As I said, you only trade with people if they have something you need. If ALL that they have is gold and they have nothing else, they produce nothing and they own nothing but gold, while you have food and other supplies, then you are the one with all the wealth. They lost their wealth somehow, they have a past store of value but not the wealth.
For example there was a huge infestation and most food was destroyed except for food that you stored in your basement. Before that moment money made sense, after that moment the question is: what except for food do you need? You can exchange your food for other things, so food is your store of value.
But that's an unsustainable situation, food does not last for a very long time and if everybody else is starving and not doing anything about it, you'll be the last person with all that food (and with all of their gold) because they are all going to die from hunger.
Again: gold is money, money is only needed when you want to TRADE with other people, not when you have everything and they have nothing and produce nothing that you want.
Money as a concept stops working in that situation, only barter works. Whether gold is part of that barter, yes, I would say it still is, it always was. During the wars people used paper money to start fires in their stoves and gold was still a store of value, medium of exchange and unit of account.
Here is why you WOULD still take gold, by the way, your food will go bad eventually unless you eat all of it. If gold is the ONLY thing that people have at the moment and nothing else, I suppose you can either give them the food that will go bad anyway or you can trade it for gold. They have nothing else, what are you going to trade for otherwise?
If they have nothing you want, you won't trade with them at all. If you are going to trade, you will require something. The best thing that will not go bad and can be used LATER is gold, not cash (by that time all cash is more worthless than clean sheets of paper).
Be careful not to tell Californian senator Leland Yee, he is already throwing a fit about 3D printed guns, if you tell him that an INVISIBILITY CLOAK can be printed with a 3D printer, then that's it, the guy will have a freaking heart attack while pushing for a bill that would declare 3D printers military grade technology that must be strictly prohibited for civilian use.
I can imagine him talking about it: they will have 3D printed guns and they will put on their 3D printed invisibility cloaks and then they'll take over Washington without us even noticing!
Yes, there's a very, very long history of such theft, so why do you think things would end any differently? Why are you confident in your "gold backed" cards?
- this is my risk I am taking with a specific bank that I deal with. I have some of my money in that bank specifically so that I can use the credit card around the world.
The world runs on credit, credit = debt, debt = money.
- wrong equation, debt does NOT equal money:)
Debt is not money, debt is promise of money in the future. Promise of money may or may not be fulfilled.
If you are productive and you make the money to cover your debt, then you can repay your debt. It does not create or destroy money to owe a debt, only actual productive work creates money.
Bizarre, so you explicitly want a gold-backed standard and the trading of notes. You end up with the same inflation via re-evaluation that you decried earlier.
- no, I don't want anything, my point is that saying that "there is not enough gold" is invalid.
It's an invalid point, because you are comparing what? Tons of gold to gazillions of dollars in existence? As I said, your dollars will be revalued to represent your gold holdings. So if there is 1 Trillion dollars and 10 tons of gold, then you have that relation of dollars to gold and there is enough gold.
Division, a simple math concept, works like a charm.
You end up with the same inflation via re-evaluation that you decried earlier.
- revaluation of your dollar to your existing gold reserve is not inflation, it's adjustment of real price of your money.
Inflation is printing of more currency that is not backed by anything. If on the other hand, you acquire more gold later on your currency increases in value. Nobody forces you to print more of it.
But I am NOT advocating for paper currency or 'gold standard' of any kind at all, I am against gold standard or fiat, to me gold itself is money.
Today using gold as money is easier than ever before in history given our ability to move information as electrons around. You don't need to walk around with gold bars, though you actually can.
For you, apparently none, because you believe in your "gold backed" credit/debit cards.
The sock IS the investment. If you open your sock drawer you'll see a bunch of assets that have appreciated in nominal price (you have cotton in your socks) while dollar lost huge amount of value in the same time span that you have accumulated your sock investment portfolio.
Yes, fixed rate of exchange between bank notes and gold reserves require that there is enough gold to cover the notes. If there aren't there may be bank runs.
Crash in relative value is not the same as crash of fiat. Relative value price fluctuations are a fact of demand supply curve, fiat doesn't recover after a crash because if currency is backed by nothing but faith, then once it crashes even if you limit the supply afterwards, nobody wants the fiat at all.
As to the life span of the dollar: no paper currency in history lived past 80 years, so at 42 years that's 50%. However in that stretch of time the dollar lost over 98% of value and the process is accelerating. There is no formula that will tell you what will happen in the future precisely, when exactly the events will unfold and what will be the exact sequence, but call it intuition.
You can definitely say that this is purely speculation on my part but I feel strongly about it.
In a scenario where provisions become scarce, what do you think keeps more value, paper currencies or monetary metals?
Of-course I agree with you that when all shit hits the fan you just want to survive, you need food, energy, shelter, weapons and ammunition, however that's a situation where you have ALREADY converted your gold into those things you need to survive and that's a situation where you are not interested in EXCHANGE with other people.
Imagine this: you are 1 person with a store of food, there are 1000000 people around you with no food at all.
If you are going to trade for anything with anybody, you are probably going to do it only to get something you really really need, maybe somebody has antibiotics and you don't have any. Maybe somebody offers to work for you and you want an extra pair of hands.
Does money mean anything when other people have NOTHING of value?
You are missing the entire POINT of money. Money is not the goal in ITSELF, gold is money, but gold is not the point in itself.
Gold is money that helps you to buy things from other people in a more efficient manner. But you only trade with other people for GOODS and SERVICES that they provide, not for money, not for gold!
You take other people's gold for your products and services keeping in mind that later on you will be able to buy with that gold products and services that other people can provide you with that you WANT.
If other people have nothing at all that you want then you don't need their money, whatever that money may be.
This is the part where the entire education establishment is shown to be the failure that it is: it completely failed you.
You have no idea what money is. You have no idea what trade is. You have no idea why people trade with each other.
That's a huge educational gap, but the power establishment doesn't want you to understand anything about money and trade, so it's institutionally intentional.
- right, that's why there are no savings but only debt, that, combined with taxes and regulations is why savings that are used as investment capital moved to other parts of the world.
which leads people to run around pretending that low rates of inflation are a conspiracy
- rethink that statement, did you really mean low rates of interest?
Low rate of interest in a low savings environment is a conspiracy, but it's a conspiracy that is out in the open, it is the Federal reserve and other central banks that have a 'mandate' to create inflation.
"I'll sell you this TV for $100" and you to respond, "Sure, I'll owe you, is this IOU OK?" The Fed (and the banks it regulates) doesn't even have a monopoly on money creation.
- you did NOT create money in that example, you created debt and debt can be restructured without any new money coming into being.
Real money is created by production, debt is not real money, debt is a promise, a promise can be written on a piece of paper, but that's not money, that is most commonly known as a bond.
