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uomo_senza_nome
2011 Jun 23, 6:47am
If everyone agreed that the long term trend for gold was up, up, up then they would be buying it NOW.
lol people think its way too expensive. they don't understand dollar has been devalued steadily as well...its all smoke and mirrors, what happens to the dollar and no one seems to notice...no one seems to care.
And if everyone was buying now, the price of gold would go up. That’s how the future expectations are already priced in.
confidence is a big thing for the fiat currency. confidence is still lingering, but waning big time.
Just because people disagree with you doesn’t mean they are brain-dead or asleep.
lol am not saying that. but everyone should at least be looking to BTFD.
Wow....someone asked why gold is valuable as money and NO ONE brought up its physical properties?
Gold has these wonderful physical properties that make it a great fit for money:
* Rare enough that having some is meaningful. You can't just "grow more on trees" or print some or play games like that. Nor can you go to the beach and get bucketsful, like you can with sand. Even aluminum ore would be a little too easy. You have to go mine HARD for it. All the gold ever mined could be formed into a 19-meter cube, a cube that increases in size only 1-2% each year (and probably even less in coming years).
* Identifiable and workable, even with primitive tools. Its boiling point is low enough that you don't need space-age blast furnaces to work it; it's soft and malleable and can be made into easily-stamped coins of known weight or jewelry. It's a bright yellow color that is easily identified and not like most other metals. That means you don't have to have sophisticated metallurgical studies in your culture to know you've got gold, which isn't really the case for, say, titanium.
* It really does not tarnish, corrode, or otherwise degrade over time. We still find ancient gold coins from time to time that are more or less intact. You can pass it down, you can leave it out in the rain, a house fire probably won't destroy it, and so on. Oh, and it's not a radioactive metal, so it won't give cancer to your great-grandchildren either!
* Since we're talking about uniform elemental material that is solid (uncompressable) at room temperature, divisibility and fungibility are clearly also in the bag as well. Not so with, say, gems, right? They can vary in quality for the same karat weight because of uncontrollable impurities or flaws or whatnot...or imagine using carbon dioxide gas as money...a balloon of it would literally inflate or deflate with the seasons! Incidentally, this uniformity and the above chemical stability make it a great "medium of exchange" too because it wears well and is the same everywhere.
To some extent, silver shares gold's properties. HOWEVER, it tarnishes over time. BUT it still works well enough that it is a common secondary metal. Also as with copper. Most other metals just don't work as well, or for thousands of years did not. Things like rhodium have far too high a melting point and is far too rare; I believe also it's more recently discovered. Platinum is too rare to be practical compared to gold. Anything that's too rare is not typically available everywhere on the earth.
Other non-metallic compounds with the same rarity and chemical stability tend not to have metal's nice working properties...malleability, low melting point for re-forming, etc.
You could argue that, in a digital age, money properties like "unit of account" are better handled by technology. However, the "store of value" aspect continues to shine for gold; paper currency loses value, digital currency loses value AND requires electricity and technology to maintain it, at significant, if not huge, cost. If you want to GUARANTEE buying power in 100 years, the best you can do is gold. If gold is not accepted as payment in 100 years, it will be because *money* per se no longer carries the same conceptual weight and we will have reverted to valuing only direct labor, water, food, shelter, clothing, and services. NONE of those things can be saved indefinitely, it should be noted...what an advanced society indeed, that would have abolished stored wealth. Or, perhaps, what an impoverished one, that could not afford it.
uomo_senza_nome
2011 Jun 24, 9:45am
Wow….someone asked why gold is valuable as money and NO ONE brought up its physical properties?
it has already been brought up in other threads. But forget about it. tatapu70 loves the fiat, centrally planned currency too much that nothing you say will be convincing enough..lol
tatupu70
2011 Jun 24, 10:28am
Wow….someone asked why gold is valuable as money and NO ONE brought up its physical properties?
it has already been brought up in other threads. But forget about it. tatapu70 loves the fiat, centrally planned currency too much that nothing you say will be convincing enough..lol
It has nothing to do with me loving fiat currency although I do think it is a much better solution than a gold standard.
