Money, What Is It? (video)

[ShawnD1]

How can a commodity currency 'fail'?

Commodity currency fails because it is rigid. Money is not allowed to be created out of nothing. If a market has no gold and nobody in another market is willing to lend their gold, then you're fucked. There's no way to stimulate trade. Here is an excerpt from wiki's page about the great depression.

http://en.wikipedia.org/wiki/Great_Depression#Gold_standard
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"Economic studies have indicated that just as the downturn was spread worldwide by the rigidities of the Gold Standard, it was suspending gold convertibility (or devaluing the currency in gold terms) that did most to make recovery possible.[43][44] What policies countries followed after casting off the gold standard, and what results followed varied widely.
Every major currency left the gold standard during the Great Depression."
*******

When every major country jumps ship on a system, it's probably for a reason.

Do you agree that a free market commodity money makes it harder for reckless spending (and thus savings destruction) to occur?

No I do not agree. The government is able to spend as much money as they want because people are willing to lend it to them. It doesn't matter if it's fiat money or gold money. If guys like me are willing to lend a bar of gold to the government, then the government is still allowed to spend as much as they want. In financial terms, you're lending money to someone when you "buy" their debt. If I give the US government a bar of gold and they give me a piece of paper saying I have a 20 year bond for 1 bar of gold, what they've given me is a note saying that I lent gold to them and that they will pay it back to me on the date printed on the bond.

The example that was given had to do with someone's private bar. In the case of a private bar, the customers decide to go there or not.

You're completely missing the point. It's not about customers. It's about OSHA and safe work conditions. There is reason to believe that second hand smoke in very large quantities (ie working in a bar) is a safety hazard, so it is regulated the same as one would regulate ammonia or benzene floating in the air. You can't just have an uncontrolled amount of smoke or ammonia in the air and claim that it's ok because it's private property. Safety regulations overrule private property rights.

If I agree to go sky-diving, then I agree with the risks it includes.

Terrible logic. We can't do crazy shit like remove fume hoods from chem labs just because some chemists are crazy enough to work without them. Similarly, we can't ignore health risks caused by high amounts of airborne particulates (smoke) just because someone somewhere is willing to work in those conditions.

Say I own a gold and silver mine. What would I do with all the gold and silver I mined? Why would I sell it? I'm basically printing money out of the ground... I can't do anything to make it more or less valuable. I could sit on a pile of gold all my life and basically become a king.

This doesn't really seem like a problem. If you find gold, the government is able to print money to represent that gold. It would cause inflation, but the amount of inflation would be so small that nobody would even notice.

 

[gingermeggs]

http://www.youtube.com/watch?v=Gizetn5VuA0

I made this video. What do you guys think of it?

Firstly, get a haircut and a real job!

The guy is a dutch zionist/fascist shitbag.
Can you eat gold or silver?
Can a king fuck your wife without reprisal?
Can a king deprive you of your liberty?
What if the King's first son is an Arsehole? Sultanism?
What if your next door neighbor wants to open a brothel at his joint and cook crystal meth? Release the pitbull terriers? But what if he's got a 50cal trained on the front gate?
What about the Anarchy he then goes on about, no police or government, he skipped the history of 1900's wild west USA because he was basically saying we should live like those days, Where if you got the guns and neighborly support, almost anything goes. How do you get private property? With gold? Nothing new there, just a form of currency which is hard to carry around or hide.
These saxons are really bent cunts!
Seems ww2 hasn't ended..............yet!
I wouldn't give him a brass rah-zoo for that lecture!
Just another non-productive gold pusher- look out if he had to work with his hands to feed himself!
You don't jump ship if the skipper is truly mad, mutiny is the answer!
*the crew begins to whisper amongst themselves

So many people just don't like to work any more!

4- Communist world
5- Islamic theocracy

5- is probably going to be the outcome, 2050- if we aren't all dead come 2012!

 

[sandorski]

It's okay to admit you have no argument. You don't need to deflect the argument by saying, "go read a book." Would this history of economics suffice?
http://en.wikipedia.org/wiki/The_Theory_of_Money_and_Credit

Been discussed before. Read up on how the Bankrupt USA was in a Depression, until some Hicks found some yellow Metal in California. It wasn't because there was so much Gold there, it was merely because it was simply Gold.

