Why do so many people oppose hard money when the government never allowed it to work?

[Anarchist420]

That's what I want to know.

Hard money relies on two things:

1. That it's not government-created.

2. That there is a mandate forcing banks to operate on 100% reserves or at least punish banksters if they embezzle without consent of the owner.

So, basically, everyone against hard money is against it when they don't even realize why it didn't work.

 

[PeshakJang]

Do you think our economy would be larger, smaller, or the same if we had always adopted a 100% reserve, gold standard banking system?

 

[RightIsWrong]

Do you think our economy would be larger, smaller, or the same if we had always adopted a 100% reserve, gold standard banking system?

It would most likely be smaller.

Do you think that it would be more, less or equally as susceptible to bubbles if it required hard reserves?

 

[IGBT]

can't play debt equity smoke and mirrors games with real money.

 

[ShawnD1]

That's what I want to know.

Hard money relies on two things:

1. That it's not government-created.

???

All useful money systems are government created. The money has universal value because taxes must be paid using that particular currency. If there's no standard form of money, you end up with screwed up situations where the store owner only accepts caesar denarius coins but your employer only pays wages in NCR greenbacks.

When that happens, a HUGE system is middle men is created. Those middle men are called money changers. Jesus hates money changers.
http://en.wikipedia.org/wiki/Cleansing_of_the_Temple


Since I'm a catholic, I should probably explain the money changers situation. The roman empire had coins with the emperor's face on them. You need these coins to pay taxes, and they are the accepted form of currency. It's against jewish law to have coins with the emperor's face on them because it's something similar to idolatry. Because of this, donations to the temple must be paid using jewish coins, and that means jewish temples were filled with people who would sell you jewish coins in exchange for roman coins. They control the supply of those coins, so people would get ripped off by money changers.

Banks act as modern day money changers. If you buy US products online using a Canadian credit card, there is a small fee applied for the currency exchange. It's usually a percentage fee. Now imagine if you had a fee like that for every single thing you buy. You go to Costco and there's a 2% fee to convert your bank's currency to the Costco currency. Then you go to Best Buy and they use a different currency with another fee. This is why having competing non-standard currencies is always bad.

 

[Siddhartha]

That's what I want to know.

Hard money relies on two things:

1. That it's not government-created.

2. That there is a mandate forcing banks to operate on 100% reserves or at least punish banksters if they embezzle without consent of the owner.

So, basically, everyone against hard money is against it when they don't even realize why it didn't work.

There have been economies in the past that were based on grain, salt, gold, etc. Are there any 1st or 2nd World economies that are based on gold?

 

[Imp]

Actually paper money is a relatively recent invention. For thousands of years people traded with food, salt, metals, gems, etc.

Nice job stimulus idea. You'll probably need a couple thousand call centers to barter all your online purchases, and more cashiers. Then probably training to do the same. Or, all those items are equated to an equivalent standard form of currency...

 

[FaaR]

For thousands of years people traded with food, salt, metals, gems, etc.

...And we stopped doing that, because we realized that system's no damn good.

The problem today isn't that we have paper money, but rather that the accumulation of paper money has become a means unto itself (ie: become wealthy), rather than the original intent, which was for money to act as a vehicle to assist/ease trade.

If you're a blacksmith and you need to see a tailor for a new coat, chances are the tailor doesn't want horseshoes as payment. Even if he against all odds did, how many horseshoes is fair payment for the coat? Hence money. But when gathering money is the primary motivator for...well...EVERYTHING these days, things start going screwy everywhere.

 

[Darwin333]

That's what I want to know.

Hard money relies on two things:

1. That it's not government-created.

2. That there is a mandate forcing banks to operate on 100% reserves or at least punish banksters if they embezzle without consent of the owner.

So, basically, everyone against hard money is against it when they don't even realize why it didn't work.

1. 100% reserve is retarded.

2. It is still government controlled to a large degree which is almost the same thing as government created.

3. It takes the power of our money supply from the Fed (can't argue that they haven't been royally fucking up lately) and gives it to foreign countries, many of them shithole foreign countries.

4. It can easily be manipulated by a few powerful people outside of our borders leaving us very little recourse.

 

[Darwin333]

.
But when gathering money is the primary motivator for...well...EVERYTHING these days, things start going screwy everywhere.

That has been the case since, well probably since the beginning of our recorded history. Having a paper currency hasn't changed this in any way except making your wealth easier to store perhaps.