You get scared because it seems to you obvious - despite being wrong - that if something can be used to transfer wealth it would follow that holding on to it would mean you keep that wealth. But money isn't wealth, it isn't value. And you holding on to it doesn't benefit anyone, it just means you make it more difficult for others to engage in transactions (because you're holding onto the unit of exchange) until someone else creates more money - which, ironically, you then crap your pants about.
- I don't know WTF you are trying to say about me being scared, how about the people that are really scared: paper pushers, that are scared of real money of real interest rates?
Gold is valuable, so is steel, so is oil, so is grain, so are coffee beans. But gold is the only item of these that has been used as money consistently, though other items on that list have been used as money as well throughout history.
When you hold a PROMISSORY NOTE, that is when you know you only have something that may or may not be of any value at all.
When you hold gold or oil or grain or steel or coffee beans, they will always have value (as long as it doesn't get spoiled, that's why gold is always preferable). So if you hold real products and real money then you actually are ABLE to store value.
Now that may scare YOU. You may be scared that some people are actually capable of storing real value and not allowing inflation to destroy it, but it does benefit the society by providing somebody with savings that can be used to start and finance a business enterprise. Not promissory notes, not bonds, not dollars, but actual real things and the easiest ones to convert to anything else are things like gold and maybe silver, but even aluminium works, that's why people with lots of money even store aluminium.
Excellent find. Here are some actual items from their menus (I downloaded the PDFs):
INTERNATIONAL STATIONS EUROPE (Please Select 3 Items) Organic & Artisanal Selection Of Focaccia, Olive, Tomato, & Raisin Bread Heirloom Tomato, Fresh Mozzarella, Cold Press olive Oil, Opal Basil, With 6 year old Balsamic Vinegar; Classic Caesar Salad; Anchovy Dressing, Hearts of Romaine, Grated Grano Padano, Spiced Croutons; Local Heirloom Field Greens with Candied Walnuts, Kunik Goat Cheese and Poached Pears Tomato, Chickpea Lentil & Quinoa Salad with Mint; Local Arugula, Frisee & Mizzuna With Citrus Salad & Basil Vinaigrette; Grilled Asparagus, Pimento and Olives Fried Chickpeas and Sea Salt; Israeli CousCous Marinated Roasted Peppers; And Herbed Feta
FAR EAST ASIA (Please Select 2 Proteins) 5 Spice Duck with Sauce Bigarade; Soy Sauce Braised Chicken; Moo Shoo Pork; Scallion Pancakes and Plum Sauce; Accompanied With; (Please Select 2 Accompaniments); Shrimp Shomai Mirin, Soy Dressing; Asian pear, Watercress, Mizzuna, Lemon Ginger Vinaigrette; Soba Noodle Salad, Julienne Vegetables, Peanuts, Scallions, Ginger Soy Sauce, Vegetable Fried Rice; Peking duck Spring Rolls; Sweet Chili Sauce Jasmine Rice; With Eggs, Shitake & Tamarind; Blackened Chinese Long Bean; Jade Green Baby Bok Choy
INDIA (Please Select 2 Proteins) Curried Goat with Spicy Mango Chutney; Mushroom Briyani; Garam Masala & Yogurt Marinated Lamb; Roasted Sweet Potato; Curried Chicken; Cinnamon & Cardamom Scented Basmati; Roast Salmon; Garam Masala SpicedTtomato Chutney;
Accompanied with (Please Select 2 Accompaniments) Spiced Green Beans with Coconut; Tomato, Peas & Paneer; Smoked Salmon, Raita, Pappadum; Hummus, Raita; Pita Bread
LATIN AMERICA (Please Select 3 Proteins) Watercress, Frisee, Oranges, Pickled Red Onions, Basil Lime Dressing Monterey Seafood Ceviche Beef Empanadas with Tomatillo Sauce Dungeness crab Gazpacho With Fried Yucca with Mojito Arroz Con Pollo Ropa Vieja (Beef Stew) Pork Belly or Pernil (Roast Pork) With Fried Plantains Accompanied With White Rice & Beans Sweet Fried Plantains Heirloom Tomato, Red Onion & Avocado Salad
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TSAR SUSTAINABLE CAVIAR STATION Paddlefish, Osetra & Sevruga Served with Chopped Egg, Onion, Blini & Toast Points Optional with frozen vodka at additional charge (Ice Carvings are additional)
UNITED NATIONS MENUS SUSTAINABILITY "The ability to meet the needs of the present without ompromising the ability of future Generations to meet their own needs." - United Nations, World Commission on Environment & Development BUTLER PASSED HORS Dâ(TM)OEUVRES (Please choose 4 ambient & 4 temperate) Ambient Sustainable Sea Scallop & Halibut Seviche Dungeness Crab With Spicy Gazpacho Foie Gras Terrine,Brandied Cherry, on pretzel bread Fig, Artisan Goat Cheese & Hazelnut on Puff Pastry Salmon or Lamb Tartare On Japanese cracker, Tsar Sturgeon Caviar Local Hudson Valley Goat Cheese, Date & Artichoke Bruschetta Scottish Smoked Salmon On Irish Soda Bread, Clotted Cream Assorted Sushi & Sashimi Tuscan Toast; Goat Cheese, Red Pepper, Spinach and Artichoke Mascarpone, Dates & Lemon Zest; Multi Grain Toast Smoked Trout Salad; Seasonal Apples, Taro Chip Trumpet Crusted Beef Tenderloin; Roasted Shallot Marmalade Murray
And what would happen if all the gold being hoarded in vaults were dropped onto the market to be used for *useful* stuff?
so all the central banks and all the individuals around the world would all of a sudden decide to get rid of it?
It is possible if for example we discovered a simple and very effective and cheap way to convert say... dirt to gold, sure. Other than that what will happen must sooner than your scenario is people doing that to US Treasuries. Basically when that happens the value of whatever is dumped that way plunges, it's a panic selling, in panic selling whatever is being sold goes down in price, even if you are selling magic wands.
Anyway, supply and demand doesn't mean that the price will stay above the production cost - it could easilly be that there is too much being produced at this time - yes, producers of any product have problems if the buyers value the product less than the cost to produce it.
- OK, it's hard for me to explain the point I guess, the point is that this is not a bubble situation where the cost of production is so close to the current spot price in the market and there is no speculation in the underlying paper value of the mining companies.
The speculation in paper gold but the complete disregard of the paper value of mining companies with their extremely amazing PEs (6, 5 for many companies, you can buy the company with its 5 years of earnings, it's crazy) it shows that there is no such thing as a bubble in that sector, the majority of people are extremely bearish on gold and its entire underlying sector. This is a bull market and the crowd is behaving exactly as it is supposed to behave in a bull market.
Oh, he'd take gold over many things, he talks the talk, but when it comes to walking the walk at the end people know what the facts are. Thousands of years of history prove that gold is money, there is no other thing like it that worked as money for as many people for such long stretches of time.
