What's in YOUR wallet? (hint: it is not money) UPDATE: INTERVIEW WITH AUTHOR

[Dissipate]

Originally posted by: sonambulo
i cant believe you dumbsh!ts are still arguing with the op. just let him choke on his solid gold dildo and die. seriously.

WTF!??!?!

Don't like it? There are thousands of other threads that you can choose from.

 

[sonambulo]

Originally posted by: Dissipate

Originally posted by: sonambulo
i cant believe you dumbsh!ts are still arguing with the op. just let him choke on his solid gold dildo and die. seriously.

WTF!??!?!

Don't like it? There are thousands of other threads that you can choose from.

no! i choose you! i'll send in my charizard with his fire-breath attack to weaken you! then i can catch you in my poke-ball and train you to use in my poke-match!

 

[Sahakiel]

Originally posted by: DissipateThere are HUGE veins of gold in Russia right now just waiting to be mined. Why aren't they being mined? Most likely because the price of gold is not high enough for it to be worthwhile to mine. You see it doesn't matter how much gold is found in the Earth, it matters if it is worthwhile to mine it.

I hope you appreciate the irony of using the price of gold in US dollars to determine whether it is worthwhile to mine it. Historically, when economies were based on precious metals, mining was done by any means necessary. Why? Well, the reason is because doing so increases the money supply. The miners have to be paid one way or another (either mining or doing other work) so might as well get them to increase the money supply. This is literally creating money where none existed.

In order to increase the supply there must be a demand, and to fulfill that demand requires labor. 500 tons of gold is not going to leap out of the ground tomorrow. I don't know what you mean by "manufactured", gold can only be "manufactured" in one way I know of: super colliding superconductors, currently an EXTREMELY expensive technology, now and many years to come. As for gold being stolen, I don't know what you mean by that, an enormous amount of gold would have to be stolen and dumped on the market for it to have an effect. As for traded, that does affect the price, but gold has historically been relatively non-volatile.

When your currency is a precious metal, there always exists demand for more of said metal. This demand can result in increased speculation, mining, and counterfeiting.
At the current level of technology, you are right in that gold can only be "manufactured" using tokamaks and the like. However, once again, you reference the high cost of such a procedure in money (aka "dollars"). Assuming a currency system similar to the gold standard, the only "costs" is the one time capital expenditure of building the system, maintaining it, and the electricity to run it. Ironically, using such a system fo "manufacture" gold inevitably leads to inflation.
Yes, of course a large amount of gold would have to be stolen. Assuming the use of gold to back the currency, it would require a large amount of gold to be in the vaults. One truck load of gold would be the equivalent of several millions of dollars. Steal that gold, and suddenly the government has that much less backing. Steal the gold, sell it on the market, government eventually buys gold to replace, etc.
Of course gold would be non-volatile with a gold standard. The exchange rate for notes is literally fixed by the government so looking at dollar figures is highly inaccurate. What matters is the buying power of the dollar which is related to the supply inside the government's vaults. Trading on the open market can affect the supply of the gold itself which will cause the value of the gold inside said vaults to fluctuate.
What's truly bad about the open market is when more than one nation uses the gold standard but with different exchange rates. Early 1900's saw an opportunity for exchanging gold in the US, selling it elsewhere (Britain, I think), exchanging the notes for US dollars and making a nice profit on the way.

I would like to take the opportunity to bring up the concept of:

seign·ior·age ( P ) Pronunciation Key (snyr-j)
n.
Revenue or a profit taken from the minting of coins, usually the difference between the value of the bullion used and the face value of the coin.

Now today seigniorage also includes paper currency, it is the value derived from the amount it takes to print the tokens and the amount that they can be exchanged for. As it is now the government is receiving huge sums of value from seigniorage, even when there is no inflation, for even with 0 inflation the government would still receive seigniorage from the currency it circulates to keep up with the growth of the economy. Why should the government get to commit seigniorage? That is value out of your paycheck. That is taxation without representation, there is nothing in the tax code relating to seigniorage, and yet it hits everyone who is not the first receivers of the newly printed currency (a huge portion of the population).

The government is not receiving seigniorage. With the current system, the government has no direct control over the value of each bill printed. What it does control is the supply of bills in circulation. This is where it seems seigniorage would come into play.
The total value of goods and services in the United States is independent of the currency used. The value would not change if measured in rubles, pesos, or dollars even with a Gold Standard system. What this implies is that every single bill in circulation is representative of a fraction of that value. If N is the number of dollars in circulation, then each $1 bill has a value of 1/N and each $20 has a value 20/N. That is the nature of fiat money.
That is why it would seem the US government is receiving seigniorage. The government holds a debt which is equal to the dollar amount of bills printed minus the dollar amount of the national economy with interest. At first, this may seem illogical, but you have stated the reason for this discrepency. It takes time for the supply to trickle which means that at any given moment in time, the likliehood of the dollar amount of the US economy and the bills in circulation being equal is very small as to be negligible.
Anyways, what looks like seignorage is actually the national debt. The national debt is the source of inflation and the taxation phenomenon.
If the US government actually printed the exact number of bills destroyed, there would be no taxation. However, there would be deflation as the economy grew due each bill acquiring increased portions of the national economy. Ideally, the government would print extra dollars equating to the amount of economic growth, even negative figures for shrinking. Unfortunately, beaureaucrats have a nasty habit of overspending, which leads to inflation and the taxation phenomenon.

 

[Sahakiel]

Originally posted by: DissipateHuH? I specifically said that the value of tokens is based on supply and demand as well, just in different ways. If gold can be used in industry that is intrinsic value, you could take that gold Eagle out of your pocket and use it to plate a wire for instance. There is a market for the substance gold itself, whether it is used as money or to plate a wire. there is arguably a market for paper, but the paper that FRTs are printed on has virtually insignifcant intrinsic value.

So quit saying greenbacks have no intrinsic value.
In reality, greenbacks as they are now have a lot of intrinsic value in terms of copy-protection. Bills from other certain foreign nations are much more secure, but that's because they are less likely to be copied.

It costs the BPE 4 cents to print $100 FRTs, your arguments just keep getting weaker. Furthermore, you conveniently forgot that FRTs have non-physical form: computerized in which virtually 0 labor is invoked by their creation. The Hunt brothers did try to corner the silver market at one time, but they failed miserably and lost billions, I don't believe the government even tried to stop them. Commodities are what are known as PRICE TAKERS markets, which means that no single entity can significantly affect their price. The price of gold can be affected by the government since it owns so much, but this would cease being the case if gold was once again used as a currency for then there would be too much in circulation.

