be just fine.

Posted by: ladies employed in the oldest profession in the world at May 31, 2010 02:15 PM (+IAM2)

Yes, I'd like to know what an ounce of silver will buy me...

Posted by: conscious, and testing the murky waters of sin at May 31, 2010 09:21 AM (YVZlY)

61 Yes, I'd like to know what an ounce of silver will buy me...

Never been in that market, but I am guessing at today's price maybe an HJ.

Posted by: Guy Fawkes at May 31, 2010 09:23 AM (7VvJB)

62 "...money turns out to be be strange, insubstantial, and practically impossible to define. Then I began to understand that economic theory was really about value. But value is something that's personal and relative, and changes all the time. Money can't be valued. Value can't be priced. I should never have worried that I didn't know what I was talking about. Economics is an entire scientific discipline of not knowing what you're talking about." from the great P. J. O'Rourke's Eat the Rich. Money is a laughably indefinable expression of quantity that sometimes/never/almost relates to real-world supply and demand. No one knows what it really is or worth, and that's what keeps it going.

Posted by: theoneandonlyfinn at May 31, 2010 09:25 AM (lV4Fs)

63 Which is a good reason to buy hard assets with cash, and store them on your own premises. Uncle Sugar can only confiscate it if he knows you have it.

Posted by: Monty at May 31, 2010 02:11 PM (O3eFQ)

Exactly.  And I would add that one of the effects of the Fed keeping interest rates so low is that there is very little cost to someone holding assets outside of the system.  When all they are paying is a little over 3% for 10 year bonds, it isn't a bad idea or bet (considering all the risks today) to have assets kept in hard form at home.  This even applies to the fiat currency, as there is always the possibility of accounted dollars being destroyed while physical dollars maintain a certain amount of tradable value.

And the Fed can't stop themselves from doing this, since any rise in interest rates, which would draw dollars and assets back into accounts in the system, would kill us as our debt service goes through the roof.

BTW, excellent article, Monty.  I've never been a gold bug, but I've never entertained the actual disintegration of our monetary system as a looming reality.  I didn't think our government would be that careless and irresponsible.  The election fo the Indonesian Imbecile, especially after the credit crisis showed us the sitaution we were in, changed all that for me.  This is one of the reasons why I remain convinced that America actively chose national suicide with that election.  Everyone knew how close to the edge this country was and they decided, "Fuck it.  Fuck it all."  And "fuck it all" they did.

I would add one bit about gold, it seems to be the institutional store of value above currency - i.e. always of value for large wealth transactions and which larger organizations will use as transferable value.  For local interactions and the amintenance of smaller amounts of wealth, I would go with the BMan's recommendation for silver (though silver is far too bulky for large repositories of value).

Posted by: progressoverpeace at May 31, 2010 09:26 AM (Qp4DT)

64 "WhatchyouTalkin'bout! Monty?"

Posted by: Obama Clutching his Stash at May 31, 2010 09:28 AM (HPsbD)

65

What is money?

I dunno, but it ain't yours bitch.

Posted by: Barky O at May 31, 2010 09:30 AM (fLHQe)

66 .money turns out to be be strange, insubstantial, and practically impossible to define I tend to think of "money" (in the abstract sense) as a battery -- a way of storing energy for later use. It's also a way of making expended energy generic so it can be "spent" on anything. If I dig a ditch for Farmer John, he could "pay" me with half a beef or several bushels of corn; but if he pays me with money, I can use my labor to buy anything. I store my labor in the battery (money), and then discharge that energy later for a good or service. Bad money leaks energy; good money retains it. Gold and silver are, historically, the best value-batteries we have ever discovered.

Posted by: Monty at May 31, 2010 09:30 AM (O3eFQ)

67
When the going gets tough, chocolate bars and nylons will get you more pussy than Frank Sinatra.

Posted by: GI Joe at May 31, 2010 09:32 AM (Oxen1)

68

I tend to think of "money" (in the abstract sense) as a battery -- a way of storing energy for later use.

so, women have nuclear power plants between their legs?

Posted by: garrett at May 31, 2010 09:33 AM (HPsbD)

69

which gets me thinking...could 'Peak Pussy' ever be reached????

Posted by: garrett at May 31, 2010 09:35 AM (HPsbD)

70 All I need is some rope, a knife, and a fid.

Posted by: MacGyver at May 31, 2010 09:35 AM (G60Nl)

71 When the S hit the F in Argentina lots of places preferred to be paid in gold. They all had scales and test kits for it. They only wanted at least 18K gold and wouldn't accept 14k gold. The smart way to jeep gold was in the form of gold chains. To buy something you would simply take out your pocket tool and cut off enough links to make your purchase.

The Frogs screwed the U.S. in a lot of ways during the 60's and 70's but demanding full gold value for American cash backed 22% by gold was a real pricks trick. That's reason enough to hate them forever.

And last -- there's nothing wrong with a fiat currency if it's managed properly. But right now it's being abused so badly that we might soon revert to precious metals and barter. And lead might become a new precious metal.

Posted by: Ed Anger at May 31, 2010 09:35 AM (7+pP9)

72 OT: Nice 'n sunny at Arlington Cemetery and a downpour of rain in Chigago. Karma is a bitch.  Fuck You Obama.

Posted by: conscious, and testing the murky waters of sin at May 31, 2010 09:38 AM (YVZlY)

73 which gets me thinking...could 'Peak Pussy' ever be reached????

Not in my experience.

Posted by: Will Folks! at May 31, 2010 09:39 AM (u+34p)

74 "I'm buying some gold and silver."

While probably a smart, long term move, consider this in your 'shit-hits-the-fan' scenario:

You can't eat it.
I have a gun.

Posted by: GarandFan at May 31, 2010 09:40 AM (6mwMs)

75 Hmm. Let me go back over to last night's gun thread and see what I should be picking up. Never thought I'd live to see times like this.

Posted by: joncelli at May 31, 2010 09:40 AM (c4gj8)

76 70

which gets me thinking...could 'Peak Pussy' ever be reached????

Posted by: garrett at May 31, 2010 02:35 PM (HPsbD)

That might be messing with science in a way that should probably be avoided, but hey, I'll volunteer to participate in the research.

Posted by: conscious, and testing the murky waters of sin at May 31, 2010 09:41 AM (YVZlY)

77 man, Will. That took 4 minutes...slow here, today.

Posted by: garrett at May 31, 2010 09:42 AM (HPsbD)

78

That might be messing with science in a way that should probably be avoided, but hey, I'll volunteer to participate in the research.

Just because the research seems daunting is no reason to let the question go un-answered...in the 'Spirit of Scientific Inquiry' and all that. 

**Gets out 'Grant Writing for Dummies'**

 

Posted by: garrett at May 31, 2010 09:44 AM (HPsbD)

79 All wealth is meaningless if you don't have a way to protect it.

Posted by: rawmuse at May 31, 2010 09:46 AM (pjZ+1)

80

I was worried for a moment that this would be a Paulbot anti-fed rant.  Thankfully, no.

People with no sense of history complain that fiat money allows the government to rob the wealthy by inflating the currency.  Historically, the government when in need of money would rob the wealthy by sending soldiers to rob the wealthy.  Confiscation of gold by needy governments happens as often as fiat currencies going to 0. 

Lest we forget, for much of the 20th century, it was illegal to own gold in America.  The government will always print money when it needs money - no monetary system can stop that.  A fiat currency is simply the least painful way to allow for that inevitability.

Have we made it so painless that we've enabled reckless government spending?  I rather think we'd have reckless government spending regardless, and, well, at least it's less painful.

Posted by: lgw at May 31, 2010 09:46 AM (QswAM)

81 well, that's an awful lot of words, but i'll ad my two cents: a few days ago i exchanged some money for a Palau Islands toluk. a toluk is a tortoise shell dish formed by softening in hot water and pressing into a wooden form; the dish is then ornamented by carving along the edges. the toluk itself is a form of money, in that it is a valuable kept by women to exchange for services or obligations such as in weddings or other social debt. it would be treasured and handed down generationally for future important payments" it's quite beautiful. (don't worry, it's early 19th century, so no turtles were harmed in the making of this dish. at least not recently.)

Posted by: gomm at May 31, 2010 09:49 AM (EA+Co)

82 lgw: An interesting case in the debasement of government currency is to look what happened to the Roman denarii. It went from being (fairly) fine silver in 211BC, and then began a great debasement under Nero. Finally, under (I think) Diocletian the Denarii was made of bronze and was almost worthless.

Posted by: Monty at May 31, 2010 09:52 AM (O3eFQ)

83

Of course, kings and queens throughout history have debased the currency.  By Henry VIII's death, English "hard" money was practically worthless.  Among Elizabeth I's many skills was accountancy; her austerity measures, while seemingly peculiar in some ways today, rebuilt the monetary structure onto sounder footing (although again, by the time of her death she--England--was in debt again).  The main reason for the French Revolution was the debasement of the currency by the indebtedness of the King (and his interest in our own Revolution).

Heck, even the pharoahs of Egypt, by their relentless provision for the afterlife, caused the indebtedness of the country and its descent into a satellite state of the Roman Empire.

I don't seem to have a point.here and am just babbling...

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 09:52 AM (GkYyh)

84 OT but on Facebook, all my lib idiot pals are commemorating all of the servicemen and women who died for "true freedom", which is commie code bullshit. "Freedom" doesn't need a quantifier. Pisses me off, yes, it does.

Posted by: rawmuse at May 31, 2010 09:53 AM (pjZ+1)

85 In a worst case scenario, I'll take a Chicken over a Ingot of almost anything but lead!. Posted by: garrett at May 31, 2010 02:09 PM (HPsbD) --------------------------------------- I'll bet you would, but I guarantee you'll be paying for that chicken's services, the easy way or the hard way.

Posted by: The Chicken's Pimp at May 31, 2010 09:55 AM (uKraB)

86 Pisses me off, yes, it does.

Yes, it does me too.
Reminds me of the discussion on that Slate forum yesterday.  One person wrote: "I will fly the flag outside my house as long as I have the freedom to do so."  An idiot lefty respondent wrote "why wouldn't you have the freedom to fly your flag?"

They take freedom completely for granted.  Absolutely 100% for granted.  It's sickening really that they think the purpose of the military is to plunder foreign countries and that the defense budget should be eviscerated in order to pay for single-payer health care.

Posted by: chemjeff at May 31, 2010 09:57 AM (Gk/wA)

87 Don't forget the Lace Wigs pile.

Posted by: davidt at May 31, 2010 09:59 AM (HtIec)

88

"Freedom" doesn't need a quantifier.

These people believe there is such a thing as 'more fair'.

Posted by: garrett at May 31, 2010 10:00 AM (HPsbD)

89 The advance of technology is the only thing that will save us now.

Posted by: John at May 31, 2010 10:01 AM (90oki)

90 The best definition of money is the one given by Ayn Rand in "Atlas Shrugged"...

Money is a tool of exchange, which can't exist unless there are goods produced and men able to produce them. ...

When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. It is not the moochers or the looters who give value to money. Not an ocean of tears not all the guns in the world can transform those pieces of paper in your wallet into the bread you will need to survive tomorrow. Those pieces of paper, which should have been gold, are a token of honor--your claim upon the energy of the men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle which is the root of money.

Posted by: Extreemism in the Pursuit at May 31, 2010 10:03 AM (YPjyl)

91

OT but on Facebook, all my lib idiot pals are commemorating all of the servicemen and women who died for "true freedom", which is commie code bullshit.

I got to thinking about posting a facetious response under my backwards-talking alter ego's handle, but then I thought again: Not today.

Posted by: FireHorse at May 31, 2010 10:09 AM (cQyWA)

92 People with no sense of history complain that fiat money allows the government to rob the wealthy by inflating the currency. My complaint about fiat money is that, historically, it is doomed. No fiat currency has ever lasted more than a couple of hundred years (and usually a lot less than that). But then, we are in uncharted waters in the world now: every nation in the world, as far as I'm aware, uses fiat currency. It's not like we can start using Spanish doubloons or British sovereigns if our own currency becomes debased to the point of uselessness -- European money is even more worthless than ours is. I still think that the privatization of money is the only way forward. I was convinced by Hayek's Denationalization of Money (which, given that it was written during the 1970's, showed some pretty impressive foresight on Hayek's part), which I recommend to people who are interested in the subject. You can find the PDF for free if you google around a little bit.

Posted by: Monty at May 31, 2010 10:11 AM (O3eFQ)

93

The best definition of money is the one given by Ayn Rand in "Atlas Shrugged"...

