Fiat Currency - Currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves.
A yuan backed by gold is not a fiat currency. The dollar was not fiat currency until it was not longer backed by the restraint of gold.
The next reserve currency will be backed by gold and China is currently in the driver's seat.
Reserve status of the US dollar has been a blessing to Americans for many years. The Bretton Woods system was brilliant. It has kept the US dollar strong via foreign demand for years and made imported goods cheaper for Americans. It could continue to be a blessing if it's keepers were not so irrresponsible. As usual, greed and corruption ruin another currency.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Gold is worth what we collectively say it is worth though our trading markets. It has value based on other currencies, not an inherent value that is strictly defined. We don't typically say that such-and-such is worth 1.3 oz of gold, do we? So, the notion that gold is THE reserve currency doesn't make sense. A currency backed by gold might have value support based on that backing, but that value will fluctuate with gold prices as well.
All money is most certainly not fiat money. However, most examples of currency could be considered fiat currency, as they require the faith to retain value. This is true whether said currency is unbacked or "backed" by something.
I must say I am not all that surprised that a writer for Forbes doesn't know the difference between money and currency.
they [fiat currencies] require the faith to retain value
so does gold, silver, platinum, corn, soybeans, oil, natural gas, cotton, coffee, as well as values of real estate, art, antiques, comic books, trading cards, and beanie babies.
The precious metals are obviously the most universal of "monies" with many of the best features, but they are far, far from "required" to back a currency
I agree that currencies don't HAVE to be backed by anything. They are basically IOU's for future production/labour.
The problem with unbacked currency is that if the issuing authority starts to issue too much currency, or slacks in terms of production (GDP, etc), no one will trust or want that currency any more. The United States is well on their way down this path. It will take a LOT of slacking, debt and borrowing to tarnish the US dollar after so many decades of it being the go to world reserve currency. But the tide is turning.
backing a currency with gold is not the same as making it redeemable for gold. Gold redemption requires a set fixed price for gold in order to maintain a set fixed value of a currency. Gold backing only requires a fixed amount of gold be held in reserve in relation to the units of currency issued. Gold backing restrains greedy and corrupt governments from creating money from thin air to support their greed and corruption. Gold requires more effort to acquire than does just ink and paper.
"Restraint" dictates (requires) that a currency be backed by something rarer than ink and paper. The proof is in the pudding (Washington/Wall St. and numerous others before them).
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Hyper-inflation happens when the faith in the currency erodes. Workers demand a currency that is at least usable to buy food and necessities. Wages skyrocket (this is the main driver of hyper-inflation, not the printing of money) and with them prices skyrocket. It is a vicious cycle.
Hyper-inflation is not inflation to a higher degree, it is a totally different economic model based on lack of trust.
DerryB: Gold backing only requires a fixed amount of gold be held in reserve in relation to the units of currency issued. Gold backing restrains greedy and corrupt governments from creating money from thin air to support their greed and corruption. Gold requires more effort to acquire than does just ink and paper.
All that would happen would be the (greedy and corrupt) Congress would over time lessen the required amount of gold incrementally until such a small amount would actually back the currency. The common denominator is the greedy and corrupt Congress.
Hyper-inflation happens when the faith in the currency erodes. Workers demand a currency that is at least usable to buy food and necessities. Wages skyrocket (this is the main driver of hyper-inflation, not the printing of money) and with them prices skyrocket. It is a vicious cycle.
Hyper-inflation is not inflation to a higher degree, it is a totally different economic model based on lack of trust.
DerryB: Gold backing only requires a fixed amount of gold be held in reserve in relation to the units of currency issued. Gold backing restrains greedy and corrupt governments from creating money from thin air to support their greed and corruption. Gold requires more effort to acquire than does just ink and paper.