 

[Darwin333]

It would most likely be smaller.

Do you think that it would be more, less or equally as susceptible to bubbles if it required hard reserves?

Roughly the same if I use our own history to base my opinion.

 

[JS80]

Actually paper money is a relatively recent invention. For thousands of years people traded with food, salt, metals, gems, etc.

http://en.wikipedia.org/wiki/Banknote#First_banknotes_in_the_world

 

[Anarchist420]

???

All useful money systems are government created. The money has universal value because taxes must be paid using that particular currency. If there's no standard form of money, you end up with screwed up situations where the store owner only accepts caesar denarius coins but your employer only pays wages in NCR greenbacks.

When that happens, a HUGE system is middle men is created. Those middle men are called money changers. Jesus hates money changers.
http://en.wikipedia.org/wiki/Cleansing_of_the_Temple


Since I'm a catholic, I should probably explain the money changers situation. The roman empire had coins with the emperor's face on them. You need these coins to pay taxes, and they are the accepted form of currency. It's against jewish law to have coins with the emperor's face on them because it's something similar to idolatry. Because of this, donations to the temple must be paid using jewish coins, and that means jewish temples were filled with people who would sell you jewish coins in exchange for roman coins. They control the supply of those coins, so people would get ripped off by money changers.

Banks act as modern day money changers. If you buy US products online using a Canadian credit card, there is a small fee applied for the currency exchange. It's usually a percentage fee. Now imagine if you had a fee like that for every single thing you buy. You go to Costco and there's a 2% fee to convert your bank's currency to the Costco currency. Then you go to Best Buy and they use a different currency with another fee. This is why having competing non-standard currencies is always bad.

The market will choose the best medium of exchange, and the government can choose to accept only gold/silver/platinum. Instead of a x dollars/pounds/euros/whatever currency denomination of silver/gold coin, they can say .2 oz of silver/gold and they can set the value of gold to silver.

If we had no legal tender laws, then people would choose what they want. A central, government currency is not a good idea and has never worked for the common man. Bankers love centralized interest rates, governmental lenders of last resort, and paper currency, because it makes them richer.

 

[JS80]

Here's a great post from FWF

Let's think this way. Paper currency is outlawed and people have to use barter/gold/sea shell as currency..

You want to build a house but you don't have enough gold/sea shell... so you write an IOU.. pretty soon everyone is starting to write IOU but there are disputes so the people elected to have a common IOU..

pretty soon the common IOU becomes standard and the economy takes off then along comes some fruit claiming the standard IOU is the root of all evil.

//rewinds to top//

 

[Darwin333]

The market will choose the best medium of exchange, and the government can choose to accept only gold/silver/platinum. Instead of a x dollars/pounds/euros/whatever currency denomination of silver/gold coin, they can say .2 oz of silver/gold and they can set the value of gold to silver.

If we had no legal tender laws, then people would choose what they want. A central, government currency is not a good idea and has never worked for the common man. Bankers love centralized interest rates, governmental lenders of last resort, and paper currency, because it makes them richer.

Bankers love "hard currency" too because they have much more direct control over the supply, and therefore the value, of it. Dabeers alone should show you that using gold or silver as our money supply is a bad idea. Then you have the small issue of most of the gold in the world is not produced in the US. So some shithole country can flood the market with gold and reduce the value of our currency and we can't do a damned thing about it.

Why do you think the Brits tried to bribe our congress into going with the gold standard after the Revolutionary war?

We would be better off backing our money with corn than gold/silver/platinum.

 

[Phokus]

The countries that got out of the great depression the quickest were the ones that went off the gold standard the earliest.

 

[Jaskalas]

can't play debt equity smoke and mirrors games with real money.

Exactly, and with that being the basis of entitlements the people, now benefiting from it, will cling to their government checks.

 

[Anarchist420]

Bankers love "hard currency" too because they have much more direct control over the supply, and therefore the value, of it. Dabeers alone should show you that using gold or silver as our money supply is a bad idea. Then you have the small issue of most of the gold in the world is not produced in the US. So some shithole country can flood the market with gold and reduce the value of our currency and we can't do a damned thing about it.

Why do you think the Brits tried to bribe our congress into going with the gold standard after the Revolutionary war?

We would be better off backing our money with corn than gold/silver/platinum.

Bankers have no much more limited control over the money supply with a hard money 100% reserve system. It's not centralized, so the market will determine interest rates. That takes away control from bankers and puts it in the hands of the people.

