Money

[deseretgov]

Yes I meant slavery. Sorry if that is offensive. But to me killing raping enslaving torturing thousands of people is not quite as bad as the enslavement of an entire planet by a few rich bankers. Causing war and turmoil all over the world for the sake of profit. And then doing this for over a hundred years. Yes American slavery was bad. But the effects of the Big Bankers, then the Federal Reserve/Central Banking system, have devistated this world far worse than American slavery did.

[WANDERER]

Now I wonder which countries in the world have the most gold ; ) ...but more to the point, which currently enormously wealthy countries are not major producers...who would control their currency as a result? What happens when countries can't access gold? Any gold whatsoever?

Sounds dodgy to me.

Gold - Wikipedia, the free encyclopedia

[a-train]

http://mises.org/multimedia/mp3/misescircle-vancouver08/3_Salerno.mp3

-a-train

[mominzion]

Who actually owns the Federal Reserve Central Banks? The ownership of the 12 Central banks, a very well kept secret, has been revealed:

Rothschild Bank of London Warburg Bank of Hamburg Rothschild Bank of Berlin Lehman Brothers of New York Lazard Brothers of Paris Kuhn Loeb Bank of New York Israel Moses Seif Banks of Italy Goldman, Sachs of New York Warburg Bank of Amsterdam Chase Manhattan Bank of New York (Reference 14, P. 13, Reference 12, P. 152)

These bankers are connected to London Banking Houses which ultimately control the FED. When England lost the Revolutionary War with America (our forefathers were fighting their own government), they planned to control us by controlling our banking system, the printing of our money, and our debt (Reference 4, 22).

The individuals listed below owned banks which in turn owned shares in the FED. The banks listed below have significant control over the New York FED District, which controls the other 11 FED Districts. These banks also are partly foreign owned and control the New York FED District Bank. (Reference 22)

First National Bank of New York James Stillman National City Bank, New York Mary W. Harnman

National Bank of Commerce, New York A.D. Jiullard

Hanover National Bank, New York Jacob Schiff

Chase National Bank, New York Thomas F. Ryan Paul Warburg William Rockefeller Levi P. Morton M.T. Pyne George F. Baker Percy Pyne Mrs. G.F. St. George J.W. Sterling Katherine St. George H.P. Davidson J.P. Morgan (Equitable Life/Mutual Life) Edith Brevour T. Baker (Reference 4 for above, Reference 22 has details, P. 92, 93, 96, 179)

How did it happen? After previous attempts to push the Federal Reserve Act through Congress, a group of bankers funded and staffed Woodrow Wilson's campaign for President. He had committed to sign this act. In 1913, a Senator, Nelson Aldrich, maternal grandfather to the Rockefellers, pushed the Federal Reserve Act through Congress just before Christmas when much of Congress was on vacation (Reference 3, 4, 5). When elected, Wilson passed the FED. Later, Wilson remorsefully replied (referring to the FED), "I have unwittingly ruined my country" (Reference 17, P. 31).

Now the banks financially back sympathetic candidates. Not surprisingly, most of these candidates are elected (Reference 1, P. 208-210, Reference 12, P. 235, Reference 14, P. 36). The bankers employ members of the Congress on weekends (nickname T club -out Thursday...-in Tuesday) with lucrative salaries (Reference 1, P. 209). Additionally, the FED started buying up the media in the 1930's and now owns or significantly influences most of it Reference 3, 10, 11, P. 145).

Presidents Lincoln, Jackson, and Kennedy tried to stop this family of bankers by printing U.S. dollars without charging the taxpayers interest (Reference 4). Today, if the government runs a deficit, the FED prints dollars through the U.S. Treasury, buys the debt, and the dollars are circulated into the economy. In 1992, taxpayers paid the FED banking system $286 billion in interest on debt the FED purchased by printing money virtually cost free (Reference 12, P. 265). Forty percent of our personal federal income taxes goes to pay this interest. The FED's books are not open to the public. Congress has yet to audit it.

resource:

http://www.apfn.org/APFN/fed_reserve.htm

It is all private owned! If more people were aware of these things, we would have more power as a people. Let's do our homework....

