Outlaw Gold Hoarders

Are you calling me closed minded? Because this is the second time around on this conversation and about the third time I think you've called me closed minded because you disagree with the truth.


Ruben

 

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While I do not claim a expertice in international monitary policy, I do know that precious metals (whether in the form of coins, or not) were not the sole, or even the major medium of exchange for much of history. Foodstuffs, salt, animal hides, whiskey, and even tulip bulbs were used as a currency at varying times. "Money" is simply an a item with a promised value, to use as medium of exchange (excepting bullion coins).

 

I would have to say I have a mind that is completely open to new ideas. I didn't always have a lot of knowledge about this subject, but I was willing to investigate. In political debates, I can debate the liberal and conservative philosophies with about equal skill, just for the fun of it, even though I have a personal preference.

You indicate I favor a gold standard. This isn't the intent of my posts. The intent was to defend an alternative economic system that works perfectly well, but is currently out of favor. What I object to are the opinions that hard money systems don't work, when it is so obvious to anyone who studies the matter that they do. For some psycological reason, a lot of people can't be content with the idea that we have chosen one system unless they can completely discredit every possible alternative, regardless of intrinsic merit or historical success. I'll leave it to others to explain why that is.

You mentioned some problems with trade while being on a gold or silver standard. The Greenspan article addressed this point. I would only add that this isn't a problem with the coinage as much as with technology. The exact same problems would exist today exchanging dollars for yen and the dozens of other international currencies if it were attempted without computerized trading systems and efficient currency markets. If gold and silver coinage were in use today, the same technological solutions would be applied to them that is applied to their modern paper equivalents. People tend not to think of this. Things aren't better today because the money is better. They are better because the markets and the technological underpinnings are better.

But the main tipoff of the closed mine [for me] is someone's insistance that hard money systems didn't work, don't work, can't possibly work; but completely unbacked money systems always will because of some imagined inherent advanatage. Trade as a percentage of world GDP was higher prior to World War I than at any time up until about the early or mid 90s. You can look it up. With no computers and no derivatives, pretty complex clearing systems were operated out of London that permitted a high and sophisticated level of world trade with very little actual movement of bullion between nations. The only requirement was a settlement in ounces instead of paper. Now it would be with bits and bytes. The open and flexible mind has to mentally project what today's advances in technology and finance could add to the older processes.

However, I completely agree with your comments on stubborness. People today believe that the way things are is the only way they could possibly be without some sort of cataclysmic breakdown -- mostly due to that stubborness. The real truth is that there are usually multiple solutions to any problem, including that of currencies and trade.

So I can function in our current fiat currency system with complete comfort and full knowledge of its strengths and weaknesses. I also feel that as a result of my research, I'd be equally comfortable under a hard currency system provided the same laws and protection of personal freedom was in place. I consider having a working knowledge of multiple systems to be an advantage, and also a sign of an open mind.

 

It must be remembered that South Africa remained on the gold standard until 1965,when the Rand was allowed to float.After the issue of the Krugerrand began in 1967,it was actually illegal until fairly recently for South Africans to own the Krugerrand.The import
of the Krugerrand into Great Britain was illegal because of its association with the apartheid regime.Fortunately,I have never been put off by the Krugerrand's negative associations,as the Krugerrand is still being struck today,as have the fractions been since 1980.I have never been able to afford the full Krugerrand,but I do have 2 of the 1/10 Krugerrands - 1984 & 1990.They are very nice coins,& are a valid part of anyone's British
Commonwealth coin collection,as South Africa is now fully recognised as a full member of the British Commonwealth.

Aidan.

 

Dude, you have been fighting long and hard for the obvious. :headbang: You cite facts and other people come back with quips. You cite facts in context and other people cite facts out of context.

Ludwig von Mises pointed out that socialists and capitalists usually agree on the facts. The price of this was at that level in this place at that time. The disagreements come from the theoretical frameworks that explain the facts. Most people do not even have theoretical frameworks.

We know that socialism does not work. Yet, we maintain public schools and then we wonder why people are ignorant. Public schools are to education what collective farms are to argiculture. People who teach themselves are smarter for the same reasons that farmers who tend their own land are better able to produce surplus.

(And, yes, "teaching yourself" -- at least for me -- does include going to school. It is a matter of who is in control of the process. As an instructor myself, I have a different view of the matter when I am enrolled as a student.)

The world definitely has a gold standard. You are on it. I am on it. That the government in Washington DC is not on it is not much different than the fact that some other person is not. When the central banks dumped gold in 1995, someone bought it -- by definition, or there would have been no price at all. Americans (and others) buy coins. Other people buy jewelry. In fact the greatest fraction of gold goes into jewelry, which people in many places use for both adornment and for savings. You cannot separate the one market from the other.

China and India now allow their citizens to (legally) own gold. Like Mexico, the USA, and all of the other socialist states, the governments of China and India can inflate their currencies, but the people will not care as much because they have gold savings. But even Switzerland plays that game.

The important thing is to see the governments of the world -- like the corporations of the world -- as artificial and eternal indivduals, in no way above, beyond, or beneath the laws of economics, just as with the laws of physics.

Anyway, thanks for holding down the fort! :high5:

 

1. All values are subjective. Even for those of us who subscribe to objective values, our preferences are rationally treated as subjective by the general market. In other words, my preference for gold (or silver or copper or these two old banknotes from Washtenaw County 1837 and 1854) are not more or less "moral" than your preferences.

2. No values are universal. The standard of value (life) is universal as a standard: any sentient, rational being (computer program, Vulcan, Human, dolphin) will have the same standard of value. How they apply that standard is not universal, but unique.