- you mean since 1971. Yeah, since 1971 this planet is on a single paper currency, this has never happened before, this experiment is failing, so you are going to observe the consequences of paper failure.
they always trade paper notes that represent the gold
- bank notes are 1:1 ounces, but if a bank prints more of them than there are, then it's theft. People dealt with that for a long time, today you can have a gold backed debit and credit cards.
Another problem with gold is that there really isn't enough of it around to be used as an everyday currency.
- common misconception. What you have is billions of tons of paper (and zeroes in computer systems) and thousands of tons of gold. We are only talking about revaluation of paper against gold, the same amount of gold that exists today can represent 1 dollar or 1 quadrillion dollars, the nominal paper representation is irrelevant.
You also mentioned Cyprus, and that kind of bank taxation could have just as easily have happened with gold, unless you kept it safe yourself, which you could have done with paper currency too.
Gold is valuable to a common man by being universally accepted as money for thousands of years while being immune to government inflation, it can't be printed. Paper can be printed, ounces of gold cannot be printed and gold is accepted, many on/. don't understand the simple facts of life. You personally don't need to understand it or even believe in it, believe in this: in the last global war many currencies died off but gold was accepted everywhere. Believe this: central banks in wealth producing nations are accumulating gold reserves.
Obviously billions of people never needed convincing that they just accept gold as money, including today. All of the comments left that say that gold isn't money because in the stores they don't take gold, well, first of all they do take gold, I have a gold backed debit card. Secondly it took a serious offence by governments to achieve the goal of 'cashless society' and it took a serious slight of hand done a number of times, including 1913 introduction of the Fed and 1917 allowing the Fed to monetise Treasury debt and 1925 allowing the Fed to monetise bad UK debt owed to France, which started the bubble that collapsed eventually in 29 and in 1971 Nixon just defaulted on the gold dollar and that was it. I guess USA had a very large amount of kinetic energy, a very large store of credit that people gave it.... the interest rates today are still extremely low, there is no relation between real credibility of USA as a debtor and the interest rates, the only thing that still keeps the charade going are the central banks around the world (just in these 2 month, Japan, EU, Australia, Poland, Mongolia have reduced their key interest rates that are set by the central banks and bought more US Treasuries to devalue their own currencies, which hurts their own people).
So gold has been in use as money for thousands of years, but all paper currencies end up dead in less than 80, that's just history, nothing else.
As to your empty island, well that's the real money - what you need to live, to survive. All money that is not food and not just things we need to live are representation of value. The real value is in whatever allows us to live.
Do you need a crate of US dollars on an empty island, a box of gold or a ton of food? Anybody in their right mind will take food, but that's exactly it, we need money so that we can buy thing that keep us alive, and money itself is useful when we trade with OTHER people.
If there were NATIVES on that island, which do you suppose they would rather accept in lieu of some FOOD that you desperately needed? Green pieces of paper or shiny yellow pieces of METAL?
As to bottle caps - they are subject to inflation. Gold is not measured by how pretty the bars are or what is minted on the coin, gold is measured by purity and weight. That's all it is - actual amount, not a random number written on a random piece of paper.
And yes, people did buy and sell food and other things with gold when there were shortages. Guess what, when FOOD is in tight supply, everything else fails but gold is still used to exchange, this is as true today (central banks are acquiring thousands of tons now) as it was during any time, but especially during hard times, like times of WAR.
Paper works as long as the society is not in a war, as long as the economy is growing faster than politicians create inflation.
Gold works when everything fails, everything else fails, gold remains the only true money.
If you don't understand difference between limited amount of metal that cannot be created just by desire of politicians and pieces of paper that can printed in any quality as long as they can find trees and paint, well, I can't help you then.
Maybe a 100 trillion Zimbabwe dollar note would help.
Here in France, university costs relatively nothing
- right, when you say 'nothing' you mean nothing to you, conveniently forgetting that somebody is paying for everything. France is bankrupt, by the way, it can't pay its debts either so all this socialism will end on the streets, similar to Greece or so.
Measured in US dollars gold today takes about $1100 to $1200 to mine to get an ounce, so it's not as far away from it's current spot price as you may think. In fact there are many 'economists' who say that gold is in a bubble completely neglecting the cost of its production (which went up considerably in the last 10 years due to 'noneixsting' inflation, non-existing if you take gov't word for it). They are even saying that gold mining companies will go out of business in this 'gold bubble' because price of gold in US dollars will go down.
So wait, price of gold in US dollars will go down, which will crash the miners but the metal is in a bubble? Realise the absurdity of that. If gold costs that much to produce that companies are shutting down production, then prices should be going up, not down:) supply demand in action, because of the price of gold as measured in US dollars is not going higher as it should due to the cost of production (JPMorgan is using every trick in the book to attempt and manipulate the nominal price) the companies that mine it stop mining it. This means the supply is shrinking, and indeed, in the physical market the premiums are HUGE, never seen before, that's because there is NO physical gold at the 1400 or 1500, nobody can deliver it to you (this includes silver). There is 100 times as much 'paper gold' as there is physical, so all it takes is 1 large delivery request........ There are many many things here I could write for days probably, the Cyprus situation, GS 'premonitions' and existing short positions while sending 'sell' signals. Basically the real money that cannot be printed is a serious threat to the fake monetary system of the world.
I suggest simply paying attention to what China is doing to realise what is real and what is not.
No, gold is real money. Fiat means 'by law' or 'by decree', real means that the people use it without anybody forcing them, they just see it as money and gold fits that very well.
Also as to 'price' of gold or value, today it costs mining companies about 1100-1200 USD to mine an ounce, so that's inflation. All these people saying: there is no inflation, are they insisting that inflation only limits itself to the gold mining sector?
How about the stock market at 15000, you think that's based on actual economic activity?:) No, it's inflation, that's where inflation is going right now, the stock market, the bond market and the housing market again.
The stock markets are high due to enormous inflation?
yes, of-course. That's where inflation went, bonds and stock market. That's what the Fed does when it gives the banks free money, so that they would buy Treasuries and stocks pushing those prices higher.
By the way, food is getting more expensive, so is energy, so is shelter, so is medical insurance and care, so is any type of insurance, so is transport, utilities, everything.
That you are not observing huge spikes in the consumer sector is the result of the foreigners still absorbing US created inflation (lately Japan, EU, Australia, New Zealand, Mongolia, Poland just to name a few) of-course China is still buying US dollars and Treasuries and exporting goods to USA. They are still absorbing US inflation, but now plenty of it is in the stock market, in the bond market, in housing (Fed is pushing).
What do you think it is, you think USA companies are so much more productive that the US stock markets are going up? That much more productive? How is that possible, full time employment is record low in history of USA. Energy consumption is lowest in over a decade, energy imports are lowest in 25 years.
USA is so much more productive with lowest employees, lowest amount of energy imported and used, highest number of people on social welfare programs, disability, food stamps (sorry, it's called SNAP today, that's the PC term)? I don't think so.
It's not productivity that pushes the stock market up, it's inflation. That's where inflation is going, that's the assets the new money is chasing, NOT YET the consumer items as much.