My question is, and always has been, why is there such demand for gold. Because value is a combination of supply and demand. Being rare does not automatically make something valuable. And the answer isn't because of its chemical or physical properties. The answer is always--because people have always believed it to be valuable. Well, that's fine. It's just not something I would ever want to invest in.
My question is, and always has been, why is there such demand for gold. Because value is a combination of supply and demand. Being rare does not automatically make something valuable. And the answer isn’t because of its chemical or physical properties. The answer is always–because people have always believed it to be valuable. Well, that’s fine. It’s just not something I would ever want to invest in.
Slow down there, cowboy. If you take a moment and think about it, you answered your own question. The value comes purely from the utility inherent in the physical properties.
Plus you are confusing *price* and *value*. *Price* is a combination of supply and demand. *Value* is the force that drives demand. But you knew that, right?
Gold's value is that it has great utility as money. Just ask yourself the same question about fiat money. What gives fiat money its value? It's just paper or digital bits...why would you keep any value in it? It's useful as money, yes? It's just a question of how MUCH money utility it has. Right now fiat currency is more accepted for all the money properties except perhaps "store of value", but even then not so much. But the tide is changing.
The only reason that gold is so high right now is because all these "Gold will replace US dollar as world currency" talk.
However Gold will never become "money", because the money supply has to increase with the population growth.
uomo_senza_nome
2011 Jun 25, 3:19am
However Gold will never become “moneyâ€, because the money supply has to increase with the population growth.
More shallow fallacies. Why should the money supply increase with population? If money stock remained the same and productivity increased and more efficient goods/services are produced, then prices are in a continuous decline. Gold becomes that much more valuable when exchanged for goods.
Here's Murray Rothbard:
But money differs from other commodities in one essential fact. And grasping this difference furnishes a key to understanding monetary matters. When the supply of any other good increases, this increase
confers a social benefit; it is a matter for general rejoicing.
More consumer goods mean a higher standard of living for
the public; more capital goods mean sustained and
increased living standards in the future. The discovery of
new, fertile land or natural resources also promises to add to
living standards, present and future. But what about
money? Does an addition to the money supply also benefit
the public at large?
Multiplying coin will not whisk these resources into being. We
may feel twice as rich for the moment, but clearly all we are
doing is diluting the money supply. As the public rushes out
to spend its new-found wealth, prices will, very roughly,
double—or at least rise until the demand is satisfied, and
money no longer bids against itself for the existing goods.
Thus, we see that while an increase in the money supply, like an increase in the supply of any good, lowers its
price, the change does not—unlike other goods—confer a
social benefit. The public at large is not made richer.
Whereas new consumer or capital goods add to standards of
living, new money only raises prices—i.e., dilutes its own
purchasing power. The reason for this puzzle is that money
is only useful for its exchange value .
tatupu70
2011 Jun 25, 5:29am
Plus you are confusing *price* and *value*. *Price* is a combination of supply and demand. *Value* is the force that drives demand. But you knew that, right?
I was sloppy in my last post--thank you for pointing that out.
Gold’s value is that it has great utility as money. Just ask yourself the same question about fiat money. What gives fiat money its value? It’s just paper or digital bits…why would you keep any value in it? It’s useful as money, yes? It’s just a question of how MUCH money utility it has. Right now fiat currency is more accepted for all the money properties except perhaps “store of valueâ€, but even then not so much. But the tide is changing.
And your point is? How does that relate to the value of gold? And how is the tide changing?
If money stock remained the same and productivity increased and more efficient goods/services are produced, then prices are in a continuous decline. Gold becomes that much more valuable when exchanged for goods.
In other words, deflation. Why do people spend if deflation is coming? People will stop spending and wait for better price.
This will cause recession.
wk
2011 Jun 25, 9:05pm
There are very few items in our lives that ever experience deflation.
Remember, people can't really delay entirely spending on Food, Healthcare, heating, cooling, until prices come down. Yes, they do cut back and doctors offices have seen a drop off as a result of the economic contraction. But, I've yet seen a drop in prices and most people I know get hungry regularly. Besides the Governments never pause their spending to wait for lower prices and Government employees get pay raises/bonuses even when times are bad.
