Gold - Commodity or currency?

[Martinghoul]

I too would be interested. If you could provide the ISIN code will aim to do some look ups and follow it through.

Will this be a live trade that you will be taking or an example?

Well, if not live, then recent, for sure... We can look at bonds, but, as I suggested, why don't we look at some stuff in futures, since that mkt offers a bit more of a common ground.

 

[new_trader]

Huh? You're not making any sense here, man... Really, just think a tiny bit about the argument I have made and you will hopefully understand my point (it's quite simple). Then you might realize that posting more videos of people saying things on TV is, how do I say it, rather silly.

None of your argument against the gold standard have made sense, and now I know why: “ [You] have been an active participant in the areas of financial mkt that embody the particular aspects of the modern monetary system that we have been discussing”.

You must have studied at the same school of modern economics as Ben Bernanke and Alan Greenspan.

 

[Atilla]

None of your argument against the gold standard have made sense, and now I know why: “ [You] have been an active participant in the areas of financial mkt that embody the particular aspects of the modern monetary system that we have been discussing”.

You must have studied at the same school of modern economics as Ben Bernanke and Alan Greenspan.

Hi guys,

I think somebody had recommended this book on these threads a while back and currently reading it with great interest.

http://www.amazon.co.uk/House-Cards...9590/ref=sr_1_7?ie=UTF8&qid=1309077112&sr=8-7

There are lots of interesting observations and the book is really well written and very engaging. Almost like a novel. You get to view the markets, the characters and sort of snippets of the back ground events that led to it all.

Perhaps no related to gold thread but NT when you say Modern economics it made me think.

Economics since the start of time is pretty straight forward and old fashioned exchange of goods really. But man's inventiveness in producing stuff and justifying it to him self is amazing.

I mean Credit Derivatives - in fact any derivative is effectively a game of 2nd life. To think man spends billions playing a game of 2nd life is ABSOLUTELY SHOCKING and is the most rewarded business and pass times on the planet.

I think I need to take a cold shower... :help::help::help:

 

[new_trader]

Economics since the start of time is pretty straight forward and old fashioned exchange of goods really. But man's inventiveness in producing stuff and justifying it to him self is amazing.

You got it in one Atilla. Only a modern economist can take something simple and complicate it beyond recognition and render it useless. Commerce has been around for centuries so how can any thinking adult subscribe to the ‘modern monetary’ nonsense! Economics is common-sense, not something that needs to be drowned in trumped up highbrow theories and formulas.

http://www.goldstandardsolution.com/why-now/

Government spending tends to grow as long as there is money to spend, and our massive deficits show that government borrowing will expand as long as money is freely available. Moving U.S. currency to the gold standard would put a leash on Congress, restricting its ability to borrow and borrow without end.

As America spends more and more money—billions on bank bailouts, trillions on new health care entitlements—it’s fair to ask where all that money is coming from.

Our government is borrowing more and more money from investors and foreign countries. When these lenders turn the spigot off, as they eventually must, we could be forced to “monetize” our debt by printing more and more money.

Even if politicians proposed raising taxes to settle our national debt, they couldn’t possibly raise $14 trillion in the process. And it certainly doesn’t look like the U.S. government is poised to start spending less. We’re continuing to spend money that we don’t have.

Eventually, something will have to stabilize all that economic pressure. The longer we wait, the more dire the consequences will become.

We could see hyperinflation. The African nation of Zimbabwe recently saw inflation soar by more than 231 million percent. Zimbabwe’s paper money was literally not worth the paper it was printed on. This sort of hyperinflation occurs when a monetary unit loses its stability.

“Regular” inflation is more likely than hyperinflation, but it’s nothing to sneer at. Inflation destroys wealth, and is especially devastating for those who have saved their money for retirement. We’ve seen what inflation can do to the U.S. dollar over the last forty years: Since leaving the gold standard, the dollar has dropped in value by 72 percent compared to the euro and 75 percent compared to the Japanese yen.