And of course I want to pay extremely expensive tuition, and then strategically live like a pauper so I don't have to pay back loans. Then, after the first 10 years are up, I can go to any employer with my decade old education, and expect to make a bunch of money. It seems like a foolproof plan of action, because not only are 10 year old degrees very important, but humans are great at delaying gratification.
- what you want is irrelevant, you are going to respond to INCENTIVES.
Here are your incentives:
Pay as you Earn plan limits federal loan repayment obligations to 10% of "discretionary income" defined as total income above 150% of the federal poverty level.
That's $16,000 for individual, $33,500 for a family of 4.
If you earn $80,000, then you'll be paying about 4,500 per year. If you earn $50,000, then you'll be paying $1,500 per year.
So given that, and the fact that the more you earn, the less of the interest you'll be able to deduct from your taxes, the incentive is not to maximise pre-tax, pre-loan repayment earnings but instead to maximise the post-tax, post-loan payment earnings and those are different goals with different incentive structures.
Sure, if your choices are 50K or 150K you should go for 150K salary.
If your choices are 40K or 65K then it's absolutely not clear that you will take 65K over 40K once you calculate what you'll be taking home (and of-course there are other considerations, such as where you have to live to make a higher salary, what will your other expenses be, other taxes).
Basically paying a loan is exactly the same as paying a tax and people act to minimise paying taxes all the time when the choices are: work harder and get almost no (or no) extra benefit or work less, live cheaper and get the same monetary outcome at the end.
Swiss Franc became currency in September 2011, I remember it very well, I follow such things. Up until then it was basically a bank note that you could exchange for a weight of gold or silver.
By definition money is store of value, means of exchange and unit of account. Fiat currencies have nothing to do with gold standard.
Gold is the money, gold standard means that there is an equivalent amount of notes (not fiat money, but redeemable bank notes), so you can get the weight of gold back for that paper from the bank. It's like using deposit box keys where you store gold as medium of exchange. Gold as money doesn't 'collapse', but currencies that are supposedly backed by gold can collapse because the entity issuing them can print an unlimited number of them and then just say: sorry, we don't have the gold to redeem for your paper.
That's what Nixon did to US dollar, rather than allowing the dollar to revalue from 35 bucks to 100 or so that it would under those conditions, he defaulted on the money.
Baseless US dollar now is 42 years old. Under normal circumstances I would say it's at 50% of its life span, under the current circumstances I must say it's closer to 98% of its life expectancy.
- I don't know what you consider to be a 'lower-tier one', when one is used on 1/6th of the total land mass of this planet, is it a 'low tier one'? I am talking about the USSR ruble in this case. I think that probably was the biggest currency collapse in terms of land area that used it.
Of-course in the former USSR there were many currency collapses, a number of times ruble was redefined and restructured all due to inflation and lack of productivity but huge government spending. That's what it takes: lack of productivity, government spending and thus inflation (the government controls the fiat currency and prints it to spend on government). But there is no productivity, so the increase in money supply only bids up prices for existing assets and products and prevents businesses from investing, because there are no savings in high inflation scenario and without savings the real interest rates are enormous. Of-course if that's also coupled with regulations and laws that prevent business from occurring then it's a double whammy. But really, think about the SIMILARITY of that to US dollar and the Euro (though in both cases there are areas where productivity is concentrated to a higher level, like in California, Switzerland, Germany, or resource rich areas, like Texas, Norway).
Nobody goes through hyper (or even just high) inflation for giggles, but note that the mainstream 'economics' is ALL about creating inflation. That's all that your 'economists' push for, that's all they promote. Well, that and higher taxes on the productive population, higher income redistribution. Really, those are not economists, from POV of economics they are shamans and politicians not economists.
All fiat currency IS a sham that is subject to whims of politicians, that's why it is FIAT. Fiat is by definition not real money and instead an abstract controlled (inflated) by the politicians, who like the power it gives them to spend without taxing and thus to keep in power.
This is different from Bitcoins in a very important way, though I DO NOT consider Bitcoins to be money. Bitcoins have 1 of 3 properties of money, but it is a useful medium of exchange that allows bypassing the official channels and fees and gives you speed and flexibility.
Also it's not commodities that cause inflation, commodity prices only respond to inflation, inflation is by definition expansion of the money supply.
Technical details will be hashed out, as I said - this is an interesting thing to observe. This is a revolutionary type of currency, the society is learning from it and eventually it will be replaced of-course by many other currencies that will learn from this one.
Personally I don't think it's a store of value or even a unit of account, but I think it's a good medium of exchange, the more people accept it, the easier it is to transact without involving large existing institutions that have their costs to consider and are regulated by governments.
What do you mean? That's exactly what we just observed in Cyprus, the currency just broke. You can argue that it wasn't the currency, but the banking system in Cyprus, but I can say: bitcoins in your wallet didn't break, it's only a technical issue of client incompatibility.
Sure, and the same thing happens when a bank prevents you from withdrawing your money you supposedly have there and then you find out that anywhere between 40% to 100% of it is lost for you.
North Korea devalued currency over the weekend 100 to 1.
Cyprus basically split Euro in 2 at least, where if your money was in one of their banks, you lost anywhere between 40 and 100%, that would be a devaluation. All of a sudden if your money is in a Cyprus bank your Euro is not worth at all what other Euros are worth.
Rubble collapsed with the collapse of USSR, but even before the collapse it was just in a constantly accelerating free fall. Grivna or Hryvna or however you write that in English (Ukrainian post USSR currency) replaced another currency that existed before it (and there were more than one), which devalued at amazing pace day to day and things like that happen over DAYS or HOURS sometimes, that's because a restructuring is not a restructuring without massive losses.
By the way, that's a big reason as to why I only sees gold as real money, something that cannot be 'revalued' by gov't in a heartbeat.
There are South American stories, there are European stories, the Japanese are going down that path, there are African stories, Asian stories, you point at a location on the world map and if there are people there, there was a currency collapse there at some point (and there will be more later on).
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As I said, you only trade with people if they have something you need. If ALL that they have is gold and they have nothing else, they produce nothing and they own nothing but gold, while you have food and other supplies, then you are the one with all the wealth. They lost their wealth somehow, they have a past store of value but not the wealth.
For example there was a huge infestation and most food was destroyed except for food that you stored in your basement. Before that moment money made sense, after that moment the question is: what except for food do you need? You can exchange your food for other things, so food is your store of value.
But that's an unsustainable situation, food does not last for a very long time and if everybody else is starving and not doing anything about it, you'll be the last person with all that food (and with all of their gold) because they are all going to die from hunger.
Again: gold is money, money is only needed when you want to TRADE with other people, not when you have everything and they have nothing and produce nothing that you want.
Money as a concept stops working in that situation, only barter works. Whether gold is part of that barter, yes, I would say it still is, it always was. During the wars people used paper money to start fires in their stoves and gold was still a store of value, medium of exchange and unit of account.