Speaking of, look at what the pinkos on facebook are saying......

(don't even bother reading the comments. waste.of.time.)

 

Posted by: laceyunderalls at May 31, 2010 10:13 AM (+IAM2)

94

Debased specie currency (which seems inevitable) makes it a royal pain to shop for anything.  Imagine you just want to buy a 6-pack of beer from the convenience store - now you have to haggle endlessly over the value of each individual coin, and it isn't your first 6-pack of the day.  No thanks!

Currently, each dollar of the M1 (currency plus checking/demand accounts) is backed by a dollar of "mortgage-backed securities", property of the Fed, which has to be an odd one for the history books.  The Fed also hase about 5 cents worth of gold for each dollar of the M1, which would seem to rule out Mad Max scenarios, currency-wise.  This makes Humongous sad.

(Actually, in a Mad Max scenario, black papper is your best bet - historically it has traded at its weigh in gold, it's no so hard to store, and it's cheap now.  Of course, it's a bit hard to resell if the whole wasteland thing doesn't pan out.)

Posted by: lgw at May 31, 2010 10:16 AM (QswAM)

95 don't even bother reading the comments. waste.of.time. That describes Facebook more generally. The quality of Facebook comments seem to track those on YouTube: which is to say, howler-monkey gibbering. I'm not the biggest fan of Atlas Shrugged (it's a damned silly novel, in fact), but it's a hell of a lot better than Das Kapital or the Communist Manifesto -- and has the overriding advantage of having been proven correct as times goes by.

Posted by: Monty at May 31, 2010 10:17 AM (O3eFQ)

96 A privatized, asset-backed currency regime would solve a lot of the boom-bust problems in the capitalist/mercantilist countries, I think. Posted by: Monty

I've seen similar arguments before but I honesty don't see any evidence for this.

Here's a list of recessions and panics in the US. If we look at the 1790 - 1920's lists, periods in which we had either specie currency or private banks issuing their own paper, we see no 4 year period without one event. That's hardly a good track record.

Posted by: Garbonzo the Garrulous at May 31, 2010 10:20 AM (zgd5N)

97

Well, if the collapse comes, I'm kinda doomed, being handicapable as I am only thanks to the mod cons.  What kind of gun is good for a small weak person to have?

Although I'm better off than the co-eds across the hall: When Snowmageddon fell, our building rep checked on all of us to make sure everyone was set for loss of power and heat, etc.  The co-eds chirped, "Oh, yes, we're ok, we stocked up on lots of microwave meals!"

I about fell over laughing.  Thanks for the food site, Vic!

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 10:20 AM (GkYyh)

98 Actually, in a Mad Max scenario, black papper is your best bet Sugar would trade high too. And salt, in certain areas. ("Worth your salt" comes from the Roman times when a soldier was paid with a ration of salt rather than coins.) In fact, commodities would probably trade at substantial fractions of gold: rice, beans, oats, flour, all kinds of stuff. In an Armageddon scenario, I'd much rather have guns, ammo, food, and potable water than gold. But I view that outcome as extremely unlikely. High inflation is a much more likely outcome, and gold or silver makes a dandy hedge in that scenario. (I also just bought a new car, so I can pay back my loan later in inflated dollars.)

Posted by: Monty at May 31, 2010 10:22 AM (O3eFQ)

99 Regarding gold and silver NEVER being worth ZERO.

In a world-gone-mad, Armageddon, you can be sitting on piles of gold.  At that stage of society; food, water, shelter, and clothing would be much more valuable.

You walk up to a guy and offer a gold coin.  WHAT can he do with it, that will increase his chances of seeing the next day?

Read a book once, detailing life aboard a troop transport on the way to invade a Pacific Island.  The men had been paid prior to leaving port.  Most sent the money home, but kept a few sliver dollars 'just in case'.  Several were observed 'skipping' the sliver dollars across the water while they lay at anchor, seeing who could go the furthest.

At that place, at that time, in those circumstances:  those silver dollars were WORTH zero.  Of no more value than a flat stone.

Posted by: GarandFan at May 31, 2010 10:22 AM (6mwMs)

100 When someone asks incredulously (usually rhetorically, too) what value money actually has, I say that the motorcycle dealership thought that several thousand dollars was worth trading for a sportbike. What a bunch of suckers.

Posted by: fb at May 31, 2010 10:22 AM (G60Nl)

101 RE Monty's statement in #93

In the end, there will be only chaos.  .

From Breaking News Twitter.

Update: Turkey's prime minister describes Israeli raid as 'state terrorism' - AP


Let them cry over it.  If the Turks feel froggy, let them leap.


Posted by: Kratos (missing from the side of Mt Olympus) at May 31, 2010 10:23 AM (c0A3e)

102 Any morons up for lacrosse? NCAA Div I Championship on ESPN at 3:30 eastern/2:30 central. Should be excellent- awesome offense vs awesome defense. 5 minutes, bitches! Notre Dame vs Duke

Posted by: naturalfake at May 31, 2010 10:25 AM (I49Jm)

103

My old man was usually an idiot, but he did teach me that something, anything, is worth only the price you are willing to pay for it.  I think a lot of people never realized that.

They're the folks with all those pristine Beanie Babies in the attic.

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 10:27 AM (GkYyh)

104 "Money" really is nothing more than a medium of exchange. I think this is something Monty was trying to avoid getting into but when it boils down to basics all it is is something to make barter easier.  Its the ramifications of that that get complicated.

Human trade started out as barter but it is hard to get change back from a goat when that was all you had to trade and you just wanted a bowl of rice.

There have been many things used as a form of currency to make this happen they were not always precious metals like gold or silver. The one thing that all of these forms of currency had in common was that they had some intrinsic value for the population using them AND the population trusted that value to remain fairly constant.

It doesn't matter what you use but those things have to remain in affect.  Even gold can fail if the system is abused enough. When the Spanish flooded Europe with gold from the new world they experienced hyper inflation then.  Gold in effect became worth less than it had before. But since eventually the Spanish ran out of other people's gold the situation stabilized. That held up pretty well until the 30s when FDR started tinkering with gold.

A dollar is worth a dollar now as long as people think it is worth a dollar. If people start getting the idea that a dollar is worthless or will be in a few months it will in fact become worthless.

The entire thing is, and always has been, based on trust. When the trust breaks down we will be back to barter.

And if that happens my friends the world will collapse because the number of people living today can not be supported by a "barter economy". Neither can the world's economy be supported by going back on to the "gold standard" either.  There simply isn't enough gold in the world to do that. 

Posted by: Vic at May 31, 2010 10:27 AM (6taRI)

105 When it all comes tumbling down- You will ALL be my bitches! Oh yes, you will.....

Posted by: Beanie Baby Billionaire at May 31, 2010 10:31 AM (I49Jm)

106 A dollar is worth a dollar now as long as people think it is worth a dollar. But what is a dollar "worth"? Relative to what? Ten years ago gold was about $250 an ounce. Now it's $1300 an ounce. Did gold appreciate or did the dollar depreciate? (Or both?) Who decides? If you say "the market", you're wrong. Our government decides what a dollar is worth -- that's why were in such a fucked-up mess right now. Our dollar's value isn't being set by the market; it's being set by bureaucrats who are working against the free market more often than not. That's why I no longer trust it as a value-store.

Posted by: Monty at May 31, 2010 10:32 AM (O3eFQ)

107 Sugar would trade high too. And salt, in certain areas. ("Worth your salt" comes from the Roman times when a soldier was paid with a ration of salt rather than coins.)

Posted by: Monty at May 31, 2010 03:22 PM (O3eFQ)

"Salary".

Posted by: progressoverpeace at May 31, 2010 10:32 AM (Qp4DT)

108 garand,to second your example of the value of silver comes this story of the value of gold (perhaps apocryphal): the recently salvaged steamer "columbia", carrying bullion and coins from the gold rush, sank in stormy weather. its passengers had to decide on the value of their gold. those who stuufed their pockets drowned, those who didn't survived, or at least had a chance. as for my Palau Islands tortoise shell toluk (see post #82 for a full description), come the pocky-lips, i dare say it won't have much value, but i will have had the enjoyment of this beautiful object. what price that?

Posted by: gomm at May 31, 2010 10:34 AM (7JES6)

109 There simply isn't enough gold in the world to do that. Technically, that's not true: we could simply revalue an ounce of gold at, say, $30,000 an ounce. That would do it. But realistically, you wouldn't go back to a gold-standard; you'd go to an asset-backed standard. (Which raises the question of how to fairly and transparently value assets, but that's another whole can of worms....)

Posted by: Monty at May 31, 2010 10:35 AM (O3eFQ)

110 Meh. Gold standard solves one problem and creates another. If you set gold-to-dollar exchange rate in stone, then you will run into inflation or deflation (depending on what grows faster - your economic growth or mining yields). If you decide to keep government's hand on monetary policy and pick adjustable exchange rate then there is no real advantage over fiat currency - "because we say so" come with risk of "we changed our mind". And then all kinds of financial paper can assume function of currency, other countries may try to game the exchange system like it was before Gread Depression... Good investments are the only way to outrun inflation.

Posted by: Andrey at May 31, 2010 10:35 AM (o58gn)

111 Besides gold and silver, we're putting some of our money into long-term storage food, shotguns, and ammo.

Posted by: Zoltan at May 31, 2010 10:35 AM (P84E9)

112 Stock up on this.

Indispensable.

Posted by: chemjeff at May 31, 2010 10:36 AM (Gk/wA)

113 "Salary".

Salieri!

Posted by: Zombie Wolfgang Mozart at May 31, 2010 10:38 AM (u+34p)

114 Thanks Monty...but er ah....mind iffin I borra a dollah?

Posted by: Cousin Floyd at May 31, 2010 10:39 AM (e9JZd)

115

Video of the IDF soldiers being attacked

But those people on board that ship were 'humanitarians' dontcha know?

Posted by: laceyunderalls at May 31, 2010 10:39 AM (+IAM2)

116 Technically, that's not true: we could simply revalue an ounce of gold at, say, $30,000 an ounce.
Posted by: Monty

So it will be priced by fiat? You do see the problem here, no?

Posted by: Garbonzo the Garrulous at May 31, 2010 10:40 AM (zgd5N)

117 The case for gold as survival wealth is the "partial collapse" scenario.  If things go full blown collapse, then, as others have said, your wealth will be in stuff like eggs, salt, potable water, gasoline, and ammo.

However, if you envision a quasi-feudal situation, with some localized, county-level markets and organization, but no would-be "sovereigns" big enough to get their promises recognized everywhere, then gold and other traditionally precious metals might be quite valuable for trade.

Basically a situation where there's enough organization to have a need for "money," but not enough organization that governments' promissory notes will be generally accepted in trade.

No idea how likely any of that is.

Posted by: P.M. at May 31, 2010 10:41 AM (lDnrj)

118 Stock up on this.

tinyurl error pages? Not sure what Mad Max will want to trade those for.

Posted by: Waterhouse at May 31, 2010 10:41 AM (u+34p)

119 O/T

From Drudge: MEXICAN PIRATES!

Posted by: chemjeff at May 31, 2010 10:41 AM (Gk/wA)

120 o/T:  Rick sanchez is beatin down of Glenn Beck today isn't he....

Posted by: curious at May 31, 2010 10:42 AM (p302b)

121 Oops

Try this link

Posted by: chemjeff at May 31, 2010 10:42 AM (Gk/wA)

122 You do see the problem here, no? Only if we allow governments to monopolize the money supply. As I said before, I'd also like to see the privatization of the money supply. Let market forces dictate what the money is worth.

Posted by: Monty at May 31, 2010 10:44 AM (O3eFQ)

123 From Breaking News Twitter.

Update: Turkey's prime minister describes Israeli raid as 'state terrorism' - AP


Let them cry over it.  If the Turks feel froggy, let them leap.


Posted by: Kratos (missing from the side of Mt Olympus) at May 31, 2010 03:23 PM (c0A3e)

Turkey is quickly descending into a cesspool of Islamic hate. Put a fucking fork in them.

Posted by: conscious, and testing the murky waters of sin at May 31, 2010 10:45 AM (YVZlY)

124 did i happen to mention i bought a Palau Islands tortoise shell toluk? i think i may have... ah yes, i did and i gave description in post #82! fascinating...

Posted by: gomm at May 31, 2010 10:45 AM (73jUp)

125 Try this link Fail x 2. Another one and I get to give you a head-noogie.

Posted by: Monty at May 31, 2010 10:45 AM (O3eFQ)

126 Our dollar's value isn't being set by the market; it's being set by bureaucrats who are working against the free market more often than not. That's why I no longer trust it as a value-store.

