Washington State proposed bill to make gold and silver legal tender

In a gold standard - gold only backs the base currency. Money in 401 Ks and in your bank account are not base currency - They are derivatives backed by the Bank's reserve requirement of base currency (10% reserve or whatever it may be). A gold standard does not eliminate Fractional Reserve Banking.

 

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This is of course nonsense. If you care to prove it with more than an opinion then I'd be glad to consider it.

 

The only purpose for a 401K is to preserve your wealth from income taxation. On a gold standard, an income tax is impossible. Keep in mind the income tax was imposed on the people only when the Federal Reserve was created. There is no such thing as base and fractional reserve currency either. Fractional reserve currency is "made up currency". None of these paper tricks exist under a gold standard. Under a gold standard banksters have convinced people to deposit gold into their institutions and participated in fractional reserve banking on those assets, and it usually ended in disaster. Most people avoided it. This is why our current government and establishment is so against it and will fight to the bitter end to prevent one from being re-established.

On a gold standard, the government does not issue currency. It assays gold and silver into coins and possibly issues paper money that can be directly redeemed as such. Other gold and silver coins/bars/etc can be used for commerce as it is the value of the metal being used. Not the empty promises of their central bank.

 

It's a good question. Part of the answer is that the "dollars" in bank accounts and 401ks are not really dollars. They are investments in dollar denominated instruments. But you are correct that there isn't enough gold to cover every dollar -- and there doesn't need to be. You can find the writings of Antal Fekete on the internet. He explains how the gold standard operated prior to World War I and how circulating gold bills created a large enough wage pool to fund a high level of commerce and international trade. The answer lies in Adam Smith's real bills doctrine, which explains how a very small gold base can support large and complex economies. Happy reading.

 

I don't like it either, and the majority of people you ask will probably say they prefer extend and pretend to biting the bullet and living within their means. I contend that deflation should have happened, and still needs to happen in order to equilibrize things. It will hurt, and nobody will like it, myself included, but the longer we wait the worse it will be. When a bubble is created, if the solution is to create another bigger bubble to absorb the previous one that's not really helping anything. It's just buying time at the expense of greater sacrifice down the road.

 

I explained it in a previous thread pretty thoroughly and you simply wish to appear open minded and I am stating something I have not explained. Nice try, but those who have been on this board more than a couple of weeks know that I have explained this, that you read it, and you are simply trying to impune the idea without having to defend your own beliefs. YOU are the one who posted the graph, why don't YOU defend it? Why don't you explain why a dollar that could buy 1/35th an ounce of gold in 1940 magically has the same purchasing power in 2012 where it can buy 1/1700th an ounce. If that is not true, then your graph is a lie trying to scare people into believing the sky is falling.

If anyone who is truly wishing to learn wishes to read about it, I will try to find the thread.

Btw Fatima, why are you afraid to show the debt in terms of ounces of gold? How many hundreds of threads have you berated the board and silver supporters with your "fact" that "only gold is money"? Then show your graph in how many ounces of gold we are in debt, changing each year into ounces of gold at the going rate. Are you afraid it will not fit into your, "OMG we are going bankrupt any second so I must put all my assets into gold or my children will be sold into slavery" world view? Would your graph not be scary enough for "shock affect"?

To everyone else, I never claim our debt and spending are not a problem, I am saying all graphs that treat a dollar as the same thing over time will ALWAYS show the same shape Fatima's shows. ALWAYS. Its a function of the error in the assumption in the graph. You can show the EXACT SAME SHAPE when graphing anything over a long time period, price of gold, price of corn, price of cotton, workers wages, etc. It is actually a great lesson in showing how people, (sometimes innocently), can graph something in error and try to shock people with the results. This is why I taught this exact point in economics, the dangers of erroneous graphs and not reading into shapes of graphs.

 

Not really disagreeing with you sir. Kicking the can down the road is a popular strategy. They have been doing it for 100 years in this country. I am just not convinced, like many are, that the road ends in just a couple of more years. I think they will simply kick the can harder.

I don't like it either, but I try to be a realist and simply live with what I believe will most likely happen.

 

You can call me names as much as you like and you explained nothing. You gave your opinion that a graph is deceiving. Yet you provided no examples, so you are left with trying to discredit me and personal acendotes where you pat yourself on the back.

Prove the chart is a lie. You can't and I say your contention is nonsense.

 

Chart a simply compounding series. Gee, its identical to your graph. What a coincidence. Proved.

Your chart is a lie, as are all charts like that, and to say otherwise after being shown the truth is proving your mathematical ignorance.

Edit: I will post the simple graph for you:



Simple series compounding at 7% over 70 years. You're welcome.

 

Looks like it shows the same thing to me even though you attempted to hide the real numbers as a deception though it has nothing to do with what I posted. It amazes me there are people on this forum which will tell you to not believe what your eyes see. You have proven nothing to me. If you simply refuse to believe the very clear numbers in the chart I posted, just say so. I don't care.

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Who here has a hard time understanding this chart? Do you think it lies to you by giving you the info in a deceptive format? Who here looks at this chart and doesn't believe the debt is growing out of control? Who here can't see the link between the growth of the debt and the conversion to 100% fiat in 1971-1973. Yeah, exactly.

