A question for those of you who claim a gold backed currency could not work.

gecko109

From 1776-1933 the U.S. was on a gold standard. This nation made tremendous gains towards becoming a major world player.

From 1933-1971 the U.S. still had metals backed currency....and in that timeframe became the world's emminent superpower.

From 1971-present the U.S. has been on a completely fiat, unbacked monetary system and is on the verge of economic collapse.


So please explain to me how this country became the world's superpower......all the while having its money backed by physical metal.....yet couldnt possibly function if we again returned to that system?

DrBuster

We hold the most big sticks, that's how. We're on the military backed currency standard until DC screws that up too.

I think everyone here is on our own metals currency standard, cake - the rest can eat it.

gsa1fan

<< <i>We hold the most big sticks, that's how. We're on the military backed currency standard until DC screws that up too.

I think everyone here is on our own metals currency standard, cake - the rest can eat it. >>



So true! That's why we have to shoot a few Tomahawk missiles every now & then to keep folks awake

OPA

<< <i>From 1776-1933 the U.S. was on a gold standard. This nation made tremendous gains towards becoming a major world player.

From 1933-1971 the U.S. still had metals backed currency....and in that timeframe became the world's emminent superpower.

From 1971-present the U.S. has been on a completely fiat, unbacked monetary system and is on the verge of economic collapse.


So please explain to me how this country became the world's superpower......all the while having its money backed by physical metal.....yet couldnt possibly function if we again returned to that system? >>



I suppose a couple of World Wars to get the economy moving again, just helped a little bid. I'm not sure, but I suspect both wars could not have been financed had we remained on a strict gold based currency. Didn't we have a great depression somewhere along the line?

JCMhouston

I don't think the backing of gold has anything to do with having world power. If you go back to the 18th C., practically speaking, all nations were on either a gold or silver standard. Same with the early 20th C., the reason we overtook Europe in the early 20th C. has to do more with WW I eating up an entire generation of young European men and the inability of European powers to deal with a modern political reality. Trying to maintain fuedalism into the 20th C. was just never going to work. Our problems in the late 20th C. likewise have little or nothing to do with the gold standard. It has more to do with greed, avarice, the inability to think as a nation, the World Bank, the UN, the idea that the "rich" countries must pay for the "poor" countries, the inability of our politicians to keep their hands out of everyone elses pockets and the list goes on and on. We could write a thesis on any one of these.

However from a more historical perspective power runs in cycles, in early recorded times you had Greece, Egypt etc.(ignoring for the present early far east civilizations), they lasted some number of generations and fell. Rome took over for a while then it too fell, the Franks took over Europe for a couple of generations and they fell, in modern Europe you had Spain for a while, then England, France almost a world power for a while, and they all fell. The US took over the world stage for 100 years and then we started to go by the wayside, Japan was on top of the world for a single generation, the "Asian Tigers" for less than that, now China for an unknown period of time.

Historically what goes around comes around as they say, there is a natural cycle to the birth and decline of a civilization, it just seems to be faster cycles now.

cohodk

From 1776-1933 the U.S. was on a gold standard. This nation made tremendous gains towards becoming a major world player

This country went through several massive boom and bust cycles that would make this current "recession" look like a party during that time. It truely was only after 1933 when the USA flexed its global muscle, and that due to the destruction of most of the European manufacturing infrastructure.

The current "scheme" has removed the deflationary forces that were so present during the 1776-1933 timeframe. But dont worry, those forces will be back.

57loaded

reasons why for going off gold backed currency (wikipedia) short

i have read that there would be devastating depression if a gold standard was reinstated just here.

gold would need to be at a price of ~50k per ounce.

other countries would need to follow suit?

i am not defending what has happened.

roadrunner

<< <i>From 1776-1933 the U.S. was on a gold standard. This nation made tremendous gains towards becoming a major world player.
From 1933-1971 the U.S. still had metals backed currency....and in that timeframe became the world's emminent superpower.
From 1971-present the U.S. has been on a completely fiat, unbacked monetary system and is on the verge of economic collapse.

