[e-gold-list] Re: If there are to be no more t-bills...
Almost all of the world uses non backed fiat currency. The world has never seen this before Brenton Woods in 1971. Fiat currencies are fraud and theft. I've heard statements like this quite a few times now, and it all sounds a bit like hot air to me. It doesn't quite make sense. Would you care to explain why you think fiat currencies are inherently and completely bad, as opposed to non-fiat currencies? Such as gold-based ones, I presume? I don't think gold-based currencies are backed by anything much better either. Sure, you can have a ton of gold. But what good is a ton of gold? I can't use it. There are only a few high-tech industries that make what could be called constructive use gold, and the rest of it is used for displays of vanity. To me, a ton of gold means about as much as a ton of hay. *Unless* I can sell it to someone who *does* have a need for gold as a material. Such as the aerospace industry, or the computer hardware industry. These people will pay for gold as much as makes economic sense, compared to alternatives - such as the use of other materials with similar characteristics. Of course, I can also sell the gold to someone who will sell it to someone who will sell it as material to the industry that can use it. But at the end of it all, any sensible basis for the price of gold is set by this same industry: gold cannot be worth less than those people will pay for it, and in the long term it cannot be worth much more either. So, instead of a currency that is backed by the entire economy, you have a currency that is backed by only a small branch of that economy. How is that much better than USD? Suppose someone finds a huge goldmine. Or someone discovers an asteroid that consists of pure gold, and hauls it to Earth. Or someone discovers a way to produce gold atoms cheaply. Or, more probably, someone finds a way to convert major gold-using industrial processes to use another, cheaper material instead. If your fortune is based on gold, it will depreciate in value - big time. If your fortune is backed by the economy as a whole, discoveries of more efficient industrial processes or new goldmines don't have an influence. No, scrap that - they do have an influence: more efficient industrial processes mean economic growth, which makes the economy-based currency stronger. I think the concept of currency backed by economy is good. After all, money is compensation for hours spent working. Money ought to correspond to time spent, not to weight of material acquired. So I think it does make great sense to back a currency on economy, not on material. My opinion is therefore that any bashing of "fiat currencies" a priori is largely unsubstantiated. It may be true that a gold-backed currency would survive an economic recession better than an economy-backed currency; but on the other hand, an economy-backed currency is resilient to changes which cause depreciation in the value of gold. The two types seem to be complementary rather than adversary. Regards, denis --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED]
[e-gold-list] Re: If there are to be no more t-bills...
Hello! Almost all of the world uses non backed fiat currency. The world has never seen this before Brenton Woods in 1971. Fiat currencies are fraud and theft. I've heard statements like this quite a few times now, and it all sounds a bit like hot air to me. It doesn't quite make sense. Would you care to explain why you think fiat currencies are inherently and completely bad, as opposed to non-fiat currencies? Such as gold-based ones, I presume? I've heard fiat currencies called 'fraud' and 'theft' for a long time, too, and while I can't say for sure that they have these attributes, they do seem to have some similarities. Let's say that I create a new currency called 'Igits', and I loan you 100 'Igits' with an agreement that you repay me the 100 igits at the end of a year, along with an extra 5 igits in interest. Without an underlying commodity backing the igits, then how can the borrower repay the loan, with interest. The borrower must rely on the issuer distributing other igits to other people, and the borrower hopes to acquire these new igits in exchange for services he provides. It has the essence of a con because the issuer must continue to expand the monetary base to keep his loans from defaulting, and this is exactly what the Federal Reserve, which issues US dollars, does. I don't think gold-based currencies are backed by anything much better either. Sure, you can have a ton of gold. But what good is a ton of gold? I can't use it. There are only a few high-tech industries that make what could be called constructive use gold, and the rest of it is used for displays of vanity. To me, a ton of gold means about as much as a ton of hay. The primary purpose of gold is to hoard it -- not to use it in manufacturing. This is its purpose as a monetary asset. How is that much better than USD? With an artificial currency, like igits, or