No contrary to popular belief by governments they can not "control" the economy or the value of things. The market, in the long run, will ALWAYS set the price of goods and services regardless of what the government does.

What the government can do is royally screw things up in the short term by creating shortages and uncertainty.

Yes it now takes more dollars to buy gold than it did a few years ago.  Why is that? Because a lot of people saw the impending problems and started buying gold as a hedge. Anytime people start buying up a commodity its price goes up. It is also going up against other currency as well, not just dollars.

And the bottom line from all of that is that it is doing exactly what I said. The thing that caused people to buy gold was they started to lose trust in their currency due to government action, and like you they felt that traditionally gold was a hedge against that currency becoming worthless. 

In any case, I think we are saying pretty close to the same thing.

Posted by: Vic at May 31, 2010 10:46 AM (6taRI)

127 O/T: Okay here's an AoSHQ-worthy headline:

Air Force Pounds MILF Lair With Rockets

courtesy Instapundit

Posted by: chemjeff at May 31, 2010 10:46 AM (Gk/wA)

128 How many goats for that pint of whiskey and 10 minutes with the girl?

Posted by: ziptie at May 31, 2010 10:47 AM (UdYT0)

129 No, the second link works

Anyway, it takes you to a picture of a can of "Unicorn Meat - Now With Extra Sparkles"

Posted by: chemjeff at May 31, 2010 10:47 AM (Gk/wA)

130 Fail x 2. Another one and I get to give you a head-noogie.

FTFY...wow I'm even uncomfortable with that one...but  wtf...

Posted by: Cousin Floyd at May 31, 2010 10:47 AM (e9JZd)

131

Another one and I get to give you a head-noogie.

Please, no encouragement. It will only lead to something Hello Kittyesque....

Posted by: laceyunderalls at May 31, 2010 10:48 AM (+IAM2)

132 129 O/T: Okay here's an AoSHQ-worthy headline:

 Air Force Cheney Pounds MILF Lair With Rockets Warcock

courtesy Instapundit

Posted by: chemjeff at May 31, 2010 03:46 PM (Gk/wA)

FIFY.

Posted by: conscious, and testing the murky waters of sin at May 31, 2010 10:50 AM (YVZlY)

133 See, now this is on topic:

Hello Kitty Gold Pendant

Posted by: chemjeff at May 31, 2010 10:50 AM (Gk/wA)

134 No, the second link works It just takes me to the Google front page. (I'm using the Chrome browser; does that make a difference?)

Posted by: Monty at May 31, 2010 10:50 AM (O3eFQ)

135

59 Guy Fawkes: Anybody truly interested (and paranoid) should study the Argentine collapse, gold chains and jewelry were more accepted than coins because few people could value the coins or "give change".

I believe it was over at Mish's site that a commenter observed that in Argentine during their collapse, people wore gold chain necklaces and carried pliers.  To pay for items, they would clip off a few links of their necklace.

If things get to that point here, it will be too late for gold chains and pliers.

Posted by: Boots at May 31, 2010 10:51 AM (06JTY)

136 Well Monty I don't know why it doesn't work, I'm using Firefox and it works for me.

Sigh guess the humor is lost.

Posted by: chemjeff at May 31, 2010 10:52 AM (Gk/wA)

137

I wouldn't go too far into gold Monty. Gold is a hedge and the best it can ever do is break even. It is far too late to "invest" in gold now as the major price increases have already occurred.

If I had $1000, and was considering either:

1) Purchasing [roughly] a single ounce of gold, or
 
2) Purchasing [roughly] 2000 rounds of high velocity ammunition [for a rifle, or a shotgun],

then I wouldn't hesitate to purchase the ammunition.

When TSHTF, an ounce of gold will buy you exactly diddly squat.

Whereas 2000 rounds of high velocity ammuntion will at least buy you a little "Don't Tread on Me".

IYKWIMAITYD.

 

 

 

Posted by: Lindsey Grahamnesty licking Rahm Emanuel's sweet, hairy balls at May 31, 2010 10:53 AM (wa5IX)

138 If things get to that point here, it will be too late for gold chains and pliers.

Wait...what?

Posted by: Mr. T at May 31, 2010 10:54 AM (e9JZd)

139   To pay for items, they would clip off a few links of their necklace.

If things get to that point here, it will be too late for gold chains and pliers.

Posted by: Boots at May 31, 2010 03:51 PM (06JTY)

If that's the case, I'll be in great shape!

Posted by: Mr. T at May 31, 2010 10:54 AM (YVZlY)

140 Damn! We were thinking the same thing.

Posted by: Mr. T at May 31, 2010 10:54 AM (YVZlY)

141

From Breaking News Twitter.

Update: Turkey's prime minister describes Israeli raid as 'state terrorism' - AP






In other news, water is wet.

Posted by: Blazer at May 31, 2010 10:55 AM (t72+4)

142 I hear the Turks treat the Kurds well, we should all look to their example.

Posted by: JavaJoe at May 31, 2010 10:57 AM (e9JZd)

143 Gold's value is static.  The amount it costs to buy it in fiat currency is what goes up and down......giving the impression that the gold is fluctuating and not the currency.  How you prove this is by simply asking yourself, "Self, how much gold is there?" And, "Self, how much paper currency is there?"  

An ounce of gold takes a certain amount of effort to find it and mine it.  And most importantly each 'strike' is finite. That dictates the value of gold.  Paper currency requires no effort to produce it and is virtually infinite.........thus it has no value.  Food, water, livestock, land, firearms, medicine, etc have value.  Paper Currency does not.  Another way of figuring this whole thing out is this, what designates a trader and a tradee in a business transaction?  The trader had something of value that the tradee wanted.  And, for those that think paper currency in the bank is of value, you have to explore further.  Financial Institutions exchange their word for contracts on items of value.  They acquire these items of value with nothing of value.  A good gig if you can get it.

A good American example of how paper currency doesn't have value.  Confederate Currency.  The moment the Confederacy surrendered, all the currency the Southerners possessed was valueless.  But, their tables, chairs, land, cattle, still maintained their value.

In my opinion the best hedge for your investments is gold and silver.  But, the best investments are land (they're not making anymore of it, but, as somebody pointed out its ownership and value is backed by contract) and items of value that can be traded up and down for other items of value.

Posted by: gawntrail at May 31, 2010 10:57 AM (lgU25)

144 chemjeff, that took my to an offer for male enhancement.  Historically, were enhanced males legal tender?

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 10:58 AM (GkYyh)

145 In other news, water is wet.

Also melty.

Posted by: Wicked Witch of the West at May 31, 2010 10:58 AM (u+34p)

146 Being a contrarian, I'll be stocking up on Slapchops.

Posted by: Waterhouse at May 31, 2010 11:00 AM (u+34p)

147 Well shoot I don't know what I'm doing wrong, the tinyurl links work for me.  I didn't get no male enhancement page.

Posted by: chemjeff at May 31, 2010 11:01 AM (Gk/wA)

148 A good American example of how paper currency doesn't have value. Confederate Currency. I remember reading somewhere that Southern tradesmen would only accept Union greenbacks or gold coins as payment at the last. That should have been a sign to the South that their cause was futile: when you're reduced to using your enemy's currency, it's over. Many bakers would accept Confederate dollars only for small things: a baker, for example, would place a Confederate dollar over a piece of gingerbread and cut out a piece exactly that size. Gold's value is static. Well, it's relatively stable. It's not static. More gold is being mined all the time. In fact, gold really isn't all that rare -- palladium and platinum are far rarer. One ounce of gold would have bought you a nice pair of handmade English dress-shoes forty years ago; that's still true today. But in dollar terms, those shoes are way more expensive.

Posted by: Monty at May 31, 2010 11:03 AM (O3eFQ)

149 1) Find what people need
2)?
3) Profit!


This is what I'm betting my retirement money on.

Posted by: JavaJoe at May 31, 2010 11:03 AM (e9JZd)

150

OT: This may not seem like much to some, but I think it's a big fucking deal:

Barack Hussein Obama becomes the first U.S. President to hold press conference without any American Flags present

So, maybe there was another motive for the flags absence. We know Obama (or his handlers) carefully choreograph his image, his appearances… It’s why he’s so teleprompter-dependent. Surely he and his advisers know that flag issues have been a lightning rod — even before he was elected. I think this was deliberate. Could it be that Obama really is ashamed of America? Could it be that he thinks he is the citizen of the world which has no flag? Ladies and gentlemen this is very disturbing coming from the office of the Presidency. This is not normal to not have the symbol of the United States and its government in the east room of the White House and it is not very Presidential either. Many patriotic brave men and and women have died under the stars and stripes called old glory. This fiasco coupled with the President skipping the laying of the Wreath at the Tomb of the Unknown Soldier at Arlington Cemetary this Memorial Day speaks volumes of the man (or Usurper) that sits in the Oval Office. What say you?

Posted by: conscious and supporting Israel 100% at May 31, 2010 11:04 AM (YVZlY)

151  I didn't get no male enhancement page.

Posted by: chemjeff at May 31, 2010 04:01 PM (Gk/wA)

So our date for tonight is in jeopardy?

Posted by: Andy Sullyvin at May 31, 2010 11:06 AM (YVZlY)

152

This was brought under control after a fashion in the '80s, but the economic crisis since 2008 has been the result of the lack of monetary and fiscal discipline in the previous two decades, caused in large part by the inability to figure out how exactly to manage a system in which dollars, both paper and computer, are created out of nothing as a function of indebtedness.

Something you need to keep in mind is that if Bernanke has manufactured a bubble of price stability in an era when demographics dictate that we ought to be experiencing massive price DEFLATION, than his interference in the marketplace actually represents a massive price INFLATION.

People who keep waiting for Bernanke's printing presses to produce absolute inflation don't seem to realize that price stability alone represents monstrously large relative inflation [prices being astronomically high relative to where they ought to be].

 

Posted by: Lindsey Grahamnesty licking Rahm Emanuel's sweet, hairy balls at May 31, 2010 11:07 AM (wa5IX)

153 All things being equal I look forward to inflation.

My mortgage would be less and my salary would increase.

I recall paying my mother's mortgage at $278 a month.

just sayin..

Posted by: JavaJoe at May 31, 2010 11:11 AM (e9JZd)

154 A good American example of how paper currency doesn't have value.  Confederate Currency.

LOL, I just posted a link to a site a few days ago showing that the Confederate dollar was worth more than the U.S. dollar now. 

It takes anywhere from $1,000 to $1500 to buy a Confederate $100 dollar bill now. 

But as I said earlier, a dollar will be worth a dollar as long as people trust it to be worth a dollar.

Posted by: Vic at May 31, 2010 11:11 AM (6taRI)

155 Posted by: conscious and supporting Israel 100% at May 31, 2010 04:04 PM (YVZlY)

Been having a tough week, saw a peak at the press conference and posted on here, "was there no American flag at the press conference".....thought I was going crazy....Thank you for posting this....it matters to me too that there was no American flag and it will matter to more and more Americans as they slowly find out about it.

Posted by: curious at May 31, 2010 11:12 AM (p302b)

156 Vic:

"Money" really is nothing more than a medium of exchange. I think this is something Monty was trying to avoid getting into but when it boils down to basics all it is is something to make barter easier.  Its the ramifications of that that get complicated.

Human trade started out as barter but it is hard to get change back from a goat when that was all you had to trade and you just wanted a bowl of rice.

In a pure barter system you would want the guy's sandals or maybe his daughter. You would haggle endlessly in order to not get shortchanged. That's the nature of the barter system.

The main reason why currency replaced barter was civilization. The hallmark of  civilization is the specialization of labor; the creation of industries.

So you're a beat-up worn-out aboriginal American living at Cahokia in the 14th century. But you knap spear points the best and offer them for trade. You've made your own little industry. The problem is -- everybody wants to buy your spear points with rabbit skins because it was a big year for rabbits. You have rabbit skins up the poop chute already and tell your prospective buyers "I can't eat rabbit skins, get me some venison". Your buyers say "I can't kill deer without spear points".

And so a new medium of exchange needs to exist. One that was not necessary during hunting-gatherer times when there was little if any specialization of labor. That's how currencies were born.

The entire thing is, and always has been, based on trust. When the trust breaks down we will be back to barter.

That's  highly unlikely because, as a world, we've become civilized and simply can't deal with a barter system. How do you barter for natural gas or electricity? The economies of the world will fight mighty hard to prevent it from happening.

At least in my lifetime. They don't seem to give a damn about their kids, though.