All that would happen would be the (greedy and corrupt) Congress would over time lessen the required amount of gold incrementally until such a small amount would actually back the currency. The common denominator is the greedy and corrupt Congress. >>
So called gold backing is meaningless without convertability. Paper that is backed by gold that can't be accessed is no different than paper that has no backing.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i> Congress would over time lessen the required amount of gold incrementally until such a small amount would actually back the currency. >>
Of course they would, the Romans proved this when they slowly reduced the amount of gold and silver in their coinage to increase their military expansion and line their leaders' pockets (sound familiar?). It was their eventual downfall and the downfall of any nation that follows their example.
The value in a "backed" and strong currency lies not in that placed on it by it citizens. The reward comes from the value put on the currency by foreign trading partners, something the US is slowly but surely learning the hard way. Strong dollars can buy more foreign goods the same as it can buy more domestic goods. Strong currency is a good investment for a foreign investor.
Inflation is a slow increase in prices. Hyperinflation is a rapid decrease in currency value and faith in the currency itself.
<< <i> Paper that is backed by gold that can't be accessed is no different than paper that has no backing. >>
Access to the gold by the holders of paper is not necessary as the effort and expense to acquire the backing dictates the currency was not "invented." Access by auditors to prove it is actually there to back the currency is a necessity. The restraint that a gold backing puts on money creation does make it different than a fiat currency. The backing itself indicates there is some real expense/sacrifice behind the money creation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Salt used to be money. Gold is just a shiny yellow metal that humans have a fondness for. It mostly has value because the "rich" of any society deemed it to have value. To 99% of the worlds population it is worthless--they would rather have clean water and food. Would you rather go into battle with a sword made of gold, or one made of iron? Think maybe all the overthrown Kings throughout history would have opted for the iron sword?
Call me crazy, but even a yuan backed by 100% gold would not encourage me to trade my US dollars for yuan.
Belief in gold is a religion. Fortunately there are enough people who hold the faith.
So called gold backing is meaningless without convertability. Paper that is backed by gold that can't be accessed is no different than paper that has no backing.
Call me difficult, but I agree with PH.
If there's no direct convertability, there's really no backing and no accountability except for elites who get to audit the stack with no disclosure. Been there already and we've seen the slippery slope before - many times, in fact. Happens every time, in one form or the other.
Nix fractional reserve banking. Nix the Fed. Implement Real Bills policy. Make the bankers earn a living the old fashioned way - by working, lending, saving, etc...
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Salt used to be money. Gold is just a shiny yellow metal that humans have a fondness for. It mostly has value because the "rich" of any society deemed it to have value. To 99% of the worlds population it is worthless--they would rather have clean water and food. Would you rather go into battle with a sword made of gold, or one made of iron? Think maybe all the overthrown Kings throughout history would have opted for the iron sword?
Call me crazy, but even a yuan backed by 100% gold would not encourage me to trade my US dollars for yuan.
Belief in gold is a religion. Fortunately there are enough people who hold the faith. >>
All commodities have their own purposes and qualities. There is no need for "belief" in gold because it has great utility outside of monetary purposes (i.e. semiconductors). In thousands of years, no commodity has held or stored wealth better than precious metals. I don't need to educate this crowd on why PMs are better for the application of storing wealth than any alternative for a majority of (but probably not all) situations. No "belief" is needed, because industry will always need gold/platinum/silver because there are no substitutes for some applications, and therefore they have intrinsic value.
<< <i><< Congress would over time lessen the required amount of gold incrementally until such a small amount would actually back the currency. >>
Of course they would, the Romans proved this when they slowly reduced the amount of gold and silver in their coinage to increase their military expansion and line their leaders' pockets (sound familiar?). It was their eventual downfall and the downfall of any nation that follows their example. >>
Yes, but at least this ratio would be published and known, unlike today's situation with the unbacked USD.
PC, gold has very little utility. There are vast supplies of it sitting around the world. For it present industrial applications it is not scarce at all. Silver has more uses, but it also is in great abundance-- if it wasn't common folk like us would not be able to buy "monster boxes".
