Bring back the Gold Standard?

[Intense]

You're the fucking fool.

The price of gold would market clear based on the actual amount of gold held by the government, which we have no fucking idea of right now because they won't audit and SHOW US.

Whatever the price of gold becomes, is what it becomes. That now becomes the money. If 1oz of gold is $100,000, then a 1oz gold coin is $100,000 to spend. Obviously people aren't going to carry around $100,000 with them in one coin, so gold certificates are created to denominate lower values for the purpose of everyday spending.

I don't know why that's hard for you to understand, other than you're a fucking retard and don't know jack shit about any of this beyond some wiki article you just read, where you looked for the "criticisms" section and it told you what you wanted to hear.

Seriously, go to another thread. This one is SOOOO above your pay grade.

What you keep refusing to take into consideration is the manipulation of the worlds gold market after the fact.

Why do you keep doing that?

Manipulation of the world's gold market?

That's your argument?

Wake the fuck up honey, EVERYTHING is manipulated in this world. Nothing is sacred.

Least of all, fiat currency MANIPULATED by the Federal Reserve.

Play Money.

 

[loosecannon]

Maybe Zeollick's suggestion going to a gold standard was just his way of saying the USD is toast.....

...next step... a new world currency....?

That won't happen.

It may be that reserve currency managers increase the amount of gold and silver they own as well as other currencies while still having the dollar as the main reserve currency. There is nothing out there that can replace the dollar, at least at the moment.

Special Drawing Rights - Wikipedia, the free encyclopedia

Special Drawing Rights (SDRs) are international foreign exchange reserve assets.[1] Allocated to nations by the International Monetary Fund (IMF), a SDR represents a claim to foreign currencies for which it may be exchanged in times of need.[1]

Today, the US Dollar is the world's primary foreign exchange reserve asset,[2][3][4] and SDRs may be little used.[5] Some nations, notably China and Russia (as well as the UN[2]), favor increasing the substance and function of the SDR.[6][7]

Although denominated in US dollars, the nominal value of an SDR is derived from a basket of currencies; specifically, a fixed amount of Japanese Yen, US Dollars, British Pounds and Euros.[1]

SDRs are the International Monetary Fund's unit of account[1] and are denoted with the ISO 4217 currency code XDR.....

When Special Drawing Rights were created in 1969 one SDR was defined as having a value of 0.888671 grams of gold, the value of one US dollar at that time.[1] After the breakdown of the Bretton Woods system in the early 1970s, the SDR was redefined in terms of a basket of currencies.

 

[loosecannon]

The US does NOT and never will control the worlds entire gold supply you fucking fool

That doesn't matter, Zoellick was proposing a GLOBAL gold back currency system. China and Russia have been advocating the same for several years and the IMF has toyed with launching one.

I don't advocate that. I advocate each sovereign nation maintain its own currency standards.

No more globalized currency system.

But the best system of all was the dollar reserve system managed by the IMF and the BIS from 45-71. If you don't have a global clearing house for currencies even those backed by gold, you do get poor nations gaming the system to siphon off wealthy nations wealth and you get currency manipulation like that of today.

Zoellick's intention is to address those probs.

The strongest economic force that created the series of wars that culminated in the two great wars was currency manipulation. The IMF solved that problem, and ended those wars, by acting as an authority over exchange rates.

 

[Toro]

Maybe Zeollick's suggestion going to a gold standard was just his way of saying the USD is toast.....

...next step... a new world currency....?

That won't happen.

It may be that reserve currency managers increase the amount of gold and silver they own as well as other currencies while still having the dollar as the main reserve currency. There is nothing out there that can replace the dollar, at least at the moment.

Special Drawing Rights - Wikipedia, the free encyclopedia

Special Drawing Rights (SDRs) are international foreign exchange reserve assets.[1] Allocated to nations by the International Monetary Fund (IMF), a SDR represents a claim to foreign currencies for which it may be exchanged in times of need.[1]

Today, the US Dollar is the world's primary foreign exchange reserve asset,[2][3][4] and SDRs may be little used.[5] Some nations, notably China and Russia (as well as the UN[2]), favor increasing the substance and function of the SDR.[6][7]

Although denominated in US dollars, the nominal value of an SDR is derived from a basket of currencies; specifically, a fixed amount of Japanese Yen, US Dollars, British Pounds and Euros.[1]

SDRs are the International Monetary Fund's unit of account[1] and are denoted with the ISO 4217 currency code XDR.....

