What is money? Where does our money come from?

[barjon]

5% deposits bid to aid homebuyers - UK News - MSN News UK

The Government will stump up 5.5% of the value of a mortgage on a home worth up to £500,000 in England, while the housebuilder will put up 3.5% to help guarantee mortgage lenders against any losses and stimulate a wave of fresh lending.

The support of lenders is vital if the scheme is to succeed and there had been fears they would fail to put their weight behind it. It is hoped the initiative will not only help buyers struggling to raise the deposit required for a new home but will also create new work - and jobs - in the construction industry.


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Although the free market is clearly indicating that house prices are too high, the Government has decided it wants to create construction jobs and help the Banking industry by putting people into debt.

"Are there any other special interest groups that want money before we turn off the printing presses for the evening?"

Q.E.D!

ooh yes, and if we'd always allowed the free market to run in unfettered glory then there'd still be 12 year old kids slaving away for fourteen hours a day for nowt but a slice of bread.

I think I've had it with all you doomsters.

ah, the kingdom was lost
and all for the want of a horseshoe nail

well, I'm sorry, sire, but there weren't any gold ones.

 

[counter_violent]

ooh yes, and if we'd always allowed the free market to run in unfettered glory then there'd still be 12 year old kids slaving away for fourteen hours a day for nowt but a slice of bread.

I think I've had it with all you doomsters.

Never did me any harm !

 

[new_trader]

ooh yes, and if we'd always allowed the free market to run in unfettered glory then there'd still be 12 year old kids slaving away for fourteen hours a day for nowt but a slice of bread.

I think I've had it with all you doomsters.

ah, the kingdom was lost
and all for the want of a horseshoe nail

well, I'm sorry, sire, but there weren't any gold ones.

Yes Jon. Now all we need is for the Government to buy everyone a car, a boat, a holiday home and deposit £2million in their bank account and nobody would ever have to work again!

 

[barjon]

Yes Jon. Now all we need is for the Government to buy everyone a car, a boat, a holiday home and deposit £2million in their bank account and nobody would ever have to work again!

no, no, nt. I should have had all that but the thievin', bandit Government has stolen it all from me while I slept.

 

[barjon]

nt/ducky

Just to make it clear that I'm not seeking to make any sort of point in this post - I'm just curious.

The question I have is: How would we return to the Gold Standard if we wanted to do so?

So far as I know we've about £50 billion circulating and a couple of trillion in the accounts overall. In the vaults is about 300 tonnes or so (worth £14 billion) of gold (thanks, Gordon - smart move ).

How would it work? Would we just divi up the 300 tonnes into the couple of trillion (which would make the redemption promise on the notes look pretty sick - in effect saying "We promise to redeem this £ for something worth a few pennies") or what?

As I said, not trying to make any sort of point here. Just wondering whether it would be possible.

jon

 

[ducati998]

nt/ducky

Just to make it clear that I'm not seeking to make any sort of point in this post - I'm just curious.

The question I have is: How would we return to the Gold Standard if we wanted to do so?

So far as I know we've about £50 billion circulating and a couple of trillion in the accounts overall. In the vaults is about 300 tonnes or so (worth £14 billion) of gold (thanks, Gordon - smart move ).

How would it work? Would we just divi up the 300 tonnes into the couple of trillion (which would make the redemption promise on the notes look pretty sick - in effect saying "We promise to redeem this £ for something worth a few pennies") or what?

As I said, not trying to make any sort of point here. Just wondering whether it would be possible.

jon

Sure it would be possible.

All that is required is total the money supply. Divide that total money supply by your available gold.

The problems are really in defining what is your true total money supply. If you badly underestimate it, you will create an instant deflation, which would resolve over time, but would be a very brutal way to return to gold.

Far better to accept the current level of inflation, and include some dubious claims to money, which again over time will resolve anyway, and return to gold with the minimum of dislocations in the price system.

The problem would be if a major economy made a unilateral return to gold. The difference in values twixt the say UK's gold money and the market price of gold, would potentially be significant.

Add all these together, divide by gold, and see if the figure comes anywhere close to the market price for gold currently. Of course that misses the mortgages and all manner of other claims to money.

jog on
duc

 

[new_trader]

This would just as easily apply to the Pound, apart from the fact that it isn't the worlds reserve currency.