<< <i>PC, gold has very little utility. There are vast supplies of it sitting around the world. For it present industrial applications it is not scarce at all. Silver has more uses, but it also is in great abundance-- if it wasn't common folk like us would not be able to buy "monster boxes". >>
A lot of people would disagree with the idea that Silver and Gold are in great abundance.
irrational exuberance appears to be in great abundance.
<< <i>gold has very little utility. There are vast supplies of it sitting around the world. For it present industrial applications it is not scarce at all. Silver has more uses, but it also is in great abundance." >>
Gold's utility and industrial applications are limited because it is scarce. Silver's industrial demand is quickly outpacing its supply and will eventually lead to limited uses also because of scarcity. And dollar supply? I think it is safe to say that supply will never be a problem.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Gold's main utility has almost always been as a store of wealth. Much more so than paper promises. Or electrons. Or sea shells. Or salt. Isn't it a contradiction when some people say that there isn't enough gold to function as money, and yet we still hear all of these statements about the overabundance of gold and vast supplies of it sitting all over the world. It can't be both.
The one thing that we do know for sure about gold is that governments don't want to use it as money because they can't create it out of nothing, which means that they would have to find much more difficult ways to extract it from the populations, which would curtail most of their ability to buy cheap votes, which means that they would actually have to consider the welfare of the people they represent in much more transparent ways.
And at the risk of saying something as easy as "this time it's different", I would acknowledge that a looming silver shortage has been on the horizon since at least 1972 or so, when I first started reading about our depleting strategic stockpile and all of the predictions of a silver price spike that was going to happen as soon as the stockpile ran out. As I recall, it took about 10 years longer for the stockpile to run out than was first imagined, and when it did run out there wasn't much of a market impact that I can recall.
However, this time it may be different. Silver is being used more in critical industrial applications now and it's a very useful metal. It might actually be running low this time. But who really knows?
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>Gold's main utility has almost always been as a store of wealth. Much more so than paper promises. Or electrons. Or sea shells. Or salt.
And at the risk of saying something as easy as "this time it's different", I would acknowledge that a looming silver shortage has been on the horizon since at least 1972 or so, when I first started reading about our depleting strategic stockpile and all of the predictions of a silver price spike that was going to happen as soon as the stockpile ran out. As I recall, it took about 10 years longer for the stockpile to run out than was first imagined, and when it did run out there wasn't much of a market impact that I can recall.
However, this time it may be different. Silver is being used more in critical industrial applications now and it's a very useful metal. It might actually be running low this time. But who really knows? >>
Silver is far from "running low", judging by how many crap rounds and bars exist and more churned out every day, if there was a better (aggregate) use for silver, it wouldn't be made into "collectible" tchotchkies you see at ebay, apmex, and all the other myriad retailers of this material... the "shortage" is just marketing BS to get it sold. We will still be having this conversation 10, 20, and 50 years from now, and I hope it will still be as interesting the nth time
silver supply was extended with the advent of digital photography and the near end of photographic chemical printing.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Silver is far from "running low", judging by how many crap rounds and bars exist and more churned out every day, if there was a better (aggregate) use for silver, it wouldn't be made into "collectible" tchotchkies you see at ebay, apmex, and all the other myriad retailers of this material... the "shortage" is just marketing BS to get it sold.
Well, that's kind of an intuitive answer, and while I might agree with it intuitively the main problem is that silver production & consumption statistics are incomplete and somewhat fuzzy, in my opinion. Always have been, in my opinion.
What concerns me more is the shenanigans that Comex plays and the CFTC's apparent blindness or unwillingness to make the process transparent and accountable. The accounting standards for banks are the same way.
In other words, if you put your faith in this "system", I believe that you are misguided at best. Hyperinflation is a loss of confidence in the system (and currency) by a majority of the people.
We've all known for a long time that social security is nothing more than a Ponzi. What we didn't realize at the time was that everything else was being managed the same way. Now, if you don't realize what's happened to the debt and it's impact on everything else, you are being naïve. That includes retirement accounts, healthcare, and employment.