When Special Drawing Rights were created in 1969 one SDR was defined as having a value of 0.888671 grams of gold, the value of one US dollar at that time.[1] After the breakdown of the Bretton Woods system in the early 1970s, the SDR was redefined in terms of a basket of currencies.

The SDR is just a derivative of other currencies. The fund managers can replicate it by buying in proportion the weights of the SDR on their own. They don't need the IMF to do that.

 

[uscitizen]

If gold went to 100,000/oz you would pay dearly for it.
Gold also has many industrial uses. Microchips and electronics for example.
A double whammy on those products.

 

[loosecannon]

That won't happen.

It may be that reserve currency managers increase the amount of gold and silver they own as well as other currencies while still having the dollar as the main reserve currency. There is nothing out there that can replace the dollar, at least at the moment.

Special Drawing Rights - Wikipedia, the free encyclopedia

Special Drawing Rights (SDRs) are international foreign exchange reserve assets.[1] Allocated to nations by the International Monetary Fund (IMF), a SDR represents a claim to foreign currencies for which it may be exchanged in times of need.[1]

Today, the US Dollar is the world's primary foreign exchange reserve asset,[2][3][4] and SDRs may be little used.[5] Some nations, notably China and Russia (as well as the UN[2]), favor increasing the substance and function of the SDR.[6][7]

Although denominated in US dollars, the nominal value of an SDR is derived from a basket of currencies; specifically, a fixed amount of Japanese Yen, US Dollars, British Pounds and Euros.[1]

SDRs are the International Monetary Fund's unit of account[1] and are denoted with the ISO 4217 currency code XDR.....

When Special Drawing Rights were created in 1969 one SDR was defined as having a value of 0.888671 grams of gold, the value of one US dollar at that time.[1] After the breakdown of the Bretton Woods system in the early 1970s, the SDR was redefined in terms of a basket of currencies.

The SDR is just a derivative of other currencies. The fund managers can replicate it by buying in proportion the weights of the SDR on their own. They don't need the IMF to do that.

But it began in 69 as a fractional reserve gold currency of sorts. Last sentence in the quote above.

So if you simply reinstated gold as backing for SDR wallah!

 

[konradv]

Gold certificates would be printed on the supply of the actual gold as well, so people wouldn't actually have to carry around 1/100,000th of an ounce of gold around with them to spend $1.

If certificates are on the actual supply of gold, wouldn't that severely constrain the amount of money in circulation? Even when we were on the gold standard there was a multiple of the actual gold value printed as notes. Wasn't that also "fiat money", since the majority wasn't covered by actual gold?

It is called fractional reserve not fiat, fiat money has no backing except the authority and credit of the state.

Fractional reserve gold currency is the historic standard. It allows multiplication of the money supply usually 10 times the value of the volume of gold in existence, or about $54 trillion today for the whole world.

If you needed to you could slide that reserve ratio around within limits to dampen inflationary and deflationary trends.

It would be far easier than out Fed interest rate targeting.

But you're talking 10% backing vs 0%. I don't see that as anything but 90% fiat money. Calling it "fractional reserve" seems to be a distinction without a difference.

 

[loosecannon]

Gold certificates would be printed on the supply of the actual gold as well, so people wouldn't actually have to carry around 1/100,000th of an ounce of gold around with them to spend $1.

If certificates are on the actual supply of gold, wouldn't that severely constrain the amount of money in circulation? Even when we were on the gold standard there was a multiple of the actual gold value printed as notes. Wasn't that also "fiat money", since the majority wasn't covered by actual gold?

It is called fractional reserve not fiat, fiat money has no backing except the authority and credit of the state.

Fractional reserve gold currency is the historic standard. It allows multiplication of the money supply usually 10 times the value of the volume of gold in existence, or about $54 trillion today for the whole world.

If you needed to you could slide that reserve ratio around within limits to dampen inflationary and deflationary trends.

It would be far easier than out Fed interest rate targeting.