I'm sorry my arguments are getting weaker. I've been using logic all along without realizing you were judging the strength of my arguments on flights of fancy.
I did not forget greenbacks have a non-physical form. On the other hand, you seemed to have forgotten the labor involved in setting up the computer system, keeping the system secure, maintaining the system, and running the system. If you know anything about electronics, the costs are far from negligible.
Single entities CAN significantly affect their price because commodities markets are, at their core, based on supply and demand. Simply view the effect on prices of, say, wheat, when farmers are not paid to stop growing it.

Regardless of what happened in the 19th century, legitimate gold warehouses can and do exist today: e-gold, e-bullion, pecunix and goldmoney just to name a few. It is known that all currency on these sites 100% backed by gold, therefore the value of said currency mirrors the price of gold and can be spent on many third party sites.

I never did say gold warehouses don't exist. What I did say is that currency systems similar to the Gold Standard have the same problems as fiat money systems.

 

[Eli]

Originally posted by: Dissipate

Originally posted by: Eli

Originally posted by: Dissipate

Regardless of what happened in the 19th century, legitimate gold warehouses can and do exist today: e-gold, e-bullion, pecunix and goldmoney just to name a few. It is known that all currency on these sites 100% backed by gold, therefore the value of said currency mirrors the price of gold and can be spent on many third party sites.

Why is that a good thing?????

I don't want the value of my money to be based on the value of gold. I don't want the value of my money to be based on any tangible physical object that can be manipulated.

The value of FRTs is manipulated every day, why are you willing to trade one manipulation for another? The price of gold is subject to market forces just like anything else. I suppose you shouldn't own a house because the value of your house could be "manipulated". Face it, the exchange value of all the objects around you is dependent on what others will pay for it. It just so happens that gold has been something people will pay for, and it has been that way for thousands of years. Any manipulation of the price of gold would be temporary and its effects, while possibly noticeable would be limited.[/quote]Nono, I should've clairified. I meant manipulated by someone other than our government.

 

[Dissipate]

Originally posted by: Sahakiel

Originally posted by: DissipateThere are HUGE veins of gold in Russia right now just waiting to be mined. Why aren't they being mined? Most likely because the price of gold is not high enough for it to be worthwhile to mine. You see it doesn't matter how much gold is found in the Earth, it matters if it is worthwhile to mine it.

I hope you appreciate the irony of using the price of gold in US dollars to determine whether it is worthwhile to mine it. Historically, when economies were based on precious metals, mining was done by any means necessary. Why? Well, the reason is because doing so increases the money supply. The miners have to be paid one way or another (either mining or doing other work) so might as well get them to increase the money supply. This is literally creating money where none existed.

I did not use the price of gold in U.S. dollars, I simply said: the price of gold, where is this illusory phrase "U.S. dollars" in my quote? Creating money where none existed is not a problem if labor was performed to create that money. You keep trying to classify money as being something independent of other things in the economy. Money is NOT some mysterious thing that is somehow different than say cars, trucks, chairs, computers or any other item that is exchanged. It is a tool in the economy which is the product of market forces (except when government intervenes with those forces). It has a supply, and a demand. If there is a demand for gold REGARDLESS of what its purpose is, be it as a medium of exchange, or to plate wires it doesn't matter. A demand is a demand is a demand. That demand will be met and those who meet that demand will receive other goods and services in the economy in exchange, and rightfully so. The miners mining the gold will not suddendly be bestowed some enormous spending power with their newly mined gold at the expense of everyone else, this is an utter myth about the process. Obviously this in contrast with tokens for obvious reasons, because tokens can be created regardless of the demand for them.[/b]

In order to increase the supply there must be a demand, and to fulfill that demand requires labor. 500 tons of gold is not going to leap out of the ground tomorrow. I don't know what you mean by "manufactured", gold can only be "manufactured" in one way I know of: super colliding superconductors, currently an EXTREMELY expensive technology, now and many years to come. As for gold being stolen, I don't know what you mean by that, an enormous amount of gold would have to be stolen and dumped on the market for it to have an effect. As for traded, that does affect the price, but gold has historically been relatively non-volatile.

When your currency is a precious metal, there always exists demand for more of said metal. This demand can result in increased speculation, mining, and counterfeiting.

Now, you yourself are speculating. Aliens could come down to earth and counterfeit FRTs as well as numerous other bad things that could occur and have occurred with FRTs. See above about mining.[/b]

At the current level of technology, you are right in that gold can only be "manufactured" using tokamaks and the like. However, once again, you reference the high cost of such a procedure in money (aka "dollars").

There it is again, that illusory "dollars" that never existed in my OP. I merely said extremely expensive technology, expense is not relative to dollars, it is relative to man-hours required and the skill of those man-hours. Please stop saying that I said something, which I did not.

Assuming a currency system similar to the gold standard, the only "costs" is the one time capital expenditure of building the system, maintaining it, and the electricity to run it. Ironically, using such a system fo "manufacture" gold inevitably leads to inflation.

I don't know where you got this bogus information. Do you know anything about gold mining at all? If what you say is true everyone and their brother would be building gold mines.

Yes, of course a large amount of gold would have to be stolen. Assuming the use of gold to back the currency, it would require a large amount of gold to be in the vaults. One truck load of gold would be the equivalent of several millions of dollars. Steal that gold, and suddenly the government has that much less backing. Steal the gold, sell it on the market, government eventually buys gold to replace, etc.

*YAWN*, more wild speculation. If aliens came down to Earth...

Of course gold would be non-volatile with a gold standard. The exchange rate for notes is literally fixed by the government so looking at dollar figures is highly inaccurate.

I don't know what year you are living in but the exchange rate for gold or even fiat currencies is certainly not fixed.

What matters is the buying power of the dollar which is related to the supply inside the government's vaults. Trading on the open market can affect the supply of the gold itself which will cause the value of the gold inside said vaults to fluctuate.

So what? The exchange value of practically everything you own fluctuates.

What's truly bad about the open market is when more than one nation uses the gold standard but with different exchange rates. Early 1900's saw an opportunity for exchanging gold in the US, selling it elsewhere (Britain, I think), exchanging the notes for US dollars and making a nice profit on the way.