[HiJolly]

Tell me you didn't really mean to say "slavery." Or perhaps you were using it metaphorically, which doesn't make any sense, but I'm trying to give you the benefit of the doubt.

Nothing this country has ever done was more vile than slavery.

Elphaba

Oh, I don't know.... There's always the way we treated the native American Indians... I think I could make a pretty good argument that that was worse.

HiJolly

[Traveler]

There are many factors that affect the economy. What backs currency is only one factor. The only reason I am oppose to gold-silver backing of money is that scarce commodity backing of currency cannot grow in the same proportions with a growing economy – otherwise in a stable non moving economy it works fine.

One of the factors that effects economy is called money supply. In the USA, this is the number of dollars allowed to circulate. The money supply has more to do with boom and bust economy than what backs the dollar – although they are related. In general the greater the money supply the more backing of dollars in liquid assets are needed to prevent a bust. The less money supply in the economy the more non-liquid assists can be used. One problem occurs when there is the money supply increasing in the economy without assets – this is the essence of inflation.

Another problem is shifting assets from liquid to non-liquid without altering the money supply, which is in part what we are currently seeing.

In the USA we have found the politics does not mix well with the overseeing of our monitory system. That is why we went to the Federal Reserve System. But the Federal Reserve System does not prevent politics from becoming an issue in policy.

I submit that the only way to maintain a stable system is to have government control and accountability. At least then an educated and intelligent body of interested citizens can correct problems through elections. But it appears to me that we do not have an educated and intelligent body of interested citizens in the USA. What we have are citizens that want someone else to fix for them whatever is wrong.

The Traveler

[funkymonkey]

Thought this was a good read for the topic...

Hirsh: Despite Crisis, U.S. Still World's Leader | Newsweek Voices - Michael Hirsh | Newsweek.com

[Elphaba]

Oh, I don't know.... There's always the way we treated the native American Indians... I think I could make a pretty good argument that that was worse.

I disagree it was worse, though I think it was on par. But because many of the Native Americans were turned into slaves as well, I included them in my use of the word "slaves." I really was thinking of them as well.

I am just stunned at the difference between slavery and what is happening in the market. It's like saying the holocaust wasn't the worst thing that could have happened, relatively speaking, or that Stalin's purges were small potatoes. I don't even have words for how outrageous that is.

We are not physically enslaved. We do have some power over what is happening today, though I think many Americans have no idea what to do. But if they were to study on it, they would at least understand what is happening.

Slaves would never have had that chance.

Elphaba

[a-train]

The only reason I am oppose to gold-silver backing of money is that scarce commodity backing of currency cannot grow in the same proportions with a growing economy – otherwise in a stable non moving economy it works fine.

We first need to demonstrate that there is any reason whatsoever for the gold supply to increase in the same proportion with a growing economy. In other words, why do we need to fix the price of goods at some certain level? Do we really believe that falling prices in fuel, clothing, food, and housing are a problem? Gas has dropped from $4 a gallon back to $3 a gallon in the past few months in my area. Has anyone complained? Where is the public outcry? Should the FED print tons of extra cash just to insure gas stays at $4 a gallon? Why?

Further, if deflation is so utterly terrible, why is inflation any better?

Plus, the central banks of the world have very well proven that their techniques are prone to inflation. When they realize they have gone too far what is their only option? DEFLATION: the one and only opposition you have to the gold standard. In fact, it is very easily arued that our current monetary arrangement is more prone to deflationary troubles than the gold standard.

If you are truely wanting to prevent the scenario wherein economic growth does not out-pace the growth in the money supply (which I still see little argument for the consumers to pay ever increasing prices), central banking with a fiat currency has well proven itself to be very far removed from any solution.

-a-train

PS I'm also still wondering about the Asian fiat currency that existed for several thousand years with little upheaval. Are we talking about the Song Dynasty's paper currency? Most of the books I've read on the subject list that as the first real paper money system in known history. However, it was created in the late 10th century and ended in hyperinflation in the 15th century when it was replaced by another paper system which was also replaced by the Ming Dynasty with coinage in the 1650s due to inflation. Paper currencies did not return to China until the late 19th century. Correct me if I'm wrong, but that is all I've been able to discover concerning paper money in China.