So please explain to me how this country became the world's superpower......all the while having its money backed by physical metal.....yet couldnt possibly function if we again returned to that system? >>



There were a number of interruptions in that gold standard along the way....such as 1861-1879, bi-metalism from 1878-1900, 1914-1920. And some will argue that we really came off the gold standard from the start of WW1 and technically never went back to the strict system instituted prior to 1914. During the 19th century we had private banks and US Banks 1 and 2 that in essence cheated on the gold standard numerous times. One such example was following the war of 1812 (1813-1821). So the bankers cheated on the standard whenever it was in their best interest to do so, especially to fund wars. When they pulled the liquidity plug (following bouts of irrational exuberance) they also caused recessions and depressions. The moderate adherence to a gold standard was able to keep the debt manageable until we finally closed the gold window. But even if we had kept a gold standard, the bankers still would have invented otc derivatives....and still would have found a way to crash the economy regardless of a gold standard or current monetary laws. They flat out invented their own personalized debt-money system.

roadrunner

piecesofme

I suppose a couple of World Wars to get the economy moving again, just helped a little bid. I'm not sure, but I suspect both wars could not have been financed had we remained on a strict gold based currency. Didn't we have a great depression somewhere along the line?

secondrepublic

The U.S. dollar could easily have a backing in gold. In fact, you could argue the existing U.S. gold reserves, along with other U.S. government assets, already act as a de facto backing for the currency.

And actually, if you talk to normal people out there -- not people on these boards -- many people still believe the currency has a backing of some kind.

calleocho

It would work.

The reason it hasnt work all that well in the past its not because of the metal itself but rather Politicians and bankers.

I have always been interested in the reasons why the Latin Monetary union didnt work out so well...and its never because the gold standard didnt funtion as it was supposed to ..it was rather corrupt politicians finding creative ways to abuse the system.

However the British and American gold standards worked much better...and especially the germanic estates did a much better job.

dpoole

Gold backing means stability, but there's not much room for expansion economically in that case beyond the possession/availability of physical gold (people with paper can retrieve the gold at will, right?).

You talk about frustrated individual enterprise and freedom.

That's why the US experienced booms and catastrophic busts, as people fiddled with the money supply in order to foster the expansion of the 19th century.

Backing the currency instead on the "faith in the US government" meant we could expand available "money" much quicker to accommodate investments, wars and so on.

But that meant we became less attentive to assuring that genuine wealth expanded enough to preserve the power of the currency. We'd have wild inflation, if we hadn't had the historical anomaly of happening to also have the "international currency" that other, richer folks have been supporting for purposes of self-preservation.

That deceit, though, is about to run its course as foreigners now seek other ways to preserve their wealth.

Governments debasing their currency to pay debts. That's the repeated pattern of history. It's it amazing how inexorible that is?

OPA

<< <i>It would work.

The reason it hasnt work all that well in the past its not because of the metal itself but rather Politicians and bankers.

I have always been interested in the reasons why the Latin Monetary union didnt work out so well...and its never because the gold standard didnt funtion as it was supposed to ..it was rather corrupt politicians finding creative ways to abuse the system.

However the British and American gold standards worked much better...and especially the germanic estates did a much better job. >>



Reality check.......What makes you think it would it be any different the next time around? With human nature the way it is.. It's part of our DNA. Gold backed currency is nothing but a Camelotian Pipe dream in a Utopian World.

derryb

<< <i>So please explain to me how this country became the world's superpower......all the while having its money backed by physical metal.....yet couldnt possibly function if we again returned to that system? >>


Gold standard limited the amount of financing for the war machine. Not until Nixon took us off the gold standard did we truely become the "superpower" during the Reagan years. With no restraint on the dollar, the great creater of money (the banking cartel) was able to finance all the planes, ships and bombs that the pentagon claimed to need, resulting in our current status - slaves to debt.

calleocho

I somewhat agree with you OPA ...my point was that The Gold Standard itself its not to blame.

cohodk

Come to think of it, I believe we should back our currency with the yellow commodity----CORN.