US Dollars, the central authority has the power to destroy the currency by creating an excessively large supply. Such an authority also has the power to extend credit far beyond what would be possible with a commodity-backed currency. Gold does not lend itself to inflation for these reasons, and cannot be debased. You know, if you have an ounce of gold, that it will be worth as much 100 years from now, as it is today. The US Dollar is now worth about 1 / 50th of what it was worth just 70 years ago. Suppose someone finds a huge goldmine. Or someone discovers an asteroid that consists of pure gold, and hauls it to Earth. Or someone discovers a way to produce gold atoms cheaply. Or, more probably, someone finds a way to convert major gold-using industrial processes to use another, cheaper material instead. If your fortune is based on gold, it will depreciate in value - big time. Probably not as much as fiat currencies have depreciated in our lifetimes. Even so, such a new discovery would give people time to adjust, and ultimately, the value of gold would change to a new level, always one comensurate with the amount of energy it took to create it from other forms of matter. Ultimately, what you measure in value, when you measure gold, is the value of the energy it took to discover it, claim it, mine it, separate it, assay it, purify it, mint it and coin it -- you measure the value of the enery it took to extract it from the Earth. Gold is pure energy. I think the concept of currency backed by economy is good. After all, money is compensation for hours spent working. Money ought to correspond to time spent, not to weight of material acquired. So I think it does make great sense to back a currency on economy, not on material. Does this sort of currency lend itself to use in a free market? Could anyone issue such a currency? If not, then why not? and from where is the authority derived for one agency, alone, to issue the currency? My opinion is therefore that any bashing of "fiat currencies" a priori is largely unsubstantiated. It may be true that a gold-backed currency would survive an economic recession better than an economy-backed currency; but on the other hand, an economy-backed currency is resilient to changes which cause depreciation in the value of gold. The two types seem to be complementary rather than adversary. The US dollar was on the gold standard until 1971. This means that the US Dollar was just another name for a specific weight of gold, until 1971. Therefore it's a bit early to draw the conclusion, that such a fiat currency as the US dollar, is capable of maintaining its stature and integrity in the long-run. We'll see... Craig --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED]
[e-gold-list] Re: If there are to be no more t-bills...
-Original Message- From [EMAIL PROTECTED] Almost all of the world uses non backed fiat currency. The world has never seen this before Brenton Woods in 1971. Fiat currencies are fraud and theft. I've heard statements like this quite a few times now, and it all sounds a bit like hot air to me. It doesn't quite make sense. Would you care to explain why you think fiat currencies are inherently and completely bad, as opposed to non-fiat currencies? Such as gold-based ones, I presume? major snippage My opinion is therefore that any bashing of "fiat currencies" a priori is largely unsubstantiated. It may be true that a gold-backed currency would survive an economic recession better than an economy-backed currency; but on the other hand, an economy-backed currency is resilient to changes which cause depreciation in the value of gold. The two types seem to be complementary rather than adversary. Hi Denis, It is easy to draw incorrect conclusions and formulate incorrect opinions if you do not have the necessary knowledge to adequately assess the situation. For instance, can you give me an opinion on which is the better or more secure encryption algorithm, blowfish or Triple DES? As you can see, unless you are a cryptographer who has studied the two (which appear to do the same job), you will not be able to give a valid analysis. Of course you may have an opinion, but it is meaningless unless backed by adequate knowledge. What I am saying is, your comments indicate that you need to spend a LOT more time researching and learning about the subject of fiat currencies before your opinion is valid. Do yourself a favour and spend some time researching the subject. You could do a lot worse than read the book "Money" by James Ewart. Once you understand the fundamentals of money and economics you may be horrified to know how you have had the wool pulled over your eyes. One consolation... you are not alone, and possibly the vast majority of people would agree with your current assessment. Unfortunately just because the majority of people believe something does not necessarily make it right/true. Best regards, Sidd. --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED]
[e-gold-list] Re: If there are to be no more t-bills...