Edited October 2, 2008 by a-train

[JohnBirchSociety]

There are many factors that affect the economy. What backs currency is only one factor. The only reason I am oppose to gold-silver backing of money is that scarce commodity backing of currency cannot grow in the same proportions with a growing economy – otherwise in a stable non moving economy it works fine.

One of the factors that effects economy is called money supply. In the USA, this is the number of dollars allowed to circulate. The money supply has more to do with boom and bust economy than what backs the dollar – although they are related. In general the greater the money supply the more backing of dollars in liquid assets are needed to prevent a bust. The less money supply in the economy the more non-liquid assists can be used. One problem occurs when there is the money supply increasing in the economy without assets – this is the essence of inflation.

Another problem is shifting assets from liquid to non-liquid without altering the money supply, which is in part what we are currently seeing.

In the USA we have found the politics does not mix well with the overseeing of our monitory system. That is why we went to the Federal Reserve System. But the Federal Reserve System does not prevent politics from becoming an issue in policy.

I submit that the only way to maintain a stable system is to have government control and accountability. At least then an educated and intelligent body of interested citizens can correct problems through elections. But it appears to me that we do not have an educated and intelligent body of interested citizens in the USA. What we have are citizens that want someone else to fix for them whatever is wrong.

The Traveler

Money is central to economy, in fact, it is the economy.

Without being able to even define "Money" we will never understand the free market. Paper Fiat Currency is not "Money". That is where the problems we now face begins and ends.

[JohnBirchSociety]

We first need to demonstrate that there is any reason whatsoever for the gold supply to increase in the same proportion with a growing economy. In other words, why do we need to fix the price of goods at some certain level? Do we really believe that falling prices in fuel, clothing, food, and housing are a problem? Gas has dropped from $4 a gallon back to $3 a gallon in the past few months in my area. Has anyone complained? Where is the public outcry? Should the FED print tons of extra cash just to insure gas stays at $4 a gallon? Why?

Further, if deflation is so utterly terrible, why is inflation any better?

Plus, the central banks of the world have very well proven that their techniques are prone to inflation. When they realize they have gone too far what is their only option? DEFLATION: the one and only opposition you have to the gold standard. In fact, it is very easily arued that our current monetary arrangement is more prone to deflationary troubles than the gold standard.

If you are truely wanting to prevent the scenario wherein economic growth does not out-pace the growth in the money supply (which I still see little argument for the consumers to pay ever increasing prices), central banking with a fiat currency has well proven itself to be very far removed from any solution.

-a-train

PS I'm also still wondering about the Asian fiat currency that existed for several thousand years with little upheaval. Are we talking about the Song Dynasty's paper currency? Most of the books I've read on the subject list that as the first real paper money system in known history. However, it was created in the late 10th century and ended in hyperinflation in the 15th century when it was replaced by another paper system which was also replaced by the Ming Dynasty with coinage in the 1650s due to inflation. Paper currencies did not return to China until the late 19th century. Correct me if I'm wrong, but that is all I've been able to discover concerning paper money in China.

Well DONE!!!

Hey, have you read "MONEY: Ye Shall Have Honest Weights and Measures"? It is THE book on real money. Once you read it, you'll have blood squirting out your ears in rage over the theft / slavery of the American economy.

[JohnBirchSociety]

I agree with you, Traveler. Gold-backed money has no elasticity.

The elasticity of money is a requirement if we are to avoid continual cycles of prosperity>growth>no money supply to support expansion>recession -- repeat, and every 10 or 20 times around substitute "depression" for "recession". JohnBirchSociety is exactly 180 degrees off. Take a look at the financial history in the USA's first 100 years. Happened all the time.

HiJolly (the mystic Banker)

Wow, you are factually wrong on nearly the entire front.

There is no such thing as Gold-backed money. Gold IS Money.

Gold or Silver money, real money, as mandated by our divinely inspired Constitution (hmmm, ever wonder WHY?) is elastic enough to meet population growth and has been remarkably consistent throughout history. Problems occur when we step outside of what is Constitutionally mandated / prudent.

