Gold is worse than fiat

[bitchess]

Both gold and silver have performed very well as speculative assets at times over the past decade although in the past two years a definite pull back has set in, but that doesn't change the fundamental premise for anyone holding either gold or silver. If you are buying physical hold in yer hand gold and silver, you are essentially storing wealth for the long long term. Perhaps even wealth that you will never sell.

If/when the USD crashes through hyperinflation, the value of all currencies will turn to dust. Especially Bitcoins, whose entire value is based upon the ability for people to readily turn them into local currencies around the world. In a situation such as this, nominal or notional wealth will mean nothing. All that will mean something is real raw materials and resources and who owns or controls them. If such a situation occurs, then anyone holding gold or silver will be thanking the heavens that they do. This explains why China, Russia, and various other central banks around the world are busy stocking up on as much gold reserves as they can get their hands on, and perhaps explains why their is increasing talk of 'gold repatriation'.

After the crash, it will not be a bunch of internet geeks who decide what the new global currency will be and what it will be based on. It will be those holding all the real resources who decide and I doubt Bitcoins will be flavour of the month with them. A return to a gold standard is unlikely, but the whole world will be demanding a currency backed by commodities as opposed to paper promises.

The USD is not going to crash through hyperinflation.  People who like gold tend to worry about government actions and central banks.  The Fed is doing the right thing by printing money like crazy right now.  They know that the economy MUST avoid deflation.  Downward spiral and hoarding must be avoided, with the USD and with BTC in the 22nd century.

Bitcoins entire value is not based on people's ability to readily turn them into local currencies.  It's value is based on it's usefulness as a transactional unit of barter via the internet without a central authority to regulate the transaction histories.  If there are no government sanctioned currencies one day, it is very feasible that I send my BTC to your BTC address, and you give me your apple.

[MatTheCat]

The USD is not going to crash through hyperinflation.  People who like gold tend to worry about government actions and central banks.  The Fed is doing the right thing by printing money like crazy right now.  They know that the economy MUST avoid deflation.  Downward spiral and hoarding must be avoided, with the USD and with BTC in the 22nd century.

Bitcoins entire value is not based on people's ability to readily turn them into local currencies.  It's value is based on it's usefulness as a transactional unit of barter via the internet without a central authority to regulate the transaction histories.  If there are no government sanctioned currencies one day, it is very feasible that I send my BTC to your BTC address, and you give me your apple.

and the lead jester takes the stage!

[RationalSpeculator]

Until like 2 weeks ago I was kinda a goldbug, but now.. just accept it; "gold sucks" and stop being wrong.

Treason!

Great post. You are right.

gold  - fiat - cryptocurrency

[bitchess]

The USD is not going to crash through hyperinflation.  People who like gold tend to worry about government actions and central banks.  The Fed is doing the right thing by printing money like crazy right now.  They know that the economy MUST avoid deflation.  Downward spiral and hoarding must be avoided, with the USD and with BTC in the 22nd century.

Bitcoins entire value is not based on people's ability to readily turn them into local currencies.  It's value is based on it's usefulness as a transactional unit of barter via the internet without a central authority to regulate the transaction histories.  If there are no government sanctioned currencies one day, it is very feasible that I send my BTC to your BTC address, and you give me your apple.

and the lead jester takes the stage!

support? I mean that is my one word way of saying, can you elaborate on your implication that my post is logically incorrect?  I don't think you can, but would love to enter a reasonable discourse with you because if I am wrong I will learn and be enlightened by your un-conveyed knowledge.

[RationalSpeculator]

 The Fed is doing the right thing by printing money like crazy right now.  They know that the economy MUST avoid deflation.  

If that is true then bitcoin is a bad idea because no one can print more of it at will, and so sharp deflationairy contractions will happen from time to time, and will destroy the economy! 

Downward spiral and hoarding must be avoided, with the USD and with BTC in the 22nd century.

This is not true. Hoarding, or saving, is exactly what needs to be done MORE in times of crises. And is exactly what was done too little in times of prosperity leading to malinvestments and loses. Crises serves to learn people that risk does not always pay and investments should be done with your brains. This way less capital is wasted on useless ventures.