Posted by: Ed Anger at May 31, 2010 11:14 AM (7+pP9)

157

That's highly unlikely because, as a world, we've become civilized and simply can't deal with a barter system. How do you barter for natural gas or electricity? The economies of the world will fight mighty hard to prevent it from happening. At least in my lifetime. They don't seem to give a damn about their kids, though.

We aren't worried about the civilized world.

What we're worried about is scenarios like Zimbabwe or Cuba - where they don't have natural gas or electricity - and the question of whether or not Obama [and/or his successors] try to go full-blown Mugabe or Castro on us.

 

Posted by: Lindsey Grahamnesty licking Rahm Emanuel's sweet, hairy balls at May 31, 2010 11:18 AM (wa5IX)

158 Posted by: Ed Anger at May 31, 2010 04:14 PM (7+pP9)

You are saying the same thing I did using different examples and explanation. Barter is inefficient so you have to have an exchange medium that people will trust.

And if we were forced back into a barter system now the world would collapse.

Posted by: Vic at May 31, 2010 11:18 AM (6taRI)

159 You're right Monty, static is not a good word.  Relatively stable is a better way of describing it.  But, the premise is sound.  And those shoes are only more expensive because of inflation.  It takes the same energy input to produce them then as it does now. 

And, palladium and platinum are more rare AND more valuable, but they do not have history.  And, if they were to be considered, they would not replace gold, they would simply enter the value chain above it.  Kind of like Gold and Silver right now.

I find it interesting that Diamonds do not play a major role in these types of discussions.  I'd be interested in your take on them.

Posted by: gawntrail at May 31, 2010 11:19 AM (lgU25)

160 I think the people that are arguing the barter system assume the world has collapsed and are planning for that...although I'm not sure it the world will collapse in the next 300 years.

Or so...

Posted by: JavaJoe at May 31, 2010 11:20 AM (e9JZd)

161 And BTW, even during the "hunter-gather" era when humans started trading amongst themselves they quickly developed a medium of exchange besides pure barter.

Posted by: Vic at May 31, 2010 11:20 AM (6taRI)

162

Turkey is quickly descending into a cesspool of Islamic hate. Put a fucking fork in them.

I usually just wait til the thing in the side pops out.

Posted by: FireHorse at May 31, 2010 11:21 AM (cQyWA)

163

Diamonds don't have the history of precious metals, and their value is extremely high due to the DeBeers cartel.  The supply of diamonds far exceeds demand.  And their value is too hard to measure and fake...their are 4 c's, which is 3 too many to be used as a medium of exchange. 

I alson think silver is better than gold at or near current price levels, unless it is 'flee on foot' emergency reserve money. 

Posted by: Deadalus Mugged at May 31, 2010 11:26 AM (78Fe/)

164 Diamonds have high value because they look pretty.  Cartel or not, De Beers wouldn't be raking in the cash if people didn't want to buy diamonds.  It is the same with most gemstones.

Posted by: chemjeff at May 31, 2010 11:28 AM (Gk/wA)

165 I find it interesting that Diamonds do not play a major role in these types of discussions. I'd be interested in your take on them. I'm not an expert, but I suspect that it's because diamonds and other gemstones are too easy to synthesize, and tend to be too subjective in valuation. It takes a very expert eye to judge a diamond's worth. Gold or silver can be assayed accurately by almost anyone, given basic knowledge of chemistry and metallurgy. Gold is gold, and a troy ounce is a troy ounce anywhere in the world and whomever is assaying it. But a diamond is more subjective. Raw or uncut? Flawed or unflawed? Color? Brilliance? Purity? A "pure" diamond really isn't worth much except in industrial terms -- "flaws" are what make a diamond interesting in decorative terms. I suppose that gemstones do represent a certain kind of value-store, but traditionally, they aren't anywhere near gold or silver.

Posted by: Monty at May 31, 2010 11:30 AM (O3eFQ)

166 I mentioned diamonds in an earlier post. They had use as a conversion medium during the early days before and during WWII because they were portable for people fleeing the Nazis.

Currently the only people who are dealing in diamonds as a medium of exchange (other than selling them for jewelry) are the terrorists who are smuggling them.

And the above posters are correct, diamonds are only expensive now because DeBeers has a virtual monopoly and they control the supply. If that monopoly is ever broken the price of diamonds will fall like a rock.

Posted by: Vic at May 31, 2010 11:31 AM (6taRI)

167 Any scenario is more likely to be like 1929 and not  the end of the world. My grandmother always remarked that there was no lack of goods, but a lack of money all during the depression.
 Any new depression will be the same way, but with a modern twist. Gasoline for example might cost 15 dollars a gallon, or one silver Roosevelt dime.
  Early in our country's history there was a scarcity of ready money. Most goods and services were bartered.A barrel of cider for a pair of shoes.A pair of shoes to the lawyer representing you in court. The Stamp Act was so onerous because payment was in specie. Which hardly anyone had.
  Having some gold and silver never hurts, but as someone mentioned above having a skill may be something of greater value.
  I'm a better than average welder and have all the equipment in my garage.

Posted by: mueller at May 31, 2010 11:32 AM (8BaFI)

168

Turkey is quickly descending into a cesspool of Islamic hate. Put a fucking fork in them.

I usually just wait til the thing in the side pops out.

Posted by: FireHorse at May 31, 2010 04:21 PM (cQyWA)

For Turkey, that thing popping out on the side is a rush into northern Iraq to take over the Kurdish area and the oil fields of Kirkuk.  By the time you see that, it's too late.  That Turkey is overdone.

Posted by: progressoverpeace at May 31, 2010 11:33 AM (Qp4DT)

169 130 How many goats for that pint of whiskey 1/4 ounce of heroin and 10 minutes with the girl boy?

FIFY

Posted by: Contemplating the Beardless at May 31, 2010 11:35 AM (nLIhP)

170

Today I bought candy and bottled water because tomorrow both are going to start being taxed by my state. And I won’t give them one red cent of tax money where I don’t have to. They created a new tax on 5000 items, from chocolate chips to Snickers bars, however certain candy is exempt, for example if it contains flour it is exempt. Not only is it incredibly Byzantine, but it is requiring stores and suppliers to put in many man hours to make the changes, so it is costing businesses a huge amount of money in an economy where some businesses don’t have that kind of money. Many specialty chocolate places may go out of business.

 

Multiply the stupidity of state governments in regard to money by the stupidity of the federal government and then multiply by the stupidity of the international economic systems and I’m pretty sure the sum is chaos.

Posted by: ParanoidGirlInSeattle at May 31, 2010 11:35 AM (RZ8pf)

171 As an example of the transitory nature of fiat currency, if the EU collapses and those countries go back to printing their own, what is a euro worth?

there are 2 arguments here, the mad max scenerio where lead, food and fuel are valuable, and the hyperinflation scenerio where having gold would be damn smart.  I would be arguing the latter is more likely.  (ps - alot of german dealers have recently run out of gold).

Posted by: Guy Fawkes at May 31, 2010 11:36 AM (7VvJB)

172 I'm glad to hear there are other people who understand about Diamond supply and demand and why.

And, I've been wondering. When taking down a trophy hobo, is it the shopping cart or the old trench coat you get mounted?


Posted by: gawntrail at May 31, 2010 11:38 AM (lgU25)

173 Not only is it incredibly Byzantine, but it is requiring stores and suppliers to put in many man hours to make the changes, so it is costing businesses a huge amount of money in an economy where some businesses don’t have that kind of money. That is what is so colossally stupid about many of these tax regimes. The money they cost in terms of decreased productivity and implementation costs far outweigh the revenue they take in. High-tax areas like California and New York are chockablock with taxes like that.

Posted by: Monty at May 31, 2010 11:39 AM (O3eFQ)

174 Chris Christie would eat the tax revenuer.

He's rownery like that.....just sayin..

Posted by: JavaJoe at May 31, 2010 11:39 AM (e9JZd)

175 As an example of the transitory nature of fiat currency, if the EU collapses and those countries go back to printing their own, what is a euro worth?

A laugh.  Of course, laughter is the best medicine.

Posted by: progressoverpeace at May 31, 2010 11:40 AM (Qp4DT)

176 Your lesson ommitted "Fractional Reserve". Assume a currency that is 100% backed by gold (or anything else you can stuff in a warehouse). Chances are, requests for conversion from script to gold are rare. And the gold isn't doing anything in the warehouse. You can lend out that gold and boost the economy. Save thing with banks. You have $1,000 in your checking account. The bank is going to keep cash-on-hand equal to 100% of deposits. They loan out the cash and make money off the interest. Once you're comfortable with Fractionable Reserves in the 5-10% range, it's a short step to doing away with the reserve and having fiat money. BTW, fiat money is ok with me so long as the govt. doesn't go crazy.

Posted by: Comrade Arthur at May 31, 2010 11:46 AM (ymoe8)

177

I mean, I don’t really know much about how point of sale systems work, but it seems to me that there is going to be an awful lot of reprogramming of machines needed in order to charge a tax on some items and not on others because you can’t just go in and set the category “candy” to taxable now, not every candy item is taxable. It isn’t like taxing the whole category of liquor.

 

Not only that but in the supply chain when it comes to creating foods there is now a tax on things that weren’t taxed before, for example chocolate chips. So all the bakeries that make cookies get hit with the tax on chocolate chips too, not just the consumers buying chocolate chips in the grocery store. And you can bet that they’ll be passing that tax right on to us.

 

I know I’m harping on this, but it seems indicative of the much larger picture. The same is true on a federal level when you look at the situation with ObamaCare and what is and isn’t taxed, for example and how much more complicated they’ve made it.

 

It is all chaos at some point dammit.

Posted by: ParanoidGirlInSeattle at May 31, 2010 11:50 AM (RZ8pf)

178

 When taking down a trophy hobo, is it the shopping cart or the old trench coat you get mounted?

You mount the Cart. 

The Coat and Skin make for handy camoflauge and decoy material.

Posted by: Andy Sullivan at May 31, 2010 11:51 AM (HPsbD)

179 Once upon a time I read an essay by a Fed Reserve honcho on the history of money. Went from Barter Warehouse Receipts Reserve Currency Fractional Reserve Fiat Money Pointed out the problems with each of those stages. for example, 100% reserve currency? What if I need a loan to expand my business - do I need to wait for somebody to find a new gold mine? Stupid me, I never saved a copy of it and haven't been able to google it since then. If you have a bone to pick, I'd like to refer to that essay for the answer but I can't so I won't be able to help the thread along. Summing up, as the economy gets bigger and bigger it becomes appropriate to move from one stage to the next.

Posted by: Comrade Arthur at May 31, 2010 11:54 AM (ymoe8)

180 #121 - Instead of warning people about pirates, shouldn't the Department of Public Safety, oh, maybe kill those pirates?  Por encouragez les autres?

Nah, that's crazy talk.

Posted by: BUTCH at May 31, 2010 11:55 AM (hpHaN)

181 Well, a Euro might make as good  a toilet paper as any used in European countries.

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 11:56 AM (GkYyh)

182 Echoing someone's comment, it is very unlikely you would have a hyper-inflation and not have societal collapse, i.e., collapse of faith in government and a likely collapse of property rights. I suppose your gold and silver would be useful on the flip side (the eventual re-building of society/markets).

Posted by: mockmook at May 31, 2010 11:56 AM (5ssRl)

183 And the gold isn't doing anything in the warehouse. It does seem strange, I admit. You go to the trouble of digging gold out of the ground, melting it, recasting it...and then putting it right back into another hole in the ground, only this time with guards around it. Still, that's what batteries do: they just sit there, and dispense energy when called upon to do so.

Posted by: Monty at May 31, 2010 11:57 AM (O3eFQ)

184 money is a medium of trade. no longer does mankind have to trade slabs of meat or fish for fur or a nice axe. besides, people do some things better than others...im not sure id trust kratos to supply a village with his share of fish but he could make a damn good blacksmith ya know?

its just a universal medium of trade is all. kinda simple really.

Posted by: str8 outta monongahela at May 31, 2010 11:58 AM (J1ThS)

185
Instead of warning people about pirates, shouldn't the Department of Public Safety, oh, maybe kill those pirates?  Por encouragez les autres?


Nah, that's crazy talk.

Posted by: BUTCH at May 31, 2010 04:55 PM (hpHaN)






Are you talking about that lake in Texas? I'll have to maybe pencil that in as a vacation destination this summer. Can't think of anywhere else right now where you can both fish and hunt at the same time from a bass boat.