There's really no way to know when the system simply stops working. I experience hiccups in business more now than in past memory. But I have to look at the bright side - maybe it's just my memory that's going.
Q: Are You Printing Money? Bernanke: Not Literally
We've all known for a long time that social security is nothing more than a Ponzi
This is often said, but it is misleading in the following sense:
It is definitely the case that Social Security, particularly Medicare, has a very serious funding problem.
However, the type of changes that would bring projected deficits under control are as follows (these are illustrative but are not meant to be a precise recommendation):
Decrease benefits by 1 % per year for the next 20 years, and Increase Social Security taxes by 1 % per year for the next 20 years, and Introduce a means test to tax benefits of well off participants
Definitely earlier Social Security recipients have and will receive more value than they paid in, and in that sense, one could view it as a Ponzi like scheme. The reason why the analogy is dangerous, however, is that in fact, relatively modest changes can be implemented today that will put the system on a sound footing. This is not the case with a Ponzi Scheme. Unfortunately, the required changes, are not palatable to either party and therefore we just dither.
A gold back currency I believe can become corrupted also by greedy and corrupt governments. They will find a say to subvert it. Governments will never be restrained in their spending.
I should have said that government finance is a giant Ponzi.
Social Security was a Ponzi until the politicians removed it from its own segregated account and allowed the money to be used in the General Fund. After that, it was no longer a Ponzi, just an extension of another wealth transfer scheme.
It's kinda like the "debt limit". I don't remember when they invented the "debt limit", but it wasn't that long ago. I also don't remember why the debt limit was invented. Does anyone here remember? What's the point of the debt limit, exactly?
At some point, they will discover that they can't change the math. The fact that they keep trying to change the math should tell us all something.
Q: Are You Printing Money? Bernanke: Not Literally
Upon enactment of the Second Liberty Bond Act of 1917, Congress began the practice of imposing limits on specific categories of debt. As a recent Congressional Research Service report recounts, in 1939 Congress eliminated the separate limits and created an aggregate limit covering nearly all public debt.
<< <i>Upon enactment of the Second Liberty Bond Act of 1917, Congress began the practice of imposing limits on specific categories of debt. As a recent Congressional Research Service report recounts, in 1939 Congress eliminated the separate limits and created an aggregate limit covering nearly all public debt. >>
I'd like to add the Budget and Accounting Act of 1921, enforced by the GAO, required the President to make his own budget. It was to add the President along with the Congress the responsibility of "...all matters in relation to the receipt, disbursement, and application of public funds." The GAO would audit and make recommendations on their findings. This bit a micro-mangaging was what Wilson wanted and eventually signed by Harding.
I'm not sure why, maybe it's self evident, but in a span of about 10 years there were many new agencies and laws regarding the "accountability and dispersement" of tax monies. It seems in an attempt to regulate previous large economic swings the "panics" they wanted to soften were actually exacerbated soon afterward.
Comments
A yuan backed by gold is not a fiat currency. The dollar was not fiat currency until it was not longer backed by the restraint of gold.
The next reserve currency will be backed by gold and China is currently in the driver's seat.
Reserve status of the US dollar has been a blessing to Americans for many years. The Bretton Woods system was brilliant. It has kept the US dollar strong via foreign demand for years and made imported goods cheaper for Americans. It could continue to be a blessing if it's keepers were not so irrresponsible. As usual, greed and corruption ruin another currency.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
A yuan backed by gold is not a fiat currency.
Gold is worth what we collectively say it is worth though our trading markets. It has value based on other currencies, not an inherent value that is strictly defined. We don't typically say that such-and-such is worth 1.3 oz of gold, do we? So, the notion that gold is THE reserve currency doesn't make sense. A currency backed by gold might have value support based on that backing, but that value will fluctuate with gold prices as well.