The whole keynesian philosophy that people should SPEND more during crises is invented by bureaucrats serving the masters who are always happy to find moral arguments to fill their pockets (money being printed to 'save the economy' goes directly to the ruling elite: governments and bankers).

[coincrunch]

I've been buying silver since it was $4 an ounce 10 years ago.  I'm way ahead and will continue to buy.  This is a minor setback, the rally will continue.

The fed is printing money at a record pace, degrading your dollars daily.

in the 1940s, the silver content in three mercury dimes would buy you a gallon of gas.  Today..  it will still buy you a gallon of gas.  Seems like a pretty effective hedge to me

[bitchess]

The Fed is doing the right thing by printing money like crazy right now.  They know that the economy MUST avoid deflation.  

If that is true then bitcoin is a bad idea because no one can print more of it at will, and so sharp deflationairy contractions will happen from time to time, and will destroy the economy!  

Downward spiral and hoarding must be avoided, with the USD and with BTC in the 22nd century.

This is not true. Hoarding, or saving, is exactly what needs to be done MORE in times of crises. And is exactly what was done too little in times of prosperity leading to malinvestments and loses. Crises serves to learn people that risk does not always pay and investments should be done with your brains. This way less capital is wasted on useless ventures.

The whole keynesian philosophy that people should SPEND more during crises is invented by bureaucrats serving the masters who are always happy to find moral arguments to fill their pockets (money being printed to 'save the economy' goes directly to the ruling elite: governments and bankers).

What are the economic implications, if every person, corporation, bank were to hoard.  Ie, put cash under mattress, banks would keep cash in their vaults.  The extra cash that otherwise would have been used on discretionary spending.  That would not get spent.  On the aggregate, the deflation breeds recession.  And the resultant recession breeds more deflation.
http://en.wikipedia.org/wiki/Deflationary_spiral#Deflationary_spiral

I agree that this is debatable and different views exist.  I am just expressing what I think is the more common view which is supported by what people learn in macroeconomic policy courses.  

Regarding your comment about our current macroeconomic situation.  It's all about timing.  I agree that the most recent crises was caused by excessive investment.  Central banks are supposed to raise rates to slow down the economy during times of boom, and decrease interest rates to lift up economies during times of crises.  And regulations need to be part of the picture.  They are printing money now because the target interest rate is below zero in their models.  They have the goal of promoting long term economic stability.  They don't always get it right and tend to err on the more stimulative side (as history has shown.)

The reason I bring up the implied deflationary spiral issue associated with BTC in the 22nd century is purely a comment on the design of the currency.  It is a major flaw with BTC that must be addressed eventually otherwise the system will blow up once people realize the issue.  It appears that I have a stronger view than the people who wrote the below wiki page.
https://en.bitcoin.it/wiki/Deflationary_spiral

Regardless of whether it's 1979, 1989, 1999, 2009, or 2019.  I would make the same commentary on the BTC protocol.  If you have a fixed supply at 21 million and the demand for BTC supply is increasing at that time, the price will rise.  People will buy more since it's going up and the BTC usage for real transactions would grind to a halt.
http://en.wikipedia.org/wiki/Quantity_theory_of_money

There are two ways this can be avoided IMO
1) somebody starts an entity that lends BTC with the fractional reserve system
2) have the ability to change BTC money velocity

I don't have much understanding of whether or not either of these are achievable.

[bitchess]

I've been buying silver since it was $4 an ounce 10 years ago.  I'm way ahead and will continue to buy.  This is a minor setback, the rally will continue.

The fed is printing money at a record pace, degrading your dollars daily.

in the 1940s, the silver content in three mercury dimes would buy you a gallon of gas.  Today..  it will still buy you a gallon of gas.  Seems like a pretty effective hedge to me

2 thoughts
1. has the supply of silver ceased?
2. if the silver standard was used, how do you think the economy would have performed in the last 100 years?  Would the same thing hold?

#2 is obviously a difficult question but would be interesting to think about.

