Minimum wage in 1964.

[Matt1970]

They still did that when the gold standard existed. It was originally started by lying. People would take gold to the goldsmith and get a piece of paper that was redeemable for gold. The people holding the gold and handing out paper quickly realized that most people never ask for the gold back. That means you could make paper money based on nothing and nobody would notice unless everyone tried to withdraw gold at the same time. Rather than calling this fraud, it became known as fractional reserve banking.

That crap still exists without the gold standard. Imagine I have a big wad of cash worth $1000. My friend Joe asks to borrow $500 cash and I say yes. Me and Joe go to the bar and Joe starts a bar tab. He says "don't worry, spungo gave me a $500 line of credit to pay my bar tab." The bar owner asks me if this is true. I say yes and I show him the wad of cash. Satisfied, the bar owner allows Joe to have a bar tab. Now suppose I did that a total of 4 times with 4 different people at 4 different bars. I only have $1000 cash but I've managed to lend out $2000. I've lent out more cash than I have. Nobody will catch me on this lie unless all of them ask for my cash at the same time.
If you do this, you will go to jail for fraud. If the bank does it, it's called fractional reserve banking. Welcome to America. Being rich makes you above the law. Bankers are never thrown in jail for this because they were rich enough to bribe politicians to make it so this type of fraud is legal.

Except fractional reserve banking predates the American government and nearly every country does it.

 

[Spungo]

Except fractional reserve banking predates the American government and nearly every country does it.

Every country is run by scumbags who can be bribed.
Also forgot to say that different countries have different limits of how much you're allowed to lie. Wiki says Canada and Australia don't even have limits. You can use $100 to lend out billions if you really wanted to.

 

[Svnla]

$1.25 in 1964 is equal to ~$9.35 in 2013.

Where do you get that data? I am always interest about how much $1 is worth at a particular time period.

 

[Ryan]

Where do you get that data? I am always interest about how much $1 is worth at a particular time period.

http://www.bloomberg.com/news/2011-...fails-to-beat-inflation-chart-of-the-day.html

 

[Anarchist420]

Finally, what makes gold or silver more valuable than paper?

Value is subjective, but I'd rather have gold than paper because paper is more common.

 

[zinfamous]

Lost in all the responses here -- his actual point, which is that we went from coins with some intrinsic value to ones made of base metals.

I wish I had been alive back then. I would have hoarded those silver coins like they were going out of style (since they were).

the value of inheriting detritus from depression-era relatives.

--I received a big sack of coins from my grandmother after she passed several years ago, diviid up by my father amongst brother and cousin.

It was full of silver dollars and silver quarters, copper pennies, silver dimes, etc. The melt value of that ~20lb bag, this time last year, was about $2200. (just in silver dollars, I believe)

 

[Charles Kozierok]

I think you may have misunderstood me, I wasn't arguing that they had NO intrinsic value, but that much of their value is driven by demand that is every bit as illusory as paper money demand.

I find that implied equivalence dubious.

Gold and silver may not be the most useful substances on earth, but they have a lot more intrinsic value than fiat currency. I don't see too many people making wedding bands out of small rectangles of paper, as just one obvious example. (Most gold production goes to jewelry, even today.)

Precious metals have been sought after, valued, traded and used for thousands of years. I feel pretty confident that the US dollar won't be around in the year 3013.

Regardless of that, if you believe hard money has fewer downsides than fiat currency why not support a return to it? How do you square this with the overwhelming opinion of economists against the return to the gold standard? Or did you mean some other form of commodity based currency and in that case how would it address the major problems with hard money such as speculative attacks, deflation, and inability to respond to economic shocks?

I don't really know how to quantify which has more or fewer downsides. They both have serious problems, and especially in an era with the availability of modern mining techniques, I am not comfortable with the US going to a standard relying on a substance that is found in abundance in countries like China and Russia. (We have substantial deposits here too, though.)

I would be fine with fiat currency because of its advantages if I could feel confident that the people in charge would resist the temptation to abuse the power that it gives them. Over the course of history, pretty much every paper currency has eventually been destroyed because of the ability to issue it in unlimited quantities, and I think we'll end up there eventually as well.

zinfamous: Lucky dog.

 

[Matt1970]

Every country is run by scumbags who can be bribed.

Dat much be true.

 

[Darwin333]

Lost in all the responses here -- his actual point, which is that we went from coins with some intrinsic value to ones made of base metals.

I wish I had been alive back then. I would have hoarded those silver coins like they were going out of style (since they were).

At the time they were worth more than they the metal simply because they were US currency. Why would you have been hoarding something for the metal when the stamp (or whatever its called) was literally worth more than the metal it was stamped on?

