Has The world Gone mad???

[kahem89]

http://e24.no/makro-og-politikk/her-er-staten-som-faar-penger-naar-den-laaner/20137035

Norwegian article use google translate to make it English.

The article states

Denmark the state is lending money and earn negative interest for it. 6 months negative 0,07 % 3 months 0,21 %

They actually earn 0,21 % interest for lending money from investors at a 3 month time.

I never thought i would see this. Apparently investors look at this as a safe house to put their money.

Your thoughts? ( I think it`s madness, but then again some countries print money like its toilet paper so...:smx4

 

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[Pat]

Since we are off the gold standard the world has gone mad...

Inflation will take care of that. More money will get printed to make up for it...

Until the first country slips into hyperinflation at least.

 

[kahem89]

I think every financial system eventually got its flaws (gold standard too). Just got a little shocked seeing negative interest rates. Even tought it makes sense when inflation is high in other countries.

 

[Pat]

Out of curiosity, what are the flaws of the gold standard in your opinion?

Apart from the government not being able to print money of course

(I ask because there might be a vote in 2013 in Switzerland that could get us back on to a gold standard)

 

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[kahem89]

Well for starters the gold standard was taken off by many countries in the greatest depression. And many Financial crises has excisted for centuries with the gold standard, that's just the way human psychology effect the markets. If you believe in a country (paper money) or a piece of metal, or salt(has been a currency way back), doesn't seam to matter to me? (maybe gold standard would be good for the Us since it holds most of the world gold? not sure about this but then again countries like iran holding so much oil seams like ww3 to mee :smxF

The only value of gold is in jewelry and in computers if you think about it. So to make sense of it in today's economy we should make it the OIL standard lol. Also were 7 billion people and growing and we don't have much gold. What should the gold standard really be? 1g of 12carat gold is 10 bux? how much gold do we really need to have an effective money system with 7 bill people. Printing of money has it advantage, thought of course a downside too

I think crises will happen regardless of our money system and things will change value like waves. Sometimes assets is king, sometimes commodity's, and yes sometimes cash

Dunno if this makes sense, but im writing it regardless hehe.

 

[Brander]

Well for starters the gold standard was taken off by many countries in the greatest depression.

Yes, because they wanted to print money without any discipline holding them back. Governments LOVE counterfeiting.

And many Financial crises has existed for centuries with the gold standard.

That's false. The only times you had inflation in those conditions is when Spanish were bringing great quantities of gold from the new world and when THE GOVERNMENT was skimming off the gold and silver coins.

If you believe in a country (paper money) or a piece of metal, or salt(has been a currency way back), doesn't seam to matter to me?

You equate tangible real things with blind hope?

maybe gold standard would be good for the Us since it holds most of the world gold?

They probably have almost no gold, Fort Knox has not been audited for almost a century.

The only value of gold is in jewellery and in computers if you think about it.

It is a store of value and a hedge against inflation. Hold gold for 100 years and it will still be worth exactly the same (in purchasing power), while your paper money will not even exist any-more as a currency probably, much less buy anything.

I think crises will happen regardless of our money system and things will change value like waves.

Of course, but what kind of a system would you want - one where the PROBABILITY of something collapsing would be small or one that we have now where collapse is built into the system?

 

[kahem89]

Goverment exposed /debugged lal

And many Financial crises has existed for centuries with the gold standard.
That's false.

The only times you had inflation in those conditions is when Spanish were bringing great quantities of gold from the new world and when THE GOVERNMENT was skimming off the gold and silver coins. You assume way too much.

Bullshit, even mr Isaac newton experienced stock crash.
I think your thinking of financial crises is flawed, inflation is just a new term. People loosing jobs, companys going bust is my term if you dont agree i dont care.

The only value of gold is in jewellery and in computers if you think about it.
LOL, it is a store of value and a hedge against inflation. Hold gold for 100 years and it will still be worth exactly the same, while your paper money will not even exist any-more as a currency probably much less buy anything.

False, Gold prices has gone up ad down for centuries. You might as well hold it in oil or other commodities. saying that gold will be the same in 100 years is a gamble(people give things value not a yellow metall). Your the type of guy that would starve with 10 gold bars on you. "Gold is much more worth than food" ( Nope, not if its a shortage of food).

And to the rest of the post i dont see any arguments why the gold standard is any good, I only see a guy thatis defending hes "GOLD" to the bitter end.