Posted by: Blazer at May 31, 2010 11:58 AM (t72+4)

186

There was an interesting essay by someone who survived the debt crash in Argentina in the 1980s when the value of the Argentine peso dropped to zero.   It was an how-to manual for survival in a barter economy.

The writer said to keep your gold and silver in jewelry and other small trinkets.  Avoid hoarding large gold coins or bullion.  You can barter and get a *lot* more stuff by trading with jewelry of equivalent weight.   Something about the psychology of pretty shiny objects versus a big lump of metal.

Posted by: Huusker at May 31, 2010 12:09 PM (eWnjT)

187 Great article Monty. Make sure to stock up on food, water, tp and ammunition though.

Posted by: ChicagoJedi at May 31, 2010 12:11 PM (WZFkG)

188 LOL, Glenn Beck is on now talking about what government is good for in economic shit. He is talking about the Chicago Climate Exchange and their "expected 10 trillion dollar" market. He showed someone asking about this from one of the financial shows and I kept waiting for the $64K dollar question:

What product are you selling and why would anyone pay 10 trillion dollars for it?

I guess everyone understood that the government would make people buy this. Then the next question becomes why is this company going to get to sell a non-product and make 100% INFINITE profit because the government orders it. 

This is what the government is good for if you do NOT have a working Constitution to prevent them from doing it.

We quit having a working Constitution really beginning in 1850s.

Posted by: Vic at May 31, 2010 12:12 PM (6taRI)

189
So, so you think you can tell Heaven from Hell?

Blue skies from pain?

Can you tell a green field from a cold steel rail?

Posted by: Touch Turtle at May 31, 2010 12:12 PM (XuxCF)

190 turtle: yes

Posted by: gomm at May 31, 2010 12:18 PM (7JES6)

191 Well said, Monty.

One minor error: nickels currently have more than 5c worth of nickel in them, so they are hard money. 

If you're too much of a punk to hoard gold and silver, you can hoard rolls of nickels as they will keep their metal value even as Zimbabwe Ben debases the dollar.

Posted by: W.C. Varones at May 31, 2010 12:19 PM (AxOwK)

192 & in fact i own you! beautiful palau islands toluk (described in post #82).

Posted by: gomm at May 31, 2010 12:20 PM (7JES6)

193 And Monty was talking about hyperinflation like Zimbabwe NOT total anarchy. If that were the case why buy anything? I live on a street full of liberals with no guns. I'll take the gold, food, water, etc from them. I'm the big bad cricket on a street full of ants. Har Har Har.

Posted by: ChicagoJedi at May 31, 2010 12:22 PM (WZFkG)

194
And BTW, even during the "hunter-gather" era when humans started trading amongst themselves they quickly developed a medium of exchange besides pure barter.

Posted by: Vic at May 31, 2010 04:20 PM (6taRI)

Copper trinkets and the like were indeed traded according to individual tastes by hunter gatherers. Wampum appeared only after the aboriginal American seafood industry was born.

You tell me about aboriginal Americans and I'll tell you about nuclear power plants.

Posted by: Ed Anger at May 31, 2010 12:22 PM (7+pP9)

195

Remember THE FLINTSTONES used CLAMS for money?

Posted by: Turtlewing Plover at May 31, 2010 12:22 PM (XuxCF)

196 I guess everyone understood that the government would make people buy this. Then the next question becomes why is this company going to get to sell a non-product and make 100% INFINITE profit because the government orders it. Posted by: Vic at May 31, 2010 05:12 PM (6taRI) I believe the government will be getting the bulk of the money; as I understand it, the seller only gets the commission.

Posted by: mockmook at May 31, 2010 12:27 PM (5ssRl)

197 what's interesting about my post (#82) is that i bought an object that in itself is a kind of currency. and also the issue that you are all avoiding, the demand side of the equation. i paid for with hard-earned $$ and own an object for its intrinsic value, its beauty, rarity, meaning, etc. i bought it with disposable income. this is the issue. there is a hell of alot of disposable funds out there. people have been living like pharoahs the last 20 years with non-disposable income, ie on debt. but there is tremendous prospoerity out there on planet earth, & those of you who truly believe the pocky-lips is coming are wrong. ain't gonna happen. stock up on your gold & mausers (both of which may have value) but there isn't a great depression/collapse of the economy coming.

Posted by: gomm at May 31, 2010 12:28 PM (EA+Co)

198
Remember the episode of THE TWILIGHT ZONE with the guys who stole all that GOLD then went to SLEEP for a hundred years in a cave in the middle of the desert?

When they woke up they had NO WATER and their GOLD was WORTHLESS!

Posted by: Turtlewing Plover at May 31, 2010 12:29 PM (XuxCF)

199 As I understand it, not that I do, the govt sells the carbon credits through their politcally connected buddies, and then people trade them so the workers can breathe or something.

Posted by: Guy Fawkes at May 31, 2010 12:30 PM (7VvJB)

200

That was one of the several episodes featuring the great SHERIFF LOBO.

Posted by: Turtlewing Plover at May 31, 2010 12:30 PM (XuxCF)

201
Can you trade a TOLUK for a BEAVER PELT?

How about for some Palau beaver?

Posted by: Turtlewing Plover at May 31, 2010 12:31 PM (XuxCF)

202

Somewhat related, I've been thinking about careers.

(I had one once, in IT, but I've been home with the kids for 8 years now.)

I was thinking today about what fields might be good in bad times.

My best idea so far is in food production. Not gourmet cooking as much as knowing how to (and being wiling to) cook from scratch, can and otherwise preserve stuff, make the most out of your garden, etc.

Whatcha think?

Posted by: Mama AJ at May 31, 2010 12:32 PM (XdlcF)

203 scuse me, but sometimes y'all sound like those koskids types saying bush was going to put in a dictatorship. it's very self re-inforcing but has no relationship to reality.

Posted by: gomm at May 31, 2010 12:32 PM (73jUp)

204 but there isn't a great depression/collapse of the economy coming.

Well then, since you say so, it must be.

Posted by: Guy Fawkes at May 31, 2010 12:33 PM (7VvJB)

205 In grade school, we used marbles and steelies for money.

Posted by: conscious, definately a hunter at May 31, 2010 12:34 PM (YVZlY)

206

You have made one error:

You have, as with most who support specie currency, assumed that it has a set value against which it can be measured. It does not.

Gold, silver, and copper currency, as indeed platinum and similar metals being used as such, fluctuate in value both against fiat currencies, and against whatever they might be used to purchase as currency itself. They are just as subject to inflation, deflation, and devaluation as fiat currency. Even more critical, they are also subject to local desirability, something that fiat currencies as legal tender are mostly immune to.

Just because you have an ounce of gold in no way means it is "worth" any particular amount of grain or portion of your rent. It does not mean it will be "worth" an identical amount or portion next week, month or year. And it does not mean that any individual you are dealing with will always desire your gold in exchange for what he has.

When you understand that, you understand that gold is just as much a fiat currency as any other. It has value because some group of people somewhere say it has value, and on some level they guarantee you with nothing more than their word that you will always be able to exchange it for whatever other goods you desire.

The only difference is that commodity backed currency, which is a more accurate description of what gold etc currency is, has an intrinsic value in use other than as currency. You can "always" (that is, subject to ability) turn your gold into jewelry, your silver into tableware, and your copper into pipes and electronics. Your fiat paper currency has limited commodity value for arts and crafts or as kindling.

Posted by: Sam at May 31, 2010 12:35 PM (hvDIX)

207 You tell me about aboriginal Americans and I'll tell you about nuclear power plants.

Well since I worked in one for 30 years and had an SRO license I guess I know all about nuclear power plants.

But I wasn't talking about aborigines in America. The first recorded use of an exchange medium took place in the middle east in 3000BC and it was a measure of grain.

Posted by: Vic at May 31, 2010 12:39 PM (6taRI)

208 You want to know what really gives the dollar its value? The fact that Americans are required to pay taxes in dollars. You can have your employer pay you in gold, you can get stores to sell you stuff for gold, but come tax time you must sell some of your gold for dollars to pay the IRS. That makes the dollar valuable, because it can be used to buy gold from you.

Posted by: schizoid at May 31, 2010 12:41 PM (ECqjx)

209 30-40 years ago, many of the world catastrophes would have brought on a real recession/depression: $200/barrel oil; greek/portugal/iceland default; bank failures, etc. any one of these would have sunk the american economy (and has happened). but today, the world economy plows ahead at 40 knots. it's not fail proof (china collapse esp.) but the engine for growth can absorb many of these things. it's amazing. thank you reagan & thatcher. (would everybody please stand.)

Posted by: gomm at May 31, 2010 12:42 PM (7JES6)

210

Is Confederate money really worth that much now??? I have lots of it....including plenty of hundreds. I ain't givin' it up; it's a part of my family history, which means far more to me than money, but it's amusing to me to think that it IS actually worth more than a US dollar now. Sad, but funny in an ironic way, I guess.

I myself am always amazed at how few adults actually understand where money comes from. They think the government just "has" it somehow, and can get as much as they need. One of these people is a good friend of mine, has a Bachelor's degree (laughingly refers to it as her AA, as in Affirmative Action), and teaches elementary school. Also drank plenty of Kool-Aid, but I probably didn't need to tell y'all that.

And would it be possible to see a picture of this beautiful palau islands toluk we keep hearing so much about? Did I miss a post?

Posted by: MissTammy at May 31, 2010 12:43 PM (GXLjK)

211 You have, as with most who support specie currency, assumed that it has a set value against which it can be measured. It does not. Well, sure. It's just that gold and silver, historically, have retained their value better than any other specie. Does that mean this will be true in the future? Maybe, and maybe not. But it's the way to bet. Food is perishable; finished goods decay and degrade and have far larger changes in relative value over time than gold or even silver.

Posted by: Monty at May 31, 2010 12:44 PM (O3eFQ)

212 interesting you should bring up mesopotamia 5,000 years ago, because i also just bought a 4th millenium bc votary figure. small but monumental. amazing thing created by a very good artist (not all of them are).

Posted by: gomm at May 31, 2010 12:48 PM (7JES6)

213 87 Pisses me off, yes, it does. Yes, it does me too. Reminds me of the discussion on that Slate forum yesterday. One person wrote: "I will fly the flag outside my house as long as I have the freedom to do so." An idiot lefty respondent wrote "why wouldn't you have the freedom to fly your flag?" They take freedom completely for granted. Absolutely 100% for granted. It's sickening really that they think the purpose of the military is to plunder foreign countries and that the defense budget should be eviscerated in order to pay for single-payer health care. Mark my words. there will come a time when freedom will mean not flying a flag when instructed to

Posted by: dr kill at May 31, 2010 12:48 PM (w9bVp)

214 both the oceanic dish (beautiful) and the mesopotamian figure together cost far less than a car and could go into a major museum. acquired from top dealers (of course) and affordable by most of you. (providing you are interested in such things).

Posted by: gomm at May 31, 2010 12:52 PM (7JES6)

215 I already know that a Pink Floyd the Wall poster in French equals 5 pounds of sugar and a dozen eggs, and that a Beatles White album equals a gold necklace I wanted.  A chest of drawers and a Whatnot Shelf equals 3 hours of labor.  It's what someone else wants that you already have that gives you "purchasing" power.

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 12:52 PM (GkYyh)

216 Both the oceanic dish (beautiful) and the mesopotamian figure together cost far less than a car and could go into a major museum. I don't mean this as a shot (honest!) but this reminded me of something my sage old uncle once said: Some people would buy a bag of shit if it was an old bag. But then, neither he nor I are collectors of antiques.

Posted by: Monty at May 31, 2010 12:54 PM (O3eFQ)

217 Is Confederate money really worth that much now??

I posted a link last weekend on one of the threads.  It should be easy to find people dealing in that stuff in any moderate or large city though.

Posted by: Vic at May 31, 2010 12:55 PM (6taRI)

218 OT: Home movies of VJ Day along Kalakaua Ave. in Waikiki, H/T Ricochet -

http://tinyurl.com/37u7zov



Posted by: Skookumchuk at May 31, 2010 12:58 PM (btzPD)

219 Monty, you should put the phrase that is at the bottom of all correspondence with brokers which basically satisfies their errors and omissions policy.  So, essentially, if they make a big mistake or give you the wrong advice, then they aren't libel.

Posted by: curious at May 31, 2010 01:00 PM (p302b)

220 monty: indeed 93-97.52% of the stuff out there is just old shit. well, old (which is ok to own for that) but of negligible aesthetic (scary word) value. these two are exceptional. modest, not the best, but actual high quality. (quality, there's the rub)

Posted by: gomm at May 31, 2010 01:02 PM (73jUp)

221 I had a friend from England over here shortly after 9/11.  We went into DC to look at the Stuff.  She was astonished that you can buy copies of the Declaration, Constitution, G-burg Address, just anyuwhere.  Why the hell was that?  (I was just thinking of the copies of old American currency I used to love to buy when I was a kid.)  (And how good the fake oldness smelled.)