It would be akin to hoarding dimes today for the value of the metal.

PS: What gave those coins "intrinsic value"?

 

[Darwin333]

Value is subjective, but I'd rather have gold than paper because paper is more common.

So the exact same mechanism gives them "value" and your only argument is scarcity??? That is why you believe we should put our monetary value, at least partially, into the hands of people that don't like us??

And is paper really more common than metal? What are you using to come to this conclusion? Weight? Volume? Pure bullshit?

 

[DominionSeraph]

precious metals have been sought after, valued, traded and used for thousands of years. I feel pretty confident that the US dollar won't be around in the year 3013.

Currency's value is in its use is as a medium of trade, not as some supposedly infinite storehouse of value. If you store dollars for 1000 years you may have nothing at the end, but you had nothing in the meantime as well. Gold/silver, you may have something at the end, but again you had nothing in the meantime, rather depreciating the whole endeavor. (Jewelry isn't metal in currency form, it's in artistic/sentimental form and isn't so easily traded at that value level. If the value of your jewelry is only in its scrap value, it's because it's worthless as jewelry.)

 

[OverVolt]

Minimum wage peaked at $10.56/hr inflation adjusted.

http://www.newyorker.com/online/blogs/johncassidy/2013/02/the-case-for-a-higher-minimum-wage.html

It was never anywhere near $26.

You are talking about getting paid $1.25/hr and investing it into silver, which is different.

Its like saying you could make $500 an hour if you made minimum wage and bought apple stock starting in 1980 that then went up 3,800% for the ipod, iphone days etc.

 

[Charles Kozierok]

At the time they were worth more than they the metal simply because they were US currency. Why would you have been hoarding something for the metal when the stamp (or whatever its called) was literally worth more than the metal it was stamped on?

In 1964 that was still true, but the writing was on the wall -- the price of silver was rising, and would blow past the "fiat breakeven point" of $1.38 or so by the end of the decade.

That's the entire reason they stopped using it.

This is a pattern that repeats itself throughout history. The name of the British currency comes from the fact that once upon a time, it represented one pound of silver. Today, a pound of silver is worth over 275 fiat British pounds.

Currency's value is in its use is as a medium of trade, not as some supposedly infinite storehouse of value.

There's no inherent reason that it can't be both. That is, unless the currency only has value because a government says it does.

 

[DominionSeraph]

There's no inherent reason that it can't be both.

There's no reason it need be both, so other concerns can trump. And they do.
/thread

 

[OverVolt]

Money isn't wealth. Gold is wealth. Silver is wealth. Don't confuse money with wealth. Because they are different.

REAL things are wealth, not numbers in a computer. They can manipulate the computer numbers all they like, we have less actual wealth. And you can feel it. The computer numbers just make us feel good about having less actual stuff.

It also tricks some people into thinking that everything is okay when in reality there is a run on real wealth. Be it gold, stocks, houses, farmland, guns, cars, food, education, healthcare or energy. Did that make it click?

There is not enough wealth anymore to go around the planet. Every country can't use oil like the USA does. The number of cars went up 800% in Ireland, they didn't really use many cars, now they do. But they can't afford it and are going bankrupt, etc.

They fudge the money numbers with QE. The actual physical wealth is in short supply. Its rather obvious if you don't confuse money with wealth.

"getting yours" in the world economy is now a credibility game.

 

[Charles Kozierok]

There's no reason it need be both, so other concerns can trump. And they do.
/thread

Not quite that simple.

One of the fundamentals requirements of a stable medium of exchange has to be control over supply. That's the problem with fiat money -- it's too easy to just print more of it. And that's why you see people talking about going to a gold standard, even if it would be a bad idea for other reasons. It's not because some sort of fetish, it's because there's too much history showing what happens when governments are able to just print as much money as they want.

Look at this graph. Do you think it's any coincidence that we went off the gold standard and stopped using silver in our coins at the time we did?

 

[jackschmittusa]

The price of precious metals has risen to stupid levels because of hoarders and speculators. If you look to the 1800s when gold and silver coin was common, you could buy groceries with a 1oz. gold coin and get change in gold (smaller coins) and silver. If you are hording it now awaiting the financial collapse of large nations, imagine what you would get for change from your gold coins if you needed to buy some milk and bread. Certainly not anything like the $1600 dollars you think it is worth now. Barter would be the currency of choice and gold would assume a minor role.

 

[who?]