In a free market, nothing is static, so, over time there will be up and down cycles. That is the nature of the free market. Money, real money, remains remarkably stable throughout all of this. An ounce of GOLD is and ounce of GOLD, it is stable.

The financial history of the first 100 years of the United States is one of deflation of prices, and an increase in the standard of living that was greater than entire past of human history combined. It was only when government stepped outside of its' GOD-ordained Constitutional mandates on REAL money that REAL problems occurred.

In a free market, there will always be ups and downs, but they are MUCH much less violent and common than in Socialism / Fiat Currency. Those are the facts of history.

[Traveler]

We first need to demonstrate that there is any reason whatsoever for the gold supply to increase in the same proportion with a growing economy. In other words, why do we need to fix the price of goods at some certain level? Do we really believe that falling prices in fuel, clothing, food, and housing are a problem? Gas has dropped from $4 a gallon back to $3 a gallon in the past few months in my area. Has anyone complained? Where is the public outcry? Should the FED print tons of extra cash just to insure gas stays at $4 a gallon? Why?

Further, if deflation is so utterly terrible, why is inflation any better?

......

First I would point out that all who make their living associated with fuel, clothing, food and housing understanding the problem with falling prices for those commodes. How would you like to have your means of providing a living divided in half - while other are having their means doubled even thought they are not even working?

Here is the main problem which those that put forth the gold/silver standard ignore and refuse to answer. If we have a 1 billion economy that is supported by 1 billon in currency and a population of 50 million - how can that economy grow to a 30 billion economy and a population of 150 million?

The simple economic answer is that either the economy cannot grow or that the value of gold must arbitrarily change which means that value of gold becomes greatly inflated or that all other elements of wealth becomes deflated. Such variance in economy creates instability and lack of confidence.

The other point that is being ignored is that gold and silver are not just a means for backing currency but are also necessary raw material in the semi-conductor manufacturing industry. So if we float gold and silver for a growing economy then the electronic semi-conductor industry also over inflates.

In truth if we want a true free and open economy we must have a 100% barter system which means no money of any kind.

The Traveler

[funkymonkey]

Um, is anyone watching the stocks dive today?

[a-train]

First I would point out that all who make their living associated with fuel, clothing, food and housing understanding the problem with falling prices for those commodes. How would you like to have your means of providing a living divided in half - while other are having their means doubled even thought they are not even working?

As someone who makes his living selling clothing, I can tell you that the entire clothing industry is praising lower materials costs. Further, if I am able to make the same living selling my products at lower costs, I welcome the notion. Certainly a form of "hyper-deflation" would hurt businesses if they were selling items for less money than they paid, but then again, if they could still buy more with the money they collect than the previous amounts, you would hear no complaints.

What a-train? If I bought a shirt for $10 and was forced to sell it for $5 because of deflation, I lost $5 right? Right. But, if I can now buy two shirts from my supplier for $5 because of deflation, then why should I complain?

However, the gold standard does not create such a scenario.

Here is the main problem which those that put forth the gold/silver standard ignore and refuse to answer. If we have a 1 billion economy that is supported by 1 billon in currency and a population of 50 million - how can that economy grow to a 30 billion economy and a population of 150 million?

I already answered this question. If the total goods and services in an economy on the gold standard were to increase by 30 times without any increase in the gold supply, the value of gold would possibly increase by 30 times. Why is that a dreadful notion? Is it a dreadful notion? hmmm.. And most importantly, does the current fiat system solve that "problem"? It doesn't. The purchasing power of an average man's work hour for any given commodity decreases as the population-to-commodity ratio increases, regardless of the monetary system. The fiat system DOES NOT fix the "problem" you are asking about.

If it takes one year's wages to buy a given parcel of land, the same parcel will demand more wages as the population competing for that parcel increases. This is regardless of over-all inflation, deflation, the gold-standard, a fiat system, or whatever.

I hope you understand that I am answering your question.

The simple economic answer is that either the economy cannot grow or that the value of gold must arbitrarily change which means that value of gold becomes greatly inflated or that all other elements of wealth becomes deflated. Such variance in economy creates instability and lack of confidence.