Let's say there are fixed 21 million silver coins in the US government vault.  As the US population grows, each person has their own economic activity (they need to eat and buy stuff).  In other words total aggregate real GDP should grow.  As this happens how much should 1 silver coin buy?  If you have 21 million silver coins and 21 million population, does that mean roughly 1 coin per person?  Ok, we simply split up the silver coin into smaller pieces and spend it faster, that way we can keep the silver price stable.  What if somebody gets impatient and just pays more to buy a silver coin because they are so scarce in this situation?

Then you get deflation (silver prices go up) and a spiral starts.

[johnyj]

Gold is superior in holding value simply because it is a product of labour, just like bitcoin, you must pay some effort to produce it, either exchange it with your labour, or you mine it with your labour

Before 1971, fiat is a debt note backed by the amount of gold that central banks hold, you can always use fiat to exchange gold at central bank. But after 1971, the gold standard ended, the back of the fiat was removed, so essentially all the fiat is backed by nothing, its value purely decided by supply and demand

From labour based value theory to supply and demand based value theory, that is the trend in mainstream economics

But this change brought a foundamental change: Now the central bank can create money as they will without having any asset backing. Before, under a gold standard, the central banks are not any different than anyone else, they should also work/exchange to get the gold and then they can issue the notes backed by their gold

Because their money is not generated by work, they will tends to abuse it. No matter how many beautiful and complex theories they can find to disguise their action, people will sooner or later find out this biggest problem since 1971

It's been 42 years and most of this scheme still holds tight, it clearly showed how a money without any real value can have constant exchange value purely based on consensus

[RationalSpeculator]

The Fed is doing the right thing by printing money like crazy right now.  They know that the economy MUST avoid deflation.  

If that is true then bitcoin is a bad idea because no one can print more of it at will, and so sharp deflationairy contractions will happen from time to time, and will destroy the economy!  

Downward spiral and hoarding must be avoided, with the USD and with BTC in the 22nd century.

This is not true. Hoarding, or saving, is exactly what needs to be done MORE in times of crises. And is exactly what was done too little in times of prosperity leading to malinvestments and loses. Crises serves to learn people that risk does not always pay and investments should be done with your brains. This way less capital is wasted on useless ventures.

The whole keynesian philosophy that people should SPEND more during crises is invented by bureaucrats serving the masters who are always happy to find moral arguments to fill their pockets (money being printed to 'save the economy' goes directly to the ruling elite: governments and bankers).

What are the economic implications, if every person, corporation, bank were to hoard.  Ie, put cash under mattress, banks would keep cash in their vaults.  The extra cash that otherwise would have been used on discretionary spending.  That would not get spent.  On the aggregate, the deflation breeds recession.  And the resultant recession breeds more deflation.
http://en.wikipedia.org/wiki/Deflationary_spiral#Deflationary_spiral

I agree that this is debatable and different views exist.  I am just expressing what I think is the more common view which is supported by what people learn in macroeconomic policy courses.  

Regarding your comment about our current macroeconomic situation.  It's all about timing.  I agree that the most recent crises was caused by excessive investment.  Central banks are supposed to raise rates to slow down the economy during times of boom, and decrease interest rates to lift up economies during times of crises.  And regulations need to be part of the picture.  They are printing money now because the target interest rate is below zero in their models.  They have the goal of promoting long term economic stability.  They don't always get it right and tend to err on the more stimulative side (as history has shown.)

The reason I bring up the implied deflationary spiral issue associated with BTC in the 22nd century is purely a comment on the design of the currency.  It is a major flaw with BTC that must be addressed eventually otherwise the system will blow up once people realize the issue.  It appears that I have a stronger view than the people who wrote the below wiki page.
https://en.bitcoin.it/wiki/Deflationary_spiral

Regardless of whether it's 1979, 1989, 1999, 2009, or 2019.  I would make the same commentary on the BTC protocol.  If you have a fixed supply at 21 million and the demand for BTC supply is increasing at that time, the price will rise.  People will buy more since it's going up and the BTC usage for real transactions would grind to a halt.
http://en.wikipedia.org/wiki/Quantity_theory_of_money

There are two ways this can be avoided IMO
1) somebody starts an entity that lends BTC with the fractional reserve system
2) have the ability to change BTC money velocity

I don't have much understanding of whether or not either of these are achievable.

