.... Now, you may have an argument for why the postwar boom was fueled by the gold standard but I am not so sure one could really make that connection. What was the specific connnection between the gold standard and postwar prosperity? If the gold standard is the cause of prosperity, how do you explain the proviations of the Great Depression?
Would the US have been given the world's reserve currency in 1944 w/o it's huge dowry of gold? I don't know but it didn't hurt. Enough gold had to be there to settle international debts when demanded. We started out with around 20,000 tons of gold and ended with 8,100. The fact that this agreement existed allowed the US to slowly depreciate the dollar over the next 25 yrs. before our trading partners got tired of it. Having the world's reserve currency played a key role in what the US was able to accomplish without much world oversight. Maybe the reserve currency is not what it was once but we still have it, and partly because we still do have the most gold, at least on paper. But our post war boom was fueled by owning the world's reserve currency. Gold must have played a role in that. The first 27 yrs accustomed everyone to a workable world reserve currency. The next 39 yrs have been mostly on fumes and good will.
<< <i>I believe the derivative number is overstated. While it may be $1.4 quadrillion, there are buy and sell sides, and things are counted multiple times. I think I read somewhere that if you unraveled it all, it would collapse down to a few trillion in actual costs. Not that "a few trillion" is a tiny number, of course.
I read a very clear and concise article about why you can't "go back" to the gold standard. Unfortunately, I don't remember where I saw it, otherwise I'd post a link. >>
The problem in my opinion is leverage, especially unrecognized leverage and risk. These are stripped financial instrument which can involve huge risk since part of something can lose far more value than the asset itself. Most of these derivatives are bets on what is essentially the status quo and if there are any real changes then there will be entities exposed to tremendous losses. This goes ten times over for instuments tied to bonds, their yields, or valuations.
So long as nothing ever changes then there's no problem but we're at a point where changes are necessary. Can all these be unwound if we ever tried? We're steaming toward the rocks with the wheel tied.
The Chinese government has already announced they don't intend to honor or force Chinese entities to honor the losses on silver shorts laid off on them by the big US banks. Everywhere there are time bombs waiting to go off. And they continue to invent new derivatives that peo- ple can't really comprehend so computers are required.
But...isn't the entire net present value of "everything" in the world something like 20-30 trillion? In that case, it's not possible to have "real" debts that are much greater than that, much less 20x. You can have a put option and a call option on an underlying security, but they mostly would cancel each other out beyond a little arbitrage and the underlying security.
Dammit...now I want to try and find a number somewhere that gives an estimate on the value of the world's assets...
For world financial assets I've seen numbers like $100-$150 TRILL. I've also seen some analysts figure out the world's total inherent value including resources yet to be mined or discovered. That means tallying up the value of all the dirt, crust, minerals, water, etc. That number was on the order of $2+ QUAD as I recall...smaller than the bets currently placed.
That's the problem with the otc derivatives. The bankers did indeed create bets (with leverage of up to 50-100X) of probably 10X the financial value of the world in order to pull off their guaranteed commissions and end of year bonuses. They weren't happy to take out a single CDS that AIG would fail, but they took out 50 bets that AIG would fail even though there is only one AIG. And they applied the same measure to our homes as well: 50 bets at $200K that your neighbor would default on his mortgage....yet there is only one deed and one home to settle with. The collateral behind the other 49 bets is thin air. Now do this for all the properties, businesses, cities, and assets in the world. Yup, they levered up the world's financial assets by 10X. It doesn't have to make sense because it never will.....just that they did indeed do it while no one was paying attention. And none of them knows how to undo it. At least not yet. If it were a simple cancellation game, it would have already been done and well underway....yet they got the FASB to reverse their opinion to allow otc derivatives to be marked to model yet again.
I like Cladking's analogy of a ship heading for the rocks with the wheel tied....and no one's minding the helm....everyone's down in the engine room shoveling more fuel into the boiler! If the Duke boys had a problem, they'd just rev up the old General Lee and jump over it. But can a ship at high enough speed jump the reef? Yeeeeeeeeeee.......haaaaaaaaaaaaa.
<< <i>.... Now, you may have an argument for why the postwar boom was fueled by the gold standard but I am not so sure one could really make that connection. What was the specific connnection between the gold standard and postwar prosperity? If the gold standard is the cause of prosperity, how do you explain the proviations of the Great Depression?