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 01:04 PM (GkYyh)

222

GOLD!

 

- G. Gordon Liddy

Posted by: TheJane at May 31, 2010 01:05 PM (9TxlI)

223 As with virtually all gold advocates, the article fundamentally misinterprets the Bretton Woods system and gold's role in it.

Furthermore, it evidences ignorance in the two areas gold-bugs always fail to consider.  There isn't enough gold in the entire world to back even the dollar, assuming we could convince all other nations and private holders to give up their reserves.  (Math is a vital skill to have when speaking of economics).  So the ONLY way a gold standard could EVER be implemented would be through massive deflation, an idea only a blithering idiot would embrace.

Secondly, gold-bugs long for the "stability" that they believe a "hard currency" delivers.  They never bother to explain why, then, there were bouts of inflation and deflation, recessions, panics, trade imbalances, valuation crises, and even the Great Depression under the old gold standard to which they offer worship.


Posted by: Adjoran at May 31, 2010 01:05 PM (3hg5M)

224 ot kind of:
Spiegel reports that German president, and former IMF head, Horst Kohler has resigned effective immediately, "a shock announcement that comes as the latest in a series of blows to Chancellor Angela Merkel."

Posted by: Guy Fawkes at May 31, 2010 01:06 PM (7VvJB)

225 224 Do they sell many copies of The Magna Carta?

Posted by: Miss'80sBaby at May 31, 2010 01:08 PM (Yq+qN)

226 Do they sell many copies of The Magna Carta?

The original Magna Carta was destroyed.  That is all that is out there now is copies. 

Posted by: Vic at May 31, 2010 01:11 PM (6taRI)

227 Axe Peggy and Maureen and Eleanor what to do--- then do the opposite

Posted by: dr kill at May 31, 2010 01:11 PM (w9bVp)

228 oh, so this a gold standard post! sorry, monty et al, between getting schnickered & thinking of witty ways to say thaings about myself, i didn;t have time to read it. but, a few months ago i happened to get curious about the amount & $ value of the gold reserves. USA has the biggest, like 90% or smthng, and the total comes to about a trillion dollars. (or smthng)! you're telling me the world should go to gold??? this govt flushes that down the toilet in a blink.

Posted by: gomm at May 31, 2010 01:12 PM (7JES6)

229 two areas gold-bugs always fail to consider.

We should ban those 2 words: always and never.

1.  You don't have to believe in a gold standard to be a gold bug or visa-versa.
2.  The "stability" is in the so far enduring value of gold, not of an economy or currency.

Posted by: Guy Fawkes at May 31, 2010 01:13 PM (7VvJB)

230 Adjoran: Wow. Arrogant and snotty. You must be a real demon with the ladies.

Posted by: Monty at May 31, 2010 01:14 PM (O3eFQ)

231 229 The original Magna Carta was destroyed.  That is all that is out there now is copies.

Yes (1225 & 1297), but they don't sell copies of the copies do they? How many Brits actually want to read it?

Posted by: Miss'80sBaby at May 31, 2010 01:15 PM (Yq+qN)

232 Yes (1225 & 1297), but they don't sell copies of the copies do they? How many Brits actually want to read it?

LOL, how many CAN read it? It is written in Latin.

Posted by: Vic at May 31, 2010 01:22 PM (6taRI)

233 this is old-think. it used to be in classical economics (up to, say 1990) that money supply determined everything. deregulation and supply side thinking upended that good-ol' cart. the libs love the prosperity but won't acknowledge the source. i'm skeptical of cons who stand on the formerly govt controlled cart (i know there's more to it; thank you greenspan) and bewail the consequences.

Posted by: gomm at May 31, 2010 01:23 PM (7JES6)

234 235 LOL, how many CAN read it? It is written in Latin.

I assumed that Latin was still a requirement in the UK. Perhaps not.

Posted by: Miss'80sBaby at May 31, 2010 01:29 PM (Yq+qN)

235 Hell, we haven't required Latin here for almost a century unless you are studying to be a priest. I am sure that it is the same in the UK.

I know I couldn't read the thing.

Posted by: Vic at May 31, 2010 01:31 PM (6taRI)

236 hell, i don't know what this thread is about. i just wanted to talk about myself. sincere apologies to monty & all for anything i posted that was ON-topic.

Posted by: gomm at May 31, 2010 01:33 PM (73jUp)

237 ace: many thanks for this opportunity to be published! really, thank you and i'm very, very sorry. but i'll keep looking for the marvelous opportunities this site offers to interject.

Posted by: gomm at May 31, 2010 01:36 PM (73jUp)

238 238 Hell, we haven't required Latin here for almost a century unless you are studying to be a priest. I am sure that it is the same in the UK.

I know I couldn't read the thing.

Well, I had thought Latin was a public school (UK) requirement, but perhaps that isn't right. (Assumed that from everything I'd read.) As for here, you have to know it if you attend a classical school & some other private institutions.

Posted by: Miss'80sBaby at May 31, 2010 01:37 PM (Yq+qN)

239 I'm guessing I still cling to old-fashioned views about the UK, especially where education is concerned. :sigh:

Posted by: Miss'80sBaby at May 31, 2010 01:39 PM (Yq+qN)

240 Miss 80s Baby, not that I saw, over here.  From the way she talked, she wouldn't have expected to buy copies of the Magna Carta over there, although I'm sure there must be such.  She was also surprised by DC's license plates, "Taxation Without Representation," and couldn't believe that NH has "Live Free or Die" on theirs.

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 01:39 PM (GkYyh)

241 244 Did she go to public school (UK), & did they require Latin?

Posted by: Miss'80sBaby at May 31, 2010 01:41 PM (Yq+qN)

242 oh, and btw, i forgot! i also just bought a roman silver panther, c. 1st cent ad, 1.5 inches high, in remarkable condition and very detailed. better than anything sotheby's or christie's has had in the past 15 years (of its type). it';s interesting. up until the imperial period, romans were forbidden from owning more than an ounce or so of silver. the jewelry is modest and spare. then, boom! extravagance you wouldn't believe. well, actually, any of you guys would trump just about any of theirs'em ( made up that jargon). what an incredible world we have.

Posted by: gomm at May 31, 2010 01:42 PM (7JES6)

243 really! i just bought all these things in the past month. did my leg work. very cautious. went to the best of the best. and ALL 3 probably cost what a few vacations would run. you have to be verrrrry careful. but moreso, you have to be interested and like it. and boy, there's more mediocrity and sharks out there than you can shake a toluk at.

Posted by: gomm at May 31, 2010 01:47 PM (73jUp)

244 Miss 80s Baby, yes and no.  She was in "university" but I thought her relatively uninformed.  Also, she reflexively was anti-Israel, whereupon a wise third person got us all talking about the Air and Space Museum, instead.

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 01:50 PM (GkYyh)

245 but gosh, it's interesting. you learn, intellectually and visually. it's all about (to steal from the title of the dean of american furniture dealer's book, israel sacks): good, better, best.

Posted by: gomm at May 31, 2010 01:51 PM (7JES6)

246 ... and, boy, best of best can be expensive: a sumerian figure of a lion/man (don't ask) about 3 inches high just sold for over $50 million.

Posted by: gomm at May 31, 2010 01:53 PM (7JES6)

247 Magna Carta - text in English (1297) here:

http://tinyurl.com/ye9rnaa

A pointed reminder to the king that his vassals had rights, and that he had responsibilities.

Posted by: Gasoline Gus at May 31, 2010 01:56 PM (ZnIuc)

248 There really isn't enough actual gold and silver to use as currency by everyone or even all 300 million Americans.   It would therefore not actually be currency, but another commodity for bartering or merely a supplement to a fiat currency.

Posted by: Speller at May 31, 2010 01:57 PM (o0R2E)

249 It doesn't seem to matter whether Monty has a good point or some valuable information to offer. I find his writings unpleasant to read. It's just too much work to sift through so many acres of text. Shut up, already.

Posted by: Gundo at May 31, 2010 01:57 PM (yHBP0)

250 c.3000 bc

Posted by: gomm at May 31, 2010 02:01 PM (73jUp)

251 and when you see the piece, you understand it. not that $50 million is rational for anything. but wow. extraordinary and you would say, yeah, if anything should get that, that's ok.

Posted by: gomm at May 31, 2010 02:04 PM (73jUp)

252 btw the pieces i mentioned, the palau dish, the 4th millenium figure (really, really good, but very, very small) and the roman silver panther are all peripheral things. that's how i could afford them. but they are all pretty fine (super imho) within their class; not the greatest, but very to very,very good (actually, 1 gets to near wonderful).

Posted by: gomm at May 31, 2010 02:11 PM (73jUp)

253 It's just too much work to sift through so many acres of text. Shut up, already.

So WTF are you doing here then, get lost.

Posted by: Vic at May 31, 2010 02:12 PM (6taRI)

254 and if you came into my home & saw them you'd say about these negligible things, "eh. to each their own."

Posted by: gomm at May 31, 2010 02:14 PM (73jUp)

255 ... [aside]: fag.

Posted by: gomm at May 31, 2010 02:15 PM (7JES6)

256 ;-)

Posted by: gomm at May 31, 2010 02:16 PM (7JES6)

257

Monty,

Thanks for the effort you put into this.

Unpleasant as Adjoran's post may have been, do you mind attempting to address what he said?

Posted by: MlR at May 31, 2010 02:21 PM (568Ut)

258 Unpleasant as Adjoran's post may have been, do you mind attempting to address what he said? To the extent that he had anything of substance to say, it was basically the same old dispute between the gold-bugs and the fiat-currency people. I'm not really a gold-bug myself because I don't think that going back to a gold-standard is the answer (as I've said at length earlier in the thread). But it seems like madness to me to continue along the path that fiat currencies are going as if there's nothing wrong. A fiat currency requires a government that is transparent, honest, and prudent: and no government in the history of the world has met these criteria...at least not for long. I'd like to see currency privatization or at the minimum a move to an asset-backed (not necessarily purely gold-backed) currency.

Posted by: Monty at May 31, 2010 02:26 PM (O3eFQ)

259 Gundo, I am sure you are kidding.  Otherwise, you would just be very unpleasant.

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 02:33 PM (GkYyh)

260 "Did she go to public school (UK), & did they require Latin?"

The question might have clarified nothing: "public school" in the UK means what "private school" means in the US.

Posted by: Dave J. at May 31, 2010 02:39 PM (/dqSG)

261 gomm, I also have some bits of esoterica that have more value as "ooh, pretty!" than anything else--they reverberate with their own histories of people long dead, cultures no longer extant.  I feel as though I am safeguarding their little places in the world.  Plus, "Oooh, pretty!"

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 02:46 PM (GkYyh)

262 wth, so has anybody mentioned nixon? he took us off the gold standard. so, in addition to the triangulation (with Kissinger PBUH) of opening up china to undermine the ussr (one of the greatest acts of statesmanship in world history; boy did THAT work out well! even took down mao), he also did this monumental acvt. impressive.

Posted by: gomm at May 31, 2010 02:47 PM (7JES6)

263 2 cheers for Nixon! [no irony intended]

Posted by: gomm at May 31, 2010 02:49 PM (7JES6)

264

Spoken as a Hayek fan (who hasn't yet gotten to that part of his work),

Are there any principled arguments against privatized/competing currencies?


Thanks again for the give and take.

Posted by: MlR at May 31, 2010 02:54 PM (568Ut)

265

Are there any principled arguments against privatized/competing currencies?

Posted by: MlR at May 31, 2010 07:54 PM (568Ut)

Probably the same sorts of arguments against privatized military.  Too much of a nation is dependent on its currency.  While the administration of this might be inefficient and a bit wasteful in the hands of the government, it is one of the foundations of national soveriegnty and that is a cost that is worth it (as with standing armies).

Posted by: progressoverpeace at May 31, 2010 02:59 PM (Qp4DT)

266 Are there any principled arguments against privatized/competing currencies? Well, sure there are. Many people think that a governmental monopoly over the issuing of currency is a requirement for meaningful fiscal policy (if you don't control your supply of money, you can't respond quickly enough to monetary emergencies). One of the problems with the Euro, in fact, is that it imposes a single monetary policy on countries with many different (and often contradictory) fiscal policies. Another knock against private currencies is that they tend to acquire local monopoly power, and thus be prone to abuse. (Think of company-store scrip in the coal-mining towns of the 1920's.) I think that modern technology would make this a far less likely occurence, but it's still a concern. Private currencies would also be prone to a lot of gaming and speculation, so a very robust trading-and-exchange regime would be required to provide transparency. (But this is also true of our current fiat-currency regime, so we already have that problem.)

