If I ever meet RMS, I'd like to confront him on his misunderstanding of economics, I think that beyond the future of HURD, that would be the only interesting thing to talk about with the guy.
Also from the same source you can figure out that the man is totally ignorant of the way economy functions, of what the sound monetary and economic policy should be (free market capitalism):
JA: You mean what if all the programming jobs were outsourced to foreign countries?
Richard Stallman: Yes, what if they all go? This may actually happen. When you start thinking about things like total levels of employment, you've got think about all the factors that affect it, not blame it all on one factor. The cause of unemployment is not someone or society deciding that software should be free. The cause of the problem is largely economic policies designed to benefit only the rich. Such as driving wages down.
- clearly RMS is a Marxist in his overall thinking, but MAYBE he can actually learn something about this topic if he only had an opportunity to, but he never had that opportunity.
'Driving down wages' is not a goal in itself. Wages are often not the most significant cost to the business. The most significant cost is corporate and payroll and medical and other taxes and various governmental regulations, that are normally designed to reduce and destroy competition and to provide the politicians with a large chunk of the monopoly money.
As to 'driving down wages' - I will argue that it is part of the thinking for a business, but in absence of government destroying free market, this part of the thinking would be very constraint, as competition would be very high without government involvement and without inflation that government causes by printing money. The companies would not get as large as they get when there is a government around, that is willing and insisting in participating in the business via various schemes - taxes, subsidies, regulations, etc. Also while wages may be going down in more developed countries if businesses move out of them, they increase in less developed countries, where businesses enter the economy and start producing and hiring there. But to be able to benefit from such a move, the business needs to have some economy of scale and very good protection against competition in the former place of business, which comes from good ties with the government, who wants the control over the business and cash flow.
You know, it's no coincidence that we're having all this outsourcing. That was carefully planned. International treaties were designed to make this happen so that people's wages would be reduced.
- again, this was done because the government is large and distorts the economic forces in the first place. The large corporations that benefit from the treaties certainly get various help from many governments of the world, who control their competition, reduce their taxes, making them very difficult to compete with, while raising regulations, which affects the starting businesses dis-proportionately, because they do not have such economies of scale and cannot really afford 10 more compliance officers in the company.
JA: Can you cite specific examples?
Richard Stallman: FTAA. The World Trade Organization. NAFTA. These treaties are designed to reduce wages by making it easy for a company to say to various countries, "which of you will let us pay people the least? That's were we're headed." And if any country starts having a somewhat increased standard of living, companies say "oh, this is a bad labor climate here. You're not making a good climate for business. All the business is going to go away. You better make sure that people get paid less. You're following a foolish policy arranging for workers of your country to be paid more. You've got to make sure that your workers are the lowest paid anywhere in the world, then we'll come back. Otherwise we're all going to run away and punish you."
- the problem with RMS, is that he sees the government as the force, that MUST be in business of setting economic and
How can gold keep value when it doesn't have value?
- thousands of years of human trade prove you wrong.
I'm aware gold has properties that make it a convenient form of exchange etc etc ad nauseum. But that doesn't give it value.
- it's money. Do you think your paper money has value? Gold has all properties needed for money, so it's the best money people have invented so far.
It is assigned a value in just as arbitrary a way as fiat currency is.
- 'arbitrary' in a sense that the amount of work that goes into mining it and scarcity of it vs desirability of it allow us to calculate the relative value of anything in gold, and it can't be printed by politicians, which gives it the most important aspect of value, beside all of the other benefits.
And the value of stupid people like you (to those with the gold) will go down as well. I explained it in the very paragraph you are responding to.
- no, the labor costs will go down, as they must. As for 'stupid people like you' - you are entitled to your opinion.
The rich would need you less and less, since their gold is more and more valuable each day.
- the rich don't need you today either. You need them, not the other way around. If it weren't for people, who are capable and willing to save and re-invest their savings into businesses, you'd be still a hunter/gatherer or maybe a farmer today, working for food only.
Again you prove that you have difficulty reading. I used the word PRETEND for a reason. Basically with so many stupid voters around, the US leaders no longer even need to do a good job pretending to help the voters in order to stay in power. In the past at least the voters got some interstate highways and infrastructure.
- being boiled slowly, and not being thrown into boiling water all at once - that's how the notion came up, that the government is somehow responsible for any individual well-being, rather than what its real reason for existence was in the first place. So if people forgot the reasons for their gov't even existing, decided to invent that magical reason and started believing in it, then it's their problem, when the reality come back, crushing their world view and their economy all at once.
As to infrastructure and roads, I explainedwhy this was a terrible idea, to have government in that many times over on this site.
Now more than 9 trillion US dollars have been created out of thin air and what do the voters get?
- the destroyed currency and high prices, just what they want, or is it?
I hear the US people complaining about stuff falling apart, no money to build railways, highways, bridges, broadband. And I think - hey didn't they just print 9 trillion?
- yes, the government propped up the failing businesses, failing housing market, banks, just to keep their valuations up, prices high, and to preserve their very existence in most cases. Nothing good comes out of that ever, because money gets destroyed and the market still has all this nonsense in it, that should have been gone long ago.
They could have printed 1 more trillion and used it to buy stuff from China to build all that crap before China wises up. Before you spout about inflation, they've ALREADY created at least 9 trillion, so what's a trillion more before everyone else catches on?
- I agree. Just crash that fucker all the way down now. But all that infrastructure investment, that could have been made, would only make sense if it was made by private businesses, building things that markets actually need, not all this nonsense subsidized infrastructure, which only looks good for gov't statistics of the fake GDP, but it does nothing to improve the economy and create real investments and jobs and wealth.
You can't do that trickery with gold.
- you don't need trickery with gold. With gold you get USA 19 century - huge increase in productive activity and wealth creation and standard of living and dropping prices simultaneously.
But you can with US dollars. So the US petrodollar is better tool for the US than gold is. It's just not being used for the benefit of the US people
- well no, you should go back to my link to my comment, where I explain the fall of the dollar value relative to other things just from 2003 alone, and you'll see that it lost over 75% of that value
Alternatives? List which materials are malleable, corrosion resistant, a very good conductor of electricity and cheaper than gold.
- it does not matter. As gold is used more and more only as money, everything we do with gold will be reevaluated and alternatives will be found. It's as simple as that. In any case, very little of the stuff is used for industrial purposes, and whatever is used, will be reclaimed in the future, and returned into the monetary system.
Did you even read and understand what I wrote?
- Yeah, I understand to the t, don't worry.
As I ALREADY said in my previous post - wealth is not and will not be evenly distributed - the top 1-2% own a lot of it. So if gold was money (or currency was gold backed) each person would have less than 1 ounce worth of gold. So the value and cost of gold goes up.
- precisely. As it must.
Deflation - that's the point. That's the key. That's the goal. That's the best thing for economy. That's the best thing for the poorest of the poor.
What is the Fed trying to do with printing all this money? They are trying to keep the valuations (prices) up for various companies, for asset classes that they see as necessary - home prices.
They are keeping prices up for things that should fall in prices dramatically, so what the real consequence is, is that the prices for everything else are going up, to ensure that the real valuations of those companies and houses, etc., fall in real terms.