 

Hide what real numbers? I told you exactly what the graph was of? You asked me to prove my point, which I think I did. Why don't YOU restate your graph in the basis of ounces of gold like I asked?

Its easy to say "well prove it" and do nothing on your own. Why don't you do more than cut and paste from some PM website and actually prove out your point in terms of something other than static dollars, (which are a lie). Prove your point in terms of oil, gold, GDP, or anything else loosely indexed to inflation, which static dollars are not.

I am betting you won't, since it will not be sensationalistic enough for you to scare people. I am also betting you will tell me once again I am misinformed, I am misleading people somehow, or the ever popular, "personal anecdotes".

You prove something mathematically for a change instead of flinging mud. Until then I am done discussing it with you, but will discuss it with anyone else interested.

 

Son, if you told me the sun was going to explode tomorrow, should I believe that too? I asked you to prove that my chart was a lie. You respond with insults, self promotion, and when called out on that, you toss up a generic chart showing compound interest.

None of his is necessary. Prove my chart is a lie. That is all I need to do. Prove it. Or are you telling everyone on this forum they are incapable of looking at data provided in graphical format and drawing their own critically thought out conclusions. I know you often try to do this, but that falls back into the camp of self promotion and personal anecdotes. I think it's scary there is a portion of this society that tries to tell others they will do the thinking for them.

One more time. Prove it.

 

I stated that every chart showing a simple compounding factor will appear as your graph appears. You said prove it, and I did. I asked you to map yoru chart to something other than something not reducing its power over time, and you ignore me, like I thought you would.

I proved my assertion that any graph showing money over a long period of time will show that shape, the exact same shape many hucksters like to scare people with. I have not looked at the data, and accept its correct, the point all along was that that graph was erroneous built, like any graph charting static dollars over time.

Either you don't get that, or you are ignoring the point. I honestly am not sure which is it.

You asked me to do something and I did. Now, for the 3rd time, are you going to restate your graph in terms of "real money" and chart the debt versus gold? I would accept inflation adjusted dollars if you don't wish to malign your precious gold.

Restated, the graph may show debt increasing. In that case the graph is actually telling us something. Short of that its simply a mathematical trick used all too frequently to scare the mathematically illiterate.

 

Dear heart. Compounding means to increase an asset based on existing assets. (debt is an asset before you blow a gasket on that one)

Compounding has absolutely nothing to do with this chart. This is a chart of new debt accumulated each year. The debt the US adds this year has nothing to do with the debt that currently exists. Congress could balance the books next year and not borrow a dime. Yet the existing chart would not change. It's not compounding Luv.

So not only did you fail to prove my chart is a lie, you also failed to understand the difference between a chart of compounding vs a chart that shows new debt creation. Fail.

 

If you chart the debt in ounces of gold as medoraman suggested you would possibly see his point and personally I found it very interesting. With these numbers see a sample below, it's easily seen that if you charted them beginning in 1971 all the way through 2011 you would have a very very different looking chart expressing US debt in ounces of gold. And using figures based on actual reported debt and yearly gold averages.
*fixed numbers
Us debt in billions 1971-36.22b
Gold price per ounce average 1971-40.62
Debt in ounces of gold in 1971 891,678,975.873954
Us debt in billions 2011-98.70b
Gold price per ounce average 2011-1,571.52
Debt in ounces of gold in 2011 62,805,436.7745877

 

Except the debt in 1971 wasn't $1.12T. The $1T mark wasn't crossed until 20 years later. The debt in 1971 was ~$400B or if you rather 0.4T.

 

Correct I used the wrong figure when pulling from the governments chart instead of debt when posting I grabbed the number for gdp. But when charting using the correct figures and updating my numbers in my prior post the point made is still valid.

 

I view this as the stalk market. An ounce of silver one day is $30. So if you sent 30 dollar for a 60 dollar bill so it would be2 ounces. So the next week if silver goes up 5 dollar an ounce so that company makes 10 dollars. It can be smart as long as the gold and silver goes up. If the company is willing to take the risk okay they could make a lot of money but can loose a lot of money.

 

I am glad someone understood.

Honestly, I had no clue at all how a graph like I described would appear, it was very likely it could still show debt going up. My only point was using a number like dollars that in our economy goes down in value every year makes it a foregone conclusion that mapping anything versus dollars will look like the graph I posted. If you notice, that exact shape graph is shown here and on the internet often, to "prove" things like debt is out of control, gold will be $10,000 an ounce soon, our economy is about to be destroyed, etc. Its a sucker move to accept that these graphs mean anything, and I guess it was the teacher in me that wanted to try to teach some members here that.

That was seriously my only point. I am glad some saw it. I was just trying to teach about these misleading graphs, not comment on the debt itself per se.

Chris

 

Except that you have not explained in any form how that chart is misleading. Maybe it's misleading to you, but it clearly shows, in real numbers, not statistics, how the debt has been increased each year since fiat was introduced. And how prior to that there was relatively no increase. Your contention that charting data is deceiving is, as I said, is pure nonsense. Disciplines, such as engineering, could not exist without it.

I do agree that, like any tool, a deceiving chart can be produced, and I would say that your attempt to portray a chart of compounding interest as having something to do with this, (which I notice you haven't commented on since this was pointed out) falls into that deception category. It's a shame that we get taken off on these tangents and I sometimes wonder if the purpose isn't to keep people from discussing the topic.