I'm familiar with the views you express. It's called Keynesianism and it's a false theory.

Bitcoin is proving that in practice.

Participants of bitcoin have no interest in converting it to an inflationary currency.  

You can however start your own inflationary crypto currency.

You will quickly discover how many people really like participating in that.

[odolvlobo]

What are the economic implications, if every person, corporation, bank were to hoard.  Ie, put cash under mattress, banks would keep cash in their vaults.  The extra cash that otherwise would have been used on discretionary spending.  That would not get spent.  On the aggregate, the deflation breeds recession.  And the resultant recession breeds more deflation.
http://en.wikipedia.org/wiki/Deflationary_spiral#Deflationary_spiral

The flaw is the part that asks, "what if every person ...". It is ridiculous to assume that this would be a normal outcome. There is no evidence that shows that low deflation causes a deflationary spiral.

Also, while a sudden deflationary event might cause a recession, long-term low deflation does not necessarily cause recession. It does, however, help efficient and productive businesses replace inefficient and unproductive businesses.

[RationalSpeculator]

So everyone seems to take for granted that gold is superior and people only use fiat because of government suppression.

But it occurred to me that this is blatantly false as someone mentioned "gold has already failed".

What backs up this statement? Well for one not a single country I know of uses gold or other metals for money. Is it really feasible that government suppression would be so powerful? Keep in mind quite a few non-oppressive and very peaceful countries with inflation STILL use fiat.

There is also lots of stories of countries using dollars instead of the sanctioned money.


So I think its safe to say that gold is not out because of suppression when you think about it.


Okay so whats the deal then, fiat clearly degrades at 1-5% (avg: 3%) a year in most countries - yet at some point the whole world decided to boot out the metals. Why?

Well a simple explanation would be that gold is simply worse in a free market.


Which turns out to be true when you run the numbers:
Lets say you are saving 20.000$, a decent chunk of savings for most people, considering how many are in debt instead these days and the poor of the world.

Well you will need to first buy the gold at a loss. You will probably have to drive to pick it up and you need to test it a bit to insure its good.
For this amount you will have to go to maybe two different guys found online to pick it up at least.
I think its safe to say buying and selling the gold will cost you at least 3% each time in transportation, offer-research, time used, risk of fraud and so on.

Okay not that bad, since you have value dense gold and not THAT much to store you now get a small safe at 200$ - quite cheap, yet that works out to another 1% cost. You skimp on alarms and other stuff.

So now you're set to go, after just a little more than 2 years you start to save money on inflation.


So on a 10 year basis it does okay - but if that is your time frame why not invest in something more productive like stocks, bonds etc., buy a car with better mileage, insulate your house? I mean gold will NEVER pay your day to day bills, gold does not climb in real value - its not a real investment!

This is supposed to be superior money and all that jazz right and this is a buffer savings so lets look at that instead. So lets say you loose your job and have to live off your savings a while after 2 years, now you pay that 3% again on at least some of your savings amount and you haven't made anything yet!

Keep in mind that you skimped on security and you safe is so small anyone could kinda just grab it and run so on a 10 year time frame what is the risk of burglary - 1% again in a nice neighborhood (that's an avg, could be 100% for YOU)?

So gold is a bad investment and bad as a buffer savings. Even during hyperinflation or the zombie apocalypse a few cigarettes will do you just as well or better.


So now the final one: Is gold good as MONEY and for EXCHANGE?
Not really: Imagine your local supermarket taking gold; total widespread acceptance. You stand there with your groceries and you have to lob like 3 grams off your "shopping nugget" and you brought your own weight to not get cheated...
I mean just play that out in your head and its obvious its a little funny.
Just to start with its a hassle to you AND the supermarket who will need more cashiers to deal with the slower transactions. They will also have a headache doing accounting with grams of gold and silver and all with different grades of purity.
They will have to move a lot of gold around the country every day from all their stores in trucks... its horrible.