Returning to the gold standard would limit the amount of inflation that could occur because the government would no longer be able to increase the supply of currency on a whim, or based on the decision of a few people at the Federal Reserve.

 

[Martinghoul]

None of your argument against the gold standard have made sense, and now I know why: “ [You] have been an active participant in the areas of financial mkt that embody the particular aspects of the modern monetary system that we have been discussing”.

You must have studied at the same school of modern economics as Ben Bernanke and Alan Greenspan.

Hahaha, you're a funny guy and I guess I'll have to take your Bernanke/Greenspan comment as compliment. You haven't actually heard anything I said, have you?

Let's try to approach this from another angle. What argument/proof/evidence will you need me to provide in order to convince you that the gold standard is NOT a viable solution for modern economies?

 

[Martinghoul]

Economics since the start of time is pretty straight forward and old fashioned exchange of goods really. But man's inventiveness in producing stuff and justifying it to him self is amazing.

Indeed... How far back do you propose to go? Good old bartering? Do you think progress in the field of economics has outpaced progress in, say, electronics? I mean computers are pretty complicated things and so is the Internet. The latter has given us nasty things like computer viruses and piracy. Does that mean we need to go back to carrier pigeons?

I mean Credit Derivatives - in fact any derivative is effectively a game of 2nd life. To think man spends billions playing a game of 2nd life is ABSOLUTELY SHOCKING and is the most rewarded business and pass times on the planet.

Well, futures are derivatives. So are options and other things that we now take for granted. The problem with credit derivatives (CDS, etc) wasn't the fact that they were derivatives, but rather that they were traded in a poorly organized mkt. The other problem with the whole setup is, of course, TBTF.

 

[Atilla]

You got it in one Atilla. Only a modern economist can take something simple and complicate it beyond recognition and render it useless. Commerce has been around for centuries so how can any thinking adult subscribe to the ‘modern monetary’ nonsense! Economics is common-sense, not something that needs to be drowned in trumped up highbrow theories and formulas.

http://www.goldstandardsolution.com/why-now/

Government spending tends to grow as long as there is money to spend, and our massive deficits show that government borrowing will expand as long as money is freely available. Moving U.S. currency to the gold standard would put a leash on Congress, restricting its ability to borrow and borrow without end.

As America spends more and more money—billions on bank bailouts, trillions on new health care entitlements—it’s fair to ask where all that money is coming from.

Our government is borrowing more and more money from investors and foreign countries. When these lenders turn the spigot off, as they eventually must, we could be forced to “monetize” our debt by printing more and more money.

Even if politicians proposed raising taxes to settle our national debt, they couldn’t possibly raise $14 trillion in the process. And it certainly doesn’t look like the U.S. government is poised to start spending less. We’re continuing to spend money that we don’t have.

Eventually, something will have to stabilize all that economic pressure. The longer we wait, the more dire the consequences will become.

We could see hyperinflation. The African nation of Zimbabwe recently saw inflation soar by more than 231 million percent. Zimbabwe’s paper money was literally not worth the paper it was printed on. This sort of hyperinflation occurs when a monetary unit loses its stability.

“Regular” inflation is more likely than hyperinflation, but it’s nothing to sneer at. Inflation destroys wealth, and is especially devastating for those who have saved their money for retirement. We’ve seen what inflation can do to the U.S. dollar over the last forty years: Since leaving the gold standard, the dollar has dropped in value by 72 percent compared to the euro and 75 percent compared to the Japanese yen.

Returning to the gold standard would limit the amount of inflation that could occur because the government would no longer be able to increase the supply of currency on a whim, or based on the decision of a few people at the Federal Reserve.

Well dear NT, I concur with your point of view as you know and to me it makes perfect sense.

I also believe it will eventually be established as the last 50 years will be deemed to be wreckless human folly with economics. I'd give it another 5-10 years for serious considerations to take place.

I also think there is a possibility World Wars will errupt and power dynamics shift as people will claim what is rightfully theirs. Let's hope not but may eventually be the only course open to people to settle balance sheet.

