Oh, no, Ben, no, you really blew it...

[Trianon]

The Bernank believes that central banks hold/trade gold because of the tradition...
And this man is running the most powerful banking organization in the world.

http://www.youtube.com/watch?v=2Dj9v9s9buk&feature=player_embedded

maybe he knows just a tad less than JP Morgan, who said in 1912:"Gold is money. Everything else is credit."

 

[Doppel]

I have a wonderful idea. Let's take the chairman of the federal reserve, the guy who didn't even think we'd necessarily have any recession at all after the worst in his life had already begun, and keep him at the reigns. Lets give him cart blanch and not call him out on his congressional discussions which are possibly the best in history for vagueness. In his last one he used the phrase "medium term". That's completely meaningless but well representative of his ability to speak at great length on a topic without committing to anything specific at all about it.

In his defense the dual mandates of the federal reserve are virtually antithetical, it's like it has an impossible mission anyway.

 

[MagnusTheBrewer]

I have a wonderful idea. Let's take the chairman of the federal reserve, the guy who didn't even think we'd necessarily have any recession at all after the worst in his life had already begun, and keep him at the reigns. Lets give him cart blanch and not call him out on his congressional discussions which are possibly the best in history for vagueness. In his last one he used the phrase "medium term". That's completely meaningless but well representative of his ability to speak at great length on a topic without committing to anything specific at all about it.

In his defense the dual mandates of the federal reserve are virtually antithetical, it's like it has an impossible mission anyway.

I could care less and the point is mute.

 

[LegendKiller]

He is correct. Gold is not money specifically. It's an asset and a shitty one at that.

 

[JS80]

maybe he knows just a tad less than jp morgan, who said in 1912:"gold is money. Everything else is credit."

1912 = 2011?

 

[Trianon]

1912 = 2011?

"This time is different", is that what you are trying to say?

 

[matt0611]

Every time gold jumps in price I check to see if the Bernank is speaking somewhere. Its usually a sign that he is. Sure enough today, he was.

 

[GaiaHunter]

He is correct. Gold is not money specifically. It's an asset and a shitty one at that.

Of course it is money - it is money with intrinsic value.

You just don't know the definition of money and you were brainwashed to think gold isn't money.

 

[LegendKiller]

Of course it is money - it is money with intrinsic value.

You just don't know the definition of money and you were brainwashed to think gold isn't money.

What intrinsic value does gold have? Ohhh boy, speaker connections, satellite shielding and...? That's all worth ~10% of the current price, if that. In fact, it has such small intrinsic value that it's not even worth the extraction costs.

 

[JS80]

"This time is different", is that what you are trying to say?

Then let's use sea shells. Ancient humans once used sea shells as money. Oh, that's different, right?

 

[LegendKiller]

Then let's use sea shells. Ancient humans once used sea shells as money. Oh, that's different, right?

They also used big rocks. Indians used wampum.

 

[GaiaHunter]

What intrinsic value does gold have? Ohhh boy, speaker connections, satellite shielding and...? That's all worth ~10% of the current price, if that. In fact, it has such small intrinsic value that it's not even worth the extraction costs.

Yeah and paper money is used as hmmm well it is used as money. So that little list beats the intrinsic value of paper money which is 0 (ZERO). And gold is used as jewelry.

The rest of the value comes from the fact it is money. Actually all the value comes from the fact it is money that is heavily resistant to debasement. That is why some people don't like gold as money since it is much harder to transfer wealth by increasing the supply of money if you need to have a gold mine and make an effort to mine or just buy gold from those that own a gold mine instead of printing paper or just putting numbers on a computer.

This is the value of gold when the overwhelming majority of people doesn't think gold is money. Imagine what the value will be when that perception changes.

 

[GaiaHunter]

Then let's use sea shells. Ancient humans once used sea shells as money. Oh, that's different, right?

And that is different from paper money how?

The government just need to put markers on it and say all the sea shells with no markers have no value.

 

[matt0611]

Then let's use sea shells. Ancient humans once used sea shells as money. Oh, that's different, right?

There are many reasons why seashells have not seen nearly as wide use as gold as money throughout history.

You can't do nearly as much with seashells as you can with gold, they are rather abundant and hence do not have much value. They are not uniform, some are big, some small, different colors etc. You can't divide them and mix them together again. I doubt they last as long as gold does etc

 

[BigDH01]

And that is different from paper money how?

The government just need to put markers on it and say all the sea shells with no markers have no value.