I must say I am not all that surprised that a writer for Forbes doesn't know the difference between money and currency.
so does gold, silver, platinum, corn, soybeans, oil, natural gas, cotton, coffee, as well as values of real estate, art, antiques, comic books, trading cards, and beanie babies.
The precious metals are obviously the most universal of "monies" with many of the best features, but they are far, far from "required" to back a currency
Liberty: Parent of Science & Industry
The problem with unbacked currency is that if the issuing authority starts to issue too much currency, or slacks in terms of production (GDP, etc), no one will trust or want that currency any more. The United States is well on their way down this path. It will take a LOT of slacking, debt and borrowing to tarnish the US dollar after so many decades of it being the go to world reserve currency. But the tide is turning.
"Restraint" dictates (requires) that a currency be backed by something rarer than ink and paper. The proof is in the pudding (Washington/Wall St. and numerous others before them).
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Hyper-inflation happens when the faith in the currency erodes. Workers demand a currency that is at least usable to buy food and necessities. Wages skyrocket (this is the main driver of hyper-inflation, not the printing of money) and with them prices skyrocket. It is a vicious cycle.
Hyper-inflation is not inflation to a higher degree, it is a totally different economic model based on lack of trust.
DerryB:
Gold backing only requires a fixed amount of gold be held in reserve in relation to the units of currency issued. Gold backing restrains greedy and corrupt governments from creating money from thin air to support their greed and corruption. Gold requires more effort to acquire than does just ink and paper.
All that would happen would be the (greedy and corrupt) Congress would over time lessen the required amount of gold incrementally until such a small amount would actually back the currency. The common denominator is the greedy and corrupt Congress.
<< <i>Which brings us back to the OP's question.
Hyper-inflation happens when the faith in the currency erodes. Workers demand a currency that is at least usable to buy food and necessities. Wages skyrocket (this is the main driver of hyper-inflation, not the printing of money) and with them prices skyrocket. It is a vicious cycle.
Hyper-inflation is not inflation to a higher degree, it is a totally different economic model based on lack of trust.
DerryB:
Gold backing only requires a fixed amount of gold be held in reserve in relation to the units of currency issued. Gold backing restrains greedy and corrupt governments from creating money from thin air to support their greed and corruption. Gold requires more effort to acquire than does just ink and paper.
All that would happen would be the (greedy and corrupt) Congress would over time lessen the required amount of gold incrementally until such a small amount would actually back the currency. The common denominator is the greedy and corrupt Congress. >>
So called gold backing is meaningless without convertability. Paper that is backed by gold that can't be accessed is no different than paper that has no backing.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i> Congress would over time lessen the required amount of gold incrementally until such a small amount would actually back the currency. >>
Of course they would, the Romans proved this when they slowly reduced the amount of gold and silver in their coinage to increase their military expansion and line their leaders' pockets (sound familiar?). It was their eventual downfall and the downfall of any nation that follows their example.
The value in a "backed" and strong currency lies not in that placed on it by it citizens. The reward comes from the value put on the currency by foreign trading partners, something the US is slowly but surely learning the hard way. Strong dollars can buy more foreign goods the same as it can buy more domestic goods. Strong currency is a good investment for a foreign investor.
Inflation is a slow increase in prices.
Hyperinflation is a rapid decrease in currency value and faith in the currency itself.
<< <i> Paper that is backed by gold that can't be accessed is no different than paper that has no backing. >>
Access to the gold by the holders of paper is not necessary as the effort and expense to acquire the backing dictates the currency was not "invented." Access by auditors to prove it is actually there to back the currency is a necessity. The restraint that a gold backing puts on money creation does make it different than a fiat currency. The backing itself indicates there is some real expense/sacrifice behind the money creation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Call me crazy, but even a yuan backed by 100% gold would not encourage me to trade my US dollars for yuan.
Belief in gold is a religion. Fortunately there are enough people who hold the faith.
Knowledge is the enemy of fear
Call me difficult, but I agree with PH.
