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Why we cannot base our global economy on gold...
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Bob™
User ID: 486388
10/13/2008 3:32 AM
Report abusive post | Why we cannot base our global economy on gold...
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There has been a lot of talk (I read it daily) about how we should all go back to an economy in which our currency is fully backed by gold, etc. (This is the Ron Paul position, for example.)
As nice as that sounds, I have also read that the size of today's global economy is *much larger* than all of the known gold reserves in the world.
(And if you think about it, that does make sense. There are roughly 8 billion people on the planet today. So, even allowing for the fact that most of Earth's inhabitants are piss-poor, I strongly doubt that we have enough gold for everyone. Do we have 8 billion ounces of gold even? I doubt it.)
And even if we have enough gold today, I doubt we have enough gold for an even larger world population in the future.
In short: This notion of having a gold-backed currency may not even be possible or practical.
So, think about that, gold bugs... : ) |
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Arboriel 
User ID: 334323
10/13/2008 3:36 AM
 | | Re: Why we cannot base our global economy on gold... | Quote |
And even if we have enough gold today, I doubt we have enough gold for an even larger world population in the future.
In short: This notion of having a gold-backed currency may not even be possible or practical.
So, think about that, gold bugs... : ) Quoting: Bob™
Enter involuntary population redection and global credits.
...and solent green.
Remember always the primacy of Being
Wisdom is found in the interdependency of all things
The only thing we keep from this life is what we have become. |
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Anonymous Coward
User ID: 513931
10/13/2008 3:39 AM | | Re: Why we cannot base our global economy on gold... | Quote |
There has been a lot of talk (I read it daily) about how we should all go back to an economy in which our currency is fully backed by gold, etc. (This is the Ron Paul position, for example.)
As nice as that sounds, I have also read that the size of today's global economy is *much larger* than all of the known gold reserves in the world.
(And if you think about it, that does make sense. There are roughly 8 billion people on the planet today. So, even allowing for the fact that most of Earth's inhabitants are piss-poor, I strongly doubt that we have enough gold for everyone. Do we have 8 billion ounces of gold even? I doubt it.)
And even if we have enough gold today, I doubt we have enough gold for an even larger world population in the future.
In short: This notion of having a gold-backed currency may not even be possible or practical.
So, think about that, gold bugs... : ) Quoting: Bob™
Well you could just re-value gold.
But that's besides the point, the gold standard had the same boom bust cycles as the current system has (read up on history). So switching to such a system would not really be that useful (although it would curb inflation better). |
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aaron_o.o
rarely pure, never simple
User ID: 513816
10/13/2008 3:47 AM
 | | Re: Why we cannot base our global economy on gold... | Quote |
venus project?
"The real rulers in Washington are invisible and exercise power from behind the scenes"
- Justice Felix Frankfurter
"Behind the ostensible government sits enthroned an invisible government owing NO allegiance and acknowledging NO responsibility to the people." - Theodore Roosevelt, 1906
Pythagoras
...never allowed his neophytes to see him during the years of probation, but instructed them from behind a curtain in his cave
- H. P. Blavatsky (Isis Unveiled)
[link to www.youtube.com]
[link to www.myspace.com] |
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Anonymous Coward
User ID: 501257
10/13/2008 3:48 AM | | Re: Why we cannot base our global economy on gold... | Quote |
Yeah, gold would be revalued and it would have silver, copper, platinum, and palladium to help it back as well. |
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Anonymous Coward
User ID: 501257
10/13/2008 3:49 AM | | Re: Why we cannot base our global economy on gold... | Quote |
I guess what I am saying is you are going to see a massive revaluing of metals... they are going way up. |
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Anonymous Coward
User ID: 520867
10/13/2008 3:50 AM | | Re: Why we cannot base our global economy on gold... | Quote |
The problem is that you can't control your money supply with the gold standard.
Suppose that the USA has a gold standard and everything goes well. Suddenly let's say some country in Africa opens new gold mines (i.e. create more money as they can freely exchange gold to dollars and vice versa in the gold standard) this will create an inflation in the USA.
In the opposite, suppose the economy is growing and people need more physical currency. But if there is a shortage of gold there can't be more physical curreny, hindering further growth.