If a country cant feed its own people, it probably shouldnt even have a currency!!!

coirn

<< <i>From 1776-1933 the U.S. was on a gold standard. This nation made tremendous gains towards becoming a major world player.

From 1933-1971 the U.S. still had metals backed currency....and in that timeframe became the world's emminent superpower.

From 1971-present the U.S. has been on a completely fiat, unbacked monetary system and is on the verge of economic collapse.


So please explain to me how this country became the world's superpower......all the while having its money backed by physical metal.....yet couldnt possibly function if we again returned to that system? >>


One is not related to the other.

Here's an example why:
From 1776-1933 the u.s. was on the count-on-your-fingers standard. This nation made tremendous gains toward becoming a major world player.

From 1901-1971 the u.s. was on the pencil and paper math standard... and in that timeframe became the world's eminent superpower.

From 1971-present the u.s. has been on the computer standard and is on the verge of economic collapse.

"So please explain to me how this country became the world's superpower....all the while having the ability to count on our fingers....yet couldn't possibly function if we were to return to that system?

See how that doesn't really work?

57loaded

the abacus?

OPA

<< <i>the abacus? >>



+ Comptometers...they've been around since the 1880's..Prior to that, it was not necessary nor did 90% of the population knew how to count past 10.

Bear

How would you feel if there was a currency exchange. Three dollars of current paper dollars

for two dollars gold backed. After 30 days, the old money is null and void and only the new money

is legal tender. The same goes for the debt. It is reduced by 33%. Gold is backing each dollar in the

fractional amount of 10%. Gold is then pegged at a sum ,sufficient for the backing. Hot drug money

would in fact become worthless as large sums of money to be traded in would cause a special task force

to investigate where it came from.

coirn

<< <i>How would you feel if there was a currency exchange. Three dollars of current paper dollars

for two dollars gold backed. After 30 days, the old money is null and void and only the new money

is legal tender. The same goes for the debt. It is reduced by 33%. Gold is backing each dollar in the

fractional amount of 10%. Gold is then pegged at a sum ,sufficient for the backing. Hot drug money

would in fact become worthless as large sums of money to be traded in would cause a special task force

to investigate where it came from. >>



That is an outstanding and excellent idea outside of the pesky fact it simply wouldn't work.
Other than that though . . .

roadrunner

The govt has been sitting on those huge stashes of new techno, high security $100 Bills. So what reason are they holding them back, the day when they tell everyone the old bills are no good unless turned in to your local bank in small increments?

roadrunner

OPA

<< <i>The govt has been sitting on those huge stashes of new techno, high security $100 Bills. So what reason are they holding them back, the day when they tell everyone the old bills are no good unless turned in to your local bank in small increments?

roadrunner >>



Feeling a bid paranoid tonight? From what I've heard from BEP sources, it is the same reason that's been published for the last 12 month or so. It may even be on their website, but I'm sure if you Google it, you'll find it.

19Lyds

<< <i>From 1776-1933 the U.S. was on a gold standard. This nation made tremendous gains towards becoming a major world player.

From 1933-1971 the U.S. still had metals backed currency....and in that timeframe became the world's emminent superpower.

From 1971-present the U.S. has been on a completely fiat, unbacked monetary system and is on the verge of economic collapse.


So please explain to me how this country became the world's superpower......all the while having its money backed by physical metal.....yet couldnt possibly function if we again returned to that system? >>

Simple.

Atomic Bomb followed by the Hydrogen Bomb followed by a bazillion Nuclear Missiles planted throughout the country side.

Fire Power brings economic prosperity when dealing with other countries and making/negotiating trade agreements.

The economic collapse had much more to do with "uncontrolled greed" than it has to do with a pm backed currency.

BTW, nobody, super power or not, is currently on a pm based currency so our economics fits right in with the rest of the world who is also in dire need of some economic refreshments.