Do you understand? Everything that gov't does is about pushing prices up, and they do it by destroying your fiat.
Gold, on the other hand, would push prices down, as in itself it would become more and more valuable and scarce, and wages would fall. But the economy of deflation years of USA shows that it was the most productive and it generated the most wealth, while the value of money was increasing steadily.
And as the population grows faster than the amount of gold grows, the value and cost of gold goes up. So the rich would give less and less gold as wages to the poor born without it.
- oh, god. The value of gold goes up relative to value of all things, that will go down, thus deflation. I explained it in previous paragraph.
Sure the value of money can go up. But your proposal makes the cost of gold go up.
- First: gold IS money. Second: you think I am proposing something that will not be done without such a proposal? You don't get it at all, do you? Not for a millisecond it goes through you skull? Gold is money. It's going up in value relative to fiat, because fiat is no longer sound money, it's created at a rate of about 10% a year to keep the valuations of things up, that gov't wants to push up, that's all. But those things need to go down in valuations, that's why gold is going up, so that the real prices drop.
It would be great if people stopped valuing gold so much as jewellery, and people like you moved on from their ignorant and primitive obsession with gold as money. There's no magic in gold as money ok? It is even more stupid than having currency backed by land area on the Moon or Mars.
- I am not forcing you to do anything. If you follow your own advice and keep to your fiat, that's fine with me, I don't care that you are losing most of your purchasing power.
The crisis was a result of looser/poor regulation allowing people to borrow what they could not afford; and allowing the smart, amoral and greedy to create ways to bundle up those loans, play pass the parcel/hot potato with them while taking commissions each time they pass it amongst themselves.
Select 27 May 2011, you will find out it closed at 1536.50.
In fact, if measured in gold, the value of USD decreased by 76%.
oil traded between 20 and 28 in 2003, May 27, 2011 it is 100 Do I need to do the math?
I can go on. My point is that when you say things like:
However, the U.S. dollar has not lost 75% of its value since 2003.
- you better be ready for a barrage of numbers.
If the USD had lost that much value, my grocery bill would have gone up by a lot more than it has.
- maybe you should go back to your old receipts and try and figure this out, but prices for food in USA went up by a factor of 2 easy since 2003. However there is a huge factor, which prevents the end user consumables from going off the charts in US (like by factors of 10) today, and that's the fact that US dollars are collecting dust in foreign central banks, who also destroy their currencies following the so called 'reserve'. They are waking up, they stopped buying almost all new US bonds, now Fed buys over 80% of all new bonds, and buys over 30% of bonds on the market, from those, who are dumping them, like Bill Gross and China, etc.
Things are not hunk dory and if something doesn't change very soon, the U.S. economy (and probably the world economy) will pass the point of no return.
- wrong again, bud, it will be US economy and some of the European economies that will go to hell and will have to rebuild from hell, but it's not going to be the world.
Again: wealth is production, not fiat or even gold, and there are plenty of countries today who do have enough production capacity, that they generate trade surpluses, not deficits, like USA does (with pretty much every country, though you only hear about the 50Billion/month deficit with China, but go ahead, look it up, USA has trade deficits even with Canada.)
As long as those countries keep their manufacturing base, they will be just fine. Their USD denominated holdings will be destroyed, but it won't matter, their own currencies will rise and will allow their own population finally to enjoy the fruits of their own labor, which until now USA had the privilege to.
it does not ignore the question, it answers the question simply by pointing out that in similar circumstances people increased production capacity and competition caused prices to fall.
Schiff is fine, he is understand economics through and through, unlike some people (Krugman), who said that any job gov't can provide is good, even if it's only digging and filling in trenches, and he has no clue about what inflation is. The Nobel Prize is dead to me until they take it back from at least Krugman and Obama.
Except whatever you think is real money (fiat) is garbage AFAIC, it doesn't store value at all. USD lost 75% of value since 2003 alone, you want to hold it? You do that.
If lithium is exposed to water, then it will burn with a modest amount of red flame, turning into lithium hydroxide in the process. I do not believe that the flame is particularly hot, either.
Lithium fire - no water involved, but the fire seems quite hot and very dangerous. I wouldn't want my money to do that.
You want the thing you pick to be rare......At the same time, you don't want to pick an element that's too rare. So osmium â" which apparently comes to earth via meteorites â" gets the axe." Seems pretty arbitrary. For starters, why couldnt pyrite be money? Why does it have to be an element?
- because iron pyrites contain iron. Iron is an industrial metal and it corrodes. It's hard to test what is in an iron coin exactly and gold is easy to test with either acids or ultrasound for large bars.
Why should money even be something that has no use in and of itself-- and if that is a requirement, how does gold possibly fit the bill?
- that's just a strange question. Why would I want to put money into a product, so I can sell it for money, it makes no sense.
Of-course we want as little industrial uses for gold as possible. There are a few uses, but they are irrelevant, given that there is relatively small amount of gold in existence and it's still not used up for anything industrial. Besides, industries are not ran by people who just want to burn money in manufacturing process, it's nonsense.
why the barter system is insufficient,
- it is actually sufficient, given that banks become warehouses for cows, chickens, wheat, orange juice, etc. and if that becomes the case, you can have even a credit card backed up by goats, not gold, but this will never happen precisely because there are so many other uses for a goat (which I leave to your imagination), hopefully most uses are dietary in nature.
or how the argument for gold kind of falls apart in societies that are rich in gold and poor in salt, or societies that decided to use other standards.
- salt is not money, but it can be used for barter. It's not money, because people consume it and it can be destroyed - it goes bad.
Half the reasons why gold is money, is because it withstands the natural and man made disasters and accidents so well. Fire? Flood? Earthquake? A meteor strike? Titanic? Who cares. If there is a way to find pieces of the metal, it can be reclaimed.
Plain and simple, using gold as a standard today would be about as arbitrary as anything else
- really? So what do you suggest would be a good standard then? Something that cannot be faked because it can be easily and cheaply tested, something that's easy to work with, recognized easily by anybody (who would recognize osmium as osmium if you showed it to them? It could be any alloy, how do you test it?)
Osmium is insanely hard to mint, to melt, to machine, anything you do with it is freaking difficult and expensive. It looks nice, though, I like it, but it's not money that people would use, otherwise they WOULD HAVE used it already as money. Is that a difficult concept?
That is simply because people have historically valued gold and had faith in it.
- oh, it's that simple, ha? So if it's that simple, how come this thread is filled with people that can't seem to grasp the concept?
Any "money" that people will trust is a good currency; if people fail to trust it, it is a bad currency.
- yeah, but trust has to be based on something. Money is not a religion, it does require proof. I don't trust fiat for a second, never have, never will, any fiat, any country, any time, it's because there are politicians somewhere, trying to steal the value of the money from you, and they always succeed at this one thing.
Quite a number of institutional holders. IMF sold a few metric tons of the metal within the last 2 years alone.
Those who say that gold is in a bubble, should really look at HUI stocks. Gold mining companies are basically where they were at the 2008 lows - doesn't look like a speculative bubble at all, there is no speculative money in the stocks, and they are easier to trade than gold for most speculators.