Posted by: Monty at May 31, 2010 03:03 PM (O3eFQ)

267 Posted by: ParanoidGirlInSeattle at May 31, 2010 04:50 PM (RZ8pf)

that's why they "own" goo gle....

Posted by: curious at May 31, 2010 03:08 PM (p302b)

268 264 The question might have clarified nothing: "public school" in the UK means what "private school" means in the US.

Which was why I placed a (UK) out to the side. My understanding was that the woman had lived in Britain her entire life. Perhaps I should have said "our version of private school", but I don't see how it makes any difference.

Posted by: Miss'80sBaby at May 31, 2010 03:10 PM (yfJ6g)

269 My understanding was also that the poster stated the woman in question went to our version of public school but went to a private university (US definition). See how it muddles everything to add those extra clauses?

Posted by: Miss'80sBaby at May 31, 2010 03:12 PM (yfJ6g)

270 no, excuse me sir, these aren't esoterica. or historical. they are works of art made by individual artists that speak across time & space. otherwise, i'm not interested in a thing that simply embodies an idea made by a hack. artists are doing that now. no, these are alive, living things (so to speak), not by their historical or cultural value or what i project on them. they live because they are made to be so and speak to us by determined artists attempting to transcend the forms of their day, within the forms of their day, to the essential and universal. some artists are good. some artists aren't. & there are a lot of craftsmen who make a living, gbt.

Posted by: gomm at May 31, 2010 03:26 PM (7JES6)

271 i'm ONLY interested in the individual.

Posted by: gomm at May 31, 2010 03:27 PM (7JES6)

272 why is great, great?

Posted by: gomm at May 31, 2010 03:32 PM (73jUp)

273

Miss 80s Baby, it was one of those not-Cambridge-or-Oxford Unis, I forget which.

gomm, I mean like a Persian shawl, a Japanese knife, a suit(?) of Chinese silk from the 19th c.  Works of minor art, not done any longer, and oo pretty.

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 03:43 PM (GkYyh)

274 quint&jessel: no cut intended. a bit of defensive perhaps. but i'm no grave tender of the historical. the piece has to knock me out. the individual who made it has to have created some thing that reaches out across time & space and sings. himself in the room. the thing alive and of beyond. not the idea of the piece, not the aspirations of the noble or ignoble conventions he speaks in. it's amazing. man can do that. and has and does. both humbling & inspiting

Posted by: gomm at May 31, 2010 03:47 PM (73jUp)

275 inspiring

Posted by: gomm at May 31, 2010 03:47 PM (73jUp)

276 quint&jessel: didn't mean a word i said. (yes i did) i dig the shawl, knife & silk.

Posted by: gomm at May 31, 2010 03:49 PM (73jUp)

277 So it wasn't historical or ritzy, but it could have been well-known in the UK.

Oh, & I said public unis earlier (our def), but I meant independent. But they're all that way, except one. This keeps getting messier....

Posted by: Miss'80sBaby at May 31, 2010 03:55 PM (Yq+qN)

278 in fact, quint, i love a wonderful persian shawl, etc. tis done, tis done well. a wonder of value.

Posted by: gomm at May 31, 2010 03:57 PM (73jUp)

279 in fact, quint, i purchased one of these from a very good couple, the finches, who are at olympia. check them out should you care to visit.

Posted by: gomm at May 31, 2010 04:01 PM (73jUp)

280 please, quint, of an afternoon, visit the finches who reside at olympia.

Posted by: gomm at May 31, 2010 04:04 PM (7JES6)

281 this week & this week only.

Posted by: gomm at May 31, 2010 04:05 PM (7JES6)

282 Here's the thing...Say catastrophe struck and only gold & silver is worth something monetarily. Just where the f are you going to BUY anything? Stores would be shut down, looted, and zombies rule the day. Who are you going to barter with?

Suppose you need a new car & gas to get you across the wastelands of Oz. You offer 5 bars of gold bullion to some schmuck with a bunch of cars and gas (let's pretend it's Jay Leno). He can say back to you "I might you a loaf of bread for those 5 bars, whatcha gonna do about it suckah?!".

I can totally see Jay saying that.

Posted by: Corona at May 31, 2010 04:11 PM (woZIc)

283

Probably the same sorts of arguments against privatized military.  Too much of a nation is dependent on its currency.  While the administration of this might be inefficient and a bit wasteful in the hands of the government, it is one of the foundations of national soveriegnty and that is a cost that is worth it (as with standing armies).

Posted by: progressoverpeace at May 31, 2010 07:59 PM (Qp4DT)

Cept don't we have privatized militaries, namely the innumerable private security contractors? Wouldn't the government have to drive them out of business for a comparable situation with currencies?

Posted by: MlR at May 31, 2010 04:11 PM (568Ut)

284 Gold, bitchez!

Posted by: Zero Hedger, drawn like a moth to the flame at May 31, 2010 04:15 PM (HSN0k)

285 ya know, quint, off my high horse for a moment i couldn't agree more with your post #265. horray/ huzzah.

Posted by: gomm at May 31, 2010 04:15 PM (7JES6)

286

Posted by: Monty at May 31, 2010 08:03 PM (O3eFQ)

Yeah, personally I don't see much in there that we don't already have, in spades, with a government monopoly.


Cept for the question of fiscal policy, but I don't have much faith in the government's ability to conduct precise fiscal policy anyway.

Which I guess leads to square one, a major thrust of your post.

Posted by: MlR at May 31, 2010 04:18 PM (568Ut)

287

217 both the oceanic dish (beautiful) and the mesopotamian figure together cost far less than a car and could go into a major museum. acquired from top dealers (of course) and affordable by most of you. (providing you are interested in such things).

 

pictures or it didn't happen.

Posted by: redclay at May 31, 2010 04:21 PM (s011Y)

288 Say catastrophe struck and only gold & silver is worth something monetarily. Just where the f are you going to BUY anything? Sigh. You do not buy commodity goods with gold or silver. You exchange enough gold or silver for the currency, and then buy the goods with the currency. If there is no local currency (pure barter), then your gold is of no avail -- but almost no economies in the last three thousand years or so operate on pure barter, so I'm betting that my gold and silver are always going to be exchangeable. I may not get the price I want...but I'll get something. I don't get why people always jump to the "Road Warrior" worst-case scenario when thinking of financial crises. A Weimar-type inflationary event or a second Great Depression is far, far more likely; and in either of these scenarios, hard currency would be of great value.

Posted by: Monty at May 31, 2010 04:24 PM (O3eFQ)

289 Which I guess leads to square one, a major thrust of your post. Yep. I'm not arguing that a privatized currency is an ideal economic model (if there even is such a thing); just that is both a feasible and preferable alternative to the regime we have now. A reliable, transparent, internationally-traded private currency regime would provide much of the long-term stability that the fiat-currency regime lacks, in my opinion. But the devil, as always, is in the details. Furthermore, I think that private actors could implement such a system pretty much without any governmental aegis at all. Let's say that five or six corporations are set up expressly for the purpose of providing a currency. They establish a value-store of some kind -- a vault of precious metals or some other non-wasting commodity -- and issue the currency. They'd need to convince businesses and markets to accept the currency, of course, but in this electronic age I don't think that'd be particularly hard to do. (Especially given the estblished and auditable value-store.) Over time, as people grew used to the idea, privatized currencies could compete with and even in many cases replace national currencies (especially in places like Zimbabwe). This would convince private businesses to pay their employees in private currency (or even from a range of private currencies, depending on the employee's preference). It could largely decouple the world economy from the stranglehold of government control, and I can only view that as a good thing. (There is the matter of how to implement a regulatory regime on this privatized currency marketplace, but no daydream is ever perfect....)

Posted by: Monty at May 31, 2010 04:32 PM (O3eFQ)

290 Re my previous post: I just basically summarized the plot to Neal Stephenson's Cryptonomicon without meaning to! (Great book, BTW.)

Posted by: Monty at May 31, 2010 04:35 PM (O3eFQ)

291


It could largely decouple the world economy from the stranglehold of government control, and I can only view that as a good thing. (There is the matter of how to implement a regulatory regime on this privatized currency marketplace, but no daydream is ever perfect....)

 

I like this idea, in theory.I do believe markets are the best arbiters in the long run. My concern is that, in the short term, markets are as prone to panics as any mob.

Posted by: redclay at May 31, 2010 04:36 PM (s011Y)

292

gomm, "in fact, quint, i purchased one of these from a very good couple, the finches, who are at olympia. check them out should you care to visit."

Olympia...where?  Or, for the more erudite here, whereat? 

Miss 80s Baby, she went to your average regular school in England, and then to some university in the London area.  Not like Eton or Harrow--do they even let girls in there?  I'm too lazy to look it up--going to sack out soon, on non-esoteric or artistic sheets.

Posted by: Quint&Jessel, Sea of Azof, Bly, UK at May 31, 2010 04:45 PM (GkYyh)

293 vic hit the nail on the head ~ post 100ish.  never been a gold bug, never will. it also seems an awful waste when used as a medium of exchange considering all the uses it has... from electronics to physics experiments to keeping girls from sleeping with some other guy for the time being.

monty... with regards to your battery analogy... if you are storing energy, would you rather store some amount in a functionally-limitless-in-quantity and readily available storage device or something that requires a good deal of effort to acquire and has many alternate uses in which it is very useful?  The easier and cheaper is obviously the better... the more productive.  And productivity is really what allows an economy, and the average paycheck, to get bigger in the long run.

recall reading someone talking about intrinsic value of gold.  no such thing.  that is linked to the Marxist labor-theory-of-value.  An item's value is based upon utility - that is, what a person is willing to pay for it because of what they will gain from acquiring it.  Not because someone put work into it.  An item only has value because someone wants it and is willing to pay a certain amount for it.  I put effort into eating and digesting this food... does that make my turd more valuable?

Posted by: A.G. at May 31, 2010 04:49 PM (qrKUQ)

294 Being a contrarian, I'll be stocking up on Slapchops.

Posted by: Waterhouse at May 31, 2010 04:00 PM (u+34p)

Okay. That's it.  Keyboard, you owe me one.

Hmm...

I wonder if there is some way to set up an app on the Yahoo group where we can track this sort of thing.

Like say, if I (theoretically, of course) cost somebody a keyboard, I would be cool if say Waterhouse had posted something like the Slapchop bit more than once.

Of course, if I were actually funneh, like some of the posters here, that might lead to me responding  OMG! ROTFL! to every third post even if it were penned by the likes of Seattle Slough or ergie, just to limit my keyboard liability.

This is much more difficult than it seems...

Posted by: Deety abasing herself at the altar of the Hopper at May 31, 2010 04:50 PM (aVzyR)

295 Stupid sock.

Posted by: Deety at May 31, 2010 04:51 PM (aVzyR)

296 I read all of the Laura Ingalls Wilder books as a girl, including Farmer Boy.

I am in no way shape or form fitted for an agrarian based barter society.

Or any sort of barter society, come to think of it.

Remember the shocking number Russian girls that had to become prostitutes in the '90's?

(And to those that don't think that the further destabilization of the 2 parent family, at the expense of fathers/husbands serving a critical role is much of a worry, I give you the aftermath of Russia post U.S.S.R.  A majority dysfunctional population of drunks and whores.)

Yeah, come to think on it, the 90's was about the time when my prime barter commodity was at it's most competitive.

I am soo scrooood!

Posted by: Deety at May 31, 2010 05:09 PM (aVzyR)

297 "money" is a kind of "stuff" others "want". It also seems to possess a common quality of having no functional usefullness in and of itself (as opposed to a generic "asset"). The money in your pocket is what we have all agreed to "want". But it is just an agreement. For example, very soon, pretty much the whole world will agree to "want" Greece's "money" much less. And so it's "value" shall.... And yes, people will always want the shiny stuff. The only question is the value at a given time. It's intrinsic "desire" (not value) is programmed into human DNA.

Posted by: illusory at May 31, 2010 05:13 PM (vQoSF)

298

Cept don't we have privatized militaries, namely the innumerable private security contractors? Wouldn't the government have to drive them out of business for a comparable situation with currencies?