I think a bigger challenge is that the Money required to maintain Government is always increasing......can the Government afford to have prices drop or be flat. Does this mean that Taxes will be lower in the future?
Taxation generally has been going up for ever - and Taxes are not just Income taxes. Think of how much the average American pays in property taxes, telecommunications taxes,gas taxes, car registration taxes, toll road fees.
When there is a whiff of Deflation you generally get massive Government intervention to get us back to Prosperity as Ben Bernanke defines it = Inflation for example 2009 and 2001.
"Gold as money" is good in theory, but will never work because the whole government spending thing is based on the ponzi scheme.
The government spends first (currently at 70% GDP). Hopefully population and economy grow fast enough to "cover" it later.
uomo_senza_nome
2011 Jun 26, 2:51am
because the whole government spending thing is based on the ponzi scheme.
This much is true. 100%.
Hopefully population and economy grow fast enough to “cover†it later.
lol, population growth will only make it worse not better...as soon as the human comes in, he/she can't enter the labor force..it takes 20 years before they do. economy growing will cover it, but only as long as energy is cheap. energy is so closely interconnected to the global economy than most people realize.
If money stock remained the same and productivity increased and more efficient goods/services are produced, then prices are in a continuous decline. Gold becomes that much more valuable when exchanged for goods.
In other words, deflation. Why do people spend if deflation is coming? People will stop spending and wait for better price.
This will cause recession.
Until the price decline actually reflects true market value. Then they buy. This causes recovery. Trying to fight a price decline via inflationary policies will only cause market distortions (and sometimes bubbles). In fact, those distortions, once they unravel, result in a larger fall out down the road. Everyone who thinks deflation is an endless cycle ignores the fact that every period of deflation was self correcting. Meanwhile, the one that took the longest to correct was the one that they tried to fight the most.
The housing market took its turn around 2007. We are about 4 years into this mess with no recovery in sight. History will eventually look back on these policies and actions and write them as a catastrophic failure, despite the fact that the media and hollywood are doing their best to try to paint the Fed as the institution that saved the economy.
tatupu70
2011 Jun 26, 11:28pm
Everyone who thinks deflation is an endless cycle ignores the fact that every period of deflation was self correcting.
How was the Great Depression "self-correcting"? Please elaborate.
uomo_senza_nome
2011 Jun 27, 2:34am
History will eventually look back on these policies and actions and write them as a catastrophic failure, despite the fact that the media and hollywood are doing their best to try to paint the Fed as the institution that saved the economy.
oakman, brilliantly said.
As David Stockman says in the video LINK: It was the 'Blackberry Panic of 2008'.
tatupu70
2011 Jun 27, 2:53am
How was the Great Depression “self-correcting� Please elaborate.
see world war 2
Good point. If he includes revolt, revolution, and wars as part of the self correcting mechanism, then it might make sense.
And your point is? How does that relate to the value of gold? And how is the tide changing?
It is simply this: all value is psychological. Even food and shelter have a value - and price - that is determined by psychology. And, as a concept, money has a high value to people right now. You keep thinking "But where is the hard, important, inelastic demand, usefulness, etc.?" but such value does not exist except in the minds of people exchanging things.
Everyone who thinks deflation is an endless cycle ignores the fact that every period of deflation was self correcting.
How was the Great Depression “self-correcting� Please elaborate.
it wasn't. That's why I said "the one they tried to fight".
tatupu70
2011 Jun 27, 8:38am
theoakman says
Everyone who thinks deflation is an endless cycle ignores the fact that every period of deflation was self correcting.
How was the Great Depression “self-correcting� Please elaborate.
it wasn’t. That’s why I said “the one they tried to fightâ€.
All evidence to the contrary, of course.
Everyone who thinks deflation is an endless cycle ignores the fact that every period of deflation was self correcting.
How was the Great Depression “self-correcting� Please elaborate.
it wasn’t. That’s why I said “the one they tried to fightâ€.
All evidence to the contrary, of course.