If there's no direct convertability, there's really no backing and no accountability except for elites who get to audit the stack with no disclosure. Been there already and we've seen the slippery slope before - many times, in fact. Happens every time, in one form or the other.
Nix fractional reserve banking. Nix the Fed. Implement Real Bills policy. Make the bankers earn a living the old fashioned way - by working, lending, saving, etc...
Antal Feteke
I knew it would happen.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Salt used to be money. Gold is just a shiny yellow metal that humans have a fondness for. It mostly has value because the "rich" of any society deemed it to have value. To 99% of the worlds population it is worthless--they would rather have clean water and food. Would you rather go into battle with a sword made of gold, or one made of iron? Think maybe all the overthrown Kings throughout history would have opted for the iron sword?
Call me crazy, but even a yuan backed by 100% gold would not encourage me to trade my US dollars for yuan.
Belief in gold is a religion. Fortunately there are enough people who hold the faith. >>
All commodities have their own purposes and qualities. There is no need for "belief" in gold because it has great utility outside of monetary purposes (i.e. semiconductors). In thousands of years, no commodity has held or stored wealth better than precious metals. I don't need to educate this crowd on why PMs are better for the application of storing wealth than any alternative for a majority of (but probably not all) situations. No "belief" is needed, because industry will always need gold/platinum/silver because there are no substitutes for some applications, and therefore they have intrinsic value.
<< <i><< Congress would over time lessen the required amount of gold incrementally until such a small amount would actually back the currency. >>
Of course they would, the Romans proved this when they slowly reduced the amount of gold and silver in their coinage to increase their military expansion and line their leaders' pockets (sound familiar?). It was their eventual downfall and the downfall of any nation that follows their example. >>
Yes, but at least this ratio would be published and known, unlike today's situation with the unbacked USD.
Knowledge is the enemy of fear
<< <i>PC, gold has very little utility. There are vast supplies of it sitting around the world. For it present industrial applications it is not scarce at all. Silver has more uses, but it also is in great abundance-- if it wasn't common folk like us would not be able to buy "monster boxes". >>
A lot of people would disagree with the idea that Silver and Gold are in great abundance.
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<< <i>gold has very little utility. There are vast supplies of it sitting around the world. For it present industrial applications it is not scarce at all. Silver has more uses, but it also is in great abundance." >>
Gold's utility and industrial applications are limited because it is scarce. Silver's industrial demand is quickly outpacing its supply and will eventually lead to limited uses also because of scarcity. And dollar supply? I think it is safe to say that supply will never be a problem.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The one thing that we do know for sure about gold is that governments don't want to use it as money because they can't create it out of nothing, which means that they would have to find much more difficult ways to extract it from the populations, which would curtail most of their ability to buy cheap votes, which means that they would actually have to consider the welfare of the people they represent in much more transparent ways.
And at the risk of saying something as easy as "this time it's different", I would acknowledge that a looming silver shortage has been on the horizon since at least 1972 or so, when I first started reading about our depleting strategic stockpile and all of the predictions of a silver price spike that was going to happen as soon as the stockpile ran out. As I recall, it took about 10 years longer for the stockpile to run out than was first imagined, and when it did run out there wasn't much of a market impact that I can recall.
However, this time it may be different. Silver is being used more in critical industrial applications now and it's a very useful metal. It might actually be running low this time. But who really knows?
I knew it would happen.
<< <i>Gold's main utility has almost always been as a store of wealth. Much more so than paper promises. Or electrons. Or sea shells. Or salt.
And at the risk of saying something as easy as "this time it's different", I would acknowledge that a looming silver shortage has been on the horizon since at least 1972 or so, when I first started reading about our depleting strategic stockpile and all of the predictions of a silver price spike that was going to happen as soon as the stockpile ran out. As I recall, it took about 10 years longer for the stockpile to run out than was first imagined, and when it did run out there wasn't much of a market impact that I can recall.