Posted by: MlR at May 31, 2010 09:11 PM (568Ut)

There is a comparable situation with currencies.  Companies issue their own coupons.  California was paying refunds with their own IOUs, for a while (and to happen, again). 

It is the main monopoly of force (exercised abroad) that our military holds.  The big weapons.  The same is true for the currency, at home.  All official business in the US must happen in the currency. And the size of the dollar, as compared to everything else, is about the same as the size and power of the US military, as compared to anything else.

Posted by: progressoverpeace at May 31, 2010 05:37 PM (Qp4DT)

299 Sigh.  I laid it all out for you guys 234 years ago:  Human self-interest is the basic driver of economics.  Stuff is worth what the other guy thinks it is worth.  There is a natural order that is self healing, if government will quit meddling.

Posted by: Adam Smith at May 31, 2010 05:37 PM (Sv7vi)

300 Multiply the stupidity of state governments in regard to money by the stupidity of the federal government and then multiply by the stupidity of the international economic systems and I’m pretty sure the sum is chaos.

I'm not sure that you get any sort of sum but I'm pretty sure the curve described is asymptotic.

Posted by: Deety at May 31, 2010 05:39 PM (aVzyR)

301 quint if ur in uk u r there

Posted by: gomm at May 31, 2010 05:40 PM (7JES6)

302 lifaf hammersmith rd

Posted by: gomm at May 31, 2010 05:44 PM (EA+Co)

303 ils avez plus des japonaise et perse aussi

Posted by: gomm at May 31, 2010 05:46 PM (73jUp)

304 The easier and cheaper is obviously the better... the more productive. Only if it doesn't leak energy at a prodigious rate. Gold stores energy very well; fiat currencies don't. Or rather: fiat currencies are not stable. They spike and valley and brown-out and can sometimes discharge without warning to zero. Fiat currencies only work where energy is cheap and prodigious and easily replaced. In other words, it only works in a world that does not exist. We live in an energy-constrained world where fiat currencies are doomed to fail.

Posted by: Monty at May 31, 2010 05:51 PM (O3eFQ)

305 aussi, il y a une expositione de la collection particulaire des peintres modernes de m. brian ferry. lhammersmith lilaf oympia

Posted by: gomm at May 31, 2010 05:53 PM (7JES6)

306 if ur in uk ur in

Posted by: gomm at May 31, 2010 06:01 PM (EA+Co)

307 W14 8UX

Posted by: gomm at May 31, 2010 06:09 PM (EA+Co)

308 I mean, I don’t really know much about how point of sale systems work, but it seems to me that there is going to be an awful lot of reprogramming of machines needed in order to charge a tax on some items and not on others because you can’t just go in and set the category “candy” to taxable now, not every candy item is taxable. It isn’t like taxing the whole category of liquor.

Meh.

Not too hard at the store level actually, when it comes to reprogramming the machines.  Just think about all of the different tags that get hung and re-hung to show the price of all the different items on sale or on promotion in a given week.

There are usually one or two employees (not managers) in any given store whose entire job is to ensure that that happens.

That's the point.  This kind of stuff gets reprogrammed on a daily basis.  I would also venture to say that at least 28 hours of every given day (7AM-11PM) of operations is devoted, somewhere, somehow, to tracking, QC'ing, and adjusting these things on a store by store basis.

The real bitch of the problem isn't even going to be tackled in Seattle or even the state of Washington.

I'm assuming that they didn't come up with a nice neat list of 4033 specific products to be taxed.

Nooo!

Your local Safeway or Krogers is going to have to get in touch with HQ and then HQ is going to have to get in touch with a manufacturer like say, Kraft (which owns Cadbury's Creme Eggs) and then Kraft is going to have to pore over this dumbass law to figure out not only whether or not any of it's Cadburry's products fit under this new tax regime (do they contain flour? to what degree? does it make a difference? should/could we add or subtract flour? would it be worthwhile?) but every-other goddamn product that they manufacture and then sell in Seattle.

Multiply that by all of the manufactures that help to stock your local grocery chain.

Independent grocers?

I dunno.

I guess they are well and truly fucked unless the major manufacturers do them a favor and release the results that the bigs pretty much forced them to come up with.

Forget seeing any smaller or artisan food companies on your store shelves soon.

I mean can Momma Rosa's Tortilla and Ganache Co., run out of a small commercial kitchen, really afford the kind of scientific assay as to the content of product that would allay the fears of any store in mortal fear of the state tax-collectors looking for a "gotcha"?

I dunno, but I'm pretty sure that this is going to end up costing me some money here in AZ.

Sounds like a lot of unproductive work to me.


Posted by: Deety at May 31, 2010 06:25 PM (aVzyR)

309 The Fish also value gold and silver. I do not know how to ask how much they value it but I have seen some pay with their life. The smart humans have taken advantage of this and designed lures.

I have yet to see a fish go after a bill on a line, yet the smart humans fall for this repeatedly. literally.

Posted by: ackum at May 31, 2010 06:26 PM (vQoSF)

310 Here's the thing...Say catastrophe struck and only gold & silver is worth something monetarily. Just where the f are you going to BUY anything? Stores would be shut down, looted, and zombies rule the day. Who are you going to barter with?

Vic.

Vic never bought into this gold crap. Instead he stocked up on ammo and cans of chili, and now he's a very rich and powerful man. He has a private army, paid for in chili, guarding his compound day and night. He's fucked every woman in a 20 mile radius for a single can of chili each. He's also made a lot of enemies, like the husbands of the aforementioned women, not to mention his own wife.

Vic is a little short sighted but he's not stupid. He has his ear to the ground and he hears rumors of a new government being established. He knows that when order is restored his chili will become worthless, his private army will desert him, and his enemies will show up and go medieval on his ass.

Vic desperately needs something that will allow him to preserve his wealth and power after the new government is established. If you can prevent him from simply taking it from you, Vic will give you lots and lots of chili for your gold.


Posted by: schizoid at May 31, 2010 06:32 PM (ECqjx)

311

Well, sure. It's just that gold and silver, historically, have retained their value better than any other specie. Does that mean this will be true in the future? Maybe, and maybe not. But it's the way to bet. Food is perishable; finished goods decay and degrade and have far larger changes in relative value over time than gold or even silver.

Retained a value. Again, they have no intrinsic value, only a comparative one. All it takes is for people to decide that gold is ugly, and it becomes just another industrial metal. Should we then consider other such metals as suitable alternatives?

Food may be perishable, but it is also essential. You can live quite well without any daily gold intake or use. That is why food was originally the commodity currency of choice. On that level, silver is also a consummable commodity because of its industrial uses.

And again, by stating it will most likely have a continuing value, you are essentially making the fiat declaration that people must give full faith and credit to that establishes its value. Yes, lots of other people make that same declaration, but it is still just an individual promise.

Posted by: Sam at May 31, 2010 06:50 PM (hvDIX)

312 All it takes is for people to decide that gold is ugly, and it becomes just another industrial metal.

No, it becomes a very useful industrial metal. Anything copper can do gold can do better. If it were plentiful lots of everyday items would be made out of gold.

But gold is very rare. If you divided all of the gold in the world equally among all of the people of the world it would work out to less than one ounce per person. That's why gold can never be cheap. If it were, people would want all sorts of things made out of gold, but you can't make much out of 1 oz. Therefore the price must rise until people, even rich people, say "Meh, I'll take the copper pipes instead."

Posted by: schizoid at May 31, 2010 07:18 PM (ECqjx)

313 All it takes is for people to decide that gold is ugly, and it becomes just another industrial metal.

But aren't you basically ignoring the historical record?

Sure, I guess that it is possible for people to decide that gold is ugly but you've no basis for even positing that this is remotely probable.

I'm not denying your point that, whatever the medium, it must be underwritten by a future promise to fulfill a contract but I think that you give short shrift indeed to the world-wide cultural resonance of gold, now and in the medium future.

And it does nothing at all to undermine Monty's original point that, right now, gold might be a better battery to sink some of the excess value he has generated into, for future use, than fiat currency.

I'm not going to argue that gold is the best battery.

Frankly, after reading this thread, I'm kind of torn between the Slapchop and black peppercorns as a hedge against inflation.

As for your statement that, " ;">food was originally the commodity currency of choice",  I'm going to have to get back to you after I take another look at the technical definitions of "commodity" and "curreny".

Also, I'm gonna take another look at Sumerian Cuneiform and decide how "choice" it was to have an actual bull or two and so many measures of grain in tow when it came time to come to the city and pay taxes and pick up a pair of sandals or two.


Posted by: Deety at May 31, 2010 07:25 PM (aVzyR)

314 "Anything copper can do gold can do better." This is more or less true but in fact copper is the best conductor (aside from silver). its ~33% better than gold, but it corrodes within ~8 hours, and the interface degrades. The interface is often overlooked. The best is gold plated copper, or just silver. but silver does oxidize in real time. Gold is really the best protector. Its very soft though; ironic huh. Don't get me started on titanium

Posted by: welder at May 31, 2010 07:32 PM (vQoSF)

315 Nope.

Now that I think about it, progressives over peace had it right hours ago on this thread.

It's enforceable contracts all the way down, baby!




Posted by: Deety at May 31, 2010 07:33 PM (aVzyR)

316 and there is another another catch. traditionally plating was done in solution and dissolving gold requires cyanide. very bad stuff. now, you can pretty much sublimate and deposit anything controllably, I think. still plating is cheaper. both toxic. things changed after they outlawed TCE.

Posted by: welder at May 31, 2010 07:41 PM (vQoSF)

317 Anyone else just love the extravagance of shiny copper added as an architectural detail on a new project that ages and starts to show a patina over the course of even a few years?

I used to get to see these things when I lived in Chicago.

Now that I live in AZ, one of the major historic sources of copper in the world, I never see actual copper used architecturally but tons of other materials are thoughtlessly, spray-painted an anemic green color that is meant to evoke patina'd copper.

I guess that's kind of a good sign, come to think of it.

AZ's copper is so valuable, that we would never think of using it for décoration.

Posted by: Deety at May 31, 2010 07:47 PM (aVzyR)

318 bare naked copper is in fact a brilliant soft pink. nothing like it. quite beautiful.

Posted by: alchemist at May 31, 2010 08:02 PM (vQoSF)

319 Welder,

I had a feeling someone was going to call me on copper vs. gold. But is my basic point wrong? If gold were cheap, would you not buy gold pipes, wires, kitchenware?

Posted by: schizoid at May 31, 2010 08:11 PM (ECqjx)

320 well your point is more or less correct. I attributed that in my first sentence and addressed the reasons in detail. Basically it would be "better" to jsut machine a block of gold, it it were apples to apples (same laws of physics but more abundant gold). That is unless the interface never needed to be exposed, then other techniques and materials could produce a better performing result for high-end, etc... but yes. gold rocks.
Rule of thumb: anything gold plated is "better".

Posted by: machinist at May 31, 2010 08:23 PM (vQoSF)

321 this is why the iphone battery does not come out.

Posted by: machinist at May 31, 2010 08:26 PM (vQoSF)

322 bare naked copper is in fact a brilliant soft pink. nothing like it. quite beautiful.

A brilliant soft pink.

Ohhh, that's what I wanted to say.


Posted by: Deety at May 31, 2010 08:55 PM (aVzyR)

323 A brick of .22 rimfire has ten boxes of fifty in it.  I'd rather have a bunch of those on hand than gold or silver.  Col. Cooper once referred to it as "ballistic wampum" for use during/after the zombie apocalypse.

Without a strong, resilient community, neither that, nor food, nor metal will be much good.

Posted by: The inexplicable Dr. Julius Strangepork at May 31, 2010 09:25 PM (RKh6P)

324 Without a strong, resilient community, neither that, nor food, nor metal will be much good.

Sooo, what's your criterion for identifying a strong, resilient community?

Be explicit.

 


Posted by: Deety at May 31, 2010 10:15 PM (aVzyR)

325 Thx machinist

Posted by: schizoid at May 31, 2010 10:43 PM (Ye7S1)

326

Someone mentioned contracts earlier and that's exactly what currency is:  A contract. It's a method of exchange.

I work for my employer and my employer pays me in currency (actually, electrons) that I can use to form contracts with others. When I buy an apple, I'm essentially trading my work skills for that apple. It beats bartering, because most grocery stores don't directly need my talents that my employer pays me for.

So what is backing up all that "fiat" currency? Look around you -- your house, your car, your belongings, the street, the nearby freeway, and every building you see.

We don't need gold to back our currency because our assets and our abilities set the value of money.

 

 

Posted by: Michael McCullough at June 01, 2010 09:41 AM (hzV1U)

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