Would the US have been given the world's reserve currency in 1944 w/o it's huge dowry of gold? I don't know but it didn't hurt. Enough gold had to be there to settle international debts when demanded. We started out with around 20,000 tons of gold and ended with 8,100. The fact that this agreement existed allowed the US to slowly depreciate the dollar over the next 25 yrs. before our trading partners got tired of it. Having the world's reserve currency played a key role in what the US was able to accomplish without much world oversight. Maybe the reserve currency is not what it was once but we still have it, and partly because we still do have the most gold, at least on paper. But our post war boom was fueled by owning the world's reserve currency. Gold must have played a role in that. The first 27 yrs accustomed everyone to a workable world reserve currency. The next 39 yrs have been mostly on fumes and good will.
roadrunner >>
The position of United States manufacturing in the world economy from the final years of WWII until about 1960, coupled with global military and diplomatic clout, holds far more explanatory power in understanding postwar prosperity that does the amount gold the United States held or the existence of the gold standard. From what you have written above, it appears that you are unsure of whether or not postwar prosperity had anything to do with it. I am still open to there being a connection but as of yet I do not believe you have supplied one.
It's interesting how coin dealers have become economists overnight.
However, I do read this forum and realize that some have comments/posts that point directly to their experience in the finance arena, financial services field, etc.....based on my background in the field.
<< <i>It's interesting how coin dealers have become economists overnight.
However, I do read this forum and realize that some have comments/posts that point directly to their experience in the finance arena, financial services field, etc.....based on my background in the field.
So I keep reading. >>
Economists never agree and are rarely right anyway so why shouldn't coin collectors get a chance to be wrong with them.
A Brief history of US monetary policy from the Civil War until the Federal Reserve Act.
Conspiracy theorists have long viewed the Federal Reserve Act as a means of giving control of the banking system to the money trusts, when in reality the intent and effect was to wrestle control away from them. History clearly demonstrates that in the decades prior to the Federal Reserve Act the decisions of a few large New York banks had, at times, enormous repercussions for banks throughout the country and the economy in general. Following the return to central banking, at least some measure of control was removed from them and placed with the Federal Reserve.
Conspiracy theorists maybe your jargon. I would replace "conspiracy theorists" with "concerned citizens" instead. MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
I come from an immigrant family that's been here now for five generations...as I'll wager 85+% of this board can also attest in their own family histories...so unless you're ancestors stepped off the Mayflower or hunted buffalo, this story may be relevant:
My grandfather was a manual laborer with a grade school education...as a result, the "best" job he ever had was manually loading and unloading sacks of coffee on the Hoboken, NJ docks and into the adjoining Maxwell House coffee plant. Well, in 1952, my grandfather had the misfortune of taking a major heart attack while doing his job. Although he survived the initial attack, since he also didn't have insurance, medical coverage or anything like disability, he was forced to go back to work after only two weeks because his boss was threatening to fire him. So back he went...and shortly after lunch on the first day back, he dropped dead on the dock at the age of 50.
But not to worry, my grandmother...now a widow at 48 with three children...was well cared for...oh that's right, no she wasn't, because we didn't believe in having a social safety net back in those days. So good God-fearing woman that she was had to go to work packing medical kits, penicillian shots and condoms for U.S. soldiers...great stuff, huh?
But those were the good old days of the gold standard, the mightly dollar and USA!...USA!...where basically the "haves" had everything and the "have nots" could just crawl under a rock and die.
And unfortunately, I think quite a few people with the biggest mouths would like us to turn back the clock...quite possibly to the time before that leftie, commie socialist pig FDR punished the rich and stole all their gold and turned the country into a marxist paradise...oh that's right, that didn't quite happen either...silly me.
But not to worry, my grandmother...now a widow at 48 with three children...was well cared for...oh that's right, no she wasn't, because we didn't believe in having a social safety net back in those days. So good God-fearing woman that she was had to go to work packing medical kits, penicillian shots and condoms for U.S. soldiers...great stuff, huh?
But those were the good old days of the gold standard, the mightly dollar and USA!...USA!...where basically the "haves" had everything and the "have nots" could just crawl under a rock and die. And unfortunately, I think quite a few people with the biggest mouths would like us to turn back the clock...quite possibly to the time before that leftie, commie socialist pig FDR punished the rich and stole all their gold and turned the country into a marxist paradise...oh that's right, that didn't quite happen either...silly me.