Why can't the economy grow? Are you saying the economy did not grow throughout the 19th Century? The economy will grow and shrink regardless of the money supply and there is nothing anyone can do about it. Would you say that if the population doubles and thus the price of land doubles that the increase in the price of land is an "aribitrary inflation". Are other elements of wealth "deflated" as property demand and price increases?

The increase in the value of gold would not be arbitrary, but would be an understandable and predictable result of changes in the ratio of supply and demand.

The other point that is being ignored is that gold and silver are not just a means for backing currency but are also necessary raw material in the semi-conductor manufacturing industry. So if we float gold and silver for a growing economy then the electronic semi-conductor industry also over inflates.

This is exactly what makes gold such a good monetary unit. It is desirable for a great many applications. This insures the long-term value of the monetary system. And the fact that it can be used in those applications and then re-used again and again is a fantastic characteristic of precious metal. We call this: durability. This has a very stabilizing effect on the monetary system. Volatility is greatly dampened and the ability of money supply insiders to manipulate prices and buy low and sell high to naive outsiders is diminished.

In truth if we want a true free and open economy we must have a 100% barter system which means no money of any kind.

Ahh, that IS what we want. Precious metals have been good to barter with from the beginning. Indeed, it can be used in many parts of the world.

If you were selling your lawnmower and asking $130, and a man from Indonesia offered you Indonesian paper currency would you take it? You say: "I'm not sure I can use that sir." He then offers you 12 ounces of silver, would you take that? What if you knew that you could get $130 for those 12 ounces from the coin shop in your neighborhood? Perhaps you'd say: "I don't want to go convert that into U.S. dollars. Could you go convert that into U.S. currency?" The old timer's response is: "Nah, forget it." Would you really pass on the sale? You could say: "Alright, how about 13 ounces?" Suppose he agreed. Would it matter if those ounces were U.S. Mint, Canadian Mint, Mexican Mint, Liberty Dollar, Johnson Matthey, Engelhard, Credit Suisse, or what have you? The coin shop buys ounces of silver regardless of their origin or mint.

What if he offered a single baseball card worth around $150? What if he offered a 45 gallon drum of Premium unleaded gasoline? What it all comes down to is convertibility. It all depends on what you plan to do with $130 and how easy it will be to do that with whatever the old timer gives you for the mower.

In truth, if whatever he gives is simply something you plan to convert into something else it is money, it is a medium of exchange, a temporary storage of value designed to exchange for a desired good or service.

Precious metals are God given stores of value that are far better than any man-made device. They are so durable that they retain value for generations upon generations and outlive every government and dynasty. They are useful in every part of the world. Their most valuable asset is their equalization of world power through the break-down of monetary control.

But understand, I do not think that money should be limited to simply silver and gold. Platinum, copper, nickel, you name it, if it is God-given I'm in. Let it all be used.

-a-train

[a-train]

Um, is anyone watching the stocks dive today?

Hmmmm..... Could it be that those warning of the dangers of deficit spending and credit expansion are being vindicated?

Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing. Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts. - Ron Paul to the Congress 10 Sep, 2003

I have days--growing more frequent all the time--when I'm convinced the time is now upon us that some Big Events are about to occur. These fast-approaching events will not go unnoticed. They will affect all of us. They will not be limited to just some areas of our country. The world economy and political system will share in the chaos about to be unleashed. - Ron Paul to Congress 09 July, 2008 (Full Text)

-a-train

[Traveler]

......

I already answered this question. If the total goods and services in an economy on the gold standard were to increase by 30 times without any increase in the gold supply, the value of gold would possibly increase by 30 times. Why is that a dreadful notion? Is it a dreadful notion? hmmm.. And most importantly, does the current fiat system solve that "problem"? It doesn't. The purchasing power of an average man's work hour for any given commodity decreases as the population-to-commodity ratio increases, regardless of the monetary system. The fiat system DOES NOT fix the "problem" you are asking about.

.......

I hope you understand that I am answering your question.

.......