19Lyds

<< <i>The U.S. dollar could easily have a backing in gold. In fact, you could argue the existing U.S. gold reserves, along with other U.S. government assets, already act as a de facto backing for the currency.

And actually, if you talk to normal people out there -- not people on these boards -- many people still believe the currency has a backing of some kind. >>

LOL! Those are not "normal" people as much as they are folks that are simply ignorant of the Country's current Financial System. Much like those individuals that believe the Federal Reserve Bank is owned by or is an agent of the US Government.

It's not.

It's a privately held Bank that has a single customer and whose ONLY purpose is to lend money to that customer and make good on that customers "Line of Credit" which is accessed through specially printed "withdrawel slips" called Federal Reserve Notes.

It makes it's money as "interest" on borrowed funds and just like any corpoation in the World, those borrowed funds are approved by the Board of Directors (Congress).

It's really quite simple.

coirn

Gram for gram, there is more heavy weight fly-by-the-seat-of-your-pants shenanigan opinions in this thread than most others.

Bear

In even the most outlandish ideas, there is usually, a modicum of truth.

DrBuster

delete

Bear

<< <i>delete >>



Probably the most articulate and perceptive

comment made on this thread.

coirn

<< <i>In even the most outlandish ideas, there is usually, a modicum of truth. >>



5% truth and 95% untruth is like 95% pure water mixed with 5% urine.

Still undrinkable.

Bear

In desperate circumstances, people have drunk 100% urine and have survived.

In this world we inhabit, at this particular point in time, anything is possible, any

thing is probable, any thing is conceivable I would not be too quick to agree with,

or disagree with, much of anything.

derryb

rationale for a gold standard

cladking

<< <i>From 1776-1933 the U.S. was on a gold standard. This nation made tremendous gains towards becoming a major world player.

From 1933-1971 the U.S. still had metals backed currency....and in that timeframe became the world's emminent superpower.

From 1971-present the U.S. has been on a completely fiat, unbacked monetary system and is on the verge of economic collapse.


So please explain to me how this country became the world's superpower......all the while having its money backed by physical metal.....yet couldnt possibly function if we again returned to that system? >>




90% of the population were farmers as recently as 1929. Whenever there was a currency crisis or
another panic it didn't stop the crops from growing or the birds from flying. People could eat.

Today food comes from factories that run on money. 3% of the population are "farmers" but it's
no longer sun and rain that makes them flourish but other factories. The "farms" themselves have
more defining characteristics of factories than of places for crops to grow (farms).

The first time there is a panic with the new gold standard there will be 10,000,000 deaths per week
from starvation after 5 days. If the panic isn't resolved quickly there will be little left but cockroaches
and gold.

vann

What matters is who controls the quantity, not what backs it. A pure gold standard won't work because it is a small market and easy to manipulate by the largest holders of it (central banks). Currency is just a commodity that facilitates commerce and just like any other commodity, if you have a corner on the market, you can influence the price. This documentary from 1996 is a great and very detailed explanation of financial systems thorough history and explains why the 'business cycle' of booms and busts is controlled by those that control the issuance of currency and accurately predicts the debt crisis of today.

The Money Masters

derryb

A revolutionary way to make it work

". . . instead of being a claim on something else, it simply is what it is: a fractional gram of gold. It can be stored, traded, or melted down - just like a coin or bar."

ebaytrader

heh.