I agree that the gold standard is not the answer and, as stated in another thread, is definately not a magic remedy to prevent crises- during the crash of 1929 all major countries had a gold standard. |
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Anonymous Coward
User ID: 501257
10/13/2008 3:52 AM | | Re: Why we cannot base our global economy on gold... | Quote |
The scarier take on this is that a significant proportion of the population could be wiped out before the fold. |
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Anonymous Coward
User ID: 495603
10/13/2008 4:05 AM | | Re: Why we cannot base our global economy on gold... | Quote |
That's why we need a basket of tangible-goods backed currencies. We can have gold certificates, silver certificates, platinum, palladium, rhodium, oil, grain reserves, etc. notes. The US Gov't would have to buy up vast quantities of commodities to be able to back them up, but it can be done.
Then, US Treasury notes could be printed by the US Treasury against their various holdings. This would restore balance to the global economic system currently in fiat money meltdown.
The market could then decide which currencies it liked better.
We must reign in the corrupt fiat money fixing scheme if we are to have a prayer of global recovery from this hyper-inflationary implosion we are just beginning to perceive.
The goal is to stop the manipulation of markets by crooks with fiat monopoly money, and true wealth-based currencies do that.
And that's really why they have been done away with by TPTB.
It's all about greed, power, and corruption.
Welcome to the New World Order. Now, get back to work, citizen! |
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Anonymous Coward
User ID: 520867
10/13/2008 4:17 AM | | Re: Why we cannot base our global economy on gold... | Quote |
That's why we need a basket of tangible-goods backed currencies. We can have gold certificates, silver certificates, platinum, palladium, rhodium, oil, grain reserves, etc. notes. The US Gov't would have to buy up vast quantities of commodities to be able to back them up, but it can be done.
... Quoting: Anonymous Coward 495603
You want your currency to depend on the fluctuations of nature and the policies of other countries? That is the worst alternative.
Grain prices could drop or get higher due to the weather or farmers, oil prices depend on the policies of OPEC, gold and silver depends whether new mines are being opened or production increased. Using that basket the currency would be less stable. |
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Anonymous Coward
User ID: 523000
10/13/2008 4:18 AM | | Re: Why we cannot base our global economy on gold... | Quote |
Here are the choices:
Gold
Paper
Chickens
Gold seems to be worth the most. |
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Anonymous Coward
User ID: 513286
10/13/2008 4:20 AM | | Re: Why we cannot base our global economy on gold... | Quote |
Anything which makes government unable to create new debt without the will of the people |
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Anonymous Coward
User ID: 520867
10/13/2008 4:23 AM | | Re: Why we cannot base our global economy on gold... | Quote |
Here are the choices:
Gold
Paper
Chickens
Gold seems to be worth the most. Quoting: Anonymous Coward 523000
A currency isn't only paper. The value of money is what you can buy with it; i.e. strictly speaking the commodities that is backing up the currency. A dollar is valued higher than let's say the currency of Zimbabwe because with a dollar you can buy airplanes, cpus etc.
So, does it really matter when a currency is backed by gold or by Boeing 747s? |
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Anonymous Coward
User ID: 513931
10/13/2008 4:24 AM | | Re: Why we cannot base our global economy on gold... | Quote |
Here are the choices:
Gold
Paper
Chickens
Gold seems to be worth the most. Quoting: Anonymous Coward 523000
Money isn't meant as something of "value". It's in theory just a temporary exchange based on trust (you sell something for money and later you buy something with the money).
To be fair I do think governments need more control over the money supply (and people need to get their heads out of their asses and actually follow politics and vote for the best guy instead of who their preacher tells them to vote for). |
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Anonymous Coward
User ID: 524808
10/13/2008 4:26 AM | | Re: Why we cannot base our global economy on gold... | Quote |
How about trees? Plenty of those! |
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Anonymous Coward
User ID: 520867
10/13/2008 4:30 AM | | Re: Why we cannot base our global economy on gold... | Quote |
How about trees? Plenty of those! Quoting: Anonymous Coward 524808
LOL, cool idea (serious). Problem is, what if suddenly Brazil or Indonesia plant new trees? It would create an inflation in your country. |
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Arboriel
User ID: 334323
10/13/2008 12:54 PM
| | Re: Why we cannot base our global economy on gold... | Quote |
How about trees? Plenty of those!
LOL, cool idea (serious). Problem is, what if suddenly Brazil or Indonesia plant new trees? It would create an inflation in your country. Quoting: Anonymous Coward 520867
Everybody needs to plant more trees....