Here is why you WOULD still take gold, by the way, your food will go bad eventually unless you eat all of it. If gold is the ONLY thing that people have at the moment and nothing else, I suppose you can either give them the food that will go bad anyway or you can trade it for gold. They have nothing else, what are you going to trade for otherwise?
If they have nothing you want, you won't trade with them at all. If you are going to trade, you will require something. The best thing that will not go bad and can be used LATER is gold, not cash (by that time all cash is more worthless than clean sheets of paper).
Be careful not to tell Californian senator Leland Yee, he is already throwing a fit about 3D printed guns, if you tell him that an INVISIBILITY CLOAK can be printed with a 3D printer, then that's it, the guy will have a freaking heart attack while pushing for a bill that would declare 3D printers military grade technology that must be strictly prohibited for civilian use.
I can imagine him talking about it: they will have 3D printed guns and they will put on their 3D printed invisibility cloaks and then they'll take over Washington without us even noticing!
No, I mean well before that, and you know it. When were people last commonly exchanging actual, physical, standard units of gold around?
- 30-40 years ago as coins and this century in grains of gold.
Yes, there's a very, very long history of such theft, so why do you think things would end any differently? Why are you confident in your "gold backed" cards?
- this is my risk I am taking with a specific bank that I deal with. I have some of my money in that bank specifically so that I can use the credit card around the world.
The world runs on credit, credit = debt, debt = money.
- wrong equation, debt does NOT equal money :)
Debt is not money, debt is promise of money in the future. Promise of money may or may not be fulfilled.
If you are productive and you make the money to cover your debt, then you can repay your debt. It does not create or destroy money to owe a debt, only actual productive work creates money.
Bizarre, so you explicitly want a gold-backed standard and the trading of notes. You end up with the same inflation via re-evaluation that you decried earlier.
- no, I don't want anything, my point is that saying that "there is not enough gold" is invalid.
It's an invalid point, because you are comparing what? Tons of gold to gazillions of dollars in existence? As I said, your dollars will be revalued to represent your gold holdings. So if there is 1 Trillion dollars and 10 tons of gold, then you have that relation of dollars to gold and there is enough gold.
Division, a simple math concept, works like a charm.
You end up with the same inflation via re-evaluation that you decried earlier.
- revaluation of your dollar to your existing gold reserve is not inflation, it's adjustment of real price of your money.
Inflation is printing of more currency that is not backed by anything. If on the other hand, you acquire more gold later on your currency increases in value. Nobody forces you to print more of it.
But I am NOT advocating for paper currency or 'gold standard' of any kind at all, I am against gold standard or fiat, to me gold itself is money.
Today using gold as money is easier than ever before in history given our ability to move information as electrons around. You don't need to walk around with gold bars, though you actually can.
For you, apparently none, because you believe in your "gold backed" credit/debit cards.
- I keep most of my money out of banks :)
The sock IS the investment.
If you open your sock drawer you'll see a bunch of assets that have appreciated in nominal price (you have cotton in your socks) while dollar lost huge amount of value in the same time span that you have accumulated your sock investment portfolio.
Yes, fixed rate of exchange between bank notes and gold reserves require that there is enough gold to cover the notes. If there aren't there may be bank runs.
Crash in relative value is not the same as crash of fiat. Relative value price fluctuations are a fact of demand supply curve, fiat doesn't recover after a crash because if currency is backed by nothing but faith, then once it crashes even if you limit the supply afterwards, nobody wants the fiat at all.
As to the life span of the dollar: no paper currency in history lived past 80 years, so at 42 years that's 50%. However in that stretch of time the dollar lost over 98% of value and the process is accelerating. There is no formula that will tell you what will happen in the future precisely, when exactly the events will unfold and what will be the exact sequence, but call it intuition.
You can definitely say that this is purely speculation on my part but I feel strongly about it.
In a scenario where provisions become scarce, what do you think keeps more value, paper currencies or monetary metals?
Of-course I agree with you that when all shit hits the fan you just want to survive, you need food, energy, shelter, weapons and ammunition, however that's a situation where you have ALREADY converted your gold into those things you need to survive and that's a situation where you are not interested in EXCHANGE with other people.
Imagine this: you are 1 person with a store of food, there are 1000000 people around you with no food at all.
If you are going to trade for anything with anybody, you are probably going to do it only to get something you really really need, maybe somebody has antibiotics and you don't have any. Maybe somebody offers to work for you and you want an extra pair of hands.
Does money mean anything when other people have NOTHING of value?
You are missing the entire POINT of money. Money is not the goal in ITSELF, gold is money, but gold is not the point in itself.
Gold is money that helps you to buy things from other people in a more efficient manner. But you only trade with other people for GOODS and SERVICES that they provide, not for money, not for gold!
You take other people's gold for your products and services keeping in mind that later on you will be able to buy with that gold products and services that other people can provide you with that you WANT.
If other people have nothing at all that you want then you don't need their money, whatever that money may be.
This is the part where the entire education establishment is shown to be the failure that it is: it completely failed you.
You have no idea what money is.
You have no idea what trade is.
You have no idea why people trade with each other.
That's a huge educational gap, but the power establishment doesn't want you to understand anything about money and trade, so it's institutionally intentional.
Store of value? No.
- right, that's why there are no savings but only debt, that, combined with taxes and regulations is why savings that are used as investment capital moved to other parts of the world.
which leads people to run around pretending that low rates of inflation are a conspiracy
- rethink that statement, did you really mean low rates of interest?
Low rate of interest in a low savings environment is a conspiracy, but it's a conspiracy that is out in the open, it is the Federal reserve and other central banks that have a 'mandate' to create inflation.
"I'll sell you this TV for $100" and you to respond, "Sure, I'll owe you, is this IOU OK?" The Fed (and the banks it regulates) doesn't even have a monopoly on money creation.
- you did NOT create money in that example, you created debt and debt can be restructured without any new money coming into being.
Real money is created by production, debt is not real money, debt is a promise, a promise can be written on a piece of paper, but that's not money, that is most commonly known as a bond.
You get scared because it seems to you obvious - despite being wrong - that if something can be used to transfer wealth it would follow that holding on to it would mean you keep that wealth. But money isn't wealth, it isn't value. And you holding on to it doesn't benefit anyone, it just means you make it more difficult for others to engage in transactions (because you're holding onto the unit of exchange) until someone else creates more money - which, ironically, you then crap your pants about.
- I don't know WTF you are trying to say about me being scared, how about the people that are really scared: paper pushers, that are scared of real money of real interest rates?
Gold is valuable, so is steel, so is oil, so is grain, so are coffee beans. But gold is the only item of these that has been used as money consistently, though other items on that list have been used as money as well throughout history.
When you hold a PROMISSORY NOTE, that is when you know you only have something that may or may not be of any value at all.