That was when the U.S. government DID fix the price of gold, but it no longer does, see above.

I would like to take the opportunity to bring up the concept of:

seign·ior·age ( P ) Pronunciation Key (snyr-j)
n.
Revenue or a profit taken from the minting of coins, usually the difference between the value of the bullion used and the face value of the coin.

Now today seigniorage also includes paper currency, it is the value derived from the amount it takes to print the tokens and the amount that they can be exchanged for. As it is now the government is receiving huge sums of value from seigniorage, even when there is no inflation, for even with 0 inflation the government would still receive seigniorage from the currency it circulates to keep up with the growth of the economy. Why should the government get to commit seigniorage? That is value out of your paycheck. That is taxation without representation, there is nothing in the tax code relating to seigniorage, and yet it hits everyone who is not the first receivers of the newly printed currency (a huge portion of the population).

The government is not receiving seigniorage. With the current system, the government has no direct control over the value of each bill printed. What it does control is the supply of bills in circulation. This is where it seems seigniorage would come into play.
The total value of goods and services in the United States is independent of the currency used. The value would not change if measured in rubles, pesos, or dollars even with a Gold Standard system. What this implies is that every single bill in circulation is representative of a fraction of that value. If N is the number of dollars in circulation, then each $1 bill has a value of 1/N and each $20 has a value 20/N. That is the nature of fiat money.
That is why it would seem the US government is receiving seigniorage. The government holds a debt which is equal to the dollar amount of bills printed minus the dollar amount of the national economy with interest. At first, this may seem illogical, but you have stated the reason for this discrepency. It takes time for the supply to trickle which means that at any given moment in time, the likliehood of the dollar amount of the US economy and the bills in circulation being equal is very small as to be negligible.

That is true for FRTs that are in circulation already, but suppose the government printed up a trillion FRTs in one day, the discrepency would then become huge. This is essentially what the government does every day, just not a trillion FRTs at a time.

Anyways, what looks like seignorage is actually the national debt. The national debt is the source of inflation and the taxation phenomenon.

You are right, part of the national debt is merely the medium of introduction of new FRTs into the system though. It doesn't matter how the FRTs get there, call the process anything you like. The fact of the matter is that seiniorage is occurring, that is undeniable

If the US government actually printed the exact number of bills destroyed, there would be no taxation. However, there would be deflation as the economy grew due each bill acquiring increased portions of the national economy. Ideally, the government would print extra dollars equating to the amount of economic growth, even negative figures for shrinking.

No, as I said before, even if the government grew the FRT supply at a rate that is equal to the growth of the economy seigniorage would still occur. The only honest way of increasing the money supply is have it so that honest labor must be performed in order to create the new money.

Unfortunately, beaureaucrats have a nasty habit of overspending, which leads to inflation and the taxation phenomenon.

I agree with you there, but their overspending is partially derived from their ability to run the printing presses.

 

[Dissipate]

Originally posted by: Eli

Originally posted by: Dissipate

Originally posted by: Eli

Originally posted by: Dissipate

Regardless of what happened in the 19th century, legitimate gold warehouses can and do exist today: e-gold, e-bullion, pecunix and goldmoney just to name a few. It is known that all currency on these sites 100% backed by gold, therefore the value of said currency mirrors the price of gold and can be spent on many third party sites.

Why is that a good thing?????

I don't want the value of my money to be based on the value of gold. I don't want the value of my money to be based on any tangible physical object that can be manipulated.

The value of FRTs is manipulated every day, why are you willing to trade one manipulation for another? The price of gold is subject to market forces just like anything else. I suppose you shouldn't own a house because the value of your house could be "manipulated". Face it, the exchange value of all the objects around you is dependent on what others will pay for it. It just so happens that gold has been something people will pay for, and it has been that way for thousands of years. Any manipulation of the price of gold would be temporary and its effects, while possibly noticeable would be limited.

Nono, I should've clairified. I meant manipulated by someone other than our government.[/quote]

HuH?? Please explain how government manipulation which is rife with political motivations is better?

 

[Eli]

Originally posted by: Dissipate

Originally posted by: Eli

Originally posted by: Dissipate

Originally posted by: Eli

Originally posted by: Dissipate

Regardless of what happened in the 19th century, legitimate gold warehouses can and do exist today: e-gold, e-bullion, pecunix and goldmoney just to name a few. It is known that all currency on these sites 100% backed by gold, therefore the value of said currency mirrors the price of gold and can be spent on many third party sites.

Why is that a good thing?????

I don't want the value of my money to be based on the value of gold. I don't want the value of my money to be based on any tangible physical object that can be manipulated.

The value of FRTs is manipulated every day, why are you willing to trade one manipulation for another? The price of gold is subject to market forces just like anything else. I suppose you shouldn't own a house because the value of your house could be "manipulated". Face it, the exchange value of all the objects around you is dependent on what others will pay for it. It just so happens that gold has been something people will pay for, and it has been that way for thousands of years. Any manipulation of the price of gold would be temporary and its effects, while possibly noticeable would be limited.

Nono, I should've clairified. I meant manipulated by someone other than our government.

HuH?? Please explain how government manipulation which is rife with political motivations is better?[/quote]You're right, but let's make the assumption that our government represents at least 50% of the population, and that they would never do anything that would put the hurt on our economy on purpose.

Yeah, assumptions suck, but I don't think it's so outlandish.

Or is it more than just black and white, prosper/no prosper, etc? Does this system allow our government to manipulate certain aspects in ways which may benefit some and not others, ie: rich/poor?

Is that why it's bad?

 

[Sahakiel]

Originally posted by: Dissipate
I did not use the price of gold in U.S. dollars, I simply said: the price of gold, where is this illusory phrase "U.S. dollars" in my quote?

Would you rather use rubles? Price implies the use of currency, though it is not limited to currency. However, the fact remains that the price of gold is only measured relative to something else. That is the nature of prices and costs.

Creating money where none existed is not a problem if labor was performed to create that money. You keep trying to classify money as being something independent of other things in the economy. Money is NOT some mysterious thing that is somehow different than say cars, trucks, chairs, computers or any other item that is exchanged. It is a tool in the economy which is the product of market forces (except when government intervenes with those forces). It has a supply, and a demand.