Bankers love paper money, FRB, and lenders of last resort. The Central Bank was not lobbied for by the people, it was lobbied for by an elite group of people, including representatives of Rockefeller as well as JP Morgan.

The common man would loan out their savings and collect interest on them.

While it's true that a country could flood another with gold, that's a lot easier to deal with than a central bank.

The countries that got out of the great depression the quickest were the ones that went off the gold standard the earliest.

Not really. The reason the GD happened was because of fractional reserve banking.

 

[Darwin333]

Bankers have no much more limited control over the money supply with a hard money 100% reserve system.

Just like Debeers has "limited control" over the diamond market, eh?

Look, it is really really simple supply and demand. If you are a uberwealthy asshole with a few uberwealthy friends you can purchase the supply and pretty much control the demand.

It's not centralized, so the market will determine interest rates. That takes away control from bankers and puts it in the hands of the people.

Who cares about interest rates? We are talking about stable value of your "money". The wealthy and/or producing nations will control what our money is worth. Do you understand that? We will litterally trade the Fed for some shithole on the other side of the world or a few wealthy assholes. I really really do not want to defend the Fed but I think I would prefer it to some country in Africa.

Bankers love paper money, FRB, and lenders of last resort. The Central Bank was not lobbied for by the people, it was lobbied for by an elite group of people, including representatives of Rockefeller as well as JP Morgan.

Banks love making money. Times are completely different now and with enough money commodity values can be manipulated hourly if they want. I will grant you that they would lose some control if people in shithole countries refuse to be bought out because they want the control for themselves.

The common man would loan out their savings and collect interest on them.

Who brokers the deal for the "common man"?

While it's true that a country could flood another with gold, that's a lot easier to deal with than a central bank.

Exactly how do you deal with another country flooding the market with something they are mining within their borders and diluting your currency other than war?


It would be better to back our currency with corn than gold. It really is that bad of an idea.

 

[Jhhnn]

Astounding lameness in this thread. Lenders have always operated on fractional reserve principles, if only on the basis of letters of credit in ancient times. 100% reserves would mean that for every $2 on deposit, only $1 could be lent, and the other $1 would have to be held as reserve. Even that won't cover a bank run, where 100% of depositors want all their money all at once.

Bankers get into trouble when they fail to hold sufficient reserves to cover loans not made on sound principles, and when they hold securities of variable value as reserves. In 1873, for example, bankers lent huge sums to build railroads that went bust, and were holding railroad bonds as reserves... in 1929, it was the stock market. In 2008, bankers did the same thing with the housing bubble and any sort of debt they could possibly securitize, taking enormous profits off the top, mindless of the welfare of their corporate steeds or anybody other than themselves.

In 1873 and earlier financial crises, all money was theoretically backed by gold or silver, and much of the money actually taken in was in the form of specie coins. None of it makes any difference when bankers get greedy.

Lack of a central bank just means that bank runs can and will spread from single phenomenon to systemic problems. Putting money in a bank really is a faith based proposition, and central banks and govt oversight just justifies that faith, provided that both hte central bank and the govt act in truly conservative fashion by preventing an over-extension of credit and risk. Which is precisely where Greenspan and the Bush Admin failed. The notion that the market will regulate itself is only true in the context of allowing huge boom and bust cycles which are anathema to a stable middle class.

 

[silverpig]

The market will choose the best medium of exchange, and the government can choose to accept only gold/silver/platinum. Instead of a x dollars/pounds/euros/whatever currency denomination of silver/gold coin, they can say .2 oz of silver/gold and they can set the value of gold to silver.

If we had no legal tender laws, then people would choose what they want. A central, government currency is not a good idea and has never worked for the common man. Bankers love centralized interest rates, governmental lenders of last resort, and paper currency, because it makes them richer.

You can't set a value of gold to silver. It's market dependent.

 

[Cerb]

Bankers have no much more limited control over the money supply with a hard money 100% reserve system. It's not centralized, so the market will determine interest rates. That takes away control from bankers and puts it in the hands of the people.

LOL. No. If there are 100% reserves, guess who will have most of the reserves? Governments and banks. The banks can hoard, flood, and ration to control money.

Bankers love paper money, FRB, and lenders of last resort. The Central Bank was not lobbied for by the people, it was lobbied for by an elite group of people, including representatives of Rockefeller as well as JP Morgan.