American Monetary Restoration

Five Essential Steps Toward Resumption of the Gold Dollar: Dollar Convertibility to Gold and Multilateral Currency to Gold

1.America leads by the President announcing unilateral resumption of the gold monetary standard at a date certain, not more than four years in the future. Unilateral resumption means that the U.S. dollar will be defined by law as a certain weight unit of gold. The Treasury, the Federal Reserve, and the entire banking system will be obligated to maintain the gold value of the dollar. On the date of congressionally authorized resumption -- that is, unrestricted dollar-gold convertibility* -- Federal Reserve Bank notes and U.S. dollar bank demand deposits will be redeemable in gold on demand at the statutory gold parity. Further use by foreign governments of the dollar as a reserve currency will entail no legal recognition by the United States.

2.The President issues an executive order eliminating every and all taxes imposed on the buying, selling, and circulation of gold. The President issues an executive order providing for the issuance of Treasury bonds backed by a proportional weight of gold. Since Federal Reserve notes and bank deposits (money) are not taxed by any jurisdiction, the executive order specifies that gold may be used as money and thus taxed in no jurisdiction in the United States nor abroad. Gold may be used to settle all debts, public and private. The Treasury and authorized private mints will provide for the minting and wide circulation of legal tender gold coin in appropriate denominations, free of any and all taxation.

3.Shortly after the announcement (step 1), the United States calls for an international monetary conference of interested nations to provide for the deliberate termination of the dollar-based official reserve currency system and the consolidation and refunding of foreign official dollar reserves. The international agreement to be negotiated will inaugurate the reformed international monetary system, that is, multilateral currency convertibility to gold, without official reserve currencies.

4.The conference agreement, attended by representatives of the IMF, WTO, and the World Bank would establish gold as the sole means by which nations would settle residual balance of payments deficits; and designate gold, in place of reserve currencies, as the sole internationally recognized monetary reserve asset. Official foreign currency reserves, to a specified extent, would be consolidated and refunded. Stable exchange rates would result.

5.A multilateral international gold standard -- the result of the convertibility agreement -- would effectively terminate floating and pegged-undervalued exchange rates. The reformed international monetary system would establish and uphold stable exchange rates and free and fair trade -- based on the mutual convertibility to gold of major currencies

 

[barjon]

mmm, does all that mean that the relative wealth of nations would be what gold they happened to have in the vaults when the change was made and the exchange rates adjusted accordingly? ie: if the US divied up their gold and came out that $1 = 1 oz (yeah, I know - ludicrous ) and the result in UK was £1 = 1/10 oz, would that mean the exchange rate became $1 = £10

 

[ducati998]

mmm, does all that mean that the relative wealth of nations would be what gold they happened to have in the vaults when the change was made and the exchange rates adjusted accordingly? ie: if the US divied up their gold and came out that $1 = 1 oz (yeah, I know - ludicrous ) and the result in UK was £1 = 1/10 oz, would that mean the exchange rate became $1 = £10

Essentially - no.

The wealth of any nation is its ability to produce, relatively or otherwise.

The calculation required to return to gold, essentially requires a totting-up of all claims to money. The higher the claims to money based upon fiduciary media, the worse it will be.

In a unilateral return to gold, the market price of gold would be arbitraged away via purchasing of goods/commodities in the unilaterally converting country for gold, thus increasing the supply of gold in that country, which would eventually reach an equilibrium - but the process would be incredibly destructive.

Only in an international return to gold, in the way described by NT could a return to gold be negotiated. Even then, there will be short-term pain as the fiduciary media created has been so egregious.

jog on
duc

 

[new_trader]

mmm, does all that mean that the relative wealth of nations would be what gold they happened to have in the vaults when the change was made and the exchange rates adjusted accordingly? ie: if the US divied up their gold and came out that $1 = 1 oz (yeah, I know - ludicrous ) and the result in UK was £1 = 1/10 oz, would that mean the exchange rate became $1 = £10

Under a gold standard gold would still trade on the free market because it would still be used for non-monetary purposes such as jewelry and electronics. If a country overvalues its currency relative to gold, people would redeem their paper money for gold instead of buying gold on the market, as a result that country would start losing its gold reserves.

In the pre-World War I "classical" gold standard, every currency unit, be it dollar, pound, franc, or mark, was defined as a certain unit of weight of gold. Thus, the "dollar" was defined as approximately 1/20 of an ounce of gold, while the pound sterling was defined as a little less than 1/4 of a gold ounce, thus fixing the exchange rate between the two (and between all other currencies) at the ratio of their weights.

This is where the cost of Government would be exposed, and it would be obvious how much they have been spending and that they have been financing it with printed money.