I see you're having trouble understanding. Money is itself a good. It is no different than say cars, trucks, chairs, computers, or any other item exchanged. It only carries the unique characterstic of being the most common medium of exchange or official recognition of universal exchange.
I think you're forgetting that labor itself costs money. The difference is that in a closed economy (such as Earth) the money supply is equal to a constant. This is ignoring wear and tear, counterfeiting and so forth. So if your currency system is based upon a precious metal, mining for said metal increases your money supply. That is creating money where there was none before.
Okay, fine, if you mine for metal and don't find any your money supply is unchanged.

If there is a demand for gold REGARDLESS of what its purpose is, be it as a medium of exchange, or to plate wires it doesn't matter. A demand is a demand is a demand. That demand will be met and those who meet that demand will receive other goods and services in the economy in exchange, and rightfully so.

You are technicaly incorrect. The demand for gold stems directly from the purporse for which it is used. Another commodity, crude oil, had virtually no demand anywhere in the world until the invention of the internal combustion engine. On the same vein, the demand for gold is also related to its use in jewelry, electronics, alcoholic drinks (12k gold flakes), etc. If there were no use for gold, there would be no demand for gold. This is where you seem to be having trouble.

The miners mining the gold will not suddendly be bestowed some enormous spending power with their newly mined gold at the expense of everyone else, this is an utter myth about the process. Obviously this in contrast with tokens for obvious reasons, because tokens can be created regardless of the demand for them.[/b]

Perhaps you should look a bit deeper into the history of the Gold Rush in California. Miners who found gold suddenly had increased spending power. That was the whole point of going to California to mine or pan for gold.
Similarly with the Colorado Silver mines.

When your currency is a precious metal, there always exists demand for more of said metal. This demand can result in increased speculation, mining, and counterfeiting.

Now, you yourself are speculating. Aliens could come down to earth and counterfeit FRTs as well as numerous other bad things that could occur and have occurred with FRTs. See above about mining.

Lol.. we are both speculating because we live in a world dominated by fiat money. Existing currency systems based on precious metals are far too small for the scope of the discussion.
As for my comment above, my statement is based on historical fact. An easy example is the colonization of the Americas by Spain. Another example is any Gold Rush; I cited California earlier. History is dotted with examples of the continuous demand for gold in nations whose currency systems were based on gold standards.

There it is again, that illusory "dollars" that never existed in my OP. I merely said extremely expensive technology, expense is not relative to dollars, it is relative to man-hours required and the skill of those man-hours. Please stop saying that I said something, which I did not.

If you did not say it, then you forgot to say it. Humans are not like ants or bees. We do not work for free for the benefit of the entire economy. The technology requires development costs, maintainance costs, running costs, all of which are paid with whatever form of currency is in use. In regards to the United States, which I had thought was the basis of our little discussion, the currency is dollars. Therefore, costs are tallied in dollars.

Assuming a currency system similar to the gold standard, the only "costs" is the one time capital expenditure of building the system, maintaining it, and the electricity to run it. Ironically, using such a system fo "manufacture" gold inevitably leads to inflation.

I don't know where you got this bogus information. Do you know anything about gold mining at all? If what you say is true everyone and their brother would be building gold mines.

Why, it would seem I know more of gold mining than you do. Especially since my statement was in regards to supercolliders and not gold mines.

Of course gold would be non-volatile with a gold standard. The exchange rate for notes is literally fixed by the government so looking at dollar figures is highly inaccurate.

I don't know what year you are living in but the exchange rate for gold or even fiat currencies is certainly not fixed.

I live in the year 2004. I would hope you are doing the same.
Perhaps you should read more carefully. The exchange rate for gold with a Gold Standard-like system is fixed. That is the foundation of such a system. The bank prints notes for which a certain amount of gold is exchanged at a fixed rate. The only way the exchange rate changes is by decree of the bank. Speaking of which, the US government devalued the dollar by lowering the exchange rate more than once before the end of the 19th century.

That is true for FRTs that are in circulation already, but suppose the government printed up a trillion FRTs in one day, the discrepency would then become huge. This is essentially what the government does every day, just not a trillion FRTs at a time.

Oh, I know that. Why do you think I posted it?

No, as I said before, even if the government grew the FRT supply at a rate that is equal to the growth of the economy seigniorage would still occur. The only honest way of increasing the money supply is have it so that honest labor must be performed in order to create the new money.

Your insistence on honest labor is understandable. Such a condition insures that the growth is entirely due to increased labor output. However, this assertion completely ignores the fact that the value of the economy as a whole is related to both labor and goods. Your assertion effectively implies that increases in efficiency lead to zero economic growth.

 

[Eli]

Originally posted by: Sahakiel
You are technicaly incorrect. The demand for gold stems directly from the purporse for which it is used. Another commodity, crude oil, had virtually no demand anywhere in the world until the invention of the internal combustion engine. On the same vein, the demand for gold is also related to its use in jewelry, electronics, alcoholic drinks (12k gold flakes), etc. If there were no use for gold, there would be no demand for gold. This is where you seem to be having trouble.

....Although, we certainly use crude oil for much more than gasoline nowadays.

But you are exactly right.

 

[Dissipate]

Originally posted by: Sahakiel

Originally posted by: Dissipate
I did not use the price of gold in U.S. dollars, I simply said: the price of gold, where is this illusory phrase "U.S. dollars" in my quote?

Would you rather use rubles? Price implies the use of currency, though it is not limited to currency. However, the fact remains that the price of gold is only measured relative to something else. That is the nature of prices and costs.

Creating money where none existed is not a problem if labor was performed to create that money. You keep trying to classify money as being something independent of other things in the economy. Money is NOT some mysterious thing that is somehow different than say cars, trucks, chairs, computers or any other item that is exchanged. It is a tool in the economy which is the product of market forces (except when government intervenes with those forces). It has a supply, and a demand.

I see you're having trouble understanding. Money is itself a good. It is no different than say cars, trucks, chairs, computers, or any other item exchanged. It only carries the unique characterstic of being the most common medium of exchange or official recognition of universal exchange.
I think you're forgetting that labor itself costs money. The difference is that in a closed economy (such as Earth) the money supply is equal to a constant. This is ignoring wear and tear, counterfeiting and so forth. So if your currency system is based upon a precious metal, mining for said metal increases your money supply. That is creating money where there was none before.
Okay, fine, if you mine for metal and don't find any your money supply is unchanged.