- show me why would anybody would be buying gold at all, if it wasn't money? Because its use in industries and jewelry requires very little of it.
It totally breaks fractional lending.
- yes. That's a good thing.
Gold is just gold, nothing magic about it
- wow, no shit.
Monetary use of gold artificially raises its value and hurts the real economy
- real economy? Real economy in your estimation gets 'hurt' if people buy gold? Ha.
Real economy is what China has, it's what Japan could have, if they stopped with destruction of their currency. It's what Germany could have, if it stopped running a huge welfare state and stopped propping up failing societies of other silly European nations. It's what USA had in 19 century - fully on gold (and silver, which was silly and counterproductive, as silver is much more corrosive and has much more industrial use).
Real economy is production. Having real money, that is not printed by politicians is a great help to real economy, because it allows storing value, it allows accumulating capital, which can be lent or used directly for new production capacity. Real economy is production capacity and products and services that production capacity provide the people with.
Buying golds saves the people from inflation created by politicians, it saves them, gives them ability to avoid inflation, and gives them the tools to store enough money to start a business or to lend to one.
As to fractional lending: cry me a river. With the current system, where banks are making all the profits, while gov't destroys money through printing, and you can't get a return on a bank deposit, which even begins to cover that inflation itself, I wouldn't want to hold my money in any of those banks.
AFAIC fractional reserve is part of the problem, not part of the solution. I wouldn't hold anything in a bank that did that. When the bond and currency crisis hit, US will bail FDIC out, so that the banks and personal deposits will be bailed out, but the actual currency will be worthless. FDIC is a freaking crime. Glass Steagall was introduced to offset the damage of FDIC, but the damage should never have been inflicted in the first place, as FDIC should never have existed.
Great depression, caused by gov't inflation and spending, didn't even cause more than 2.5% losses associated with bank runs. FDIC was introduce to stave off the perceived damage of a bank run, but the real problem was never a bank run, but the worthlessness of the currency.
He doesn't have a clue. He doesn't understand that inflation is driving savings and investment capital out, ends up driving jobs out. Combined with income taxes it allows gov't to grow into some sort of a monstrosity, that regulates everything under the Sun, making US worker totally uncompetitive. There are millions of people without work, yet in USA there are still a minimum wage laws, and there are still all sorts of regulations, that make hiring US citizens an extremely unattractive proposition when compared to people in other places.
He doesn't understand that gov't, which promises to insure bank deposits, insure health care, insure 'affordable housing', insure retirement, insure monopolies against competition, gov't that subsidizes the car industry by building roads and then starts all sorts of wars to keep the oil coming in to subsidize that type of life further, that gov't ends up creating a monstrosity of a society: totally dependent on the gov't tit, incapable of taking care of itself, thinking that everybody owes them something, unwilling to take any sort of risk, expecting every grievance to be covered by a lawsuit (as gov't displaces other jobs, then inflates value of education by artificial demand through gov't mortgages, that kids end up taking without any collateral before they even graduate, and then so many graduate in social studies, that for not knowing what to do with themselves, they continue the education in the law profession further, creating an ungodly number of lawyers in one country). That society will drive all production capacity out, and the only thing left would be the printer with a seemingly endless supply of ink and paper.
Of-course in order to get something useful out of that paper, it has to provide something, even if only a promise, so bonds are printed and sold to unsuspecting foreigners, who end up buying them forever, and if they ever stop buying, they are threatened that the US will default on the debt (that's what they are talking about, when they say debt ceiling must be raised,) but they are full of shit. Hitting the debt ceiling and not getting into further debt would only require spending to be cut, as US still collects over 2 trillion a year in taxes, that's enough to pay for a much smaller gov't and to start paying out some principal on the debt even, not only the interest.
In 19 century USA used to borrow money as well, but it was building things with that money: infrastructure, factories, etc. Then the products they made were used to pay the debt back.
Now USA borrows only to spend, and at this point, the Fed buys over 30% of all bonds on the market, and over 80% of all new bonds from the Treasury (through GS, BTW.) so clearly the printing press IS the reason that the country is in such terrible shape and debt and so totally unproductive and is in so many wars.
Sound money would put a stop to this nonsense, but that's exactly what GS doesn't want (and they are one of many, who oppose it, they benefit greatly), so it's not going to happen, and US bonds and dollars will be destroyed and then US will have to rebuild, but it won't have any savings to do so, and interest rates will be very high, so it's going to hurt like hell before it gets any better.
Other people pay taxes and bank debts and hence will trade you goods and services for those bits of paper. But they won't for the photocopie variant.
- those who matter realize that there is no difference.
It's a really simple system, the notes have no intrinsic (well an instrinsic value that is tiny) but they make trade easier and hence people agree to use them as a mechanism of exchange.
- 'agree' is a strong word for a fiat system that arose from former economy with gold/silver being money of the land, and gradually this was removed, then there was gold backing, which was removed (one of the many defaults, USA has purported on the public, never mind that the politicians say it can't default, it has already at least once in 1971).
And yes by using a fiat system you have to trust that whomever is doing the printing won't increase the supply by more than economic production has increased,
- and what does the reality tell us? That governments print fiat. They print and print, the more debt and so called "social obligations" they have, the more they print. They could tax, but then gov't would be much smaller, as taxes are unpopular, so they borrow and print and do bail outs and everything else.
So what trust are you talking about?
but in exchange you avoid random inflationary spikes when a new gold deposit is found or a new source of pretty shells is found, or whatever your backing item is.
- hold on, hold on, let me get this straight.
You are worried about new gold deposits (and we know about them in advance, so the 'inflationary spike' would be calculated into the market well in ahead of actual mining production) but you are willing to accept a politician with a printer and bunch of ink and paper? I see.
And you avoid milder inflation/deflation when the growth of the economy differes from the growth of that item.
- I have news for you: inflation today, in a USD based world is around 10% in USA (amount of new money created per year) and the rest of the world is suffering huge price rises due to the export of that inflation, (and all they have to do to stop it, is to stop using USD and stop buying US bonds).
I welcome deflation. I mean I really WELCOME deflation based on competition and increased efficiencies. It's the best thing since sliced bread, because it's cheaper sliced bread.
Gold is not that suitable to be money either. Gold is too useful to be used as money.
- it's not that useful as industrial material, and as the value of fiat plunges, the usage of gold as of industrial material will diminish further, as people will find alternatives.
the average person would have even fewer grams/ounces of gold as their TOTAL cash holdings (includes bank balances) not necessarily net worth - since some people may have cash but have a mortgage.
- you don't divide gold among all people by equal amounts, that's nonsense, it would be a tragedy for the money if it was in equal possession by all parties. As to the imagined worth of the various housing properties that people own -their worth is just that - it's imaginary, as the prices for housing are in a steady decline, and are held up only by inflation, but as housing prices are kept high by inflation, this will force the housing prices to fall in real terms anyway, as prices for everything else people use rise faster.