Gold Standard is fucking nonsense.

 

[gingermeggs]

BWAHAHAHAHHAHa

*pauses*

BWAHSHAHAHAHAHAHAA

You tell me how a person can print "gold" and then maybe you'll have a point. Otherwise you're clueless.

FACT: Gold has held significant value in nearly every single part of the globe, in nearly every civilization, for the last 4000 years.

No government or politician is ever to be trusted. Gold is more than just a keeper of value, it's a universal currency that is accepted in every part of the world, every language, every country, in any amount, for thousands of years without fail. If you cannot see this you're trolling.

A straw doll from the pharaohs tomb is worth more!
Or the tooth of a midget, now extinct, marmoset!

Gold electroplated Tungsten bars! too easy!
The preservation of real Justice is the key, not what type of currency!
Crook's will work with any system, the difference between a good system and a bad one is the success of its justice system to restrict criminal intent from growing out of control- The economic problems stem from a lack of accountability and responsibility in the Media, the government, the financial and the legal sectors of our society. Bad things happen when people put wealth above ethics and principles- Why do you need to have a course on ethics in a law degree nowadays? A= to know how far you can bend the rules!
The ethical tide always turns, don't get caught up in the run-out tide.

 

[CycloWizard]

I'll start from the top. As far as silver coins, that is the point. How much did a movie cost 50 years ago? I don't know, let's say a dollar. That's four quarters. How much does a movie cost now? Like $9 bucks?

Find me those four quarters from 50 years ago your grandparents used to buy that movie ticket. A pre 1965 quarter weighs 6.5 grams according to my Whitman Redbook (I keep one on my desk, I metal detect occasionally as a hobby), it was 90% silver and 10% copper. 6.5 grams is 1/5th a troy ounce. Silver trades right now at $19 per troy ounce. That means each pre-1965 quarter has $3.42 worth of silver in it. They had four of them, so that's $13.68 worth of silver today. You can still take those quarters, melt them down, and still buy a movie ticket at today's prices, and have money left over for popcorn and Mike and Ikes.

Find me a fiat dollar bill from that time (although I believe they had silver certificates convertible on demand to physical silver, let's pretend they had a fiat dollar) and you would need 8 more to buy a movie ticket today.

Precious metals preserve wealth for the average citizen because the average citizen does not own true wealth (no gold or silver is not true wealth, it's just a reliable way to preserve wealth), which true wealth is large amounts of supply producing land (farms), factories and businesses, or other basic natural resources (mines, fisheries, etc) or valuable skills (doctors, engineers). The only choice for the average citizen is currency. You take away their ability to preserve their currency and you're stealing their wealth. An economy cannot exist long with such an unequal share of wealth. Citizens need to be mobile and motivated, otherwise they will uprise through force or the election process.

You had me at Mike and Ikes.



The real obstacle I see, as I already mentioned is that with a population of 7 billion and 37000 metric tons of gold available (according to Wiki), that gives only 0.17 troy ounces (or $212.42) in gold per person, which corresponds to a total available currency value of $1,486,972,187,500. Of course, the same Wiki article claims a total value of over $5 trillion, so either I fail at arithmetic using a calculator or their numbers don't add up.

As for your second paragraph.

What do you suggest we use? We need a currency that is universally around the world, that cannot be manipulated by politicians through the artificially creation of, and that can be held privately and in the physical form, to prevent confiscation. Gold and silver has been used for thousands of years because of this. In reality, no metal is better than another, these metals have just been the ones universally accepted over the years and this will not change with the rise of countries like India, where over a billion people value gold as an investment and as jewelry for marriage and social purposes (look up how important gold is to the Indian people, you'll be shocked).

No currency is going to be perfect, even gold. Nothing of this world is perfect, but we have to find the least imperfect solution.

Why does a currency have to be accepted everywhere? I'll also add that, based on the current value of gold, it will become very difficult to make a coin small enough that it can be used to buy a loaf of bread ($1 of gold is about 0.0008 troy ounces, or about 25 mg). I suppose a system of mixed metals like you mentioned could solve this problem, but it also makes things a lot more complicated when the relative values of the coined metals change.