I don't think anyone here has advocated turning the clock back to the 1800's to a rigid gold standard as THE solution. Rather, we're saying that we need to back the currency with something other than just "clout." Because at some point, possibly already reached, the clout won't cut it. The gold standard was no cure all, neither was pure fiat. The gold experiment lasted about 180-200 yrs. Fiat's only been tested for 39 yrs. The best system lies in between somewhere with a % asset backed currency of some sort. FDR didn't steal the rich people's gold. He took the common man's gold while the rich people sent it overseas to European and South American banks for safekeeping where they saw a 70% increase in it's value following the revaluation from $20.67 to $35/oz. A little bit of socialism and safety nets are a good and necessary thing as they were initially intended in 1934. 100% of a "good (and free) thing" and "safety nets for everyone" as we tend to have today is not good at all. The best system lies in between somewhere. All fiat and all socialism is probably just as bad or worse than 100% unchecked liberty and 100% gold. Which way are we heading?
It's interesting how coin dealers have become economists overnight
I took 2 yrs of economics in college and can say I learned very little, esp in material that could be applied to daily life. It was going to be my minor subject next to my math major. But after Sophomore year the stuff being taught just started sounding silly to me. So that was the end of it. In any case I've probably put in >10,000 hours of self study on finances, economics, pms, charting, transactional analysis, etc. over the past 8 yrs....far from "overnight." No doubt there are many coin dealers here who have done the same if not more in their years in business. What I've learned on my own would certainly have paled to anything a 4 yr econ. degree would have given me. I or anyone else don't claim to be an economist since we didn't earn even basic let alone advanced degrees. Mark for example is a working economist and can speak for economists. All we others can do is contribute what we've learned by our studies. You don't necessarily have to have a degree to know something or to contribute. A bunch of economists just figured out that the 1st recession ended in June 2009. The same bunch were probably slow to even call the start of the first recession until it was long underway. Yet, a truckload of non-economists have done pretty well calling the peaks and valleys of the past 10 yrs...some of them might even be labeled as tangible asset types who have always gotten it. Economist Larry Summers is heading back to Harvard once again. He's now done his work trying to build a bright future for J6P. Let's not forget that as college President he played a big role in sticking conservative Harvard with a pile of structured investment vehicles (ie derivatives) that have since cost them many hundreds of $$millions to get out from under. What's he got planned for round 2?
<< <i>It's interesting how coin dealers have become economists overnight >>
Just stating the obvious - whether one sat for years to earn degrees or had a combination of education and experience in the field, or both, there is some experience to back up the posts........
Lot's of people could read articles and start spewing all the bs that is written, but fewer really understand the mechanics.
Of course, I am not knocking every coin dealer - but you've got to admit alot of them are no more than flea market salesmen.
Gold bugs can be just as ideologically blind as stock brokers. Many of those who were ideologically turned on to gold because of its insurance uses, or their crusade to reinstall the gold standard, confused those things with gold’s periodic merits as an investment. Ideology is the enemy of investment, because it obscures reality. You can be a Pollyanna on gold and silver, and may be right or wrong, but not because of your optimism or pessimism. You need to be an optimist to perceive opportunity when things don’t measure up to the world you would like to see, as opposed to a realistic view of the world and the markets as they really are.
Comments
Would the US have been given the world's reserve currency in 1944 w/o it's huge dowry of gold? I don't know but it didn't hurt. Enough gold had to be there to settle international debts when demanded. We started out with around 20,000 tons of gold and ended with 8,100. The fact that this agreement existed allowed the US to slowly depreciate the dollar over the next 25 yrs. before our trading partners got tired of it. Having the world's reserve currency played a key role in what the US was able to accomplish without much world oversight. Maybe the reserve currency is not what it was once but we still have it, and partly because we still do have the most gold, at least on paper. But our post war boom was fueled by owning the world's reserve currency. Gold must have played a role in that. The first 27 yrs accustomed everyone to a workable world reserve currency. The next 39 yrs have been mostly on fumes and good will.
roadrunner
<< <i>I believe the derivative number is overstated. While it may be $1.4 quadrillion, there are buy and sell sides, and things are counted multiple times. I think I read somewhere that if you unraveled it all, it would collapse down to a few trillion in actual costs. Not that "a few trillion" is a tiny number, of course.
I read a very clear and concise article about why you can't "go back" to the gold standard. Unfortunately, I don't remember where I saw it, otherwise I'd post a link. >>
The problem in my opinion is leverage, especially unrecognized leverage and risk. These are
stripped financial instrument which can involve huge risk since part of something can lose far
more value than the asset itself. Most of these derivatives are bets on what is essentially the
status quo and if there are any real changes then there will be entities exposed to tremendous
losses. This goes ten times over for instuments tied to bonds, their yields, or valuations.
So long as nothing ever changes then there's no problem but we're at a point where changes
are necessary. Can all these be unwound if we ever tried? We're steaming toward the rocks
with the wheel tied.