Baley

<< <i>A revolutionary way to make it work

". . . instead of being a claim on something else, it simply is what it is: a fractional gram of gold. It can be stored, traded, or melted down - just like a coin or bar." >>



Plus, an exclusive guided tour of a candy factory. "I've got another riddle for you!"

cohodk

<< <i>A revolutionary way to make it work

". . . instead of being a claim on something else, it simply is what it is: a fractional gram of gold. It can be stored, traded, or melted down - just like a coin or bar." >>




I love these marketing schemes. Always an attempt to separate us from our dollars.

http://shop.valaurum.com/Peak-Prosperity-Aurum-LIMITED-EDITION-PP2.htm

$2 worth of gold for $10.

derryb

<< <i>

<< <i>A revolutionary way to make it work

". . . instead of being a claim on something else, it simply is what it is: a fractional gram of gold. It can be stored, traded, or melted down - just like a coin or bar." >>




I love these marketing schemes. Always an attempt to separate us from our dollars.

http://shop.valaurum.com/Peak-Prosperity-Aurum-LIMITED-EDITION-PP2.htm

$2 worth of gold for $10. >>


sorta like $22 book value of AAPL for $132.

Baley

Lots of actual people make an actual market in AAPL shares. Who makes an ACTUAL market in those notes??

Like so many "PM Products", it's a one-way market, and THAT's why so many gloom and doom websites have inflated-price bullion sellers advertising in the margins of the hype article.

Musky1011

Markets are manipulated

derryb

<< <i>Lots of actual people make an actual market in AAPL shares. Who makes an ACTUAL market in those notes?? >>


What makes a market ACTUAL??

Baley

Participants

TwoSides2aCoin

I think we can rest assured the BITCOIN won't be having a huge impact on the value of any particular coin, either.

derryb

<< <i>Participants >>


So if nobody bids on any of the ebay auctions it is no longer an actual market?

cohodk

<< <i>

<< <i>

<< <i>A revolutionary way to make it work

". . . instead of being a claim on something else, it simply is what it is: a fractional gram of gold. It can be stored, traded, or melted down - just like a coin or bar." >>




I love these marketing schemes. Always an attempt to separate us from our dollars.

http://shop.valaurum.com/Peak-Prosperity-Aurum-LIMITED-EDITION-PP2.htm

$2 worth of gold for $10. >>


sorta like $22 book value of AAPL for $132. >>




No, not really at all. But that why you are so basackwards.

TwoSides2aCoin

It's very difficult to not enjoy you cohodk… in case nobody ever said so… I love your thinking.

jmski52

$3.86 worth of gold for $10

or for $8.00 if you buy 10 or more

Not as bad as cohodk would have you think, but not as good as the marketers would have you think.

Interesting idea if scaling up production reduces the costs significantly.

Not that it would ever happen.

derryb

Presented as proof that gold can actually be used as a currency, the technology is there. Why back currency when you can have it actually contain the metal just as coins do. If used, they would not have to be purchased any more than you have to purchase dollar bills - the FED would just print them only there would be some actual real cost. Of course this real cost is the whole idea behind backing a currency, to create restraint.

s4ny

You can take your dollars and buy gold. Your choice.

There isn't enough gold for the industrialized countries to
have a gold standard. It would result in steady deflation.

roadrunner

<< <i>You can take your dollars and buy gold. Your choice.

There isn't enough gold for the industrialized countries to
have a gold standard. It would result in steady deflation. >>




170,000 tonnes of gold scattered around the world isn't enough? They central banks probably didn't have more than 40,000 tonnes combined back in the 1960's. You can take your gold and buy dollars too. There's no such thing as steady deflation anymore with central banks creating boom/bust cycles. The 19th century was the closest thing to steady deflation seen yet (in between the bank's boom cycles)....most of that done on a gold standard.

There's always enough gold to go around....at a price. Fwiw, under previous workable gold standards that existed prior to 1914, >95% of the daily/weekly/monthly transactions occur with real "gold" bills. You don't need gold to handle the routine transactions...just like you don't need a pile of FRN's everytime you go into a store, restaurant, gas station, etc. By this logic, the US dollar standard is a failure as there are "not enough" to go around (ie 4X as much gold in the world as FRN's). And that would probably be "news" to the US Treasury and FED.....lol. What would happen if tomorrow everyone wanted to cash out in FRN's? That would be no different than everyone wanting to cash out in gold coin ounces on a gold standard. All the gold standard permutations that have existed since 1914 were missing key features of the previous ones.