Estimate how many ounces/grams of gold you'd get paid per month. You are probably richer than the average person in the world. But would you get paid an ounce of gold every month? Think the people paying would now be able to afford that? So the relative cost of gold would go up.
value of money needs to go up, it always needs to go up so that the relative costs of everything else will be going down, and that's good for economy, regardless of what your gov't would have you believe, as in 19 century USA, the economy was becoming stronger and wealthier year to year, with more automation and innovation and inventions, while value of money was in a steady up trend, so the dollar ended the century twice as valuable as when the century started.
The US benefits from being able to create US dollars practically on demand. Because by doing so it can transfer wealth from other countries who are still using the US dollars for billions of stuff.
- well yes, and that's going to end and then US population will be left starving and without any products, and they will have to rebuild a real economy - manufacturing, production, agriculture, mining, everything that people actually use, as opposed to having the fake 'economy' of consumption by borrowing from the very people, who also provide the products.
I own gold and silver and mining stocks, I have them for enough time to appreciate the gains, brought around by the printing of the governments of the world, I don't need to convert anybody into anything.
I LOVE LOW GOLD PRICES, because that's when I can buy more with any new fiat I have at that point.
You can tell me all about the intrinsic value of gold, but if I have no interest in gold. You will not be using it as money to buy anything from me. Whatever you use for money, must be considered to be of value to both parties of a transaction
- you are wrong, every time I buy something, I buy it with gold, that's because I have to convert some gold into that particular currency, in which the transaction takes place.
This way I am safe from inflation and you get your fiat.
In Lucerne the taxes are around 9-12%, depends, but it's going to be reduced by 50% in 2012 and will be eliminated by 2016 if people keep voting the same way as before, and there are no indications to the contrary.
I have a company registered in Cyprus, here is the chart, once Lucerne gets taxes below 6%, I'll move one here too.
Even the most socialist states, such as Sweden are lowering their income taxes now, reducing business regulations as well, because they know what's coming. They see Portugal and Greece and where the West is heading with its welfare state policies, and it's not pretty.
- CRB index says it. Gold price chart says it. Copper, cotton, wheat, rice, nickel, coffee, pork bellies, orange juice, steel say it.
The inflating bubble of the US debt says it. The increasing gold position of national bank of China says it. The debt crisis all over the Western world says it. The Middle East with its revolutions over the food prices say it.
I am not saying, I am listening.
"If it doesn't matter whether the value of something like gold is intrinsic or assigned, then there is no difference between gold and paper money." They are valuable because people want them.
- yes, gold is money and it's not food, so people really want food, but they know they need money to buy food.
Gold stores value, so if you take a silver dime minted in USA prior to 1968, you can buy a gallon of gas with it. That's the cheapest gas in US history ever, because the cheapest gas recorded was 25 cents/gallon (but they also offered full service with that, so that's part of the 25 cents).
When you say: people 'want', I am going to reply with this: people do not want their money to lose value. People do not want their money to become less valuable tomorrow than it was today, and USD lost 75% of its value since 2003 in gold and other commodities.
I suggest you go play around with the Inflation Calculator for a little bit and discover that inflation occurred even when the US was on the gold standard.
- I am not only talking about gold standard, I am talking about money printing, so if you go back to that calculator and enter 1 dollar starting from 1800 and then put the final date at 1913, you will find out this:
What cost $1 in 1800 would cost $0.58 in 1913.
Also, if you were to buy exactly the same products in 1913 and 1800, they would cost you $1 and $1.76 respectively. - which proves my point.
You can keep a herd of cattle just fine even if you eat one every now and again, they are built in interest bearing accounts
- they reproduce, but if you stop working and taking care of them, stop feeding them, they'll stop storing the value.
And they walk around so they're more mobile than gold that just sits there.
- silly quote from Warren Buffet. What's the difference between the gold that sits there and fiat currency that sits there? Both just sit there, but fiat loses value due to gov't printing and gold keeps value even if you don't feed it grass, like you'd have to do with your cattle.
And it worked well enough as a unit of account for a long time, a head of cattle is worth 3 pigs, a pig is worth 5 chicken a chicken is worth 40 eggs.
- however with the increasing efficiency of production, the relative values change quickly, as productive output grows and/or demand curve changes. Also what if your cow is too thin or maybe it's a record producer of milk? Are the values the same?
As a means of trade, if you want a new wagon, you trade a cow and get the wagon and a few chickens back.
- and that's how some weird Imperial system of trade starts: a furlong for a hog-shed and some such. We have invented the decimal system, how about we use it for once? It's really convenient.
Gold isn't money any more than dollars or euros.
- and that's why gold was at record high against Euro last week, and will be at record high against USD next week in nominal terms (again)? Those things are LEGAL TENDER, but they are not real money. They are fiat currencies, that are failing quickly right in front of everybody's eyes, and it's all because some people (politicians) love that concept: print money. They can't print gold, so it's not a 'legal tender'.
All the time fiat is falling in value against actual things, but they do this funky dance around one another, and it seems like they are worth something measured in each other, but they are constantly setting new record lows against real money.
In a small town where there is no gold, they'll use for trade instead of gold, and it will be based on the cattle standard, not the gold standard.
- and that's their full right to do so, and it makes sense for them to do so, but when they will buy something from other places, that they do not produce, they'll trade in something that is convertible between those places and that has real money for such trade.
Money is an arbitrary system made to make it easier to trade things.
- it's all good, until there is a way for a politician to abuse it, which is immediately, once gov't starts printing the fiat.
On a small scale, such as that of a few hundred years ago, gold was convenient. Gold isn't worth anything. Just like diamonds aren't worth anything.
- and that's why gold is over 1500/ounce, and diamonds, well depends on a diamond. They are not good for unit of account, they are not really excellent for storing value, because they cannot be recast into larger diamonds, once they are broken into smaller chunks, but they can be used as means of exchange of-course, but their relative value will still be calculated in gold.
The value of fiat goes down immediately, as it stops being backed by something. The backing can be anything. One share of a company is based on the value of the company, dividends it pays - that's interest bearing investment.
Fiat printed by Fed is like a share in US Fed. My point is that the 'earnings' of the Fed are fake, there is no upside, the stock is being diluted every second and the policy of the state ensures economic destruction, but I think at this point the economic destruction is now, and the next logical step is financial collapse starting with US bonds and monetary collapse.
If you don't understand what I am saying, look at what you could buy with US dollar 10 years ago, and what you can buy now in relative and in absolute terms.
Slashdot Mirror
No, you don't understand me correctly.
Whatever you mean? All of his speeches are political.
If I ever meet RMS, I'd like to confront him on his misunderstanding of economics, I think that beyond the future of HURD, that would be the only interesting thing to talk about with the guy.
Also from the same source you can figure out that the man is totally ignorant of the way economy functions, of what the sound monetary and economic policy should be (free market capitalism):
JA: You mean what if all the programming jobs were outsourced to foreign countries?
Richard Stallman: Yes, what if they all go? This may actually happen. When you start thinking about things like total levels of employment, you've got think about all the factors that affect it, not blame it all on one factor. The cause of unemployment is not someone or society deciding that software should be free. The cause of the problem is largely economic policies designed to benefit only the rich. Such as driving wages down.