Contrary to what?
Contrary to what?
Contrary to the story that you are trying to sell.
Oh really? The great depression didn't last longer than every other recession as a result of a deflationary episode? There is a reason they referred to it as the "great" depression. Would you like me to draw a picture to help you understand?
tatupu70
2011 Jun 27, 10:12pm
The real story is that the GDP numbers were fudged and real GDP cannot be calculated because you cannot calculate real GDP using inflation numbers when your inflation numbers were completely biased by the fact that the government was heavily involved in price fixing goods and services.
Ahhh. Now I see how it works. Numbers are real if they agree with you. But they are fake or fudged if they don't.
I guess you never have to admit that you're wrong that way, huh?
tatupu70
2011 Jun 28, 6:47am
The only problem with that theory is that the alternative of "not doing anything" clearly did NOT cause things to ever get better.
Any rational person would look at the data and claim FDR's policies were working. And that if anything, there should have been more intervention.
When the intervention stopped, things got worse. Not sure how anyone could see this and think that not doing anything was a better solution. When not doing anything clearly made things worse in 1937.
Finally, WWII got us out of the depression. That was one huge government intervention. Intervention worked. Non-intervention didn't. Any other explanation is just BS.
The real story is that the GDP numbers were fudged and real GDP cannot be calculated because you cannot calculate real GDP using inflation numbers when your inflation numbers were completely biased by the fact that the government was heavily involved in price fixing goods and services.
Ahhh. Now I see how it works. Numbers are real if they agree with you. But they are fake or fudged if they don’t.
I guess you never have to admit that you’re wrong that way, huh?
No, the fact that you think you can adjust for inflation when prices are being artificially fixed explains why you cannot trust the numbers. I don't expect you to understand any of this because it goes way over your head.
tatupu70
2011 Jun 28, 10:28am
No, the fact that you think you can adjust for inflation when prices are being artificially fixed explains why you cannot trust the numbers. I don’t expect you to understand any of this because it goes way over your head.
lol--is it your contention then that GDP did NOT improve during FDR's term? And unemployment did not go down?
And that things didn't get worse when government intervention stopped?
No, the fact that you think you can adjust for inflation when prices are being artificially fixed explains why you cannot trust the numbers. I don’t expect you to understand any of this because it goes way over your head.
lol–is it your contention then that GDP did NOT improve during FDR’s term? And unemployment did not go down?
And that things didn’t get worse when government intervention stopped?
Like, I said, you have trouble following a single argument. It results in you stuck in perpetual arguments with everyone. As a high school teacher, I would compare you to the students that needs everything written out and underlined so you they can follow it.
Let me try.
GDP did not improve nearly as much as the numbers reported claim. If it did, unemployment would have improved beyond 10%.
tatupu70
2011 Jun 28, 12:52pm
GDP did not improve nearly as much as the numbers reported claim. If it did, unemployment would have improved beyond 10%.
OK let me get this straight--
Oak: FDR's government intervention made the Great Depression longer.
Tatu: Actually, if you look at the numbers, government intervention improved things. GDP rose, unemployment fell.
Oak: You can't believe the government numbers
Tatu: So GDP didn't rise? Unemployment didn't fall?
Oak: Well, GDP didn't rise that much.
The point is government intervention WORKED. No intervention (1937) DIDN'T WORK. History is very definitive.
GDP did not improve nearly as much as the numbers reported claim. If it did, unemployment would have improved beyond 10%.
OK let me get this straight–
Oak: FDR’s government intervention made the Great Depression longer.
Tatu: Actually, if you look at the numbers, government intervention improved things. GDP rose, unemployment fell.
Oak: You can’t believe the government numbers
Tatu: So GDP didn’t rise? Unemployment didn’t fall?
Oak: Well, GDP didn’t rise that much.
The point is government intervention WORKED. No intervention (1937) DIDN’T WORK. History is very definitive.
The fact that you think that economic intervention ended in 1937 shows you have no knowledge of the Great Depression. The fact that you think it started in 1932 also shows you have no knowledge of the great depression.