Remember always the primacy of Being
Wisdom is found in the interdependency of all things
The only thing we keep from this life is what we have become. |
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voice
User ID: 525037
10/13/2008 12:57 PM | | Re: Why we cannot base our global economy on gold... | Quote |
There's plenty of gold to go around if its worth $30,000 an ounce OP....... |
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Anonymous Coward
User ID: 519678
10/13/2008 1:24 PM | | Re: Why we cannot base our global economy on gold... | Quote |
well lets see
US 20 dollar gold piece from its inception could always buy a really nice mens suit ... flash foward post gold standard us dollars
now 20 us dollars do not buy a really nice mens suit but guess what
that same US 20 dollar gold piece when converted to current us dollars still buys the same really nice mens suit
so you tell me whats more stable old us system of dolalrs based on gold standard or the the one we have had since they abolished the last of the system in 1971 ...
I think answer is obvious
value of gold and what it can buy has not changed over time
the circus fiat dollars backed by nothing have ...
same goes for other items of purchase ... the purchasing power of an ounce of gold really rarely fluctuates on what it will buy in terms of goods and services ...
fiat dollars is another story |
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Bob™
User ID: 486388
10/14/2008 1:16 AM | | Re: Why we cannot base our global economy on gold... | Quote |
The problem is that you can't control your money supply with the gold standard.
Suppose that the USA has a gold standard and everything goes well. Suddenly let's say some country in Africa opens new gold mines (i.e. create more money as they can freely exchange gold to dollars and vice versa in the gold standard) this will create an inflation in the USA.
In the opposite, suppose the economy is growing and people need more physical currency. But if there is a shortage of gold there can't be more physical curreny, hindering further growth.
I agree that the gold standard is not the answer and, as stated in another thread, is definately not a magic remedy to prevent crises- during the crash of 1929 all major countries had a gold standard. Quoting: Anonymous Coward 520867
Excellent points! |
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Anonymous Coward
User ID: 474106
10/14/2008 1:21 AM | | Re: Why we cannot base our global economy on gold... | Quote |
That's why we need a basket of tangible-goods backed currencies. We can have gold certificates, silver certificates, platinum, palladium, rhodium, oil, grain reserves, etc. notes. The US Gov't would have to buy up vast quantities of commodities to be able to back them up, but it can be done.
...
You want your currency to depend on the fluctuations of nature and the policies of other countries? That is the worst alternative.
Grain prices could drop or get higher due to the weather or farmers, oil prices depend on the policies of OPEC, gold and silver depends whether new mines are being opened or production increased. Using that basket the currency would be less stable. Quoting: Anonymous Coward 520867
what if our currency is based off of an average of all precious metals that the gov owns? or is that too simple? |
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Anonymous Coward
User ID: 479477
10/14/2008 1:24 AM | | Re: Why we cannot base our global economy on gold... | Quote |
OP, I think you're off on the population by a couple billion and I think you are right concerning fiat. |
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Bob™
User ID: 486388
10/14/2008 1:28 AM | | Re: Why we cannot base our global economy on gold... | Quote |
OP, I think you're off on the population by a couple billion and I think you are right concerning fiat. Quoting: Anonymous Coward 479477
You're right.
Current world population clock indicates: 6,729,984,396
(I was simply recalling off the top of my head.)
But we'll be at 8 billion soon enough, barring some kind of catastrophe. |
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Anonymous Coward
User ID: 471866
10/14/2008 2:29 AM | | Re: Why we cannot base our global economy on gold... | Quote |
How about a system where the amount of currency in circulation is strictly defined by the amount of population in a country. The best way to regulate this would be to issue every newborn baby X amount of dollars to be accessed when he/she is 18. And give congress control over what X will be. |
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Anonymous Coward
User ID: 524683
10/14/2008 2:32 AM | | Re: Why we cannot base our global economy on gold... | Quote |
How about trees? Plenty of those! Quoting: Anonymous Coward 524808
Ever read any of the Hitchhikers Guide to the Universe series?