The increase in the value of gold would not be arbitrary, but would be an understandable and predictable result of changes in the ratio of supply and demand.

This is exactly what makes gold such a good monetary unit. It is desirable for a great many applications. This insures the long-term value of the monetary system. And the fact that it can be used in those applications and then re-used again and again is a fantastic characteristic of precious metal. We call this: durability. This has a very stabilizing effect on the monetary system. Volatility is greatly dampened and the ability of money supply insiders to manipulate prices and buy low and sell high to naive outsiders is diminished.

. in response to gold and silver being a raw material to the semi conductor industry ---

Ahh, that IS what we want. Precious metals have been good to barter with from the beginning. Indeed, it can be used in many parts of the world.

......

But understand, I do not think that money should be limited to simply silver and gold. Platinum, copper, nickel, you name it, if it is God-given I'm in. Let it all be used.

-a-train

Your final statement is starting to come around to what I have been saying all along. That is that money should be backed by ALL THE WEALTH of an economy. If you build homes, sew cloths, plant crops or manufacture electrical generators for a living that should be considered part of the wealth of that economy. You add value and wealth and your contribution should not be removed from what backs, sustains and upholds the economy.

Gold has only artificial value and wealth in any economy and can be manipulated as can paper. There is nothing real to its value as economic wealth it is just speculation and nothing else. Paper money is just as viable in that its use is just another kind of speculation. If anyone understands “Lean economic and manufacturing methodology” I will use the lean concept that there is no more value added in the use of gold backed currency that the use of paper without gold backing.

The speculation of one being of more value than the other has not been proven. Both systems have been proven to be flawed and not a true reflection of an actual economy. As I posted previously money supply has had more to do with the up and down of the economy. The economic advances did not take place in the 19th century even as the industrial revolution had begun but took place in the 20th century when money was allowed to reflect the whole wealth of the economic system. There has been no better economic time in history that we have enjoyed since the end of WWII – and the single reason is because the currency was allowed to reflect the entire wealth and not be limited to the gold supply.

But as we observe our economic growth our system has not prevented whole sale economic graft and out of control wealth being transferred to business executives that have failed to provide any value to the economy and in fact have diminished economic value.

The Traveler

[a-train]

Your final statement is starting to come around to what I have been saying all along. That is that money should be backed by ALL THE WEALTH of an economy. If you build homes, sew cloths, plant crops or manufacture electrical generators for a living that should be considered part of the wealth of that economy. You add value and wealth and your contribution should not be removed from what backs, sustains and upholds the economy.

And how then does our current monetary system fulfill this? I am not even sure I understand what you are saying here. What are you saying?

Gold has only artificial value and wealth in any economy and can be manipulated as can paper.

I won't argue that precious metals cannot be manipulated, but you have to admit that a complete monopoly of paper in the hands of an elite group with no oversight whatsoever is by enormous lengths more apt to this kind of trouble than a commodity available worldwide.

There is nothing real to its value as economic wealth it is just speculation and nothing else.

What can this statement NOT apply to?

Paper money is just as viable in that its use is just another kind of speculation.

Precious metals have almost limitless uses in a broad spectrum of industries. Paper money can be written on and burned. Paper airplanes? Pillow stuffing? Toilet paper? Of course, digital money, is entirely intangible altogether.

There has been no better economic time in history that we have enjoyed since the end of WWII – and the single reason is because the currency was allowed to reflect the entire wealth and not be limited to the gold supply.

How can we attribute the economic prosperity of the United States since WWII to a monetary system not on the gold standard, especially noting the fact that the U.S. dollar was not completely severed from gold until 01 Jan, 1975?

Angolan kwanza

Argentine peso argentino

Argentine austral

Belarusian ruble

Bolivian peso

Brazilian cruzeiro

Chilean peso

Chinese yuan

Georgian kupon

Israeli sheqel

Nicaraguan córdoba

Polish złoty

Romanian lei

Soviet ruble

Turkish lira

Yugoslavian dinar

Zimbabwe dollar

- Just a handful of the paper currencies that have hyperinflated in our lifetime alone.