- clearly RMS is a Marxist in his overall thinking, but MAYBE he can actually learn something about this topic if he only had an opportunity to, but he never had that opportunity.
'Driving down wages' is not a goal in itself. Wages are often not the most significant cost to the business. The most significant cost is corporate and payroll and medical and other taxes and various governmental regulations, that are normally designed to reduce and destroy competition and to provide the politicians with a large chunk of the monopoly money.
As to 'driving down wages' - I will argue that it is part of the thinking for a business, but in absence of government destroying free market, this part of the thinking would be very constraint, as competition would be very high without government involvement and without inflation that government causes by printing money. The companies would not get as large as they get when there is a government around, that is willing and insisting in participating in the business via various schemes - taxes, subsidies, regulations, etc. Also while wages may be going down in more developed countries if businesses move out of them, they increase in less developed countries, where businesses enter the economy and start producing and hiring there. But to be able to benefit from such a move, the business needs to have some economy of scale and very good protection against competition in the former place of business, which comes from good ties with the government, who wants the control over the business and cash flow.
You know, it's no coincidence that we're having all this outsourcing. That was carefully planned. International treaties were designed to make this happen so that people's wages would be reduced.
- again, this was done because the government is large and distorts the economic forces in the first place. The large corporations that benefit from the treaties certainly get various help from many governments of the world, who control their competition, reduce their taxes, making them very difficult to compete with, while raising regulations, which affects the starting businesses dis-proportionately, because they do not have such economies of scale and cannot really afford 10 more compliance officers in the company.
JA: Can you cite specific examples?
Richard Stallman: FTAA. The World Trade Organization. NAFTA. These treaties are designed to reduce wages by making it easy for a company to say to various countries, "which of you will let us pay people the least? That's were we're headed." And if any country starts having a somewhat increased standard of living, companies say "oh, this is a bad labor climate here. You're not making a good climate for business. All the business is going to go away. You better make sure that people get paid less. You're following a foolish policy arranging for workers of your country to be paid more. You've got to make sure that your workers are the lowest paid anywhere in the world, then we'll come back. Otherwise we're all going to run away and punish you."
- the problem with RMS, is that he sees the government as the force, that MUST be in business of setting economic and
RMS is not all of GNU, so here is his personal thoughts on the matter
Richard Stallman: What about them? The programmers writing non-free software? They are doing something antisocial. They should get some other job.
Any more questions?
What are you talking about, it's RMS, I am even surprised he takes a plane at all unless it's Free (and also free).
Maybe if universities in Israel want to have him speak there, they should invite him at a different time and by him some other tickets?
Nuclear.
How can gold keep value when it doesn't have value?
- thousands of years of human trade prove you wrong.
I'm aware gold has properties that make it a convenient form of exchange etc etc ad nauseum. But that doesn't give it value.
- it's money. Do you think your paper money has value? Gold has all properties needed for money, so it's the best money people have invented so far.
It is assigned a value in just as arbitrary a way as fiat currency is.
- 'arbitrary' in a sense that the amount of work that goes into mining it and scarcity of it vs desirability of it allow us to calculate the relative value of anything in gold, and it can't be printed by politicians, which gives it the most important aspect of value, beside all of the other benefits.
And the value of stupid people like you (to those with the gold) will go down as well. I explained it in the very paragraph you are responding to.
- no, the labor costs will go down, as they must. As for 'stupid people like you' - you are entitled to your opinion.
The rich would need you less and less, since their gold is more and more valuable each day.
- the rich don't need you today either. You need them, not the other way around. If it weren't for people, who are capable and willing to save and re-invest their savings into businesses, you'd be still a hunter/gatherer or maybe a farmer today, working for food only.
Again you prove that you have difficulty reading. I used the word PRETEND for a reason. Basically with so many stupid voters around, the US leaders no longer even need to do a good job pretending to help the voters in order to stay in power. In the past at least the voters got some interstate highways and infrastructure.
- being boiled slowly, and not being thrown into boiling water all at once - that's how the notion came up, that the government is somehow responsible for any individual well-being, rather than what its real reason for existence was in the first place. So if people forgot the reasons for their gov't even existing, decided to invent that magical reason and started believing in it, then it's their problem, when the reality come back, crushing their world view and their economy all at once.
As to infrastructure and roads, I explained why this was a terrible idea, to have government in that many times over on this site.
Now more than 9 trillion US dollars have been created out of thin air and what do the voters get?
- the destroyed currency and high prices, just what they want, or is it?
I hear the US people complaining about stuff falling apart, no money to build railways, highways, bridges, broadband. And I think - hey didn't they just print 9 trillion?
- yes, the government propped up the failing businesses, failing housing market, banks, just to keep their valuations up, prices high, and to preserve their very existence in most cases. Nothing good comes out of that ever, because money gets destroyed and the market still has all this nonsense in it, that should have been gone long ago.
They could have printed 1 more trillion and used it to buy stuff from China to build all that crap before China wises up. Before you spout about inflation, they've ALREADY created at least 9 trillion, so what's a trillion more before everyone else catches on?
- I agree. Just crash that fucker all the way down now. But all that infrastructure investment, that could have been made, would only make sense if it was made by private businesses, building things that markets actually need, not all this nonsense subsidized infrastructure, which only looks good for gov't statistics of the fake GDP, but it does nothing to improve the economy and create real investments and jobs and wealth.
You can't do that trickery with gold.
- you don't need trickery with gold. With gold you get USA 19 century - huge increase in productive activity and wealth creation and standard of living and dropping prices simultaneously.
But you can with US dollars. So the US petrodollar is better tool for the US than gold is. It's just not being used for the benefit of the US people
- well no, you should go back to my link to my comment, where I explain the fall of the dollar value relative to other things just from 2003 alone, and you'll see that it lost over 75% of that value
Alternatives? List which materials are malleable, corrosion resistant, a very good conductor of electricity and cheaper than gold.
- it does not matter. As gold is used more and more only as money, everything we do with gold will be reevaluated and alternatives will be found. It's as simple as that. In any case, very little of the stuff is used for industrial purposes, and whatever is used, will be reclaimed in the future, and returned into the monetary system.
Did you even read and understand what I wrote?
- Yeah, I understand to the t, don't worry.
As I ALREADY said in my previous post - wealth is not and will not be evenly distributed - the top 1-2% own a lot of it. So if gold was money (or currency was gold backed) each person would have less than 1 ounce worth of gold. So the value and cost of gold goes up.
- precisely. As it must.
Deflation - that's the point. That's the key. That's the goal. That's the best thing for economy. That's the best thing for the poorest of the poor.
What is the Fed trying to do with printing all this money? They are trying to keep the valuations (prices) up for various companies, for asset classes that they see as necessary - home prices.
They are keeping prices up for things that should fall in prices dramatically, so what the real consequence is, is that the prices for everything else are going up, to ensure that the real valuations of those companies and houses, etc., fall in real terms.
Do you understand? Everything that gov't does is about pushing prices up, and they do it by destroying your fiat.