When you hold gold or oil or grain or steel or coffee beans, they will always have value (as long as it doesn't get spoiled, that's why gold is always preferable). So if you hold real products and real money then you actually are ABLE to store value.
Now that may scare YOU. You may be scared that some people are actually capable of storing real value and not allowing inflation to destroy it, but it does benefit the society by providing somebody with savings that can be used to start and finance a business enterprise. Not promissory notes, not bonds, not dollars, but actual real things and the easiest ones to convert to anything else are things like gold and maybe silver, but even aluminium works, that's why people with lots of money even store aluminium.
Excellent find. Here are some actual items from their menus (I downloaded the PDFs):
INTERNATIONAL STATIONS EUROPE
(Please Select 3 Items)
Organic & Artisanal Selection Of Focaccia, Olive, Tomato, & Raisin Bread Heirloom Tomato, Fresh Mozzarella,
Cold Press olive Oil, Opal Basil, With 6 year old Balsamic Vinegar;
Classic Caesar Salad; Anchovy Dressing, Hearts of Romaine, Grated Grano Padano, Spiced Croutons; Local Heirloom Field Greens with Candied Walnuts,
Kunik Goat Cheese and Poached Pears
Tomato, Chickpea
Lentil & Quinoa Salad with Mint; Local Arugula, Frisee & Mizzuna
With Citrus Salad & Basil Vinaigrette; Grilled Asparagus, Pimento and Olives
Fried Chickpeas and Sea Salt; Israeli CousCous
Marinated Roasted Peppers; And Herbed Feta
FAR EAST ASIA (Please Select 2 Proteins)
5 Spice Duck with Sauce Bigarade; Soy Sauce Braised Chicken; Moo Shoo Pork; Scallion Pancakes and Plum Sauce;
Accompanied With; (Please Select 2 Accompaniments); Shrimp Shomai Mirin, Soy Dressing; Asian pear, Watercress, Mizzuna, Lemon Ginger Vinaigrette; Soba Noodle Salad, Julienne Vegetables, Peanuts, Scallions, Ginger Soy Sauce, Vegetable Fried Rice; Peking duck Spring Rolls; Sweet Chili Sauce
Jasmine Rice; With Eggs, Shitake & Tamarind; Blackened Chinese Long Bean; Jade Green Baby Bok Choy
INDIA (Please Select 2 Proteins)
Curried Goat with Spicy Mango Chutney; Mushroom Briyani; Garam Masala & Yogurt Marinated Lamb;
Roasted Sweet Potato; Curried Chicken; Cinnamon & Cardamom Scented Basmati; Roast Salmon; Garam Masala SpicedTtomato Chutney;
Accompanied with (Please Select 2 Accompaniments)
Spiced Green Beans with Coconut; Tomato, Peas & Paneer; Smoked Salmon, Raita, Pappadum; Hummus, Raita; Pita Bread
LATIN AMERICA
(Please Select 3 Proteins)
Watercress, Frisee, Oranges, Pickled Red Onions, Basil Lime Dressing
Monterey Seafood Ceviche
Beef Empanadas with Tomatillo Sauce
Dungeness crab Gazpacho
With Fried Yucca with Mojito
Arroz Con Pollo
Ropa Vieja (Beef Stew)
Pork Belly or Pernil (Roast Pork)
With Fried Plantains
Accompanied With
White Rice & Beans
Sweet Fried Plantains
Heirloom Tomato, Red Onion & Avocado Salad
CHILLED SUSTAINABLE SEAFOOD BAR
(Please Select 2 Items)
Jumbo Gulf Shrimp; Top Neck or Littleneck Clams;
Blue point Oysters; Snow Crab Claws;
Smoked Salmon;
Accompanied with
Cocktail Sauce, Ginger Cream, Capers, Onions, Lemon Halves & Bread Sticks
TSAR SUSTAINABLE CAVIAR STATION
Paddlefish, Osetra & Sevruga
Served with Chopped Egg, Onion, Blini & Toast Points
Optional with frozen vodka at additional charge (Ice Carvings are additional)
VIENNESE TABLE
Assorted Petit Fours; Mini Profiteroles; Mini Fruit Tarts, Individual Cold Soufflés; Italian Butter, Fruit Macaroons; And Mini Fancy Cookies; Organic & Fair-trade Coffee
Love this one:
UNITED NATIONS MENUS SUSTAINABILITY
"The ability to meet the needs of the present without ompromising the ability of future Generations to meet their own needs."
- United Nations, World Commission on Environment & Development
BUTLER PASSED HORS Dâ(TM)OEUVRES (Please choose 4 ambient & 4 temperate)
Ambient Sustainable
Sea Scallop & Halibut Seviche
Dungeness Crab
With Spicy Gazpacho
Foie Gras Terrine,Brandied Cherry, on pretzel bread
Fig, Artisan Goat Cheese
& Hazelnut on Puff Pastry
Salmon or Lamb Tartare
On Japanese cracker, Tsar Sturgeon Caviar
Local Hudson Valley Goat Cheese, Date & Artichoke Bruschetta
Scottish Smoked Salmon
On Irish Soda Bread, Clotted Cream
Assorted Sushi & Sashimi
Tuscan Toast; Goat Cheese, Red Pepper, Spinach and Artichoke
Mascarpone, Dates & Lemon Zest; Multi Grain Toast
Smoked Trout Salad; Seasonal Apples, Taro Chip
Trumpet Crusted Beef Tenderloin; Roasted Shallot Marmalade
Murray
And what would happen if all the gold being hoarded in vaults were dropped onto the market to be used for *useful* stuff?
so all the central banks and all the individuals around the world would all of a sudden decide to get rid of it?
It is possible if for example we discovered a simple and very effective and cheap way to convert say... dirt to gold, sure. Other than that what will happen must sooner than your scenario is people doing that to US Treasuries. Basically when that happens the value of whatever is dumped that way plunges, it's a panic selling, in panic selling whatever is being sold goes down in price, even if you are selling magic wands.
Anyway, supply and demand doesn't mean that the price will stay above the production cost - it could easilly be that there is too much being produced at this time - yes, producers of any product have problems if the buyers value the product less than the cost to produce it.
- OK, it's hard for me to explain the point I guess, the point is that this is not a bubble situation where the cost of production is so close to the current spot price in the market and there is no speculation in the underlying paper value of the mining companies.
The speculation in paper gold but the complete disregard of the paper value of mining companies with their extremely amazing PEs (6, 5 for many companies, you can buy the company with its 5 years of earnings, it's crazy) it shows that there is no such thing as a bubble in that sector, the majority of people are extremely bearish on gold and its entire underlying sector. This is a bull market and the crowd is behaving exactly as it is supposed to behave in a bull market.
Oh, he'd take gold over many things, he talks the talk, but when it comes to walking the walk at the end people know what the facts are. Thousands of years of history prove that gold is money, there is no other thing like it that worked as money for as many people for such long stretches of time.