Yes, but first of all, no seigniorage was caused by the creation of that money(in this case), second of all the introduction of the new money would help combat deflation, which is a benefit to society and the marketplace. As the value of gold goes up and deflation starts to increase the mining operations ramp up to combat that force and stabilize the value of gold.

If there is a demand for gold REGARDLESS of what its purpose is, be it as a medium of exchange, or to plate wires it doesn't matter. A demand is a demand is a demand. That demand will be met and those who meet that demand will receive other goods and services in the economy in exchange, and rightfully so.

You are technicaly incorrect. The demand for gold stems directly from the purporse for which it is used. Another commodity, crude oil, had virtually no demand anywhere in the world until the invention of the internal combustion engine. On the same vein, the demand for gold is also related to its use in jewelry, electronics, alcoholic drinks (12k gold flakes), etc. If there were no use for gold, there would be no demand for gold. This is where you seem to be having trouble.

Please tell me where I stated otherwise. If gold fell out of fashion and became worthless then some other commoditiy would rise up in the marketplace to serve the purpose of money.

The miners mining the gold will not suddendly be bestowed some enormous spending power with their newly mined gold at the expense of everyone else, this is an utter myth about the process. Obviously this in contrast with tokens for obvious reasons, because tokens can be created regardless of the demand for them.[/b]

Perhaps you should look a bit deeper into the history of the Gold Rush in California. Miners who found gold suddenly had increased spending power. That was the whole point of going to California to mine or pan for gold.
Similarly with the Colorado Silver mines.

That is just like saying that you were suddenly bestowed incrased spending power after you went to work and got paid. The miners provide something that is in demand, just like any other worker in society. Once again you are inferring that money has mysterious properties. Granted it has some unique properties, but certainly not mysterious. Furthermore, the vast majority of miners during the gold rush were for the most part totally impoverished, so much for your increased spending power argument.

When your currency is a precious metal, there always exists demand for more of said metal. This demand can result in increased speculation, mining, and counterfeiting.

Now, you yourself are speculating. Aliens could come down to earth and counterfeit FRTs as well as numerous other bad things that could occur and have occurred with FRTs. See above about mining.

Lol.. we are both speculating because we live in a world dominated by fiat money. Existing currency systems based on precious metals are far too small for the scope of the discussion.
As for my comment above, my statement is based on historical fact. An easy example is the colonization of the Americas by Spain. Another example is any Gold Rush; I cited California earlier. History is dotted with examples of the continuous demand for gold in nations whose currency systems were based on gold standards.

So what? Many things in society have continuous demands, usually no one tries to stop anyone from meeting those, it should be no different for money.

There it is again, that illusory "dollars" that never existed in my OP. I merely said extremely expensive technology, expense is not relative to dollars, it is relative to man-hours required and the skill of those man-hours. Please stop saying that I said something, which I did not.

If you did not say it, then you forgot to say it. Humans are not like ants or bees. We do not work for free for the benefit of the entire economy. The technology requires development costs, maintainance costs, running costs, all of which are paid with whatever form of currency is in use. In regards to the United States, which I had thought was the basis of our little discussion, the currency is dollars. Therefore, costs are tallied in dollars.

No, I clearly stated that expense is measured by man hours and the level of expertise of those man hours. This is true no matter what is being used as the medium of exchange.

Assuming a currency system similar to the gold standard, the only "costs" is the one time capital expenditure of building the system, maintaining it, and the electricity to run it. Ironically, using such a system fo "manufacture" gold inevitably leads to inflation.

I don't know where you got this bogus information. Do you know anything about gold mining at all? If what you say is true everyone and their brother would be building gold mines.

Why, it would seem I know more of gold mining than you do. Especially since my statement was in regards to supercolliders and not gold mines.

Even better for me because the argument that supercolliders would cause inflation in a gold money system is inane. You go ahead and run your supercollider, you will get a few atoms of gold for an enormous amount of man hours. Saying that in the future you would be able to create a significant quantity of gold with them is once again wild speculation.

Of course gold would be non-volatile with a gold standard. The exchange rate for notes is literally fixed by the government so looking at dollar figures is highly inaccurate.

I don't know what year you are living in but the exchange rate for gold or even fiat currencies is certainly not fixed.

I live in the year 2004. I would hope you are doing the same.
Perhaps you should read more carefully. The exchange rate for gold with a Gold Standard-like system is fixed. That is the foundation of such a system. The bank prints notes for which a certain amount of gold is exchanged at a fixed rate. The only way the exchange rate changes is by decree of the bank. Speaking of which, the US government devalued the dollar by lowering the exchange rate more than once before the end of the 19th century.

I clearly stated WAY back that I do not support a gold standard. I support what is known as free tri-metalism. Go back and find the link, I'm not going to go over it again.

That is true for FRTs that are in circulation already, but suppose the government printed up a trillion FRTs in one day, the discrepency would then become huge. This is essentially what the government does every day, just not a trillion FRTs at a time.

Oh, I know that. Why do you think I posted it?

No, as I said before, even if the government grew the FRT supply at a rate that is equal to the growth of the economy seigniorage would still occur. The only honest way of increasing the money supply is have it so that honest labor must be performed in order to create the new money.

Your insistence on honest labor is understandable. Such a condition insures that the growth is entirely due to increased labor output. However, this assertion completely ignores the fact that the value of the economy as a whole is related to both labor and goods. Your assertion effectively implies that increases in efficiency lead to zero economic growth.

HuH? Stop babbling, I did not imply any such thing.

 

[Dissipate]

Originally posted by: Eli

Originally posted by: Dissipate

Originally posted by: Eli

Originally posted by: Dissipate

Originally posted by: Eli

Originally posted by: Dissipate

Regardless of what happened in the 19th century, legitimate gold warehouses can and do exist today: e-gold, e-bullion, pecunix and goldmoney just to name a few. It is known that all currency on these sites 100% backed by gold, therefore the value of said currency mirrors the price of gold and can be spent on many third party sites.

Why is that a good thing?????

I don't want the value of my money to be based on the value of gold. I don't want the value of my money to be based on any tangible physical object that can be manipulated.

The value of FRTs is manipulated every day, why are you willing to trade one manipulation for another? The price of gold is subject to market forces just like anything else. I suppose you shouldn't own a house because the value of your house could be "manipulated". Face it, the exchange value of all the objects around you is dependent on what others will pay for it. It just so happens that gold has been something people will pay for, and it has been that way for thousands of years. Any manipulation of the price of gold would be temporary and its effects, while possibly noticeable would be limited.