As I said, I know nothing about currency exchanges and haven't thought much about using a commodity-based currency, but such a system has what I would consider to be significant practical roadblocks to implementation even if we could get enough people behind it to make it happen. I'm mostly playing the devil's advocate here just to glean how you think it would actually work.


Either way, as an engineer, I can tell you that being an engineer in the US is no longer considered a valuable skill, even at the PhD level. Being a female engineer from a non-"European" background, however, makes one invaluable. Thus, the government has taken the one form of currency I have access to (i.e. human currency) and rendered it worthless using "equal opportunity" laws. Until this sort of BS is sorted out, the type of physical currency we use is a secondary concern for me.

 

[JMapleton]

You had me at Mike and Ikes.
Why does a currency have to be accepted everywhere? I'll also add that, based on the current value of gold, it will become very difficult to make a coin small enough that it can be used to buy a loaf of bread ($1 of gold is about 0.0008 troy ounces, or about 25 mg). I suppose a system of mixed metals like you mentioned could solve this problem, but it also makes things a lot more complicated when the relative values of the coined metals change.

First of all, the reason it must be accepted everywhere is because if a unit of currency only hold value because a government "says so," like a fiat currency, then a government can use that ability to change the value at any time or worst case, completely destroy the value.

Gold, the metal outlives the country. The government has no control over the wealth of the people.

As far as my mixed metal idea, yes that would be the best solution. The prices of the metals would not change very much relative to each other if they were tied to a currency or were a nation's currency. The price of metals would be in sort be convertible to good and services and this would "anchor" the price a bit, although there still would be fluctuations.

Maybe having private banknotes like the US did int he 19th century would be best. Or perhaps go back to the all silver standard. Either way it could still be done and although it would not be perfect, it's better than what we've got now, where the government can rob, steal, borrow, tax, and pay for anything at anytime it wants.

Either way, the point is, it's a way for the citizens to protect their money if it's accepted worldwide if their government fails. A nation will not be "down" for long if it's citizen's wealth was not destroyed during a government shake up.

 

[JMapleton]

Gold Standard is fucking nonsense.

Your alternative is the Paper Standard? OK, we'll leave it at that then.

Paper vs Gold. Take your pick.

 

[sandorski]

Your alternative is the Paper Standard? OK, we'll leave it at that then.

Paper vs Gold. Take your pick.

What you call "Paper" is actually no different than Gold Standard paper bills. Fiat Paper simply is not backed by Gold, it is backed by the Economic Output of the Nation it is issued by.

You can have shiny Metal, I prefer something based on something that's actually Real.

 

[JMapleton]

What you call "Paper" is actually no different than Gold Standard paper bills. Fiat Paper simply is not backed by Gold, it is backed by the Economic Output of the Nation it is issued by.

You can have shiny Metal, I prefer something based on something that's actually Real.

Backed by economic output? That's what they tell you. In reality it's backed by the nonsense spoken by a politician. You trust a piece a paper created by a politician? A crooked politician prints a piece of paper, puts his signature on it and says "this is real value and I can print as much of it as I want!"

I have stated from the time I first posted I advocate only coinage, not paper convertibles.

My shiny metal has been accepted as value for over 4000 years in nearly every part of the globe in every language, every continent, from socialist to capitalist countries to monarchies. Funny you call that "bullshit."

 

[sandorski]

Backed by economic output? That's what they tell you. In reality it's backed by the nonsense spoken by a politician. You trust a piece a paper created by a politician? A crooked politician prints a piece of paper, puts his signature on it and says "this is real value and I can print as much of it as I want!"

I have stated from the time I first posted I advocate only coinage, not paper convertibles.

My shiny metal has been accepted as value for over 4000 years in nearly every part of the globe in every language, every continent, from socialist to capitalist countries to monarchies. Funny you call that "bullshit."

It is BS, sorry.

 

[JMapleton]

It is BS, sorry.

My shiney metal: http://goldprice.org/charts/history/gold_all_data_o_usd.png

Your piece of paper: http://www.marketoracle.co.uk/images/2008/us-dollar-cycles-4-5-08_image003.gif

I win, sorry.