The Chinese government has already announced they don't intend to honor or force Chinese
entities to honor the losses on silver shorts laid off on them by the big US banks. Everywhere
there are time bombs waiting to go off. And they continue to invent new derivatives that peo-
ple can't really comprehend so computers are required.
But...isn't the entire net present value of "everything" in the world something like 20-30 trillion? In that case, it's not possible to have "real" debts that are much greater than that, much less 20x. You can have a put option and a call option on an underlying security, but they mostly would cancel each other out beyond a little arbitrage and the underlying security.
Dammit...now I want to try and find a number somewhere that gives an estimate on the value of the world's assets...
For world financial assets I've seen numbers like $100-$150 TRILL. I've also seen some analysts figure out the world's total inherent value including resources yet to be mined or discovered. That means tallying up the value of all the dirt, crust, minerals, water, etc. That number was on the order of $2+ QUAD as I recall...smaller than the bets currently placed.
That's the problem with the otc derivatives. The bankers did indeed create bets (with leverage of up to 50-100X) of probably 10X the financial value of the world in order to pull off their guaranteed commissions and end of year bonuses. They weren't happy to take out a single CDS that AIG would fail, but they took out 50 bets that AIG would fail even though there is only one AIG. And they applied the same measure to our homes as well: 50 bets at $200K that your neighbor would default on his mortgage....yet there is only one deed and one home to settle with. The collateral behind the other 49 bets is thin air. Now do this for all the properties, businesses, cities, and assets in the world. Yup, they levered up the world's financial assets by 10X. It doesn't have to make sense because it never will.....just that they did indeed do it while no one was paying attention. And none of them knows how to undo it. At least not yet. If it were a simple cancellation game, it would have already been done and well underway....yet they got the FASB to reverse their opinion to allow otc derivatives to be marked to model yet again.
I like Cladking's analogy of a ship heading for the rocks with the wheel tied....and no one's minding the helm....everyone's down in the engine room shoveling more fuel into the boiler! If the Duke boys had a problem, they'd just rev up the old General Lee and jump over it. But can a ship at high enough speed jump the reef? Yeeeeeeeeeee.......haaaaaaaaaaaaa.
roadrunner
<< <i>.... Now, you may have an argument for why the postwar boom was fueled by the gold standard but I am not so sure one could really make that connection. What was the specific connnection between the gold standard and postwar prosperity? If the gold standard is the cause of prosperity, how do you explain the proviations of the Great Depression?
Would the US have been given the world's reserve currency in 1944 w/o it's huge dowry of gold? I don't know but it didn't hurt. Enough gold had to be there to settle international debts when demanded. We started out with around 20,000 tons of gold and ended with 8,100. The fact that this agreement existed allowed the US to slowly depreciate the dollar over the next 25 yrs. before our trading partners got tired of it. Having the world's reserve currency played a key role in what the US was able to accomplish without much world oversight. Maybe the reserve currency is not what it was once but we still have it, and partly because we still do have the most gold, at least on paper. But our post war boom was fueled by owning the world's reserve currency. Gold must have played a role in that. The first 27 yrs accustomed everyone to a workable world reserve currency. The next 39 yrs have been mostly on fumes and good will.
roadrunner >>
The position of United States manufacturing in the world economy from the final years of WWII until about 1960, coupled with global military and diplomatic clout, holds far more explanatory power in understanding postwar prosperity that does the amount gold the United States held or the existence of the gold standard. From what you have written above, it appears that you are unsure of whether or not postwar prosperity had anything to do with it. I am still open to there being a connection but as of yet I do not believe you have supplied one.
However, I do read this forum and realize that some have comments/posts that point directly to their experience in the finance arena, financial services field, etc.....based on my background in the field.
So I keep reading.
<< <i>It's interesting how coin dealers have become economists overnight.
However, I do read this forum and realize that some have comments/posts that point directly to their experience in the finance arena, financial services field, etc.....based on my background in the field.
So I keep reading. >>
Economists never agree and are rarely right anyway so why shouldn't coin collectors get a chance to be wrong with them.