Gold, on the other hand, would push prices down, as in itself it would become more and more valuable and scarce, and wages would fall. But the economy of deflation years of USA shows that it was the most productive and it generated the most wealth, while the value of money was increasing steadily.
And as the population grows faster than the amount of gold grows, the value and cost of gold goes up. So the rich would give less and less gold as wages to the poor born without it.
- oh, god. The value of gold goes up relative to value of all things, that will go down, thus deflation. I explained it in previous paragraph.
Sure the value of money can go up. But your proposal makes the cost of gold go up.
- First: gold IS money. Second: you think I am proposing something that will not be done without such a proposal? You don't get it at all, do you? Not for a millisecond it goes through you skull? Gold is money. It's going up in value relative to fiat, because fiat is no longer sound money, it's created at a rate of about 10% a year to keep the valuations of things up, that gov't wants to push up, that's all. But those things need to go down in valuations, that's why gold is going up, so that the real prices drop.
It would be great if people stopped valuing gold so much as jewellery, and people like you moved on from their ignorant and primitive obsession with gold as money. There's no magic in gold as money ok? It is even more stupid than having currency backed by land area on the Moon or Mars.
- I am not forcing you to do anything. If you follow your own advice and keep to your fiat, that's fine with me, I don't care that you are losing most of your purchasing power.
Here I showed that fiat USD lost over 75% of its value since 2003. YOU keep it, go ahead. Those who get it, will do fine. Those who don't - well, too bad.
The crisis was a result of looser/poor regulation allowing people to borrow what they could not afford; and allowing the smart, amoral and greedy to create ways to bundle up those loans, play pass the parcel/hot potato with them while taking commissions each time they pass it amongst themselves.
You are correct.
- I know.
Money does not store value.
- fiat does not store value.
That is not the purpose of money.
- that's not the purpose of fiat.
However, the U.S. dollar has not lost 75% of its value since 2003.
- it did.
Here is coffee price chart it was between 60 and 72 USD per contract in 2003.
Here is coffee price chart now. It's between 259 and 290.
In fact, if measured in coffee, the value of USD decreased at the lows by 76%.
select 27 May, 2003 - you will find out that gold closed at 367.20.
Select 27 May 2011, you will find out it closed at 1536.50.
In fact, if measured in gold, the value of USD decreased by 76%.
oil traded between 20 and 28 in 2003, May 27, 2011 it is 100 Do I need to do the math?
I can go on. My point is that when you say things like:
However, the U.S. dollar has not lost 75% of its value since 2003.
- you better be ready for a barrage of numbers.
If the USD had lost that much value, my grocery bill would have gone up by a lot more than it has.
- maybe you should go back to your old receipts and try and figure this out, but prices for food in USA went up by a factor of 2 easy since 2003. However there is a huge factor, which prevents the end user consumables from going off the charts in US (like by factors of 10) today, and that's the fact that US dollars are collecting dust in foreign central banks, who also destroy their currencies following the so called 'reserve'. They are waking up, they stopped buying almost all new US bonds, now Fed buys over 80% of all new bonds, and buys over 30% of bonds on the market, from those, who are dumping them, like Bill Gross and China, etc.
Things are not hunk dory and if something doesn't change very soon, the U.S. economy (and probably the world economy) will pass the point of no return.
- wrong again, bud, it will be US economy and some of the European economies that will go to hell and will have to rebuild from hell, but it's not going to be the world.
Again: wealth is production, not fiat or even gold, and there are plenty of countries today who do have enough production capacity, that they generate trade surpluses, not deficits, like USA does (with pretty much every country, though you only hear about the 50Billion/month deficit with China, but go ahead, look it up, USA has trade deficits even with Canada.)
As long as those countries keep their manufacturing base, they will be just fine. Their USD denominated holdings will be destroyed, but it won't matter, their own currencies will rise and will allow their own population finally to enjoy the fruits of their own labor, which until now USA had the privilege to.
it does not ignore the question, it answers the question simply by pointing out that in similar circumstances people increased production capacity and competition caused prices to fall.
Schiff is fine, he is understand economics through and through, unlike some people (Krugman), who said that any job gov't can provide is good, even if it's only digging and filling in trenches, and he has no clue about what inflation is. The Nobel Prize is dead to me until they take it back from at least Krugman and Obama.
Except whatever you think is real money (fiat) is garbage AFAIC, it doesn't store value at all. USD lost 75% of value since 2003 alone, you want to hold it? You do that.
If lithium is exposed to water, then it will burn with a modest amount of red flame, turning into lithium hydroxide in the process. I do not believe that the flame is particularly hot, either.
Lithium fire - no water involved, but the fire seems quite hot and very dangerous. I wouldn't want my money to do that.
You want the thing you pick to be rare......At the same time, you don't want to pick an element that's too rare. So osmium â" which apparently comes to earth via meteorites â" gets the axe." Seems pretty arbitrary. For starters, why couldnt pyrite be money? Why does it have to be an element?
- because iron pyrites contain iron. Iron is an industrial metal and it corrodes. It's hard to test what is in an iron coin exactly and gold is easy to test with either acids or ultrasound for large bars.
Why should money even be something that has no use in and of itself-- and if that is a requirement, how does gold possibly fit the bill?
- that's just a strange question. Why would I want to put money into a product, so I can sell it for money, it makes no sense.
Of-course we want as little industrial uses for gold as possible. There are a few uses, but they are irrelevant, given that there is relatively small amount of gold in existence and it's still not used up for anything industrial. Besides, industries are not ran by people who just want to burn money in manufacturing process, it's nonsense.
why the barter system is insufficient,
- it is actually sufficient, given that banks become warehouses for cows, chickens, wheat, orange juice, etc. and if that becomes the case, you can have even a credit card backed up by goats, not gold, but this will never happen precisely because there are so many other uses for a goat (which I leave to your imagination), hopefully most uses are dietary in nature.
or how the argument for gold kind of falls apart in societies that are rich in gold and poor in salt, or societies that decided to use other standards.
- salt is not money, but it can be used for barter. It's not money, because people consume it and it can be destroyed - it goes bad.
Half the reasons why gold is money, is because it withstands the natural and man made disasters and accidents so well. Fire? Flood? Earthquake? A meteor strike? Titanic? Who cares. If there is a way to find pieces of the metal, it can be reclaimed.
Plain and simple, using gold as a standard today would be about as arbitrary as anything else
- really? So what do you suggest would be a good standard then? Something that cannot be faked because it can be easily and cheaply tested, something that's easy to work with, recognized easily by anybody (who would recognize osmium as osmium if you showed it to them? It could be any alloy, how do you test it?)
Osmium is insanely hard to mint, to melt, to machine, anything you do with it is freaking difficult and expensive. It looks nice, though, I like it, but it's not money that people would use, otherwise they WOULD HAVE used it already as money. Is that a difficult concept?
That is simply because people have historically valued gold and had faith in it.
- oh, it's that simple, ha? So if it's that simple, how come this thread is filled with people that can't seem to grasp the concept?
Any "money" that people will trust is a good currency; if people fail to trust it, it is a bad currency.