A big one is that nobody ever really trades gold
- you mean since 1971. Yeah, since 1971 this planet is on a single paper currency, this has never happened before, this experiment is failing, so you are going to observe the consequences of paper failure.
they always trade paper notes that represent the gold
- bank notes are 1:1 ounces, but if a bank prints more of them than there are, then it's theft. People dealt with that for a long time, today you can have a gold backed debit and credit cards.
Another problem with gold is that there really isn't enough of it around to be used as an everyday currency.
- common misconception. What you have is billions of tons of paper (and zeroes in computer systems) and thousands of tons of gold. We are only talking about revaluation of paper against gold, the same amount of gold that exists today can represent 1 dollar or 1 quadrillion dollars, the nominal paper representation is irrelevant.
You also mentioned Cyprus, and that kind of bank taxation could have just as easily have happened with gold, unless you kept it safe yourself, which you could have done with paper currency too.
- ah, yes, that DID happen, have you heard of MF Global? Incidentally MF Global was ran by Jon Corzine, former Democrat US Senator, former NJ Governer, former CEO of GS. That should give you a serious pause, how about that? A seriously government connected banker steals ASSIGNED people's gold bars (gold bars that have serial numbers that are assigned to specific account holders), the people were mostly farmers, who hedge against bad earnings with supposedly insurance firms like MF Global. Of-course nobody is going to jail for that, just like nobody is going to jail for Cyprus.
So what is the LESSON that is learned? Trust government more, trust fiat more, trust protected monopoly banks more?
Hmmm.
Gold is valuable to a common man by being universally accepted as money for thousands of years while being immune to government inflation, it can't be printed. Paper can be printed, ounces of gold cannot be printed and gold is accepted, many on /. don't understand the simple facts of life. You personally don't need to understand it or even believe in it, believe in this: in the last global war many currencies died off but gold was accepted everywhere. Believe this: central banks in wealth producing nations are accumulating gold reserves.
Obviously billions of people never needed convincing that they just accept gold as money, including today. All of the comments left that say that gold isn't money because in the stores they don't take gold, well, first of all they do take gold, I have a gold backed debit card. Secondly it took a serious offence by governments to achieve the goal of 'cashless society' and it took a serious slight of hand done a number of times, including 1913 introduction of the Fed and 1917 allowing the Fed to monetise Treasury debt and 1925 allowing the Fed to monetise bad UK debt owed to France, which started the bubble that collapsed eventually in 29 and in 1971 Nixon just defaulted on the gold dollar and that was it. I guess USA had a very large amount of kinetic energy, a very large store of credit that people gave it.... the interest rates today are still extremely low, there is no relation between real credibility of USA as a debtor and the interest rates, the only thing that still keeps the charade going are the central banks around the world (just in these 2 month, Japan, EU, Australia, Poland, Mongolia have reduced their key interest rates that are set by the central banks and bought more US Treasuries to devalue their own currencies, which hurts their own people).
So gold has been in use as money for thousands of years, but all paper currencies end up dead in less than 80, that's just history, nothing else.
As to your empty island, well that's the real money - what you need to live, to survive. All money that is not food and not just things we need to live are representation of value. The real value is in whatever allows us to live.
Do you need a crate of US dollars on an empty island, a box of gold or a ton of food? Anybody in their right mind will take food, but that's exactly it, we need money so that we can buy thing that keep us alive, and money itself is useful when we trade with OTHER people.
If there were NATIVES on that island, which do you suppose they would rather accept in lieu of some FOOD that you desperately needed? Green pieces of paper or shiny yellow pieces of METAL?
As to bottle caps - they are subject to inflation. Gold is not measured by how pretty the bars are or what is minted on the coin, gold is measured by purity and weight. That's all it is - actual amount, not a random number written on a random piece of paper.
And yes, people did buy and sell food and other things with gold when there were shortages. Guess what, when FOOD is in tight supply, everything else fails but gold is still used to exchange, this is as true today (central banks are acquiring thousands of tons now) as it was during any time, but especially during hard times, like times of WAR.
Paper works as long as the society is not in a war, as long as the economy is growing faster than politicians create inflation.
Gold works when everything fails, everything else fails, gold remains the only true money.
If you don't understand difference between limited amount of metal that cannot be created just by desire of politicians and pieces of paper that can printed in any quality as long as they can find trees and paint, well, I can't help you then.
Maybe a 100 trillion Zimbabwe dollar note would help.
Here in France, university costs relatively nothing
- right, when you say 'nothing' you mean nothing to you, conveniently forgetting that somebody is paying for everything. France is bankrupt, by the way, it can't pay its debts either so all this socialism will end on the streets, similar to Greece or so.
Does Canadian Tire money count?
- sure, why not? :) BUT that money started only around 1960s or so.
Measured in US dollars gold today takes about $1100 to $1200 to mine to get an ounce, so it's not as far away from it's current spot price as you may think. In fact there are many 'economists' who say that gold is in a bubble completely neglecting the cost of its production (which went up considerably in the last 10 years due to 'noneixsting' inflation, non-existing if you take gov't word for it). They are even saying that gold mining companies will go out of business in this 'gold bubble' because price of gold in US dollars will go down.
So wait, price of gold in US dollars will go down, which will crash the miners but the metal is in a bubble? Realise the absurdity of that. If gold costs that much to produce that companies are shutting down production, then prices should be going up, not down :) supply demand in action, because of the price of gold as measured in US dollars is not going higher as it should due to the cost of production (JPMorgan is using every trick in the book to attempt and manipulate the nominal price) the companies that mine it stop mining it. This means the supply is shrinking, and indeed, in the physical market the premiums are HUGE, never seen before, that's because there is NO physical gold at the 1400 or 1500, nobody can deliver it to you (this includes silver). There is 100 times as much 'paper gold' as there is physical, so all it takes is 1 large delivery request........ There are many many things here I could write for days probably, the Cyprus situation, GS 'premonitions' and existing short positions while sending 'sell' signals. Basically the real money that cannot be printed is a serious threat to the fake monetary system of the world.
I suggest simply paying attention to what China is doing to realise what is real and what is not.
No, gold is real money. Fiat means 'by law' or 'by decree', real means that the people use it without anybody forcing them, they just see it as money and gold fits that very well.
Also as to 'price' of gold or value, today it costs mining companies about 1100-1200 USD to mine an ounce, so that's inflation. All these people saying: there is no inflation, are they insisting that inflation only limits itself to the gold mining sector?
How about the stock market at 15000, you think that's based on actual economic activity? :) No, it's inflation, that's where inflation is going right now, the stock market, the bond market and the housing market again.
I don't know, after all inflation and restructuring.... pretty old
The stock markets are high due to enormous inflation?
yes, of-course. That's where inflation went, bonds and stock market. That's what the Fed does when it gives the banks free money, so that they would buy Treasuries and stocks pushing those prices higher.
By the way, food is getting more expensive, so is energy, so is shelter, so is medical insurance and care, so is any type of insurance, so is transport, utilities, everything.