Evil greedy bankers just love money. Gold, silver, titanium, copper, crude oil, coffee, lithium, Apple stock just before a new product announcement...those details don't make much difference.

The common man would loan out their savings and collect interest on them.

The common man would need to physically have his savings, somewhere safe from being stolen, and have to not pay anyone for that privilege. Before that, he must actually create savings. To make any interest, though, he would have to barter the deal for it, and also whoever he loans to must find a source of hard resources to pay him back. How is that going to work?

While it's true that a country could flood another with gold, that's a lot easier to deal with than a central bank.

Not really. Central banks will come into existence, if there is a need for others to hold your money. Unless capitalism as the world has known it is broken down, there is not a way out of this.

Not really. The reason the GD happened was because of fractional reserve banking.

Nothing to do with market speculation, or overproduction? Our banking policies certainly made it worse, but it could have, and would have, happened anyway. You want these banks to be a single great evil. They aren't. They are among the many thousands of evils of every modern economy. People let their emotions and fears guide their economic decisions. That is the core problem, and you can't fix it with a conservative banking system. As the saying goes, when you try to make something idiot proof, the world makes better idiots.

 

[Anarchist420]

Astounding lameness in this thread. Lenders have always operated on fractional reserve principles, if only on the basis of letters of credit in ancient times. 100% reserves would mean that for every $2 on deposit, only $1 could be lent, and the other $1 would have to be held as reserve. Even that won't cover a bank run, where 100% of depositors want all their money all at once.

Bankers get into trouble when they fail to hold sufficient reserves to cover loans not made on sound principles, and when they hold securities of variable value as reserves. In 1873, for example, bankers lent huge sums to build railroads that went bust, and were holding railroad bonds as reserves... in 1929, it was the stock market. In 2008, bankers did the same thing with the housing bubble and any sort of debt they could possibly securitize, taking enormous profits off the top, mindless of the welfare of their corporate steeds or anybody other than themselves.

In 1873 and earlier financial crises, all money was theoretically backed by gold or silver, and much of the money actually taken in was in the form of specie coins. None of it makes any difference when bankers get greedy.

Lack of a central bank just means that bank runs can and will spread from single phenomenon to systemic problems. Putting money in a bank really is a faith based proposition, and central banks and govt oversight just justifies that faith, provided that both hte central bank and the govt act in truly conservative fashion by preventing an over-extension of credit and risk. Which is precisely where Greenspan and the Bush Admin failed. The notion that the market will regulate itself is only true in the context of allowing huge boom and bust cycles which are anathema to a stable middle class.

If banks aren't allowed to loan out deposits, then how could there be a bank run?

LOL. No. If there are 100% reserves, guess who will have most of the reserves? Governments and banks. The banks can hoard, flood, and ration to control money.

Evil greedy bankers just love money. Gold, silver, titanium, copper, crude oil, coffee, lithium, Apple stock just before a new product announcement...those details don't make much difference.

The common man would need to physically have his savings, somewhere safe from being stolen, and have to not pay anyone for that privilege. Before that, he must actually create savings. To make any interest, though, he would have to barter the deal for it, and also whoever he loans to must find a source of hard resources to pay him back. How is that going to work?

Not really. Central banks will come into existence, if there is a need for others to hold your money. Unless capitalism as the world has known it is broken down, there is not a way out of this.

Nothing to do with market speculation, or overproduction? Our banking policies certainly made it worse, but it could have, and would have, happened anyway. You want these banks to be a single great evil. They aren't. They are among the many thousands of evils of every modern economy. People let their emotions and fears guide their economic decisions. That is the core problem, and you can't fix it with a conservative banking system. As the saying goes, when you try to make something idiot proof, the world makes better idiots.

I'm not talking about banks being allowed to loan out peoples' deposits, I'm talking about them loaning out their own money, that they get for storing peoples' money, for example.

And a money manager could take care of loaning out peoples' savings.

 

[sandorski]

Actually paper money is a relatively recent invention. For thousands of years people traded with food, salt, metals, gems, etc.

Not really true. China had paper currency a very long time ago. Don't recall how far back, but it was well over 1000 years ago.