- yeah, but trust has to be based on something. Money is not a religion, it does require proof. I don't trust fiat for a second, never have, never will, any fiat, any country, any time, it's because there are politicians somewhere, trying to steal the value of the money from you, and they always succeed at this one thing.
Quite a number of institutional holders. IMF sold a few metric tons of the metal within the last 2 years alone.
Those who say that gold is in a bubble, should really look at HUI stocks. Gold mining companies are basically where they were at the 2008 lows - doesn't look like a speculative bubble at all, there is no speculative money in the stocks, and they are easier to trade than gold for most speculators.
Gold is a commodity, not a currency.
- show me why would anybody would be buying gold at all, if it wasn't money? Because its use in industries and jewelry requires very little of it.
It totally breaks fractional lending.
- yes. That's a good thing.
Gold is just gold, nothing magic about it
- wow, no shit.
Monetary use of gold artificially raises its value and hurts the real economy
- real economy? Real economy in your estimation gets 'hurt' if people buy gold? Ha.
Real economy is what China has, it's what Japan could have, if they stopped with destruction of their currency. It's what Germany could have, if it stopped running a huge welfare state and stopped propping up failing societies of other silly European nations. It's what USA had in 19 century - fully on gold (and silver, which was silly and counterproductive, as silver is much more corrosive and has much more industrial use).
Real economy is production. Having real money, that is not printed by politicians is a great help to real economy, because it allows storing value, it allows accumulating capital, which can be lent or used directly for new production capacity. Real economy is production capacity and products and services that production capacity provide the people with.
Buying golds saves the people from inflation created by politicians, it saves them, gives them ability to avoid inflation, and gives them the tools to store enough money to start a business or to lend to one.
As to fractional lending: cry me a river. With the current system, where banks are making all the profits, while gov't destroys money through printing, and you can't get a return on a bank deposit, which even begins to cover that inflation itself, I wouldn't want to hold my money in any of those banks.
AFAIC fractional reserve is part of the problem, not part of the solution. I wouldn't hold anything in a bank that did that. When the bond and currency crisis hit, US will bail FDIC out, so that the banks and personal deposits will be bailed out, but the actual currency will be worthless. FDIC is a freaking crime. Glass Steagall was introduced to offset the damage of FDIC, but the damage should never have been inflicted in the first place, as FDIC should never have existed.
Great depression, caused by gov't inflation and spending, didn't even cause more than 2.5% losses associated with bank runs. FDIC was introduce to stave off the perceived damage of a bank run, but the real problem was never a bank run, but the worthlessness of the currency.
He doesn't have a clue. He doesn't understand that inflation is driving savings and investment capital out, ends up driving jobs out. Combined with income taxes it allows gov't to grow into some sort of a monstrosity, that regulates everything under the Sun, making US worker totally uncompetitive. There are millions of people without work, yet in USA there are still a minimum wage laws, and there are still all sorts of regulations, that make hiring US citizens an extremely unattractive proposition when compared to people in other places.
He doesn't understand that gov't, which promises to insure bank deposits, insure health care, insure 'affordable housing', insure retirement, insure monopolies against competition, gov't that subsidizes the car industry by building roads and then starts all sorts of wars to keep the oil coming in to subsidize that type of life further, that gov't ends up creating a monstrosity of a society: totally dependent on the gov't tit, incapable of taking care of itself, thinking that everybody owes them something, unwilling to take any sort of risk, expecting every grievance to be covered by a lawsuit (as gov't displaces other jobs, then inflates value of education by artificial demand through gov't mortgages, that kids end up taking without any collateral before they even graduate, and then so many graduate in social studies, that for not knowing what to do with themselves, they continue the education in the law profession further, creating an ungodly number of lawyers in one country). That society will drive all production capacity out, and the only thing left would be the printer with a seemingly endless supply of ink and paper.
Of-course in order to get something useful out of that paper, it has to provide something, even if only a promise, so bonds are printed and sold to unsuspecting foreigners, who end up buying them forever, and if they ever stop buying, they are threatened that the US will default on the debt (that's what they are talking about, when they say debt ceiling must be raised,) but they are full of shit. Hitting the debt ceiling and not getting into further debt would only require spending to be cut, as US still collects over 2 trillion a year in taxes, that's enough to pay for a much smaller gov't and to start paying out some principal on the debt even, not only the interest.
In 19 century USA used to borrow money as well, but it was building things with that money: infrastructure, factories, etc. Then the products they made were used to pay the debt back.
Now USA borrows only to spend, and at this point, the Fed buys over 30% of all bonds on the market, and over 80% of all new bonds from the Treasury (through GS, BTW.) so clearly the printing press IS the reason that the country is in such terrible shape and debt and so totally unproductive and is in so many wars.
Sound money would put a stop to this nonsense, but that's exactly what GS doesn't want (and they are one of many, who oppose it, they benefit greatly), so it's not going to happen, and US bonds and dollars will be destroyed and then US will have to rebuild, but it won't have any savings to do so, and interest rates will be very high, so it's going to hurt like hell before it gets any better.
Other people pay taxes and bank debts and hence will trade you goods and services for those bits of paper. But they won't for the photocopie variant.
- those who matter realize that there is no difference.
It's a really simple system, the notes have no intrinsic (well an instrinsic value that is tiny) but they make trade easier and hence people agree to use them as a mechanism of exchange.
- 'agree' is a strong word for a fiat system that arose from former economy with gold/silver being money of the land, and gradually this was removed, then there was gold backing, which was removed (one of the many defaults, USA has purported on the public, never mind that the politicians say it can't default, it has already at least once in 1971).
And yes by using a fiat system you have to trust that whomever is doing the printing won't increase the supply by more than economic production has increased,
- and what does the reality tell us? That governments print fiat. They print and print, the more debt and so called "social obligations" they have, the more they print. They could tax, but then gov't would be much smaller, as taxes are unpopular, so they borrow and print and do bail outs and everything else.
So what trust are you talking about?
but in exchange you avoid random inflationary spikes when a new gold deposit is found or a new source of pretty shells is found, or whatever your backing item is.
- hold on, hold on, let me get this straight.
You are worried about new gold deposits (and we know about them in advance, so the 'inflationary spike' would be calculated into the market well in ahead of actual mining production) but you are willing to accept a politician with a printer and bunch of ink and paper? I see.
And you avoid milder inflation/deflation when the growth of the economy differes from the growth of that item.
- I have news for you: inflation today, in a USD based world is around 10% in USA (amount of new money created per year) and the rest of the world is suffering huge price rises due to the export of that inflation, (and all they have to do to stop it, is to stop using USD and stop buying US bonds).
I welcome deflation. I mean I really WELCOME deflation based on competition and increased efficiencies. It's the best thing since sliced bread, because it's cheaper sliced bread.
Gold is not that suitable to be money either. Gold is too useful to be used as money.
- it's not that useful as industrial material, and as the value of fiat plunges, the usage of gold as of industrial material will diminish further, as people will find alternatives.
the average person would have even fewer grams/ounces of gold as their TOTAL cash holdings (includes bank balances) not necessarily net worth - since some people may have cash but have a mortgage.
