Gold broke through $700/oz.
05-09-2006, 05:44 PM
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not really a big deal, since the valuation of money based on the "Gold Standard" was given up years and years ago..................
The phrase “gold standard” is defined as the use of gold as the standard value for the money of a country. If a country will redeem any of its money in gold it is said to be using the gold standard. The U.S. and many other Western countries adhered to the gold standard during the early 1900’s. Today, however, gold’s role in the worldwide monetary system is negligible. Britain abandoned the gold standard 1931; the USA abandoned it 1971. Holdings of gold are still retained because it is an internationally recognized commodity, which cannot be legislated upon or manipulated by interested countries. On August 15, 1971, the world entered the first era in its history in which no circulating paper anywhere was redeemable in gold, by anyone. At one point in time it was illegal for a U.S. citizen to own gold. President Richard Nixon of U.S. closed the “gold window.” This action broke the last tie between gold and circulating currency, resulting in our modern financial system which is called a “floating currency” system
05-09-2006, 05:46 PM
#4
Originally Posted by Herrin811
not really a big deal, since the valuation of money based on the "Gold Standard" was given up years and years ago..................
05-09-2006, 06:20 PM
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Gold holds it's value, fiat currency does not. No fiat currency has ever lasted more than 200 years. The gold standard held governments accountable for the spending they did. If they over spent they would go into bankruptcy. Now since money is meaningless they can spend all they want and then inflate the debt away. Inflation is always man made.
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05-10-2006, 01:29 PM
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The Central Banks have been playing this game (google GATA for details) by leasing their gold to sellers to keep the price artificially low and prop up their phoney baloney paper. I think they're in the end game however since the Chinese and Indians have started to reduce their dollar holdings and are buying gold instead.
There is no safe haven for money in currencies or anything demonitated in dollars or other paper currency. All of the central banks want to maintain favorable exchange rates to facilitate trade so they inflate their currencies right along with the dollar. This has given the Fed free rein to inflate the dollar during the Greenspan years and Ben Bernanke has promised more of the same.
Deficit spending is to blame and simply put, no person or country can live on borrowed money forever. Eventually the debts will be paid. That time is here.
BOHICA
Edwin
There is no safe haven for money in currencies or anything demonitated in dollars or other paper currency. All of the central banks want to maintain favorable exchange rates to facilitate trade so they inflate their currencies right along with the dollar. This has given the Fed free rein to inflate the dollar during the Greenspan years and Ben Bernanke has promised more of the same.
Deficit spending is to blame and simply put, no person or country can live on borrowed money forever. Eventually the debts will be paid. That time is here.
BOHICA
Edwin
05-10-2006, 02:00 PM
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All central banks artificially inflate their currency? In all seriousness our country along w/most of the other top GDP ranking countries have a floating/flexible exchange rate, THEREFORE, it is determined in the market. What good would anybody do by artificially inflating their money. The only way to make your currency appreciate would be to pull it back out of the economy not print more. By doing so we would be helping OTHER countries b/c now there currency is cheaper making domestic flunds flow to them leading us to increased imports and decreased exports, CAUSING our Current Account defecit to increase EVEN MORE. If anything we want our currency to devalue so that China's imports aren't so cheap anymore and we actually get them to start buying from us. After all Asian countries savings rate is almost 50% while ours is negative. Simply because their currency is relatively cheaper compared with the dollar. The middle eastern countries are also not spending the oil money that is flowing to them. So inflating would be irrelevant right now, we would be shooting ourself in the foot.... 
05-10-2006, 02:29 PM
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^^That's funny right there, I don't care who you are...
Edwin is exactly right, though. We're living in a "matrix" like scenario, because our dollars decline in value continuously due to the printing presses humming along.
As long as we can get others to give us REAL goods for worthless paper money, why not?
I tell people that the gold/oil ratio is the way to think of oil prices, because the dollar (or any fiat currency) is not a good reference.
Ditching the gold standard was a move in the same vein as tax withholding-- designed to empower the politicians at the expense of the people...
Edwin is exactly right, though. We're living in a "matrix" like scenario, because our dollars decline in value continuously due to the printing presses humming along.
As long as we can get others to give us REAL goods for worthless paper money, why not?
I tell people that the gold/oil ratio is the way to think of oil prices, because the dollar (or any fiat currency) is not a good reference.
Ditching the gold standard was a move in the same vein as tax withholding-- designed to empower the politicians at the expense of the people...
05-10-2006, 06:40 PM
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If we didn't ditch the gold standard, our growth would have been limited due to the limited amount of gold.....If we had stuck to gold while all other large economies broke away to embrace growth we sure wouldn't be where we are today. Change is a good thing fella's, especially if you understand the intricate details of macro and micro economics....
05-10-2006, 08:25 PM
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GMA admited this morning that "big bad oil" isn't the only ones making record profits.
Oh well, we keep selling tools so the drillers can keep turning to the right.
Oh well, we keep selling tools so the drillers can keep turning to the right.
05-10-2006, 08:37 PM
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Originally Posted by B.A.Ram
If we didn't ditch the gold standard, our growth would have been limited due to the limited amount of gold.....If we had stuck to gold while all other large economies broke away to embrace growth we sure wouldn't be where we are today. Change is a good thing fella's, especially if you understand the intricate details of macro and micro economics....
The Keynesian ideas of priming the pump is simply a method whereby the issuers of a currency can steal from the people who hold paper currency assets.
A gold standard with a free market in banking would not only eliminate the outright theft but it would also lower interest rates because a large part of the interest required is to cover the built in inflation of the underlying currency.
The idea that there isn't enough gold is silly because prices will always adjust according to the supply of goods and the supply of money. Progress is done by people who produce things out of sweat and investment. The Keynesian system of fiat currency benefits the first recipients of the new currency, namely the bankers, the most then the benefits become progressively lower until the poor schlump who is counting on his savings or a social security/pension check takes it in the wazoo because of the higher prices being bid up by the increase in the supply of money.
Edwin