Paper money has a huge amount of value. Namely, it's something I can give to the bank so the local sheriff doesn't come and kick me out of my home and something I can give the government so that it doesn't throw me in jail. It's value has now become real.

And it's hard to qualify gold as money considering I can't imagine any local seller accepting gold as payment without determining how many USD they can fetch for it. I can do the same thing with copper, silver, platinum, rocks, equities, bonds, ceiling fans, xboxes, stereos, TVs, guitars, etc, etc, etc. Are these things all money too?

 

[LegendKiller]

Yeah and paper money is used as hmmm well it is used as money. So that little list beats the intrinsic value of paper money which is 0 (ZERO). And gold is used as jewelry.

The rest of the value comes from the fact it is money. Actually all the value comes from the fact it is money that is heavily resistant to debasement. That is why some people don't like gold as money since it is much harder to transfer wealth by increasing the supply of money if you need to have a gold mine and make an effort to mine or just buy gold from those that own a gold mine instead of printing paper or just putting numbers on a computer.

This is the value of gold when the overwhelming majority of people doesn't think gold is money. Imagine what the value will be when that perception changes.

No, especially since the mining cost (~800/oz) effectively negates its uses and destroys the supply/demand balance. That's why you don't really see it used. About 80% of gold's usage comes from non-intrinsic sources. That means, on a linear basis, gold is worth 20% of its current price, ignoring the supply/demand curve. On a reasonable basis, it's worth far less than 20% on an intrinsic basis as an over-supply would crush the price.

Jewelry usage is not intrinsic value, that is psychology.

No, the rest of the value comes from the greater fool theory. It's only worth what other people will buy it for and it has no practical uses on its own.

Its far from resistant to debasement and is a shitty inflation hedge.

Further, it can't even growth with the economy, thus, even it were to be used for "money" it would have to be debased one way or another.

 

[matt0611]

Paper money has a huge amount of value. Namely, it's something I can give to the bank so the local sheriff doesn't come and kick me out of my home and something I can give the government so that it doesn't throw me in jail. It's value has now become real.

And it's hard to qualify gold as money considering I can't imagine any local seller accepting gold as payment without determining how many USD they can fetch for it. I can do the same thing with copper, silver, platinum, rocks, equities, bonds, ceiling fans, xboxes, stereos, TVs, guitars, etc, etc, etc. Are these things all money too?

One of the main reasons federal reserve notes have value is that we need them to pay taxes, yeah.

People are forced to do business in dollars because of legal tender laws and other laws. They do economic calculation, profits, revenue etc in dollars so its important to figure out the dollar value of gold when doing business with it because USD is the most widely used. If gold were allowed to circulate freely and there was no USD then they wouldn't have to calculate its value in USD.

 

[GaiaHunter]

Paper money has a huge amount of value. Namely, it's something I can give to the bank so the local sheriff doesn't come and kick me out of my home and something I can give the government so that it doesn't throw me in jail. It's value has now become real.

And it's hard to qualify gold as money considering I can't imagine any local seller accepting gold as payment without determining how many USD they can fetch for it. I can do the same thing with copper, silver, platinum, rocks, equities, bonds, ceiling fans, xboxes, stereos, TVs, guitars, etc, etc, etc. Are these things all money too?

The fact most shops don't accept gold is due to the fact it hasn't been used in a while. But for example Switzerland is discussing the return to the gold standard.

And if you go to Europe they will only take your USD after determining how many Euros that will fetch them - actually you will have to go a currency exchange house/bank.

But in any country there will be places where they will trade your gold for local currency with no problems - shops buying gold are everywhere these days.

And no you can't do that with xboxes, rock, ceiling fans, stereos, tvs, etc. You need to find someone that want to trade that product for the products you want to buy.

 

[BigDH01]

One of the main reasons federal reserve notes have value is that we need them to pay taxes, yeah.

People are forced to do business in dollars because of legal tender laws and other laws. They do economic calculation, profits, revenue etc in dollars so its important to figure out the dollar value of gold when doing business with it because USD is the most widely used. If gold were allowed to circulate freely and there was no USD then they wouldn't have to calculate its value in USD.

But there is a USD and it can be used to pay debts and taxes, thereby creating a huge demand for USD. It's stupid to talk about gold as money. There is a big difference between accepting an ounce of gold as payment and accepting $1500 worth of gold as payment which just happens to currently be about 1 ounce. I've only seen people do the latter.

 

[GaiaHunter]

No, especially since the mining cost (~800/oz) effectively negates its uses and destroys the supply/demand balance. That's why you don't really see it used. About 80% of gold's usage comes from non-intrinsic sources. That means, on a linear basis, gold is worth 20% of its current price, ignoring the supply/demand curve. On a reasonable basis, it's worth far less than 20% on an intrinsic basis as an over-supply would crush the price.