- you don't divide gold among all people by equal amounts, that's nonsense, it would be a tragedy for the money if it was in equal possession by all parties. As to the imagined worth of the various housing properties that people own -their worth is just that - it's imaginary, as the prices for housing are in a steady decline, and are held up only by inflation, but as housing prices are kept high by inflation, this will force the housing prices to fall in real terms anyway, as prices for everything else people use rise faster.
Estimate how many ounces/grams of gold you'd get paid per month. You are probably richer than the average person in the world. But would you get paid an ounce of gold every month? Think the people paying would now be able to afford that? So the relative cost of gold would go up.
value of money needs to go up, it always needs to go up so that the relative costs of everything else will be going down, and that's good for economy, regardless of what your gov't would have you believe, as in 19 century USA, the economy was becoming stronger and wealthier year to year, with more automation and innovation and inventions, while value of money was in a steady up trend, so the dollar ended the century twice as valuable as when the century started.
The US benefits from being able to create US dollars practically on demand. Because by doing so it can transfer wealth from other countries who are still using the US dollars for billions of stuff.
- well yes, and that's going to end and then US population will be left starving and without any products, and they will have to rebuild a real economy - manufacturing, production, agriculture, mining, everything that people actually use, as opposed to having the fake 'economy' of consumption by borrowing from the very people, who also provide the products.
I own gold and silver and mining stocks, I have them for enough time to appreciate the gains, brought around by the printing of the governments of the world, I don't need to convert anybody into anything.
I LOVE LOW GOLD PRICES, because that's when I can buy more with any new fiat I have at that point.
You can tell me all about the intrinsic value of gold, but if I have no interest in gold. You will not be using it as money to buy anything from me. Whatever you use for money, must be considered to be of value to both parties of a transaction
- you are wrong, every time I buy something, I buy it with gold, that's because I have to convert some gold into that particular currency, in which the transaction takes place.
This way I am safe from inflation and you get your fiat.
In Lucerne the taxes are around 9-12%, depends, but it's going to be reduced by 50% in 2012 and will be eliminated by 2016 if people keep voting the same way as before, and there are no indications to the contrary.
Singapore rates - I like the place.
I have a company registered in Cyprus, here is the chart, once Lucerne gets taxes below 6%, I'll move one here too.
Even the most socialist states, such as Sweden are lowering their income taxes now, reducing business regulations as well, because they know what's coming. They see Portugal and Greece and where the West is heading with its welfare state policies, and it's not pretty.
Because you say so?
- CRB index says it. Gold price chart says it. Copper, cotton, wheat, rice, nickel, coffee, pork bellies, orange juice, steel say it.
The inflating bubble of the US debt says it.
The increasing gold position of national bank of China says it.
The debt crisis all over the Western world says it.
The Middle East with its revolutions over the food prices say it.
I am not saying, I am listening.
"If it doesn't matter whether the value of something like gold is intrinsic or assigned, then there is no difference between gold and paper money." They are valuable because people want them.
- yes, gold is money and it's not food, so people really want food, but they know they need money to buy food.
Gold stores value, so if you take a silver dime minted in USA prior to 1968, you can buy a gallon of gas with it. That's the cheapest gas in US history ever, because the cheapest gas recorded was 25 cents/gallon (but they also offered full service with that, so that's part of the 25 cents).
When you say: people 'want', I am going to reply with this: people do not want their money to lose value. People do not want their money to become less valuable tomorrow than it was today, and USD lost 75% of its value since 2003 in gold and other commodities.
I suggest you go play around with the Inflation Calculator for a little bit and discover that inflation occurred even when the US was on the gold standard.
- I am not only talking about gold standard, I am talking about money printing, so if you go back to that calculator and enter 1 dollar starting from 1800 and then put the final date at 1913, you will find out this:
What cost $1 in 1800 would cost $0.58 in 1913.
Also, if you were to buy exactly the same products in 1913 and 1800,
they would cost you $1 and $1.76 respectively. - which proves my point.
You can keep a herd of cattle just fine even if you eat one every now and again, they are built in interest bearing accounts
- they reproduce, but if you stop working and taking care of them, stop feeding them, they'll stop storing the value.
And they walk around so they're more mobile than gold that just sits there.
- silly quote from Warren Buffet. What's the difference between the gold that sits there and fiat currency that sits there? Both just sit there, but fiat loses value due to gov't printing and gold keeps value even if you don't feed it grass, like you'd have to do with your cattle.
And it worked well enough as a unit of account for a long time, a head of cattle is worth 3 pigs, a pig is worth 5 chicken a chicken is worth 40 eggs.
- however with the increasing efficiency of production, the relative values change quickly, as productive output grows and/or demand curve changes. Also what if your cow is too thin or maybe it's a record producer of milk? Are the values the same?
As a means of trade, if you want a new wagon, you trade a cow and get the wagon and a few chickens back.
- and that's how some weird Imperial system of trade starts: a furlong for a hog-shed and some such. We have invented the decimal system, how about we use it for once? It's really convenient.
Gold isn't money any more than dollars or euros.
- and that's why gold was at record high against Euro last week, and will be at record high against USD next week in nominal terms (again)? Those things are LEGAL TENDER, but they are not real money. They are fiat currencies, that are failing quickly right in front of everybody's eyes, and it's all because some people (politicians) love that concept: print money. They can't print gold, so it's not a 'legal tender'.
Gold has properties much above the 'ooooh, shiny' silliness. It keeps value, and your precious fiat is falling in value all the time.
All the time fiat is falling in value against actual things, but they do this funky dance around one another, and it seems like they are worth something measured in each other, but they are constantly setting new record lows against real money.
In a small town where there is no gold, they'll use for trade instead of gold, and it will be based on the cattle standard, not the gold standard.
- and that's their full right to do so, and it makes sense for them to do so, but when they will buy something from other places, that they do not produce, they'll trade in something that is convertible between those places and that has real money for such trade.
Money is an arbitrary system made to make it easier to trade things.
- it's all good, until there is a way for a politician to abuse it, which is immediately, once gov't starts printing the fiat.
On a small scale, such as that of a few hundred years ago, gold was convenient. Gold isn't worth anything. Just like diamonds aren't worth anything.
- and that's why gold is over 1500/ounce, and diamonds, well depends on a diamond. They are not good for unit of account, they are not really excellent for storing value, because they cannot be recast into larger diamonds, once they are broken into smaller chunks, but they can be used as means of exchange of-course, but their relative value will still be calculated in gold.
You know what else is valuable as money? Money
- yes, but not fiat.
The value of fiat goes down immediately, as it stops being backed by something. The backing can be anything. One share of a company is based on the value of the company, dividends it pays - that's interest bearing investment.
Fiat printed by Fed is like a share in US Fed. My point is that the 'earnings' of the Fed are fake, there is no upside, the stock is being diluted every second and the policy of the state ensures economic destruction, but I think at this point the economic destruction is now, and the next logical step is financial collapse starting with US bonds and monetary collapse.
If you don't understand what I am saying, look at what you could buy with US dollar 10 years ago, and what you can buy now in relative and in absolute terms.