Nono, I should've clairified. I meant manipulated by someone other than our government.

HuH?? Please explain how government manipulation which is rife with political motivations is better?

You're right, but let's make the assumption that our government represents at least 50% of the population, and that they would never do anything that would put the hurt on our economy on purpose.

Yeah, assumptions suck, but I don't think it's so outlandish.

Or is it more than just black and white, prosper/no prosper, etc? Does this system allow our government to manipulate certain aspects in ways which may benefit some and not others, ie: rich/poor?

Is that why it's bad?[/quote]

Just because someone is elected to office by 50% of the population does not insure that they will do the right thing for the country. Many people are very good liars. Look at George Bush Sr. he said: "Read my lips, no new taxes." Then guess what? He enacted new taxes.

Does the system allow the government to manipulate certain aspects which may benefit some and not others?

Absolutely with a capital A. The banking industry reaps billions of dollars from the creation of FRTs. This power was bestowed upon them by the government. Yes, this is why the system is so bad, any time somebody can just print "money", it doesn't matter if they are a politician, a banker or anyone else. This power is bound to be abused. If society uses gold or any other valuable commodity as money, the creation of new money can only be done through labor, labor which only benefits the persons performing it, but not at the expense of anyone else.

 

[TuxDave]

Originally posted by: Dissipate

HuH? I specifically said that the value of tokens is based on supply and demand as well, just in different ways. If gold can be used in industry that is intrinsic value, you could take that gold Eagle out of your pocket and use it to plate a wire for instance. There is a market for the substance gold itself, whether it is used as money or to plate a wire. there is arguably a market for paper, but the paper that FRTs are printed on has virtually insignifcant intrinsic value.

Umm... now you're REALLY mixing yourself up. Cuz I thought you wanted to trade paper money that was backed by gold, not trade gold coins themselves. Now who in their right mine would take the money, exchange it for a gold coin which is so damn pure, and use it to plate a wire? It would be better to use the paper money, to buy ore or someone else to process the ore and use THAT to plate a wire.

 

[Dissipate]

This will answer all of the "problems" you have posed about using gold as money, shak.

Here is the conclusion of the chapter:

We conclude, therefore, that determining the supply of money, like all other goods, is best left to the free market. Aside from the general moral and economic advantages of freedom over coercion, no dictated quantity of money will do the work better, and the free market will set the production of gold in accordance with its relative ability to satisfy the needs of consumers, as compared with all other productive goods. [10]

[10] Gold mining is, of course, no more profitable than any other business; in the long-run, its rate of return will be equal to the net rate of return in any other industry.

 

[Lonyo]

Does this mean UK notes are real notes?

At law, a pay-back agreement is called a Note only when it has four essential parts or elements. If a written instrument does not have all four of these elements, it is not a Note. What, then, are the four elements needed in a written instrument for it to be a Note at law?

The first element needed is the identity of the document's maker, or who originated it. In the case of your Note to the bank, you would be the maker.
The second element needed is the name of the party which is to receive payment.
The third element needed is the due-date, a specific date when each periodic payment is due and payable, or the date the Note is to be paid by a single payment (as in a ninety-day Note).
The fourth and last element needed is the Dollar-amount of the loan or pay-back.

It has maker (Bank of England)
And says

I promise to pay the bearer on demand the sum of <value of note>

It has name of party to recieve payment (bearer - will that do?)
Due date - On demand.
Amount to pay back (in pounds though) - sum of £5/10/20/50

Does this make us better than you?

 

[Dissipate]

Originally posted by: TuxDave

Originally posted by: Dissipate

HuH? I specifically said that the value of tokens is based on supply and demand as well, just in different ways. If gold can be used in industry that is intrinsic value, you could take that gold Eagle out of your pocket and use it to plate a wire for instance. There is a market for the substance gold itself, whether it is used as money or to plate a wire. there is arguably a market for paper, but the paper that FRTs are printed on has virtually insignifcant intrinsic value.

Umm... now you're REALLY mixing yourself up. Cuz I thought you wanted to trade paper money that was backed by gold, not trade gold coins themselves. Now who in their right mine would take the money, exchange it for a gold coin which is so damn pure, and use it to plate a wire? It would be better to use the paper money, to buy ore or someone else to process the ore and use THAT to plate a wire.

People in industry would probably not use gold coins, they would just get the gold directly from the mine, because obviously the cost of minting the coin would not be worth it if it is just going to be used to plate wires.

Anyways, read this:

At this point, the monetary planner might object: "All right, granting that it is pointless to increase the money supply, isn't gold mining a waste of resources? Shouldn't the government keep the money supply constant, and prohibit new mining?" This argument might be plausible to those who hold no principled objections to government meddling, thought it would not convince the determined advocate of liberty. But the objection overlooks an important point: that gold is not only money, but is also, inevitably, a commodity. An increased supply of gold may not confer any monetary benefit, but it does confer a non-monetary benefit?i.e., it does increase the supply of gold used in consumption (ornaments, dental work, and the like) and in production (industrial work). Gold mining, therefore, is not a social waste at all.

Text

 

[TuxDave]

Originally posted by: Dissipate

Originally posted by: TuxDave

Originally posted by: Dissipate

HuH? I specifically said that the value of tokens is based on supply and demand as well, just in different ways. If gold can be used in industry that is intrinsic value, you could take that gold Eagle out of your pocket and use it to plate a wire for instance. There is a market for the substance gold itself, whether it is used as money or to plate a wire. there is arguably a market for paper, but the paper that FRTs are printed on has virtually insignifcant intrinsic value.

Umm... now you're REALLY mixing yourself up. Cuz I thought you wanted to trade paper money that was backed by gold, not trade gold coins themselves. Now who in their right mine would take the money, exchange it for a gold coin which is so damn pure, and use it to plate a wire? It would be better to use the paper money, to buy ore or someone else to process the ore and use THAT to plate a wire.

People in industry would probably not use gold coins, they would just get the gold directly from the mine, because obviously the cost of minting the coin would not be worth it if it is just going to be used to plate wires.

Exactly as I thought which seem contrary to what you were implying in the above post. Nonetheless, now here's another question for you. Who would you rather have control of the money supply. The gov't? Or a foriegn gov't?