 

[new_trader]

Hahaha, you're a funny guy and I guess I'll have to take your Bernanke/Greenspan comment as compliment. You haven't actually heard anything I said, have you?

Let's try to approach this from another angle. What argument/proof/evidence will you need me to provide in order to convince you that the gold standard is NOT a viable solution for modern economies?

You’ve got to be joking, right? I can see with my own eyes what has happened in the last 30 years. The USA, UK, Greece, Portugal, Spain, Ireland etc...the global monetary system is on the brink of collapse and you think you have something to prove...I’m definitely not the funny guy.

I studied economics and I understand the principles of sound money and this is why I am buying gold but I can’t figure out why you are.

 

[new_trader]

Indeed... How far back do you propose to go? Good old bartering?

International trade IS bartering, do you think it isn't? Why does a country export its excess production? Do think it is to earn promissory notes? Besides, this argument has nothing to do with a gold standard because gold IS money, but it is money with intrinsic value.

 

[Martinghoul]

You’ve got to be joking, right? I can see with my own eyes what has happened in the last 30 years. The USA, UK, Greece, Portugal, Spain, Ireland etc...the global monetary system is on the brink of collapse and you think you have something to prove...I’m definitely not the funny guy.

I studied economics and I understand the principles of sound money and this is why I am buying gold but I can’t figure out why you are.

Good lord, I don't think I can handle so much drama. Moreover, given that we're both engaged in this discussion, wouldn't you say you have just as much to prove as myself? As to why I have bought gold, it's really quite simple and I have mentioned it a number of times. It's diversification.

At any rate, could you kindly answer my question above?

International trade IS bartering, do you think it isn't? Why does a country export its excess production? Do think it is to earn promissory notes? Besides, this argument has nothing to do with a gold standard because gold IS money, but it is money with intrinsic value.

International trade is NOT bartering. International trade uses a medium of exchange and, more importantly, it uses a whole variety of forms of credit. Did you say you studied economics?

 

[Atilla]

International trade is NOT bartering. International trade uses a medium of exchange and, more importantly, it uses a whole variety of forms of credit.

ehemm - International trade is the exchange of goods and services where one country / party has a comparitive advantage over another and by specialising, production and consumption can be maximised.

The medium of exchange and all that stuff is just transaction cost of doing business. Locally or internationally - they are simply transaction costs along with search/contracts/banks/legal tender exchange etc etc...

Medium of Exchange and forms of credit are NOT international trade!

 

[Martinghoul]

ehemm - International trade is the exchange of goods and services where one country / party has a comparitive advantage over another and by specialising, production and consumption can be maximised.

The medium of exchange and all that stuff is just transaction cost of doing business. Locally or internationally - they are simply transaction costs along with search/contracts/banks/legal tender exchange etc etc...

Medium of Exchange and forms of credit are NOT international trade!

Good lord, you guys are confused...

Barter is DEFINED as a form of trade where goods and services are exchanged directly for other goods and services, without the use of a medium of exchange, such as money. This means that most, if not all, modern trade (international or otherwise) isn't barter, BY DEFINITION.

 

[Atilla]

Good lord, you guys are confused...

Barter is DEFINED as a form of trade where goods and services are exchanged directly for other goods and services, without the use of a medium of exchange, such as money. This means that most, if not all, modern trade (international or otherwise) isn't barter, BY DEFINITION.

Playing at word games now...

Referring back to your comments below you seem to think;

Medium of Exchange and forms of credit are international trade!


Would this be a correct conclusion to draw from your blog previously?

I think we should go back to our mutual agreements as I'm getting confused with all these blogs.


As with Mr Dash, still would be very interested in how you exercise one of your trades.

 

[new_trader]

Good lord, you guys are confused...

Barter is DEFINED as a form of trade where goods and services are exchanged directly for other goods and services, without the use of a medium of exchange, such as money. This means that most, if not all, modern trade (international or otherwise) isn't barter, BY DEFINITION.