But you're talking 10% backing vs 0%. I don't see that as anything but 90% fiat money. Calling it "fractional reserve" seems to be a distinction without a difference.

To you but it is an established 1000 year old practice. In fact that is how paper money was invented. With a 10% reserve ratio banks can withstand considerable runs while continuing to honor all depositors withdrawals with actual gold secure in the knowledge that after the run subsides people would still rather keep their gold in a vault then under the tomato plants in the back yard.

And fiat currency is defined as currency valued by "fiat" or declaration. It has no backing at all.

There is a difference: a 10% gold backing will maintain the steady value of money whereas all fiat systems eventually fail completely.

Besides the world will have trouble getting by with only $5.4 trillion in circulation worldwide. Not enough currency to perform necessary transactions.

 

[Paulie]

It is called fractional reserve not fiat, fiat money has no backing except the authority and credit of the state.

Fractional reserve gold currency is the historic standard. It allows multiplication of the money supply usually 10 times the value of the volume of gold in existence, or about $54 trillion today for the whole world.

If you needed to you could slide that reserve ratio around within limits to dampen inflationary and deflationary trends.

It would be far easier than out Fed interest rate targeting.

But you're talking 10% backing vs 0%. I don't see that as anything but 90% fiat money. Calling it "fractional reserve" seems to be a distinction without a difference.

To you but it is an established 1000 year old practice. In fact that is how paper money was invented. With a 10% reserve ratio banks can withstand considerable runs while continuing to honor all depositors withdrawals with actual gold secure in the knowledge that after the run subsides people would still rather keep their gold in a vault then under the tomato plants in the back yard.

And fiat currency is defined as currency valued by "fiat" or declaration. It has no backing at all.

There is a difference: a 10% gold backing will maintain the steady value of money whereas all fiat systems eventually fail completely.

Besides the world will have trouble getting by with only $5.4 trillion in circulation worldwide. Not enough currency to perform necessary transactions.

Where are you getting 5.4 trillion from, just out of curiosity?

And just for the sake of argument, 5.4 trillion worldwide would be fine when you consider that prices of goods and services would correct to meet that supply.

It would be a shock for a while, but people would adjust.

The Fed doesn't have any problem doubling the money supply during one single FOMC meeting, and life goes on.

I think people can adapt to a supply DELATION as well.

 

[loosecannon]

the wiki article said that the volume of gold ever mined was equal to $5.4 trillion today.

deflation can easily be catastrophic with a debt based currency. I have would have to think about it quite awhile before I would believe that deflation would not be an issue with a static money supply. But at the very least the price of gold would have to adjust up toward $10K/to in order for the gold volume to match what the world currently needs to fulfill essential transactions.

Silver on the other hand is more plentiful and ideally currencies would be backed by land. But durable currency vs currencies that need constant replenishment is a step up. Even fractional backing for gold results in a durable currency.

 

[william the wie]

Kinda disastrous I would think since we only have enough gold to cover a very small fraction of our currency in circulation.

Gold would go to about $100,000/ounce

That would be great!

The biggest problem with the gold standard is that it is inflexible and doesn't accommodate the ebbs and flows of the economy over anything other than the very long run. It can constrain credit when it is most in need of being eased, and vice-versa. Plus, you are effectively putting monetary policy in the hands of mining executives, a group that has historically been very poor managers.

But then again, we may be witnessing the breakdown of the fiat currency system as we know it. Fiat money hasn't covered itself in glory over the past decade.

I think the L-5 society archives may be online if you want to do your own modeling but the gold market is why I put up the thread on private launch companies. Refining metals in space requires material capture at LaGrange points, mirrors to concentrate sunlight, low spin and magnets. Marginal costs are close to zero so an effectively unlimited supply of gold is in our future. I am trying to figure out how to profit from that.

 

[loosecannon]

I think the L-5 society archives may be online if you want to do your own modeling but the gold market is why I put up the thread on private launch companies. Refining metals in space requires material capture at LaGrange points, mirrors to concentrate sunlight, low spin and magnets. Marginal costs are close to zero so an effectively unlimited supply of gold is in our future. I am trying to figure out how to profit from that.

There is practically an infinite supply of gold in seawater too, but it costs more to refine it than it is worth, so far. But when that threshold is reached that's as high as the price of gold will ever soar.