 

[Anarchist420]

I copied the following from someone at the dailypaul:
"A "bank" should not be a place where someone can give away fictional money.
It should be a warehouse to facilitate transfer over distance and time.
It should function SOLELY as a clearinghouse for such transfer orders. (aka - deposits, withdrawals, and payments to others)
Anything else should be classified as some sort of investment firm or savings institution.
Banking should be separate from investments and savings.
No bank should be allowed to speculate with depositors money.
Lending is investment/speculation. It should not be possible to go to a bank and get a loan.
Want a loan? Go to an investment/speculation institution.
Want to save and earn a reasonable safe return? Deposit into an thrift institution.
Want to take the gable at making a killing financing the "next big thing?" Deposit into an speculation institution.
I see three basic categories:

1. Banks (aka warehouses/clearinghouses for deposits, withdrawals and payments)
   • no loans allowed
   • 100% reserve requirement
   • non-interest bearing accounts only
   • reasonable storage and transaction fees may be charged
   • May have different subtypes such as:
     • Money Bank
     • Land Bank
     • Seed Bank
     • Food Bank
     • etc. (no end to creativity here)
2. Thrifts (aka savings institutions)
   • may make very safe loans using deposits only
   • strict reserve requirements and withdrawal restrictions. (the deposits are to be expected to be loaned out somewhat to earn a return so we want to protect against runs that threaten that)
   • Also lending guidelines must require equal collateral
   • Institution shares actual profits with depositors pro-rated to the value of their deposit.
   • Interest is payable in either productive percentage or money at the discretion of the depositor.
   • Loan portfolio MUST be approved or agreed upon by depositor - i.e. a depositor can decide what enterprise sectors their money can be loaned for. (May also offer the option of letting the depositor, if the entirety of the loan funds could come from one account, to approve or reject the loan personally)
   • NO FEES - at least not for storage. Some reasonable transaction fees may be possible for transfers out of the Thrift into a Bank or Speculator
   • PAYMENTS ARE NOT POSSIBLE - this is NOT a clearinghouse for payments to others. It is a savings and loaning institution ONLY.
3. Speculators (aka investment institutions)
   • may make riskier loans for longer terms than Thrifts, but also pay depositors a higher return on those loans. Also, using ONLY deposits for loans.
   • have lower reserve requirements
   • hardly any allowance for withdrawal (more may be loaned out for longer, thus less available for easy withdrawal. The point here is to earn a return, not have easy access to funds)
   • Institution splits actual profit with depositors pro-rated to their deposit value.
   • Collateral may or may not be required for loans, regulations may be more lax - this is a "at your own risk" sort of institution with a potentially high payoff or loss in any given period.
   • Interest is payable in either productive percentage or money at discretion of depositor.
   • All loans handled by institution, but loans may be pre-directed by depositors similar to a mutual fund system.
   • PAYMENTS ARE NOT POSSIBLE - this is NOT a clearinghouse for payments to others. It is a speculating institution ONLY.
   • the only of the three types that may possibly offer a line of credit. (see below)

Using these three names is also very important.

• The names clearly and accurately describe the function AND the risk inherent in each.
• The names are easy to understand and comprehend.
• The names are in line with what people would expect from each, retaining "banks" for that set of institutions and functions most people think of when they used the word.
• Each institution should be required to use the appropriate label, Bank, Thrift, Speculator, in its official name so as to ensure people know exactly what kind of institution they are dealing with.

This would still facilitate credit/lending services we have now, but all lending must originate from deposits - not thin air.
Separating the three, protects safer institutions from the riskier ones.
If any deposit insurance is to be offered (I don't think it should) then it would only be offered to Banks, and not Thrifts or Speculators.
Money could not be loaned for non-productive use. (pay day loans, payroll loans, etc.)
Interest is created via the law of natural increase by loaning only to productive enterprises. (real, not paper production) Thus returns are possible and moral.
There would be no such thing as a line of credit absent signing over collateral and then at a steep discount to the property's present value. (like 50% or more) Max credit line could decrease with a drop in property's value, but could never increase. Available credit could only be freed up by paying down balance owed.

• This gives real collateral to the credit line
• The steep discount insures the Speculator institution depositors don't get the shaft.
• The flexible credit line protects the depositors against a drop in value. If value drops to the extent the credit line falls below the balance owed, the difference is payable immediately or the collateral is forfeit and at once either transferable to the depositor(s) or salable to compensate the depositors)

I dislike the credit option the most, but I think people will find a way to do it no matter what. Some people are fine risking their capital that way. This will ensure the institutions and other depositors in it, as well as in other institutions, are somewhat protected from poor decisions and actions of others.
Just because Joe Richguy wants to extend credit to Mr. Icant Managemoney, doesn't mean Mr. Play Itsafe should be put at risk also.
So any opinions?"