No, YOU are confused. The reason the $US became the reserve currency was because it was convertible to gold, so the paper was AS GOOD AS GOLD! Countries were not giving their production to the USA in exchange for a promissory note (as they do now), back then it was an entitlement to gold. So it was the equivalent to barter, exchanging manufactured goods for money with INTRINSIC value. The USA defaulted on its obligations when Nixon removed the convertibility in 1971.

If a country can simply print money that has no intrinsic value, why would anyone trade with them? It doesn't make sense at all. Think of an island nation that wants to import widgets manufactured in China. According to you, all the island nation has to do is simply rip some bark off a tree, write some numbers on it, declare it legal tender then send it to China and expect manufactured widgets in return. Would you send your manufactured goods to the island nation in return for bits of bark with numbers on it? No sane person would!

Do you honestly believe that because the USA can PRINT the reserve currency that it has the right to consume what the world produces?

If you were selling your car for £5000- and someone turned up with a piece of paper and wrote "I owe you £5000" on it, would you give them your car?

If someone turned up with 5 ounces of gold (that you assayed to be sure) would you give them your car?

Do you see the difference between money with intrinsic value and a promissory note?

 

[Martinghoul]

Playing at word games now...

Referring back to your comments below you seem to think;

Medium of Exchange and forms of credit are international trade!


Would this be a correct conclusion to draw from your blog previously?

Huh? What word games? Where did I say that "medium of exchange IS world trade"? Here's what I did say:

International trade is NOT bartering. International trade uses a medium of exchange and, more importantly, it uses a whole variety of forms of credit.

Yet again, my point (which I have now repeated three times, I think) is simply that, because a medium of exchange is used in modern trade, it cannot be called "barter", by definition. I am not really sure just how much clearer I could be.

 

[Martinghoul]

No, YOU are confused. The reason the $US became the reserve currency was because it was convertible to gold, so the paper was AS GOOD AS GOLD! Countries were not giving their production to the USA in exchange for a promissory note (as they do now), back then it was an entitlement to gold. So it was the equivalent to barter, exchanging manufactured goods for money with INTRINSIC value. The USA defaulted on its obligations when Nixon removed the convertibility in 1971.

If a country can simply print money that has no intrinsic value, why would anyone trade with them? It doesn't make sense at all. Think of an island nation that wants to import widgets manufactured in China. According to you, all the island nation has to do is simply rip some bark off a tree, write some numbers on it, declare it legal tender then send it to China and expect manufactured widgets in return. Would you send your manufactured goods to the island nation in return for bits of bark with numbers on it? No sane person would!

Do you honestly believe that because the USA can PRINT the reserve currency that it has the right to consume what the world produces?

If you were selling your car for £5000- and someone turned up with a piece of paper and wrote "I owe you £5000" on it, would you give them your car?

If someone turned up with 5 ounces of gold (that you assayed to be sure) would you give them your car?

Do you see the difference between money with intrinsic value and a promissory note?

Huh? While I could respond to this, there is really no point. Moreover, what does this have to do with you not knowing the "definition" of barter?

At any rate, I refuse to respond to you further until you answer the simple question that I have posed earlier. Let me reiterate:
What argument/evidence/proof will convince you that the gold standard is not a viable arrangement for modern economies?

 

[new_trader]

Huh? While I could respond to this, there is really no point. Moreover, what does this have to do with you not knowing the "definition" of barter?

At any rate, I refuse to respond to you further until you answer the simple question that I have posed earlier. Let me reiterate:
What argument/evidence/proof will convince you that the gold standard is not a viable arrangement for modern economies?

Define 'modern' economy.

 

[Martinghoul]

Define 'modern' economy.

Modern = contemporary... I mean actual existing economies of today, both DM and EM.

 

[new_trader]

Modern = contemporary... I mean actual existing economies of today, both DM and EM.

OK, more specifically- Apart from the goods produced, what makes a modern economy today different to 100 years ago?

 

[counter_violent]

I can't take any more of this thread....Sheesh theres some fick people about !