Now if you are supporting some new monetary system that is totally different from a precious metal standard and our current fiat system, I'm all ears. What exactly are you proposing?

-a-train

[Traveler]

......

Now if you are supporting some new monetary system that is totally different from a precious metal standard and our current fiat system, I'm all ears. What exactly are you proposing?

-a-train

That our currency be tied directly to and based on our gross national product.

The Traveler

[a-train]

That our currency be tied directly to and based on our gross national product.

The Traveler

OK, how?

-a-train

[Hemidakota]

Guys, this has been a good thread in learning new knowledge. I do thank all who do contribute their own insight regarding currency of our nation.

[Hemidakota]

"Trillions in Dollar Reserves: A Lifeline?"

MoneyNews - Trillions in Dollar Reserves: A Lifeline?

[Traveler]

OK, how?

-a-train

Currency is backed by the production (goods and services) of the country. You may have noted that from time to time someone will announce that the value of the US dollar has dropped so much over a certain period of time. This is always based on the buying power of that dollar. With this same notion we track the value of gold and other commodes and services.

The Gross National Product is based on the value of goods and services and how much (volume) of those goods and services are being produced and stocked piled. So we can say a dollar is worth a bushel of wheat or a third of a gallon of gas or a certain weight of gold. Once set against the Gross National Product it then floats according to the average of all that is produced. All of the goods and services are averaged to produce the value of the dollar (which is paper anyway). This way the value of money is automatically floated and not artificially established by banks, the government or any specific industry or commodity (scarce or not) – including the Federal Reserve Bank. The government does not have control nor does any individual industry or sector of the economy.

The currency is under the direct control of the very things that control the economy and is a full and complete reflection of that economy. Note that there would be no need for a Federal Reserve Bank and that banking (or gold repository) is not automatically imbedded into every industry and service. Also no single entity has control of the value of currency or the money supply (volume of dollars in circulation). And it does not matter what the medium of currency is – paper (hard) or plastic (electronic).

Of course this system has never been tried – the single big problem (elephant in the living room) is that there is no control. No one can promise to “fix” the economy because there is no single valve that controls the flow. And there is no artificial wealth, the very rich cannot sway the currency values without the changes in the economy coming back to bite them. Few politicians like such a thing because mistakes in taxes and overfunded government programs (like Social Security) would have obvious and seeable effects on the economy that could not be hidden. Anyway I will let you think about this and how various government and private nonsense would be manifested and made obvious to the public – that would likely take quick action.

It is what happens with monye anyway - why not make it simple and available for all to see and know what is going on.

The Traveler

Edited October 9, 2008 by Traveler

[a-train]

How do you peg a paper currency to the whole GDP? I'm not sure I even understand. Who makes the currency? How much currency will be produced? Who makes the decision whether to make more currency or get rid of excess? Isn't every currency redeemable for a given portion of the GDP anyway? I mean, if GDP is $13 trillion, then $1 is redeemable for 1/13 trillionth of GDP, and the purchaser gets to decide which 1/13 trillionth he buys. Right? But this is only good if people have confidence that the dollar is redeemable for 1/13 trillionth of the GDP. Thus far, this is nothing more than the very fiat system we have now. Am I wrong? What is the difference?

-a-train

[JohnBirchSociety]

How do you peg a paper currency to the whole GDP? I'm not sure I even understand. Who makes the currency? How much currency will be produced? Who makes the decision whether to make more currency or get rid of excess? Isn't every currency redeemable for a given portion of the GDP anyway? I mean, if GDP is $13 trillion, then $1 is redeemable for 1/13 trillionth of GDP, and the purchaser gets to decide which 1/13 trillionth he buys. Right? But this is only good if people have confidence that the dollar is redeemable for 1/13 trillionth of the GDP. Thus far, this is nothing more than the very fiat system we have now. Am I wrong? What is the difference?

-a-train

What Traveler is not getting, or intentionally avoiding is that Gold, and to a lesser degree, Silver, have enormously more value than paper, besides usage as currency. That is the heart of the issue. Confidence in Fiat Currency ends with confidence in the Fiat. Real money always garners some level of confidence because its' intrinsic value is not contingent upon Fiat.