David Hillary wrote: If the borrower expects to produce more than 5% more from capital he uses, he can use these extra goods to exchange for the newly issued currency to repay his loan. Thus the purchasing power of the currency can remain the same, production and the money supply increase and money has performed its function. What is there to complain about? It's impossible for a micro group of human beings to know just how much currency a legal jurisdiction needs. 'The Road to Serfdom' explains this quite well. Because a treasury and a central bank are political institutions, they always err on the side of too much in the favor of the government that they work for, untill the currency is worthless or the government is embarressed into changing to a new currency. "Inflation only occurs when the government prints paper money that is not backed by increased production." - Richard Salsman Bob --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED]
[e-gold-list] Re: If there are to be no more t-bills...
It's impossible for a micro group of human beings to know just how much currency a legal jurisdiction needs. 'The Road to Serfdom' explains this quite well. Because a treasury and a central bank are political institutions, they always err on the side of too much in the favor of the government that they work for, untill the currency is worthless or the government is embarressed into changing to a new currency. Though this sort of 'error' hasn't happened yet with US currency in the recent past, the US has had periods of serious inflation, (in the 1970's), and serious deflation, (in the 1930's), precisely because of the decisions of the central bank. During the 1910's and 1920's, the central bank was not able to keep the currency stable with the supply of gold which backed it, (and they were required to do this). The cause was an inflated money supply which found its way into the stock market and into production. When stocks collapsed, it became apparent that a currency devaluation was needed; and people started hoarding gold, in exchange for dollar bills. This led President Roosevelt to issue an executive order making it illegal for citizens to own gold, and requiring them to turn in their gold to the US Government. Even though the Federal Reserve raised interest rates, cut-off new credit, and started reeling in the money supply, the net result was that about 70% more money existed than the available supply of gold and the US dollar was devalued for the first time since the country's inception, (I believe), from around $20 an ounce to $35 an ounce. This was all the result of 20 years of easy credit, promoted by the Federal Reserve. Then, in the 1970's with the dollar floating in the world market, the Federal Reserve, again, failed to keep interest rates high enough to control inflation, which resulted in periods of extreme inflation, including double-digit inflation, from 1973 - 1979. Things didn't calm down until Paul Volker was appointed Chairman of the Federal Reserve, (by Jimmy Carter). He understood the relationship between inflation and interest rates; he raised interest rates to near 20%, until inflation dropped, and the problem has not appeared since. However, the decision to increase interest rates, (to control inflation), or to lower interest rates, (to encourage economic growth), ALWAYS has a political element, and the time will come again when it becomes politically difficult to raise interest rates to control inflation, and this could easily cause the problems in the 1970's to return again. Politics and Money have never mixed for long. Craig --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED]
[e-gold-list] Re: If there are to be no more t-bills...
[EMAIL PROTECTED] wrote: Gold is money. There is a big gold banking industry out there. It's on the secretive side so I can't give you numbers. Like any money or currency, it has it's interest rates. In gold's current case they are called lease rates. What's the matter with the 30 day gold lease (interest) rate? http://www.kitco.com/market/LFrate.html Bob, do those figures mean that (example) Gold can be leased, for one year, for (only!) 1.8075 % ? Yes (at the moment). And those low rates makes sense. If I loaned you gold, I don't have to worry about inflation decreasing the real value of the amount that you pay me back at the end of the period as much as I would if I loaned you fiat currency. Thus the lower rates than fiat currencies. Well almost all. There's the Yen carry trade going on. The one fiat currency that's cheaper to borrow than gold. That's another story. So I could borrow 100 kg of gold and pay only 1.8% interest, for a year? Maybe, maybe not. Depends on whether you are on of the big boys that can participate in the gold banking industry or one of the average Tom, Dick and Harrys that can't. Doesn't that seem very low? Yes (but not as low as borrowing Yen), and it makes sense. Gold is good money stuff in a bunch of ways. Bob --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED]