 

[StageLeft]

Originally posted by: Dissipate

Originally posted by: Skoorb

Originally posted by: Dissipate

Originally posted by: mattg1981
too long to read

Cliff Notes:

• What you believe to be a Federal Reserve Note or dollar is neither a Note or a dollar.

• What you believe to be a dollar bill is not a bill at all.

• What you are really using as money everyday is what is known as a Federal Reserve Token, similar to a token you get at an arcade or amusement park.

Cliff notes: So what.

Do you go to an arcade, put FRTs in the machine, get tokens and then go try to "spend" them at a garage sale? Of course not. Tokens are made for special purposes in a closed system (such as an arcade).

They don't work anywhere else. US bills do across the world and everyone accepts them as such. A $1000 is inherently worth nothing more than the paper it's written on. It's worth $1000 because everyone accepts it as such. If the world economy collapsed I realize that the $1000 note would be worth nothing more than kindling, but so would the title on my house be worth nothing more than kindling. Unlike gold coins, money has no inherent value. We know that, but we use it anyway because we've agreed upon it. That's good enough for me an 99.9999999% of everyone else!

 

[Dissipate]

Originally posted by: Lonyo
Does this mean UK notes are real notes?

At law, a pay-back agreement is called a Note only when it has four essential parts or elements. If a written instrument does not have all four of these elements, it is not a Note. What, then, are the four elements needed in a written instrument for it to be a Note at law?

The first element needed is the identity of the document's maker, or who originated it. In the case of your Note to the bank, you would be the maker.
The second element needed is the name of the party which is to receive payment.
The third element needed is the due-date, a specific date when each periodic payment is due and payable, or the date the Note is to be paid by a single payment (as in a ninety-day Note).
The fourth and last element needed is the Dollar-amount of the loan or pay-back.

It has maker (Bank of England)
And says

I promise to pay the bearer on demand the sum of <value of note>

It has name of party to recieve payment (bearer - will that do?)
Due date - On demand.
Amount to pay back (in pounds though) - sum of £5/10/20/50

Does this make us better than you?

No, not if you can only receive other "notes" for your "notes". That is just like me giving you an IOU, then on the date that the IOU is redeemable I give you another IOU. I'm no expert on world currencies but I believe pounds sterling used to be a measurement of silver. Therefore, if I am not mistaken the English government and central banks changed the definition of pounds to mean the "notes" themselves. More government trickery and hocus pocus.

 

[Dissipate]

Originally posted by: TuxDave

Originally posted by: Dissipate

Originally posted by: TuxDave

Originally posted by: Dissipate

HuH? I specifically said that the value of tokens is based on supply and demand as well, just in different ways. If gold can be used in industry that is intrinsic value, you could take that gold Eagle out of your pocket and use it to plate a wire for instance. There is a market for the substance gold itself, whether it is used as money or to plate a wire. there is arguably a market for paper, but the paper that FRTs are printed on has virtually insignifcant intrinsic value.

Umm... now you're REALLY mixing yourself up. Cuz I thought you wanted to trade paper money that was backed by gold, not trade gold coins themselves. Now who in their right mine would take the money, exchange it for a gold coin which is so damn pure, and use it to plate a wire? It would be better to use the paper money, to buy ore or someone else to process the ore and use THAT to plate a wire.

People in industry would probably not use gold coins, they would just get the gold directly from the mine, because obviously the cost of minting the coin would not be worth it if it is just going to be used to plate wires.

Exactly as I thought which seem contrary to what you were implying in the above post. Nonetheless, now here's another question for you. Who would you rather have control of the money supply. The gov't? Or a foriegn gov't?

It is not contrary, my point is that the gold coin could be used in industry. If it can be used in industry that increases its demand, and thusly, its value. It doesn't matter what form the gold is in. Gold is gold is gold. It has the property of being homegenous. If I have a gold coin that is 99.999 pure gold, that coin is just as good as another one that has the same weight and purity. The industrial demand confers value to gold whether it is in coin form or any other form you can imagine. It is not like suddenly because it has been minted it has no industrial value, and can only EVER be used as a medium of exchange.

Edit: as for your question I don't see how that follows the other part of your post. I do not believe that any individual entity should control the supply of money, to me it is like saying the government should control the supply of cars, gallons of milk or plywood. Gold has an international market but that does not mean that foreign governments would necessarily control the supply any more than anyone else could control it.

 

[TuxDave]

Originally posted by: Dissipate

Originally posted by: TuxDave

Originally posted by: Dissipate

Originally posted by: TuxDave

Originally posted by: Dissipate

HuH? I specifically said that the value of tokens is based on supply and demand as well, just in different ways. If gold can be used in industry that is intrinsic value, you could take that gold Eagle out of your pocket and use it to plate a wire for instance. There is a market for the substance gold itself, whether it is used as money or to plate a wire. there is arguably a market for paper, but the paper that FRTs are printed on has virtually insignifcant intrinsic value.

Umm... now you're REALLY mixing yourself up. Cuz I thought you wanted to trade paper money that was backed by gold, not trade gold coins themselves. Now who in their right mine would take the money, exchange it for a gold coin which is so damn pure, and use it to plate a wire? It would be better to use the paper money, to buy ore or someone else to process the ore and use THAT to plate a wire.

People in industry would probably not use gold coins, they would just get the gold directly from the mine, because obviously the cost of minting the coin would not be worth it if it is just going to be used to plate wires.

Exactly as I thought which seem contrary to what you were implying in the above post. Nonetheless, now here's another question for you. Who would you rather have control of the money supply. The gov't? Or a foriegn gov't?

It is not contrary, my point is that the gold coin could be used in industry. If it can be used in industry that increases its demand, and thusly, its value. It doesn't matter what form the gold is in. Gold is gold is gold. It has the property of being homegenous. If I have a gold coin that is 99.999 pure gold, that coin is just as good as another one that has the same weight and purity. The industrial demand confers value to gold whether it is in coin form or any other form you can imagine. It is not like suddenly because it has been minted it has no industrial value, and can only EVER be used as a medium of exchange.

Edit: as for your question I don't see how that follows the other part of your post. I do not believe that any individual entity should control the supply of money, to me it is like saying the government should control the supply of cars, gallons of milk or plywood. Gold has an international market but that does not mean that foreign governments would necessary control the supply any more than anyone else could control it.