 

[sandorski]

My shiney metal: http://goldprice.org/charts/history/gold_all_data_o_usd.png

Your piece of paper: http://www.marketoracle.co.uk/images/2008/us-dollar-cycles-4-5-08_image003.gif

I win, sorry.

The Gold Standard is dead. You Win nothing.

 

[Special K]

My shiney metal: http://goldprice.org/charts/history/gold_all_data_o_usd.png

Your piece of paper: http://www.marketoracle.co.uk/images/2008/us-dollar-cycles-4-5-08_image003.gif

I win, sorry.

FWIW, your gold graph is not in inflation-adjusted dollars. The peak price in 1980 would actually be over $2k in today's dollars:

http://solari.com/blog/wp-content/uploads/2009/10/inflation-chart.jpg

 

[Nielsio]

Fiat money is extremely efficient and effective

Why?

, and the most adaptable.

The most adaptable to what?

Any currency based on commodities is prone to even MORE manipulation and asset hoarding, which leads to concentration of power, which leads to rebellion, wars, death.

How do you manipulate a commodity currency?

 

[Nielsio]

I'm not very knowledgeable about currency exchange, but I have my doubts about paying for a movie at the mall with a bar of gold.

This is the essence of trade: you trade one valuable thing for another valuable. As explained in the video, if people are free in barter they choose to trade in those things that work best for indirect exchange. This means the market itself chooses what actually works. So it's kind of weird to then suggest people will go to a cinema with a bar of gold. Of course noone would do that?

One solution people come up with for small purchases are other metals, like silver or copper. Another solution is to use money substitutes. Just like today you could give someone a cheque that they can always use to take out the money from the bank. And this can also go digitally. The big difference though is that ultimately you are actually exchanging something of value, and the advantage of that is that it holds it's value very well. If you trade pure paper tickets that don't represent anything real, then a central bank can just keep printing those tickets and thereby enriching itself.

So if we had the freedom to start our own currencies, then people would quickly start using those because it would be a much better way to store your savings.

And we do not have that freedom, which should tell you something (i.e. what are they afraid of?)

Gold is only valuable because people value it. It has some technical uses, but the amounts used are so minute that they could never contribute to any intrinsic value as a commodity.

Already dealt with.

The only reason I can see why it has been treated as a currency throughout history is its mystical power over women - the same thing that makes diamonds valuable today. Thus, I can only conclude that the use of gold as a currency is completely arbitrary.

Also already dealt with. All very wrong. The market selected for gold as common medium of exchange and for good reason.

Check out this video for some more in-depth explanation why the market chose gold:

http://www.youtube.com/watch?v=QFbHw7VsNlI

That video also mentions that free market money doesn't have to be gold; maybe it could be platinum. The point is that free people choose what they think stores their value best and trades best. The importance is that freedom.

 

[CycloWizard]

This is the essence of trade: you trade one valuable thing for another valuable. As explained in the video, if people are free in barter they choose to trade in those things that work best for indirect exchange. This means the market itself chooses what actually works. So it's kind of weird to then suggest people will go to a cinema with a bar of gold. Of course noone would do that?

I think you missed the big smiley in there...

One solution people come up with for small purchases are other metals, like silver or copper. Another solution is to use money substitutes. Just like today you could give someone a cheque that they can always use to take out the money from the bank. And this can also go digitally. The big difference though is that ultimately you are actually exchanging something of value, and the advantage of that is that it holds it's value very well. If you trade pure paper tickets that don't represent anything real, then a central bank can just keep printing those tickets and thereby enriching itself.

So if we had the freedom to start our own currencies, then people would quickly start using those because it would be a much better way to store your savings.

And we do not have that freedom, which should tell you something (i.e. what are they afraid of?)




Already dealt with.



Also already dealt with. All very wrong. The market selected for gold as common medium of exchange and for good reason.

Check out this video for some more in-depth explanation why the market chose gold:

http://www.youtube.com/watch?v=QFbHw7VsNlI

That video also mentions that free market money doesn't have to be gold; maybe it could be platinum. The point is that free people choose what they think stores their value best and trades best. The importance is that freedom.

Like I said above, I'm arguing to educate myself - just playing devil's advocate, since I knew nothing about the subject before this thread. I think I understand it a bit better now though.