That you are not observing huge spikes in the consumer sector is the result of the foreigners still absorbing US created inflation (lately Japan, EU, Australia, New Zealand, Mongolia, Poland just to name a few) of-course China is still buying US dollars and Treasuries and exporting goods to USA. They are still absorbing US inflation, but now plenty of it is in the stock market, in the bond market, in housing (Fed is pushing).
What do you think it is, you think USA companies are so much more productive that the US stock markets are going up? That much more productive? How is that possible, full time employment is record low in history of USA. Energy consumption is lowest in over a decade, energy imports are lowest in 25 years.
USA is so much more productive with lowest employees, lowest amount of energy imported and used, highest number of people on social welfare programs, disability, food stamps (sorry, it's called SNAP today, that's the PC term)? I don't think so.
It's not productivity that pushes the stock market up, it's inflation. That's where inflation is going, that's the assets the new money is chasing, NOT YET the consumer items as much.
And of course I want to pay extremely expensive tuition, and then strategically live like a pauper so I don't have to pay back loans. Then, after the first 10 years are up, I can go to any employer with my decade old education, and expect to make a bunch of money. It seems like a foolproof plan of action, because not only are 10 year old degrees very important, but humans are great at delaying gratification.
- what you want is irrelevant, you are going to respond to INCENTIVES.
Here are your incentives:
Pay as you Earn plan limits federal loan repayment obligations to 10% of "discretionary income" defined as total income above 150% of the federal poverty level.
That's $16,000 for individual, $33,500 for a family of 4.
If you earn $80,000, then you'll be paying about 4,500 per year.
If you earn $50,000, then you'll be paying $1,500 per year.
So given that, and the fact that the more you earn, the less of the interest you'll be able to deduct from your taxes, the incentive is not to maximise pre-tax, pre-loan repayment earnings but instead to maximise the post-tax, post-loan payment earnings and those are different goals with different incentive structures.
Sure, if your choices are 50K or 150K you should go for 150K salary.
If your choices are 40K or 65K then it's absolutely not clear that you will take 65K over 40K once you calculate what you'll be taking home (and of-course there are other considerations, such as where you have to live to make a higher salary, what will your other expenses be, other taxes).
Basically paying a loan is exactly the same as paying a tax and people act to minimise paying taxes all the time when the choices are: work harder and get almost no (or no) extra benefit or work less, live cheaper and get the same monetary outcome at the end.
Swiss Franc became currency in September 2011, I remember it very well, I follow such things. Up until then it was basically a bank note that you could exchange for a weight of gold or silver.
By definition money is store of value, means of exchange and unit of account. Fiat currencies have nothing to do with gold standard.
Gold is the money, gold standard means that there is an equivalent amount of notes (not fiat money, but redeemable bank notes), so you can get the weight of gold back for that paper from the bank. It's like using deposit box keys where you store gold as medium of exchange. Gold as money doesn't 'collapse', but currencies that are supposedly backed by gold can collapse because the entity issuing them can print an unlimited number of them and then just say: sorry, we don't have the gold to redeem for your paper.
That's what Nixon did to US dollar, rather than allowing the dollar to revalue from 35 bucks to 100 or so that it would under those conditions, he defaulted on the money.
Baseless US dollar now is 42 years old. Under normal circumstances I would say it's at 50% of its life span, under the current circumstances I must say it's closer to 98% of its life expectancy.
albeit generally one of the lower-tier ones
- I don't know what you consider to be a 'lower-tier one', when one is used on 1/6th of the total land mass of this planet, is it a 'low tier one'? I am talking about the USSR ruble in this case. I think that probably was the biggest currency collapse in terms of land area that used it.
Of-course in the former USSR there were many currency collapses, a number of times ruble was redefined and restructured all due to inflation and lack of productivity but huge government spending. That's what it takes: lack of productivity, government spending and thus inflation (the government controls the fiat currency and prints it to spend on government). But there is no productivity, so the increase in money supply only bids up prices for existing assets and products and prevents businesses from investing, because there are no savings in high inflation scenario and without savings the real interest rates are enormous. Of-course if that's also coupled with regulations and laws that prevent business from occurring then it's a double whammy. But really, think about the SIMILARITY of that to US dollar and the Euro (though in both cases there are areas where productivity is concentrated to a higher level, like in California, Switzerland, Germany, or resource rich areas, like Texas, Norway).
Nobody goes through hyper (or even just high) inflation for giggles, but note that the mainstream 'economics' is ALL about creating inflation. That's all that your 'economists' push for, that's all they promote. Well, that and higher taxes on the productive population, higher income redistribution. Really, those are not economists, from POV of economics they are shamans and politicians not economists.
All fiat currency IS a sham that is subject to whims of politicians, that's why it is FIAT. Fiat is by definition not real money and instead an abstract controlled (inflated) by the politicians, who like the power it gives them to spend without taxing and thus to keep in power.
This is different from Bitcoins in a very important way, though I DO NOT consider Bitcoins to be money. Bitcoins have 1 of 3 properties of money, but it is a useful medium of exchange that allows bypassing the official channels and fees and gives you speed and flexibility.
Also it's not commodities that cause inflation, commodity prices only respond to inflation, inflation is by definition expansion of the money supply.
Technical details will be hashed out, as I said - this is an interesting thing to observe. This is a revolutionary type of currency, the society is learning from it and eventually it will be replaced of-course by many other currencies that will learn from this one.
Personally I don't think it's a store of value or even a unit of account, but I think it's a good medium of exchange, the more people accept it, the easier it is to transact without involving large existing institutions that have their costs to consider and are regulated by governments.
What do you mean? That's exactly what we just observed in Cyprus, the currency just broke. You can argue that it wasn't the currency, but the banking system in Cyprus, but I can say: bitcoins in your wallet didn't break, it's only a technical issue of client incompatibility.
Sure, and the same thing happens when a bank prevents you from withdrawing your money you supposedly have there and then you find out that anywhere between 40% to 100% of it is lost for you.
North Korea devalued currency over the weekend 100 to 1.
Cyprus basically split Euro in 2 at least, where if your money was in one of their banks, you lost anywhere between 40 and 100%, that would be a devaluation. All of a sudden if your money is in a Cyprus bank your Euro is not worth at all what other Euros are worth.
Rubble collapsed with the collapse of USSR, but even before the collapse it was just in a constantly accelerating free fall. Grivna or Hryvna or however you write that in English (Ukrainian post USSR currency) replaced another currency that existed before it (and there were more than one), which devalued at amazing pace day to day and things like that happen over DAYS or HOURS sometimes, that's because a restructuring is not a restructuring without massive losses.
By the way, that's a big reason as to why I only sees gold as real money, something that cannot be 'revalued' by gov't in a heartbeat.
There are South American stories, there are European stories, the Japanese are going down that path, there are African stories, Asian stories, you point at a location on the world map and if there are people there, there was a currency collapse there at some point (and there will be more later on).