Cheers

http://en.wikipedia.org/wiki/South_Sea_Company

Quotations prompted by the collapse
Joseph Spence wrote that Lord Radnor reported to him "When Sir Isaac Newton was asked about the continuance of the rising of South Sea stock… He answered 'that he could not calculate the madness of people'."[4] He is also quoted as stating, "I can calculate the movement of the stars, but not the madness of men".[5] Newton's niece Catherine Conduitt reported that he "lost twenty thousand pounds. Of this, however, he never much liked to hear…"[6] This was a fortune at the time (equivalent to about £3 million in present day terms[7]), but it is not clear whether it was a monetary loss or an opportunity cost loss.

 

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[Brander]

Goverment exposed /debugged lal
Bullshit, even mr Isaac newton experienced stock crash.

You are not intelligent enough for me to continue talking to you as well as not cordial enough to warrant any of my time to set you straight. BTW, in the future you might consider not using things that have nothing to do with the subject discussed to "prove" your point, because it makes you come across as completely unreasonable.

This primer on Free market economics 101 might interest you (or not, since you already seem to know everything there is to know).

It might still be worthwhile attaching it for others who might have an open mind (skip to 4:20 in the video to bypass the introduction):

[video=youtube;npJ0CUT8d_Y]http://www.youtube.com/watch?v=npJ0CUT8d_Y[/video]

 

[Fermovian]

There were several economic crises while still on the gold standard. At the end of the 19th century there was a particularly bad one that is considered by some to be worse than the great depression. The only thing gold has going for it is that it is difficult to create, and that can be a horrible quality in some situations. If the U.S. were to go back on the gold standard now, the economy would have to collapse in order to equalize the trade imbalance with the rest of the world. Additionally, the price per ounce would have to go up several orders of magnitude in order to turn all the "fiat currency" into gold. Credit would be near impossible to obtain.

Just because going on a gold standard would solve some of our problems doesn't mean it wouldn't cause others. Gold is a single commodity just like paper money. If gold were to become the basis of currency and were to go up a hundred fold the whole economy would have to be reorganized around the production of gold. You don't need to have a degree in economics to know that that would be an enormous dead-weight loss.

 

[kahem89]

Well said Fermovian.

And for you Roark, Trolls are abundant, I was actually waiting for a peter video to pop up. and sure enough...

 

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[theBiz]

i watched like 5 mins of this video thanx, great video roark. I really need to learn more about currencies, inflation, interested rates, and most importantly how they all affect one another. I feel ignorance is bliss here because it seems no matter how much one person knows, there is always someone on the other side to challenge their theories, and rightfully so.

Im not sure what the direct advantages would be right now of being educated on this subject but i definitely feel im behind and need to start taking more notice to it.

ok i did some reading now im ready to debate ...

The main problem with printing money is the danger of inflation. Inflation occurs when money in the system increases and the supply of goods and services does not increase at the same rate. For example, take a simple system in which there are one million goods. If there were $1 million in that system, then the goods would even out to each be worth $1. If, however, suddenly the money supply doubled to $2 million without the number of goods increasing, then the price of each good would double to $2 as well. Each dollar will have lost 50% of its purchasing power.

that should summarize it all hahah

 

[Jake]

Out of curiosity, what are the flaws of the gold standard in your opinion?

FOFOA's dilemma: When a single medium is used as both store of value and medium of exchange it leads to a conflict between debtors and savers. FOFOA's dilemma holds true for both gold and fiat, the solution being Freegold, which incidentally also resolves Triffin's dilemma.

Gold should be free to float, to act as a reference point. Like the President of the World Bank said

"What I suggested is that gold serves as a key reference point to allow people to assess the relations between different currencies," Zoellick told the press here at the end of his meeting with French President Nicolas Sarkozy in the Elysee Palace.

"I didn't propose a gold standard, which is an important distinction because it would directly link currency to gold," said Zoellick, denying reports that he had called for a return to the " gold standard" to modify the present monetary system, which he called "Bretton Woods II."

"The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values," Zoellick wrote in an article published in Monday's Financial Times.

 

[Pat]

I agree with Jake here.