3. In microeconomic terms, when some principality strikes coins of a certain size and weight and fineness, they can claim anything they want, but the markets of other people will assign other values. This is the Higley Declaration: "I am good copper. Value me as you choose." If the Republic of Florence wanted to pretend that a gold florin is "worth" so many silver coins, that conceit might not even hold as far as the city gates. Gold and silver (like apples and salted herring) were worth different amounts of different commodities in different times and places, even within any narrow window, such as "Antwerp, July, 1386."

 

Here is mine: "Gold Was Never Illegal."
http://www.coin-newbies.com/articles/gold_never_illegal.html

The difference is that of perception versus reality. The world is on a gold standard. Governmentalist money is only a fraction of all moneys. Moneys include degree-heating-days and other derivatives, of course, -- maybe 15 or 20 kinds of money -- but the most fundamental form of money in the real world we actually live in is gold. If cash is M1, then gold is M0.

 

You gentlemen seem to know an awful lot about gold. Do any of you have historical data which attempts to quantify gold on the basis of other commodities; things like silver, copper, loaves of bread, slaves, etc? I would be very interested how stable the value has been.

I remember reading an article where someone had done that with the price-ratio of gold and silver. The problem is that silver has changed value in modern times due to industrial usage, and because silver is a byproduct of both copper and gold mining. There is a lot of silver out there. Gold, by and large, has only minor industrial value. Gold still requires hoarders and those who fancy shiney metals.

We have an old lode gold mine in Sierra County called the 16:1 Mine. The mine may have been named after the ratio of the gold and silver prices in the late 1800s in California, or maybe it was the actual ratios of these metals in the dore. A memory would be convenient. Regardless, the ratio of the prices of gold and silver has increased dramatically in the past 120 years. I believe that the gold:silver ratio was 30:1 in Ebla (a town in ancient western Syria).

So what is gold really worth? 150 gallons of 87 octane American gasoline per ounce, or 75 gallons of gasoline somewhere in Europe. Is the current price of gold supported by anything tangible? What if they convened a gold auction and nobody came? Is the price of gold completely artificial? Should we use pig iron or aluminum anodes instead. In one sense, I think useful commodities actually form the basis of modern money. I assume that I am wrong. Fire away. :goof:

 

Thanks---I sent mine to the ANA but never heard anything so I guess they didn't like it....

Speedy

 

Very interesting posts by Mike and Quick Dog. It's true that money used to be thought of as a weight, not a dollar amount. A "dollar" was originally 371.25 grams of fine silver. Now it is a Federal Reserve Note with a legal "value" but no intrinsic value. So the whole idea of thinking about the "price of gold" or silver is a relatively new concept in history.

A second point is that there is no reason why the ratio of one commodity to another should be fixed. Gold, silver, copper and all other commodities fluctuate in relative value over time. It is only necessary for a society to pick one as the standard, but not try to fix a ratio between them. So the original attempt of the US government to choose the silver dollar as the monetary standard, but fix the ratio to gold as 15:1 was misguided. Gold coins should have been allowed to float in price relative to silver coins in the same manner that interenational currencies do today.

The third point is that amazingly, there is less silver [above ground] in the world than gold, yet gold sells for a price much higher than silver. This can be proven by comparing the inventory levels of the readily available stocks of the metals around the world. Going from memory [a dangerous thing], I believe there are about 1 billion total ounces of silver vs. about 4 billion ounces of gold. This includes jewelry. There is probably more silver than gold jewelry around, but industrial companies can't really get their hands on it unless prices go much higher. I don't know how things go around your house, but if silver goes to $20 per ounce, my wife isn't going to give me her jewelry and tell me sell it for melt value.

Finally, I just thought of another historical curiosity. There was originally a lot of opposition to legal tender laws in the US. The argument went something like, "If the money is good, why do we need legal tender laws to force us to take it. If the money is no good, why should we legally be required to accept it?

It's interesting stuff.

 

If you don't want it....send it my way.....

Speedy

 

Thanks for the encouragement. I enjoy discussions on the topic, maybe because I'm really trying to understand what people have against gold and silver money. I'm continuously amazed at how people automatically reject the entire concept. I don't find disagreement to be unpleasant in any way. It's highly entertaining as well as enlightening.

 

$500/ounce. I can almost smell the sweet scent of explosives and the stench of diesel fuel.

http://www.breitbart.com/news/2005/11/29/051129175023.c2qco92r.html

:whistle:

 

You can find these if you look and if you nag me enough, I might dig out some that I have xeroxed and put in folders. Basically, these are of limited value. The constant production of new goods and services changes the price information. Maize ("corn") and soy and peanuts are just part of the picture. Would you rather have 100 peanut butter and jelly sandwiches, or a new Xbox? That said, gold has been remarkably stable.

You note that silver is worth less than it was 120 years ago. You did not say that gold was worth more silver, though that is correct. You implicitly accepted the view that gold is the standard.

That you accepted gold as the standard shows why this question is meaningless. The "price" of gold is "supported" by its rarity, its divisibilty, its durability, its ductility, and its identifiablity, as well as its luster and charm. Gold is the standard. It needs no support.

 

For those of us of moderate intelligence, perhaps. But what do you say about those who think the Sacagaweas are gold. If they can't tell the difference between gold and brass, ...

 

Bonedigger
Didn't I tell you-
I'm with the government and all of those gold coins now held by collectors are supose to be sent to me for safe keeping until the govt.
Decides if they are going to recall them again