Conspiracy theorists have long viewed the Federal Reserve Act as a means of giving control of the banking system to the money trusts, when in reality the intent and effect was to wrestle control away from them. History clearly demonstrates that in the decades prior to the Federal Reserve Act the decisions of a few large New York banks had, at times, enormous repercussions for banks throughout the country and the economy in general. Following the return to central banking, at least some measure of control was removed from them and placed with the Federal Reserve.
http://www.publiceye.org/conspire/flaherty/flaherty1.html
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
My grandfather was a manual laborer with a grade school education...as a result, the "best" job he ever had was manually loading and unloading sacks of coffee on the Hoboken, NJ docks and into the adjoining Maxwell House coffee plant. Well, in 1952, my grandfather had the misfortune of taking a major heart attack while doing his job. Although he survived the initial attack, since he also didn't have insurance, medical coverage or anything like disability, he was forced to go back to work after only two weeks because his boss was threatening to fire him. So back he went...and shortly after lunch on the first day back, he dropped dead on the dock at the age of 50.
But not to worry, my grandmother...now a widow at 48 with three children...was well cared for...oh that's right, no she wasn't, because we didn't believe in having a social safety net back in those days. So good God-fearing woman that she was had to go to work packing medical kits, penicillian shots and condoms for U.S. soldiers...great stuff, huh?
But those were the good old days of the gold standard, the mightly dollar and USA!...USA!...where basically the "haves" had everything and the "have nots" could just crawl under a rock and die.
And unfortunately, I think quite a few people with the biggest mouths would like us to turn back the clock...quite possibly to the time before that leftie, commie socialist pig FDR punished the rich and stole all their gold and turned the country into a marxist paradise...oh that's right, that didn't quite happen either...silly me.
But those were the good old days of the gold standard, the mightly dollar and USA!...USA!...where basically the "haves" had everything and the "have nots" could just crawl under a rock and die. And unfortunately, I think quite a few people with the biggest mouths would like us to turn back the clock...quite possibly to the time before that leftie, commie socialist pig FDR punished the rich and stole all their gold and turned the country into a marxist paradise...oh that's right, that didn't quite happen either...silly me.
I don't think anyone here has advocated turning the clock back to the 1800's to a rigid gold standard as THE solution. Rather, we're saying that we need to back the currency with something other than just "clout." Because at some point, possibly already reached, the clout won't cut it. The gold standard was no cure all, neither was pure fiat. The gold experiment lasted about 180-200 yrs. Fiat's only been tested for 39 yrs. The best system lies in between somewhere with a % asset backed currency of some sort. FDR didn't steal the rich people's gold. He took the common man's gold while the rich people sent it overseas to European and South American banks for safekeeping where they saw a 70% increase in it's value following the revaluation from $20.67 to $35/oz. A little bit of socialism and safety nets are a good and necessary thing as they were initially intended in 1934. 100% of a "good (and free) thing" and "safety nets for everyone" as we tend to have today is not good at all. The best system lies in between somewhere. All fiat and all socialism is probably just as bad or worse than 100% unchecked liberty and 100% gold. Which way are we heading?
It's interesting how coin dealers have become economists overnight
I took 2 yrs of economics in college and can say I learned very little, esp in material that could be applied to daily life. It was going to be my minor subject next to my math major. But after Sophomore year the stuff being taught just started sounding silly to me. So that was the end of it. In any case I've probably put in >10,000 hours of self study on finances, economics, pms, charting, transactional analysis, etc. over the past 8 yrs....far from "overnight." No doubt there are many coin dealers here who have done the same if not more in their years in business. What I've learned on my own would certainly have paled to anything a 4 yr econ. degree would have given me. I or anyone else don't claim to be an economist since we didn't earn even basic let alone advanced degrees. Mark for example is a working economist and can speak for economists. All we others can do is contribute what we've learned by our studies. You don't necessarily have to have a degree to know something or to contribute. A bunch of economists just figured out that the 1st recession ended in June 2009. The same bunch were probably slow to even call the start of the first recession until it was long underway. Yet, a truckload of non-economists have done pretty well calling the peaks and valleys of the past 10 yrs...some of them might even be labeled as tangible asset types who have always gotten it. Economist Larry Summers is heading back to Harvard once again. He's now done his work trying to build a bright future for J6P. Let's not forget that as college President he played a big role in sticking conservative Harvard with a pile of structured investment vehicles (ie derivatives) that have since cost them many hundreds of $$millions to get out from under. What's he got planned for round 2?
roadrunner
<< <i>It's interesting how coin dealers have become economists overnight >>
Just stating the obvious - whether one sat for years to earn degrees or had a combination of education and experience in the field, or both, there is some experience to back up the posts........
Lot's of people could read articles and start spewing all the bs that is written, but fewer really understand the mechanics.
Of course, I am not knocking every coin dealer - but you've got to admit alot of them are no more than flea market salesmen.
Howard Ruff
July 2010
http://www.kitco.com/ind/ruff/ruff.html