What if silver was put back into circulation?

I think we're both on the same sheet of music and I have basically said this exact same thing a few times in this thread. While I think it would be nice for money to also have intrinsic value, I don't think it's feasible anymore.

 

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Switching back to a monetary system based on metals could work, but it would require a culture wide change in perception of "money". Fallacies in the perception of the word are present in quotes from this thread. For instance, people make the argument that the government would have to adjust the size and/or metal content of coins based on metal prices. They say, "what would happen when the price of silver went from $30/oz to $60/oz, we would have to adjust the coins". But, there would no longer be a conversion between silver and the dollar, alternatively, the dollar would represent a specified weight of silver. If the value of silver increased then the value of the dollar would increase, but there would be no change in the coinage. If we adjusted the coinage, then we would not truly be on a metals based monetary system. This is why we came off of this type of system in the first place, people were trying to adjust the value of the dollar independent of the value of metals. It just can't work like that.

The reason that it can't work is because we are used to a system that allows inflation. We all work, and we all want a raise every year because it makes us feel as though we are being rewarded for our efforts. Corporations, farmers, and business owners have to increase the price of their products a little more each year to account for increased labor costs. In the end it is all a facade, our increasing salaries do not actually represent an increase at all. It's all part of a system that is designed to make us "think" that we are being better compensated.

If we switched to a metal based system then inflation could not happen (no more systematic raises). The value of metals would essentially be consistent. But if something occurred that drove up the value of metals (emerging economy, technology that requires metal), then the value of the dollar would increase. This would basically cause "deflation" of the perceived value of goods. The price of a loaf of bread would go from $2 to 50 cents. This is completely backwards from what we are all used too, and that is why it wouldn't work.

 

A Difference Of Fact

I beg to differ with your understanding which is based on a singular government controlling all commerce (i.e. A One World Order). This is unrealistic, as informed know that the majority of commerce in the world is implemented outside of the government controlled distribution networks (e.g. currencies, diamonds, drugs, oil, other products, services, etc.).

International reality is that black market commercial distribution networks exist throughout the world that dwarf government/international agencies controlled networks. "Illegal" endeavors throughout the world have learned that it is easier to circumvent controlled commerce by counterfeiting currency, utilize direct exchanges of tangible services/commodities, etc.. Major Countries having desired international commodities are agreeing to forgo normal exchange mediums (e.g. International currencies, "arms for control/oil", etc.) which impede/control commerce.

In view of "Superpower" world political powers trying to control commerce, dictate exchange mediums, even embargoing/asset-seizure of countries in "non-compliance", a Pragmatist will realize the world is rapidly re-evaluating "mediums/mechanisms of exchange".

I believe you'll find that "Fiat" currencies have relatively short lives with respect to tangible commodities as exchange/trade media. In the event of societal degradation/collapse, imagine which the norm would rather have as a medium for commodity transfer: Water, food, shelter, fuel, weapons, metal/utensils, or a promissory paper note. Just "Food For Thought", based on published international analysis/documentation.

 

Agree. Silver is volitile in the open market to ever be considered for coinage again.

Back in the olden days, the silver to gold ratio was always 16 to 1. This enabled relative coinage sizes. Today, because of "wild" speculation about the use of gold and silver for monetary exchange, that ratio is way out of wack at 54 to 1.

Bottom line: If gold or silver are to be used for currency exchange, their values will need to be heavily regulated by governments through out the world. Everybody would have to agree and if you read the newspapers or daily online news, you'll realize that this just is not going to happen.

 

Let me rephrase. No downside compared to what most do with 20 bucks thats extra.

Either they spend it or it sits there.

I completely agree with you that there is much better investments. I was more comparing it to holding paper money to holding the silver coin. There are tons n tons of people out there that think putting money in a mattress is a good idea lol...

 

The problem with it is the people who handle large quantities of money HATE coins ! Coins are heavy, bulky and are more labor intensive. The banks, retailers, etc would much prefer a cashless transaction altogether. Look at the money saved by doing away with coins altogether.


Hoarding would not be an issue, since a $5 coin could be minted with $3 worth of silver and in quantities numbering in the trillions. Make them plentiful and over valued and hoarding becomes moot.

I just think that it isn;t economically sound, because coins are not economically sound. IMHO

gary

 

Bad example. Of course the German Mark was not demonetized; you can still get your DEM redeemed. The conversion rate was set more than 13 years ago and does not change.

Apart from that, if anybody wants to invest in silver, copper, stocks, wine, real estate etc. - fine, nothing wrong with that, of course. But as others have said, while all this can be had by spending/investing money, none of this is money ...

Christian

 

Idyllic World Exchanges

Doug: In an idyllic world where commerce is determined at the behest of sovereign nations, I would agree. However, my understanding is that in reality, world fiat currency values aren't generally allowed to be established by issuing countries. The "soft currencies" must be converted to "hard currencies", often controlled by colonializing nations through waring actions, threats, sanctions, or financial confiscation. Currently, the most prosperous/populous nation in the world has a dictated soft "non-convertible" currency.

I could dissertate, but believe that this internet synopsis is apropos.

"Varying theories of monetary policy, and the ever-present risk of unexpected geopolitical and policy events, preclude any claim of a currency's hardness from being called definitive. Precious metals have been the most resilient currencies, with physical gold historically outlasting all forms of paper fiat money and gold certificates.

Quantitative easing, credit downgrades, and other events of the late-2000s financial crisis have generally eroded the security of most fiat money, making it difficult to define any as a hard currency."

Just my humble understandings of "world order" currency value establishment.
:thumb:

 

I think that bullion lovers have lost a bit of prospective on precious metals. They seem to think that it is the only thing that represents solid value in the world, but does it really have inherent value beyond "Oooh, that's pretty!"

Metals were the first materials to be used as currency on a large scale (first materials were actually shells, spices, etc), which established a standardized trade system. But the metal currency represented something different to those people than it does to us today. Back in Ancient Greece or Rome, if you wanted a suit of armor you had to accumulate enough bronze coins to have one forged. Possession of decorative silver and gold items provided a strong delineation between classes, and accumulation of these coins was sought out for the same reason (to make things).

The only reason that gold and silver have value is because everyone agrees that they have value (just like our current currency). Precious metals do serve as a great buffer against a small-to-mid scale downturn in an economy. However, if everything really goes to **** worldwide then the value of precious metals will fall along with every other form of currency. The only things in the world that have true inherent value are food, shelter, water, air, and energy. Unfortunately, these are not things that can be hoarded in large amounts over long periods of time.