However, this time it may be different. Silver is being used more in critical industrial applications now and it's a very useful metal. It might actually be running low this time. But who really knows? >>
Silver is far from "running low", judging by how many crap rounds and bars exist and more churned out every day, if there was a better (aggregate) use for silver, it wouldn't be made into "collectible" tchotchkies you see at ebay, apmex, and all the other myriad retailers of this material... the "shortage" is just marketing BS to get it sold. We will still be having this conversation 10, 20, and 50 years from now, and I hope it will still be as interesting the nth time
Liberty: Parent of Science & Industry
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Well, that's kind of an intuitive answer, and while I might agree with it intuitively the main problem is that silver production & consumption statistics are incomplete and somewhat fuzzy, in my opinion. Always have been, in my opinion.
What concerns me more is the shenanigans that Comex plays and the CFTC's apparent blindness or unwillingness to make the process transparent and accountable. The accounting standards for banks are the same way.
In other words, if you put your faith in this "system", I believe that you are misguided at best. Hyperinflation is a loss of confidence in the system (and currency) by a majority of the people.
We've all known for a long time that social security is nothing more than a Ponzi. What we didn't realize at the time was that everything else was being managed the same way. Now, if you don't realize what's happened to the debt and it's impact on everything else, you are being naïve. That includes retirement accounts, healthcare, and employment.
There's really no way to know when the system simply stops working. I experience hiccups in business more now than in past memory. But I have to look at the bright side - maybe it's just my memory that's going.
I knew it would happen.
So as long as we have enough people to keep the faith we are golden.
Silver is being used more in critical industrial applications now and it's a very useful metal
Until it isnt....
silver supply was extended with the advent of digital photography and the near end of photographic chemical printing.
Knowledge is the enemy of fear
This is often said, but it is misleading in the following sense:
It is definitely the case that Social Security, particularly Medicare, has a very serious funding problem.
However, the type of changes that would bring projected deficits under control are as follows (these are illustrative but are not meant to be a precise recommendation):
Decrease benefits by 1 % per year for the next 20 years, and
Increase Social Security taxes by 1 % per year for the next 20 years, and
Introduce a means test to tax benefits of well off participants
Definitely earlier Social Security recipients have and will receive more value than they paid in, and in that sense, one could view it as a Ponzi like scheme. The reason why the analogy is dangerous, however, is that in fact, relatively modest changes can be implemented today that will put the system on a sound footing. This is not the case with a Ponzi Scheme. Unfortunately, the required changes, are not palatable to either party and therefore we just dither.
Box of 20
Social Security was a Ponzi until the politicians removed it from its own segregated account and allowed the money to be used in the General Fund. After that, it was no longer a Ponzi, just an extension of another wealth transfer scheme.
It's kinda like the "debt limit". I don't remember when they invented the "debt limit", but it wasn't that long ago. I also don't remember why the debt limit was invented. Does anyone here remember? What's the point of the debt limit, exactly?
At some point, they will discover that they can't change the math. The fact that they keep trying to change the math should tell us all something.
I knew it would happen.
<< <i>Upon enactment of the Second Liberty Bond Act of 1917, Congress began the practice of imposing limits on specific categories of debt. As a recent Congressional Research Service report recounts, in 1939 Congress eliminated the separate limits and created an aggregate limit covering nearly all public debt. >>
I'd like to add the Budget and Accounting Act of 1921, enforced by the GAO, required the President to make his own budget. It was to add the President along with the Congress the responsibility of "...all matters in relation to the receipt, disbursement, and application of public funds." The GAO would audit and make recommendations on their findings. This bit a micro-mangaging was what Wilson wanted and eventually signed by Harding.
I'm not sure why, maybe it's self evident, but in a span of about 10 years there were many new agencies and laws regarding the "accountability and dispersement" of tax monies. It seems in an attempt to regulate previous large economic swings the "panics" they wanted to soften were actually exacerbated soon afterward.