Jewelry usage is not intrinsic value, that is psychology.

No, the rest of the value comes from the greater fool theory. It's only worth what other people will buy it for and it has no practical uses on its own.

Yeah it is like ipods - it is all psychology. An ipod only costs a couple of bucks to make but some fools are willing to pay hundreds because it says apple.

Its far from resistant to debasement and is a shitty inflation hedge.

Further, it can't even growth with the economy, thus, even it were to be used for "money" it would have to be debased one way or another.

Of course it can grow the economy - the US became the richest nation using gold as currency until 1971.

What gold can't do is sustain phony economies that rely on inflating their debts away. But neither can fiat money eternally.

If you have any gold you want to trade for my paper money or some seashells please pm.

 

[matt0611]

But there is a USD and it can be used to pay debts and taxes, thereby creating a huge demand for USD. It's stupid to talk about gold as money. There is a big difference between accepting an ounce of gold as payment and accepting $1500 worth of gold as payment which just happens to currently be about 1 ounce. I've only seen people do the latter.

Right, there is fiat USD and legal tender laws and capital gains laws that prevent gold and silver from circulating in everyday transactions.

If the USD was defined as a certain amount of oz's of gold as it was in the past or if we had no USD then you could see people pricing in things such as gold or silver. You won't see this until those things change.

 

[BigDH01]

The fact most shops don't accept gold is due to the fact it hasn't been used in a while. But for example Switzerland is discussing the return to the gold standard.

The reason most people don't accept gold is because they actually demand fiat in whichever local currency their government uses.

And if you go to Europe they will only take your USD after determining how many Euros that will fetch them - actually you will have to go a currency exchange house/bank.

That's right, because they can't use USD to pay their bank or government without first converting them to their local currency.

But in any country there will be places where they will trade your gold for local currency with no problems - shops buying gold are everywhere these days.

Yes, if I go to a foreign country, just as in my own, I have to trade gold into a local currency or pay an equivalent amount of gold. In other words, gold only has value in as much as people are willing to trade it for something they can actually use to pay taxes and debts.

And no you can't do that with xboxes, rock, ceiling fans, stereos, tvs, etc. You need to find someone that want to trade that product for the products you want to buy.

I can take nearly any of those products to the local pawn shop and sell them to get currency that I can actually use to buy things, just like gold. And just like gold, they have to be converted to the local currency before I can actually buy things with them.

 

[GaiaHunter]

But there is a USD and it can be used to pay debts and taxes, thereby creating a huge demand for USD. It's stupid to talk about gold as money. There is a big difference between accepting an ounce of gold as payment and accepting $1500 worth of gold as payment which just happens to currently be about 1 ounce. I've only seen people do the latter.

The demand for USD came from the fact that when it became reserve currency it was backed by gold. Then the USD still had value because the US economy was the biggest exporter and the biggest saver. These the US is the biggest debtor and so the value of the USD is decreasing which means the demand is diminishing just as the supply increases.

 

[LegendKiller]

Yeah it is like ipods - it is all psychology. An ipod only costs a couple of bucks to make but some fools are willing to pay hundreds because it says apple.

An ipod has intrinsic value. Further, it doesn't just cost a "couple bucks" to make, Apple doesn't make that big of a margin.

Of course it can grow the economy - the US became the richest nation using gold as currency until 1971.

What gold can't do is sustain phony economies that rely on inflating their debts away. But neither can fiat money eternally.

If you have any gold you want to trade for my paper money or some seashells please pm.

The US wasn't on the gold currency post Bretton Woods, not a real one and the bulk of our growth came after that, reconstructing Europe.

Nobody here is inflating debts away.

I do like the Battletech logo. Love that game, too bad they screwed it with Dark Ages and ruined the loyal following.

 

[LegendKiller]

The demand for USD came from the fact that when it became reserve currency it was backed by gold. Then the USD still had value because the US economy was the biggest exporter and the biggest saver. These the US is the biggest debtor and so the value of the USD is decreasing which means the demand is diminishing just as the supply increases.

When the USD became the reserve currency it wasn't really gold backed. The biggest reason why we are the reserve currency is because we have the largest economy, the largest military, and the most stable political and legal system.

The debt has nothing to do with the USD declining. If that were the case then the Yen would be plummeting and the Yuan would be plummeting from people realizing the debt/GDP for China is about equal to the US once you consider the debt pyramid there.