What are LaGrande points? It sounds as if you are describing a combination solar heater and centrifuge. How will that separate gold from material captured at LaGrande points?

Ok I looked it up but didn't find anything about gold or other minerals to capture at Lagrangian points. Tho if there is material located there it would likely stay there quite a while in free orbit.

I would be willing to bet that it will cost a whole lot less to separate gold from sea water than to refine gold in deep space. In fact if the price of gold is gonna stay in this realm for several years it might be a "gold mine" of a business opportunity. And you might be able to use a centrifuge to do it. And there are lots and lots of other metals you could gather the same way including most of the rare earth minerals plus cobalt, chrome, platinum, paladium, silver etc.

I would be down to talk seriously about involvement in a project of that kind. And I know how to get free energy from the sea to power that kind of operation.

 

[william the wie]

Both sea and space produce precious metals as a byproduct but with two huge differences:

Main products: fresh water vs. ferrous metals, hydrocarbons and pure silicon that are higher value than the byproducts of desalinization.

The main products can have much higher value added due to much lower gravity in space.

As to throughput several mega tonnes of asteroids, meteors and comets can be captured each year in space. Using comet gases and liquids to create foam lowers weight by 90% but strength by only 10% to make reentry vehicles and tethered satellites can reduce relative orbital velocity to zero. With desalinization the refined salts have to be added back to the excess water to maintain the biosphere but there is no biosphere in space. The main constraints on space industrialization is the orbital junk regions and the relatively small LaGrange regions which contain a sizable fraction of the Earth's volume.

 

[Toro]

the wiki article said that the volume of gold ever mined was equal to $5.4 trillion today.

deflation can easily be catastrophic with a debt based currency. I have would have to think about it quite awhile before I would believe that deflation would not be an issue with a static money supply. But at the very least the price of gold would have to adjust up toward $10K/to in order for the gold volume to match what the world currently needs to fulfill essential transactions.

Silver on the other hand is more plentiful and ideally currencies would be backed by land. But durable currency vs currencies that need constant replenishment is a step up. Even fractional backing for gold results in a durable currency.

The World Gold Council estimates that there are about 165,000 tons of gold in existence today, or 5.3 billion ounces. At $1400 an ounce, the total value of gold on the planet is thus about $7.4 trillion.

There is actually less silver than gold. It is estimated that there are only about 1 billion ounces of silver in the world today. Silver stocks have run down from something like 40 billion 60 years ago. At $27 an ounce, the total value of silver is $27 billion. Thus, the total value of gold is ~275x that of silver. Thus, when the price of precious metals goes bananas, silver has a much higher beta than gold because supply is so much lower and thus rises more. Over the past few months, silver has risen much faster than gold.

 

[loosecannon]

What % of the Earth's volume is marooned in the LaGrangian points? It can't be more than 1% and comets are mostly ice and gold is still a rare mineral.

 

[Toro]

What % of the Earth's volume is marooned in the LaGrangian points? It can't be more than 1% and comets are mostly ice and gold is still a rare mineral.

No idea.

 

[loosecannon]

The World Gold Council estimates that there are about 165,000 tons of gold in existence today, or 5.3 billion ounces. At $1400 an ounce, the total value of gold on the planet is thus about $7.4 trillion.

There is actually less silver than gold. It is estimated that there are only about 1 billion ounces of silver in the world today. Silver stocks have run down from something like 40 billion 60 years ago. At $27 an ounce, the total value of silver is $27 billion. Thus, the total value of gold is ~275x that of silver. Thus, when the price of precious metals goes bananas, silver has a much higher beta than gold because supply is so much lower and thus rises more. Over the past few months, silver has risen much faster than gold.

Thanks Toro.

I got $6.74 trillion since a troy ounce is 1/14.6 of a pound (.06842).

and silver is actually 25 times as abundant as gold ( Abundance of elements in Earth's crust - Wikipedia, the free encyclopedia ) but it's price doesn't drive extraction nearly as effectively as the price of gold drives gold extraction.

 

[william the wie]

Oops omitted the word metal in foam metal in my earlier post. But the use of foam metal and creation of "impossible" alloys was one of the really interesting results from skylab experiments.