Douglas Adams wrote about that very thing. |
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Anonymous Coward
User ID: 520867
10/14/2008 2:38 AM | | Re: Why we cannot base our global economy on gold... | Quote |
How about a system where the amount of currency in circulation is strictly defined by the amount of population in a country. The best way to regulate this would be to issue every newborn baby X amount of dollars to be accessed when he/she is 18. And give congress control over what X will be. Quoting: Anonymous Coward 471866
More or less in line with your idea, there is actually an economic theory that says to keep the physical money supply fixed as a ratio of the gdp. Let's say the ratio is 1/10, if gdp is $1000 then there should be a total of $100 of bills and coins. If gdp is $1100, then there should be $11 dollar of physical currency.
In Fisher's equation M*V=P*T, if P(prices) * T (transactions) increases, and if V (average velocity of money) remains constant than M (money supply) should increase. |
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Anonymous Coward
User ID: 471866
10/14/2008 2:48 AM | | Re: Why we cannot base our global economy on gold... | Quote |
I kind of like my idea because depending on the amount of money X is decided to be, could be placed in a savings account for 18 years and provide a good head start to everyone and help them stay out of debt.
I guess the only challenge would be to find a value for X that would be a balance between inflation and demand, as to prevent devaluation. |
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Anonymous Coward
User ID: 520867
10/14/2008 2:53 AM | | Re: Why we cannot base our global economy on gold... | Quote |
That's why we need a basket of tangible-goods backed currencies. We can have gold certificates, silver certificates, platinum, palladium, rhodium, oil, grain reserves, etc. notes. The US Gov't would have to buy up vast quantities of commodities to be able to back them up, but it can be done.
...
You want your currency to depend on the fluctuations of nature and the policies of other countries? That is the worst alternative.
Grain prices could drop or get higher due to the weather or farmers, oil prices depend on the policies of OPEC, gold and silver depends whether new mines are being opened or production increased. Using that basket the currency would be less stable.
what if our currency is based off of an average of all precious metals that the gov owns? or is that too simple? Quoting: Anonymous Coward 474106
If currency was backed by the average of all precious metals in the hands of the government, still that would make the currency less controlable for outside interference. Let's say the currency is backed by gold and silver in the government's reserves, meaning for each Dollar you can get a certain amount of silver and gold. And for a certain amount of silver and gold you can get a certain amount of dollars.
The problem is that if foreign contries suddenly open new gold or silver mines, or people around the world are hoarding or dumping gold, it would have negative consequences on the value of your currency and the domestic prices. |
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Anonymous Coward
User ID: 502659
10/14/2008 3:08 AM | | Re: Why we cannot base our global economy on gold... | Quote |
The problem is that you can't control your money supply with the gold standard.
Suppose that the USA has a gold standard and everything goes well. Suddenly let's say some country in Africa opens new gold mines (i.e. create more money as they can freely exchange gold to dollars and vice versa in the gold standard) this will create an inflation in the USA.
In the opposite, suppose the economy is growing and people need more physical currency. But if there is a shortage of gold there can't be more physical curreny, hindering further growth.
I agree that the gold standard is not the answer and, as stated in another thread, is definately not a magic remedy to prevent crises- during the crash of 1929 all major countries had a gold standard. Quoting: Anonymous Coward 520867
The main problem with a Monetary System based Economy is that it wants to be very Malthusian as its natural logical conclusion is that the human population of the Earth has to be kept down by all and any means below a certain threshold. This can only be done by "culling the herd"... a.k.a, mass murder.
Aluminum Chromate cooked in a solar furnance will produce artifical Rubies. If Rubies were for instance in the place of Gold, then anyone with a solar furnance and aluminum Chromate could vastly affect the value of Rubies. If Rubies became as common as silicon dioxide (sand / glass) then would Rubies cease to have value as a carrier of value? "I will trade you this pound of sand for that loaf of bread." "No thanks, I already have more sand than I know what to do with."
In the advent that we finally produce sustainable controllable nuclear fusion, and we find that we can put sand into the fusion reactor and get gold out of it and still produce (rather than consume) massive quantities of electrical power and heat, will gold not then stand the likelyhood of becoming as common as sand? What then does this do to the value of Gold as a carrier of value? "I will gladly trade you this pound of Gold for that loaf of bread" "No thanks, I have more gold dust than I have room for on my square mile of land."
Consider the Sci-Fi Star Trek and their replicators. What system of "money" could ever be used in such an economy? Most certainly not a precious metal economy. Possibly a precious Energy source, like Dialithium Crystals but why then not merely use the replicator to replicate more dialithim crystals?