Could and would are two different things. Otherwise that argument of the Fed printing a bazillion notes would be a valid one, which it is not. Cuz they COULD, but they WOULDN'T Regardless, the reason why I'm asking the second question is because you seem to not see a single flaw in the gold standard and can not see a single positive in the fiat system. I'm slowly introducing you to that missing information.

 

[Dissipate]

Originally posted by: TuxDave

Originally posted by: Dissipate

Originally posted by: TuxDave

Originally posted by: Dissipate

Originally posted by: TuxDave

Originally posted by: Dissipate

HuH? I specifically said that the value of tokens is based on supply and demand as well, just in different ways. If gold can be used in industry that is intrinsic value, you could take that gold Eagle out of your pocket and use it to plate a wire for instance. There is a market for the substance gold itself, whether it is used as money or to plate a wire. there is arguably a market for paper, but the paper that FRTs are printed on has virtually insignifcant intrinsic value.

Umm... now you're REALLY mixing yourself up. Cuz I thought you wanted to trade paper money that was backed by gold, not trade gold coins themselves. Now who in their right mine would take the money, exchange it for a gold coin which is so damn pure, and use it to plate a wire? It would be better to use the paper money, to buy ore or someone else to process the ore and use THAT to plate a wire.

People in industry would probably not use gold coins, they would just get the gold directly from the mine, because obviously the cost of minting the coin would not be worth it if it is just going to be used to plate wires.

Exactly as I thought which seem contrary to what you were implying in the above post. Nonetheless, now here's another question for you. Who would you rather have control of the money supply. The gov't? Or a foriegn gov't?

It is not contrary, my point is that the gold coin could be used in industry. If it can be used in industry that increases its demand, and thusly, its value. It doesn't matter what form the gold is in. Gold is gold is gold. It has the property of being homegenous. If I have a gold coin that is 99.999 pure gold, that coin is just as good as another one that has the same weight and purity. The industrial demand confers value to gold whether it is in coin form or any other form you can imagine. It is not like suddenly because it has been minted it has no industrial value, and can only EVER be used as a medium of exchange.

Edit: as for your question I don't see how that follows the other part of your post. I do not believe that any individual entity should control the supply of money, to me it is like saying the government should control the supply of cars, gallons of milk or plywood. Gold has an international market but that does not mean that foreign governments would necessary control the supply any more than anyone else could control it.

Could and would are two different things. Otherwise that argument of the Fed printing a bazillion notes would be a valid one, which it is not. Cuz they COULD, but they WOULDN'T Regardless, the reason why I'm asking the second question is because you seem to not see a single flaw in the gold standard and can not see a single positive in the fiat system. I'm slowly introducing you to that missing information.

Once again, I do not advocate a gold standard. A gold standard means that the government fixes the price of gold, this is contrary to my beliefs. The value of gold should only be determined by the marketplace. However, as monetary systems go I am in favor of free tri-metalism. That is a system based on gold, silver and copper where the value of all three metals is set by the marketplace.

 

[TuxDave]

So you would like our currency to be based on the marketplace, and so anyone that has notes that are backed by gold, it'll be like we're all playing the stock market. What type of price stability do you expect from that?

(Mind you, I am not an economics major so perhaps I'm missing something here)

 

[Dissipate]

Originally posted by: TuxDave
So you would like our currency to be based on the marketplace, and so anyone that has notes that are backed by gold, it'll be like we're all playing the stock market. What type of price stability do you expect from that?

(Mind you, I am not an economics major so perhaps I'm missing something here)

What you are missing is that we have no price stability in today's market with government currency either. The value of FRTs is constantly changing (almost always decreasing), in the world market and here domestically. If prices are so stable why has crude oil skyrocketed?

If the value of FRTs is only what you can exchange for them then their value fluctuates even if the government doesn't pump more of them into the economy all the time. Let us suppose I have a convenience store and I'm selling candy bars. What is the difference between that candy bar costing a little bit more or less tomorrow because of factors of production, than it costing a little bit more or less tomorrow because the value of gold went up or down?

To me there is no difference. It doesn't really matter as long as gold is not volatile, which it is not for the most part.

Your comparison of gold to the stock market is a fallacy. The stock market is a market consisting of thousands of different stocks, some of which are volatile and others which are pretty damn safe investments. Gold on the other hand is only one thing, you are comparing one commodity to thousands of different kinds of investments and volatilities to a single commodity which has a single volatility. As I've said before, the value of gold is relatively non-volatile. It is probably not going to lose half its value overnight. This is even in SPITE of artificial manipulations on behalf of world governments. If unbacked currency became a thing of the past those manipulations would end.

 

[TuxDave]

Originally posted by: Dissipate

Originally posted by: TuxDave
So you would like our currency to be based on the marketplace, and so anyone that has notes that are backed by gold, it'll be like we're all playing the stock market. What type of price stability do you expect from that?

(Mind you, I am not an economics major so perhaps I'm missing something here)

What you are missing is that we have no price stability in today's market with government currency either. The value of FRTs is constantly changing (almost always decreasing), in the world market and here domestically. If prices are so stable why has crude oil skyrocketed?

If the value of FRTs is only what you can exchange for them then their value fluctuates even if the government doesn't pump more of them into the economy all the time. Let us suppose I have a convenience store and I'm selling candy bars. What is the difference between that candy bar costing a little bit more or less tomorrow because of factors of production, than it costing a little bit more or less tomorrow because the value of gold went up or down?

To me there is no difference. It doesn't really matter as long as gold is not volatile, which it is not for the most part.

Your comparison of gold to the stock market is a fallacy. The stock market is a market consisting of thousands of different stocks, some of which are volatile and others which are pretty damn safe investments. Gold on the other hand is only one thing, you are comparing one commodity to thousands of different kinds of investments and volatilities to a single commodity which has a single volatility. As I've said before, the value of gold is relatively non-volatile. It is probably not going to lose half its value overnight. This is even in SPITE of artificial manipulations on behalf of world governments. If unbacked currency became a thing of the past those manipulations would end.

Dammit, stop throwing around the word fallacy. This entire thread is a fallacy too. Using past results to predict the future is a damn fallacy too. Doing what you say will make the place better is a fallacy. Saying that if we never went on the fiat system, everything would be good is a fallacy. I know quite well what a fallacy is.

Lemme go get some data regarding gold stability... brb