Gold - Commodity or currency?

[scose-no-doubt]

an imaginary unit of gdp with an unfixed value

 

[Atilla]

an imaginary unit of gdp with an unfixed value

Oh right crystal clear... as light of day...

 

[coachdiana]

informative indeed.. =) For me gold is money as well... because there's value within itself

 

[Zod]

What is money?

Something that has no liability.

Do you live in the UK? Take a look at any Sterling note, at the top, it says "I promise to pay the bearer the sum of..."

Currency is a promise
Money is power

 

[scose-no-doubt]

Get real man. Only crackpots theoriests talk about barter trade alternatives.

Actually there are hella blue chips out there do mega mega bartering as it can be outside the scope of local and import/export taxes. Remember reading a paper on it when trying to swerve VAT for one of my clients who deals with outside EEC.
Apparently, China is really into it.

 

[scose-no-doubt]

an imaginary unit of gdp with an unfixed value

well... in real terms, not on face value.

You know what I'm getting at.

 

[new_trader]

Something that has no liability.

Do you live in the UK? Take a look at any Sterling note, at the top, it says "I promise to pay the bearer the sum of..."

Currency is a promise
Money is power

No liability? That isn't a very good definition at all. It has to have many qualities to be money such as; Accepted as a settlement for debt or exchangeable for goods and services, durable, portable and a store of value to name a few. Gold meets all of these requirements.

 

[Atilla]

Something that has no liability.

Do you live in the UK? Take a look at any Sterling note, at the top, it says "I promise to pay the bearer the sum of..."

Currency is a promise
Money is power

So what do you do to your friend when you lend him money he chooses not to pay it back?

Who has power? Him or you? I guess as he has your money he has power over you?

I live on planet pluto? Where are you from?

 

[Atilla]

http://www.haaretz.com/news/diploma...tined-for-syria-to-sail-through-suez-1.343791

Time to start loading some gold I guess.

No good can possibly come out of this...

 

[danielfisher]

Hi,
I think the gold price has greatly effected ever since the coins are replaced by paper money. It was decided many years back all the currency of a country should be back up gold but i am afraid this is not practiced by any country of the world now.....
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For beautiful gold sovereign coins : Sovereign coins and Sell Sovereigns.

 

[TheBramble]

Give it time.

 

[new_trader]

Hi,
I think the gold price has greatly effected ever since the coins are replaced by paper money. It was decided many years back all the currency of a country should be back up gold but i am afraid this is not practiced by any country of the world now.....

Yes, only a moron could think abandoning a gold standard is sensible.

Yeah of course we're all in the habit of going around buying commods with nuggits.

I mean just how much nonsense can you come out with ffs.

 

[Martinghoul]

While the gold standard has some clear advantages, it also has some very serious flaws. Its flaws make its use completely impractical in the modern economy, which means that all its putative advantages are meaningless. In short, the gold standard is a dream.

 

[new_trader]

While the gold standard has some clear advantages, it also has some very serious flaws. Its flaws make its use completely impractical in the modern economy, which means that all its putative advantages are meaningless. In short, the gold standard is a dream.

America grew to become an economic and military superpower while it was on a full gold standard so do you care to elaborate on the serious flaws which make it completely impractical? Economics is economics, 'modern' economists seem to forget this fact.

 

[Martinghoul]

Care to elaborate on the serious flaws which make it completely impractical? Economics is economics, 'modern' economists seem to forget this fact.

It works for a given economy if and only if all its trading partners promise to play by the same rules, i.e. promise to follow the gold standard. Otherwise, the best, most optimistic outcome is that the first guy to adopt it gives up a massive short-term competitive advantage. The worst case is that you''ll be potentially allowing a nefarious competitor to cripple your domestic economy with relatively little effort.

As to you example of America, it's a bit fallacious. All sorts of empires rose and fell throughout history. Is that all because of the gold standard?

 

[new_trader]

It works for a given economy if and only if all its trading partners promise to play by the same rules, i.e. promise to follow the gold standard.

The USA was one of the few countries to remain on a gold standard after WW1 and that is one of the reasons it's curency became the Reserve currency, it was "As good as gold"

Otherwise, the best, most optimistic outcome is that the first guy to adopt it gives up a massive short-term competitive advantage. The worst case is that you''ll be potentially allowing a nefarious competitor to cripple your domestic economy with relatively little effort.

What competitive advantage is given up? Can you give examples?

As to you example of America, it's a bit fallacious. All sorts of empires rose and fell throughout history. Is that all because of the gold standard?

So are Greece, Ireland, Italy, Portugal, Iceland (to name a few) examples of modern economics? Empires rose and fell generally due to mismanagement of their leaders and currency debasement was a large contributing factor. America will go the same way in much shorter time, the Roman empire lasted for well over 500 years. China is set to overtake the USA within the next 5-10 years.

 

[new_trader]

One last fact, you will often hear Jim Rogers say this: Up until 1980, America was the largest creditor nation in the world, now it is the largest debtor nation in the history of the world. It went off the gold standard in 1971, are you suggesting that all it's economic growth occurred within those 9 years? It's clear the decline occurred since it left the gold standard. I'm not suggesting that it's the only reason for the decline, but the evidence is overwhelming.

 

[Martinghoul]

The USA was one of the few countries to remain on a gold standard after WW1 and that is one of the reasons it's curency became the Reserve currency, it was "As good as gold"

Well, unless you care to offer some facts, this is just you coming up with random causal links. USA was virtually the only industrialized country whose economy wasn't utterly ravaged by war. So I would suggest that USD becoming the reserve ccy had nothing to do with the gold standard, but was due to the US being the one man left standing. Obviously, in such a case what other choice for a reserve ccy do you have, gold standard or not?

What competitive advantage is given up? Can you give examples?

It's very simple... The ability to increase money supply when the situation calls for it is a massive advantage. Why do you think the Chinese have been kickin' ass for the past couple of decades? It sure ain't 'cause they're on the gold standard. A directed command economy allows them to very easily turn the taps on and off, which is an extreme example of the sort of competitive advantage I am referring to.

So are Greece, Ireland, Italy, Portugal, Iceland (to name a few) examples of modern economics? Empires rose and fell generally due to mismanagement of their leaders and currency debasement was a large contributing factor. America will go the same way in much shorter time, the Roman empire lasted for well over 500 years. China is set to overtake the USA within the next 5-10 years.

So what is your point precisely here? Mismanagement, misallocation of resources, etc is, unfortunately, our reality, given how our society is organized. And yes, some of the excesses result from the moral hazard that is sorta inherent in fiat money. But so what? To pretend that the gold standard is the silver bullet (pun sorta intended) that makes it all go away is just plain irrational and escapist.

 

[TheBramble]

NT - check your history. You're treating Bretton Woods as if it were THE Gold Standard. It wasn't.

If it had been, Charles de Gaulle and Vietnam would not have done for them.

 

[Martinghoul]

One last fact, you will often hear Jim Rogers say this: Up until 1980, America was the largest creditor nation in the world, now it is the largest debtor nation in the history of the world. It went off the gold standard in 1971, are you suggesting that all it's economic growth occurred within those 9 years? It's clear the decline occurred since it left the gold standard. I'm not suggesting that it's the only reason for the decline, but the evidence is overwhelming.

What evidence? You keep confusing simultaneity and causality. I suggest to you that what happened to the US had nothing to do with the gold standard and everything to do with China and its policies. Happened arnd the same time, so works about as well as your suggestion.