A Monetary System for a Economic System will always have this down fall and eventually end up in a Have vs Have Not society.
And should the population of Earth exceed the total amount of say copper existing IN Earth such that in equal distribution each person is only allowed 1 centi-gram of copper, then would it not in fact be better to use something far more abundant than copper? Looking down the periodic table we start to discover that there are few good candidates for metals to use.
The American System as it was envisioned in the US Constitution is a Credit System, not a Monetary System. This is what most Americans do not understand. What is used for the carrier of the Credit Value can be anything that Congress would decide. Congress is granted that power. The US Constitution itself does not dictate exactly what it is that is to be used as a carrier of Credit. Congress has over time used a number of different things. But the main value behind that Credit is not any precious metal or any one certain substance, no, it is something a little bit more abstract, Productivity - a Term that many Americans have difficulty, seems, understanding.
Congress can literally make anything it wants to be the carrier of credit, even plastic or paper or shoes, or electronic memory digi-bits (but perhaps it should be something with a little less potential to become vapor-coin than electronic memory digibits). This is the difference between a Monetary System of Economy and a Credit System of Economy. That plastic coin (Art. 1., Section 10., US Constituion) which Congress authorized to have stamped and impressed and marked as offical legal tender US Currency would be Money as in the American System Money is defined as Credit, not Debt, not precious metal. That Plastic Coin is Money simply and merely because Congress would have said it is and by making it legal tender it becomes the vehicle in the USA to satisfy all debts public and private... you have to accept it if offered... although you could accept anything else, even gold, provided the other party had it.. but you could not refuse his US Plastic Dollar.
It took me about a year to finally see this. Ron Paul got me starting to think about such things with his Misesian Austrian Economic System (a Monetary System) that he so espouses. For a time I was thinking his Austrian Economic system was quite reasonable until I had studied the US Constitution and realized the Economic system the US Constitution enshrined (the American System) was not a Monetary System but rather a Credit System. And for one, I am still attempting to discover the many implications of this in theory and as applied to practice.
BTW, the British Economic System is also a Monetary System, as are the majority of the Economic Systems of Europe and most of the world. The American System truely seems to have been revolutionary at the time it was developed. So revolutionary that it has many many enemies in the world, but the predominate enemy of the American Credit based Economic system is the British System. I think there is a very big key here then in just who is the main economic enemy of the USA.
Once I made these discoveries, I then stopped being a supporter of Ron Paul. I have since become something along the lines of an FDR Democrat... yet I remain registered as an independent. Why? Just look at who really heads up both the National Party Leadership funding of both the Naitonal Democratic Party and the National Republican Party and that may answer that question.
Just my devalued 3 Cents worth. |
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Anonymous Coward
User ID: 502659
10/14/2008 3:17 AM | | Re: Why we cannot base our global economy on gold... | Quote |
Money isn't meant as something of "value". It's in theory just a temporary exchange based on trust (you sell something for money and later you buy something with the money).
To be fair I do think governments need more control over the money supply (and people need to get their heads out of their asses and actually follow politics and vote for the best guy instead of who their preacher tells them to vote for). Quoting: Anonymous Coward 513931
You sell something for another thing called money, you then carry that money in your pocket (cuts out all the middle men wanting their cut), later you buy something with the money.
And people need to get their heads out of their asses and vote for the best guy out of all that are running (and not just the two that the MSM allows you to remember are running).
Without understanding what in a previous post in this thread I have termed the American Credit Based Economic System you may find yourself voting for a candidate who is espousing (whether he knows it or not) a Money Based Economic System - i.e, and anti-American Economic System contrary to the US Constitution - and doing so is certainly no way to advance the cause of the US Constituion and the Republic it created.
Gentlemen, What have I given you? A Republic, If you can keep it. |
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Anonymous Coward
User ID: 502659
10/14/2008 3:20 AM | | Re: Why we cannot base our global economy on gold... | Quote |
OP, I think you're off on the population by a couple billion and I think you are right concerning fiat.
You're right.
Current world population clock indicates: 6,729,984,396
(I was simply recalling off the top of my head.)
But we'll be at 8 billion soon enough, barring some kind of catastrophe. Quoting: Bob™
Assume 7 Billion, but the how many troy oz of Gold, Silver, and Copper are there on this planet? UNKNOWN. |
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