The inflation calculator from the Bureau of Labor Statistics;http://www.bls.gov/data/inflation_calculator.htm

 

[OverVolt]

The inflation calculator from the Bureau of Labor Statistics;http://www.bls.gov/data/inflation_calculator.htm

Doesn't include food and gas, its a joke. Cause who needs those right.

 

[DominionSeraph]

Money isn't wealth. Gold is wealth. Silver is wealth. Don't confuse money with wealth.

How are gold and silver wealth? They're not that useful to the average person. Can't eat them. They won't keep you warm. Not useful for transportation. They don't do anything entertaining.

Gold and silver are fiat currencies. Their current value is based not on any value as a solid commodity, but as a currency that has a perceived immunity to inflation. But as the housing bubble showed, real things aren't necessarily worth what you paid for them. As soon as there isn't a greater fool, the price collapses.

 

[DominionSeraph]

Barter would be the currency of choice and gold would assume a minor role.

Gold would have pretty much no role because, long before there was any sort of settling on just how much it was worth (as it has no real use and would only be trickling in from the hoarders), the people would put a government in place to issue paper money to take care of the currency need.

People would not let their wealth be held hostage to the demands of the hoarders. "Give me all your food for this ounce of gold." Nah, don't need your stupid metal. That shit's worthless. We can use paper.

 

[DominionSeraph]

Look at this graph. Do you think it's any coincidence that we went off the gold standard and stopped using silver in our coins at the time we did?

Hmmm... now why would a deflationary and rigid currency system be bad for a rapidly growing economy that needs currency in abundance?

 

[fskimospy]

Doesn't include food and gas, its a joke. Cause who needs those right.

It would be a joke if it did include them. Food and gas prices are highly unstable and changes in them often do not reflect the broader economy.

 

[Thump553]

Minimum wage peaked at $10.56/hr inflation adjusted.

http://www.newyorker.com/online/blogs/johncassidy/2013/02/the-case-for-a-higher-minimum-wage.html

It was never anywhere near $26.

You are talking about getting paid $1.25/hr and investing it into silver, which is different.

Its like saying you could make $500 an hour if you made minimum wage and bought apple stock starting in 1980 that then went up 3,800% for the ipod, iphone days etc.

Hot damn, I earned minimum wage back then-no wonder I felt wealthy. Of course, not having a mortgage payment, utility bills, paying for kids, car expenses, etc. may have had a little something to do with my perception of wealth. I never invested in bullion either-my record collection was the closest I had to a hard asset investment.

Unfortunately my vast wealth soon disappeared when I went to college a few years later. Roughly $750 a semester at the start, including room and board-but I paid my own way through seven years of college and post grad degree.

 

[Darwin333]

I find that implied equivalence dubious.

Gold and silver may not be the most useful substances on earth, but they have a lot more intrinsic value than fiat currency. I don't see too many people making wedding bands out of small rectangles of paper, as just one obvious example. (Most gold production goes to jewelry, even today.)

I don't see great literature being penned on metals much either. Value is completely subjective and at the end of the day the exact same mechanism gives both gold and paper currency its value.

I have personally been in a SHTF situation where all you could do was trade and while not completely worthless gold was pretty darn close. Want to know what had the most value at that time? Good old gasoline got you quite literally anything you wanted including gold. You were very very lucky if you found someone willing to trade you gas for your gold though.

Precious metals have been sought after, valued, traded and used for thousands of years. I feel pretty confident that the US dollar won't be around in the year 3013.

I would bet by the year 3013 we will have found ways to make gold or at least mine it much more efficiently severly reducing its value. Besides, I don't really care whats going to be used as currency many many generations after I die but thats just me.

I don't really know how to quantify which has more or fewer downsides. They both have serious problems, and especially in an era with the availability of modern mining techniques, I am not comfortable with the US going to a standard relying on a substance that is found in abundance in countries like China and Russia. (We have substantial deposits here too, though.)

At least you admit the downfalls. As far as quantifying which has more, we already established that both can be manipulated so would you rather the power to manipulate it be in the hands of an entity that at least sorta (or even is just supposed to) have our best interests in mind or entities that we know for a fact wish to do us harm? Its really a no brainer to me. Consider if we move to a gold standard and a few entities get together and become the DeBeers of gold, not a very pretty picture is it.

I would be fine with fiat currency because of its advantages if I could feel confident that the people in charge would resist the temptation to abuse the power that it gives them. Over the course of history, pretty much every paper currency has eventually been destroyed because of the ability to issue it in unlimited quantities, and I think we'll end up there eventually as well.

Gold and precious metals have historically been used as currency by many nations and societies. Quick question, how many use it today? Doesn't that at the very least insinuate a draw between the two?