 

[barjon]

.........In the pre-World War I "classical" gold standard, every currency unit, be it dollar, pound, franc, or mark, was defined as a certain unit of weight of gold. Thus, the "dollar" was defined as approximately 1/20 of an ounce of gold, while the pound sterling was defined as a little less than 1/4 of a gold ounce, thus fixing the exchange rate between the two (and between all other currencies) at the ratio of their weights.

thx, nt

So if you proceeded in this way I presume you could only define your currency by reference to the quantity of gold you actually possessed? If so, that would mean that the scenario I painted - if the US divied up their gold and came out that $1 = 1 oz (yeah, I know - ludicrous ) and the result in UK was £1 = 1/10 oz, would that mean the exchange rate became $1 = £10 - could result?

If that's right I struggle to see how exchange rates could be set by the "accident" of how much gold each country just happens to have in the vaults at a particular time. It would surely result in a massive and untenable upheaval to current exchange rates?

The only way I can see of doing it would be for countries to agree to pool all their gold and then parcel it out in a way that is reflective of current exchange rates. Of course, that would assume that current exchange rates are properly reflective of each countries true wealth (ability to produce as ducky defines it) which seems an equally untenable proposition.

jon

 

[new_trader]

thx, nt

So if you proceeded in this way I presume you could only define your currency by reference to the quantity of gold you actually possessed? If so, that would mean that the scenario I painted - if the US divied up their gold and came out that $1 = 1 oz (yeah, I know - ludicrous ) and the result in UK was £1 = 1/10 oz, would that mean the exchange rate became $1 = £10 - could result?

If that's right I struggle to see how exchange rates could be set by the "accident" of how much gold each country just happens to have in the vaults at a particular time. It would surely result in a massive and untenable upheaval to current exchange rates?

The only way I can see of doing it would be for countries to agree to pool all their gold and then parcel it out in a way that is reflective of current exchange rates. Of course, that would assume that current exchange rates are properly reflective of each countries true wealth (ability to produce as ducky defines it) which seems an equally untenable proposition.

jon

Exchange rates would be fixed but I don’t believe it would be a simple matter of dividing all the money a country has issued by the amount of gold each country possesses. I have heard a few different theories on how a transition back to gold could take place and in each case, the market would need around 5 years to come up with the gold price first. Let’s say that the market in 5 years time is $5000Oz, then the US would have to define the weight of a $US in such a way that the market doesn’t choose to redeem their dollars for gold instead of buying it on the market.

Additionally, in order to have an effective gold standard, Governments would also have to stop price-fixing Interest rates and allow the free market to determine them. This way people would decide what they want to do, ie/ redeem gold and incur storage and security costs or hold $US and have none of those costs but instead be paid interest. Alan Greenspan explains clearly in his essay, I have a link to it in my signature. Gold and Economic Freedom by Alan Greenspan 1966

 

[Martinghoul]

Sorry for delay... I am back now. What'd I miss?

 

[darktone]

Sorry for delay... I am back now. What'd I miss?

That the gold standard is the only true money system and anyone who says otherwise is a f*****g idiot. :cheesy:

 

[new_trader]

How is everyone enjoying the record high petrol prices...140p/litre now? We sure are showing those Iranians who is boss aren’t we? This will teach them for trying to build big bad bombs! Of course, this is the propaganda that the inflationist’s will use to explain the crippling price rise but the sound money people aren’t stupid enough to believe that nonsense. They know that the real weapons of mass destruction are Central Banks and their fiat money.

 

[Martinghoul]

That the gold standard is the only true money system and anyone who says otherwise is a f*****g idiot. :cheesy:

Ah, thanks... I will go through the posts, but it's so reassuring that the song remains the same, so to speak.

 

[darktone]

Krugman! He knows what hes talking about right!?
Or maybe not.

 

[asiangambler]

this is quite a surprise, a mba holder, certified financial planner & certified fraud examiner giving his talk regarding our monetary system

the video length only about 18 minutes

"Zeitgeist Day" 2012 Los Angeles - "A MAD Economy" by Joe Alexopoulos - YouTube

 

[darktone]

Out on the 1st of may i think, should be worth a watch.

97% Owned Documentary Trailer - YouTube

 

[neil]

Cor i havent been here in a good while, hope your all well . Would be interested in hearing your opinions / views / facts on:-

1) What is money?
2) Where does our money come from?

(Am talking about the UK)

(1) Stuff I hand over to the wife each Friday.
(2) My wife - on a weekly basis