I think the problem is that fiat currency has a monopoly. If gold (and maybe other things as well) could be used as parallel currencies, the free market would take care of everything.

kahem, if you compare gold prices to food, oil and other things you see that it fluctuates way less compared to the fiat currencies. All this means is that things are not getting more expensive, but the fiat money is losing money much quicker than the official published inflation numbers.

Fermovian, the economy will collapse anyway. By printing more and more money you might delay it, but it will be much more painful if it ends in hyperinflation. If there is not enough gold to support the amount of fiat currency, maybe that means the gold price will in fact go up much more (as Schiff is predicting).

Some good stuff coming from both sides here. If we can keep it civil this thread might become a gold nugget (pun intended).

 

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[kahem89]

Yo I don't think The money system we have today is perfect, its just that i think gold standard has its issues. I don't think some inflation is bad, like 2-4% is okay. But when Governments have no regulation on how much money they can print problem occurs of course. Some inflation forces people to invest and stimulates growth.

 

[Jake]

I agree with Jake here.

I think the problem is that fiat currency has a monopoly. If gold (and maybe other things as well) could be used as parallel currencies, the free market would take care of everything.

kahem, if you compare gold prices to food, oil and other things you see that it fluctuates way less compared to the fiat currencies. All this means is that things are not getting more expensive, but the fiat money is losing money much quicker than the official published inflation numbers.

Fermovian, the economy will collapse anyway. By printing more and more money you might delay it, but it will be much more painful if it ends in hyperinflation. If there is not enough gold to support the amount of fiat currency, maybe that means the gold price will in fact go up much more (as Schiff is predicting).

Some good stuff coming from both sides here. If we can keep it civil this thread might become a gold nugget (pun intended).

The free market would take care of everything and Gresham's law would come into play. Gold would go into hiding as "bad money drives out good". I don't think parallel currencies are the answer, at least not in the context that you're using. If gold was used as a currency in the same fashion the dollar is used today then we circle back to FOFOA's dilemma.

On the subject of using gold as a parallel currency Goldmoney comes to mind. If you're not familiar with it, gm is a business that allowed people to purchase gold and use it in transactions. You could wire gold grams instead of $'s to people. They have recently shut down the transaction portion of their business because nobody used it. Why would you want to pay people in gold when you can pay in fiat?


Speaking of Gresham's law I highly recommend reading this which was posted back in 2000 and still remains true today. It is the way we are heading imo

here's a primer

"[SIZE=-1]The reassurance of Gresham's Law...

Perhaps a short lesson is in order for those new to this realm of thought. In 1558, Sir Thomas Gresham made his observation that whenever there was latitude in tendering payment (as could be seen in the major medieval cities where coins from many lands came together in the course of trade--as we covered in the case of Amsterdam,) inevitably the money of poorest quality was offered while the better money was retained. In describing the circulation of currency, Gresham's law says that bad money drives out good. (The inferior money circulates, while money of superior quality is held.) In our new system herein described, paper currency will circulate while Gold money will be saved.

[/SIZE][SIZE=-1]Pause for a moment to fully consider this practical notion of saving Gold on one hand, while on the other, borrowing and spending paper just as we always have in our lifetimes (and know of no other reality from personal experience.) This is in perfect tune with Gresham's law. Given our own limited history, this accord with Gresham's law provides a very comforting reassurance for predicting the success of this system.[/SIZE][SIZE=-1] Why? Because Gresham's law is arguably the only economic law that survives beyond challenge--an echo of the universal and enduring truth that given a choice, people will choose the option that serves their own needs best. Gresham's law predicts that the world's supreme currency, Gold, would not actually circulate in a conventional sense, though it would move from the hand of one saver to another as individual circumstances might require. Sure, you could use it outright as money if you insisted, but nodding to Gresham's law, wouldn't you rather keep your Gold for the rainy day and spend your paper instead? This system will enhance the transparency of national economics and financial positions, rewarding those with good fiscal policy and balanced budgets, and giving none an exorbitant privilege over another through reserve currency status. [/SIZE][SIZE=-1]It will allow the citizens a natural avenue to protect themselves against depreciation of the national currencies (which will inevitably inflate until the end of time,) and to actually gain a no-risk real "return" by simply holding the metal without the self-defeating aspect of lending it out for interest.

[/SIZE][SIZE=-1]Gold. Get you some. ---Aristotle"

[/SIZE]http://www.usagold.com/halldiscussion.html

It's a lot of text but well worth the time spent.