Achieving 10% unemployment is hardly what I would call a success story.
tatupu70
2011 Jun 28, 11:32pm
The fact that you think that economic intervention ended in 1937 shows you have no knowledge of the Great Depression. The fact that you think it started in 1932 also shows you have no knowledge of the great depression.
If I thought the Great Depression started in 1932 you might have a point.
So do you have any real basis to your theory that FDR's policies extended the Great Depression? So far you've offered nothing.
The fact that you think that economic intervention ended in 1937 shows you have no knowledge of the Great Depression. The fact that you think it started in 1932 also shows you have no knowledge of the great depression.
If I thought the Great Depression started in 1932 you might have a point.
So do you have any real basis to your theory that FDR’s policies extended the Great Depression? So far you’ve offered nothing.
"It" referred to economic intervention.
tatupu70
2011 Jun 29, 2:26am
“It†referred to economic intervention.
Right--I forgot. The government is ALWAYS intervening and is ALWAYS the cause of whatever problem we are experiencing. No matter what it is.
But, again, how's about you present a case for why FDR made the Depression longer?
“It†referred to economic intervention.
Right–I forgot. The government is ALWAYS intervening and is ALWAYS the cause of whatever problem we are experiencing. No matter what it is.
But, again, how’s about you present a case for why FDR made the Depression longer?
I've already done it for you 2 or 3 times over the years. It never sticks so I won't bother.
You're main problem is you always inadvertently create a straw man argument because you either don't read carefully or you refuse to understand what anyone is ever arguing. Half the time, I give up with you simply because every other post requires me to clarify what a pronoun was referring to.
tatupu70
2011 Jun 29, 3:30am
You’re main problem is you always inadvertently create a straw man argument because you either don’t read carefully or you refuse to understand what anyone is ever arguing. Half the time, I give up with you simply because every other post requires me to clarify what a pronoun was referring to.
lol--that's why you give up? Perhaps you might learn to write more effectively.. Just a thought.
(tip 1: learn the difference between your and you're)
You’re main problem is you always inadvertently create a straw man argument because you either don’t read carefully or you refuse to understand what anyone is ever arguing. Half the time, I give up with you simply because every other post requires me to clarify what a pronoun was referring to.
lol–that’s why you give up? Perhaps you might learn to write more effectively.. Just a thought.
(tip 1: learn the difference between your and you’re)
lol. No, even when I write a coherent sentence, you misconstrue it.
tatupu70
2011 Jun 29, 3:47am
I’ve already done it for you 2 or 3 times over the years. It never sticks so I won’t bother.
How about you link to it then if it's too much trouble to write it again?
tatupu70
2011 Jun 29, 3:49am
The fact that you think it started in 1932 also shows you have no knowledge of the great depression.
I'll stop now, but if you said this sentence to 100 people, 100 of them would say "it" referred to the Great Depression.
uomo_senza_nome
2011 Jun 30, 3:40am
You are referring to the TARP. I was talking about the stimulus.
Ah I see...the ARRA you mean? First-time home buyer tax credit being a part of it....that worked very well right?
Keynesian economics says that the government ought to replace a drop in private spending with an increase in public spending to save jobs and stop further economic decline. What Keynesian economics doesn't realize is that the public spending itself comes from the private tax payers, so in some senses - the government is essentially a machinery to take money from one pocket to put it to another pocket. Whether the government is doing this efficiently better than the market participants is a question that can be answered easily. There is no recovery after what the government has done, which means it has done a useless job.
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Lots of arguments, charts showing that gold could already be in a bubble.
Now, I know for sure that we're not there yet, its a long way to go before we reach the bubble state in gold and it will be turbulent way, rest assured.
I thought I'd post two links to show why gold has a lot of potential upside.
What we have today is a debt-based monetary system. How money gets created in such a system will really surprise a lot of people.
Death by debt: http://www.chrismartenson.com/blog/death-debt/58941
Why gold has a lot of upside (directly ties in with how the system is impacted by debt): http://dailycapitalist.com/2011/06/07/why-gold-above-15000-per-ounce-by-2020-is-realistic-without-hyperinflation/
#bubbles