But then you say "Realpra, that's not what the goldbugs mean! They mean a gold-BACKED currency you dunce, it can be digital and all!". Well then that is fiat. Fiat is kinda always backed by something (I have yet to hear of actual government "IOUs") but they always print more.
It is still fiat if its backed by gold and you hold the paper - that's how fiat started!

So clearly "barter < shells < gold/silver < fiat < crypto-currency" and NOT "shells < fiat < gold < crypto-currency". (turns out that is the historical order too!)

So what is gold good for? Well basing huge banks off of, backing fiat currencies or clearing rare debts between countries or other huge entities - which is exactly what we see today albeit not even that much (American Chinese debt is denoted in dollars for instance).


I will follow my own realization and prioritize gold/silver savings much less.
(I still need a safe for my paper wallets though...)

EDIT:
SHIT! I forgot my punch-line: "Notice how the gold cost works out to about the same as the cost of inflation for most fiat? Not coincidence! That is free market competition at work between gold and fiat!"

ta-ta-ta-daaaa......  

Loved your article OP

One thing that is better than fiat though is 'gold backed fiat'. Because it's easy/cheap to use AND does not lose it's value (But indeed you have also storage & insurance costs for the gold backing it, however this would only be around 0.5% per year).

Today fiat loses more than 3% per year in value. It's around 5%. That's been the case since 1972. Also the past 10 years prices have gone up on average around 5% per year. Correct to say that bank interest rates covered a big chunk of that, but today that's over with interest rates only around 1-2%.

The reason why there is no fiat currency backed by gold is not because the free market does not prefer that but because it is prohibited by law to offer 'gold backed fiat' to people. e-gold that got shut down is a good example. The cancellation of goldmoney's gold backed fiat attempt another.

So my point is, there is a good reason why gold has remained popular as a store of value, in the fiat world we live in. In the long term it preserves it's purchasing power much better than fiat.

Bitcoin is such a success because it has many improvements over fiat. It's transportable like fiat, but it will preserve it's value, like a 'gold backed fiat' would do. It does this without needing storage/insurance for the gold and without needing to trust the issuer of the 'gold backed fiat'. And it gets even better, gold is mined at an annual rate of 1-2% in infinity, so over the long term it is NOT going up in value because the supply grows equally fast as the growth of the economy/goods/services offered.

In contrast, starting 2030, Bitcoin's is mined less and less over time. This means that bitcoins are much cheaper than gold. Because with gold the users need to continually pay 2% per year to the miners. With bitcoin we will have to pay less and less to the miners, reducing it to only 0.1% per year in 2040.

[agentbluescreen]

2 thoughts

1. has the supply of silver ceased?
2. if the silver standard was used, how do you think the economy would have performed in the last 100 years?  Would the same thing hold?

#2 is obviously a difficult question but would be interesting to think about.

Let's say there are fixed 21 million silver coins in the US government vault.  As the US population grows, each person has their own economic activity (they need to eat and buy stuff).  In other words total aggregate real GDP should grow.  As this happens how much should 1 silver coin buy?  If you have 21 million silver coins and 21 million population, does that mean roughly 1 coin per person?  Ok, we simply split up the silver coin into smaller pieces and spend it faster, that way we can keep the silver price stable.  What if somebody gets impatient and just pays more to buy a silver coin because they are so scarce in this situation?

Then you get deflation (silver prices go up) and a spiral starts.

Baseball cards would have probably worked much better than silver. Had they chosen silver the art of fine dining would have been tragically degraded forever and banksters would be losing hair and sleep worrying about getting caught for hypothesizing rented out sugar bowl contracts..

Obviously nobody here has the FIRST CLUE about the difference between "WEALTH" and "MONEY".  

Colbert, the Malthusian Physiocrats and the "Xxx World Order" Freidmanist Mercantilists never did and still clearly don't, but almost every other valid, classical and neo-classical economist from Julius Caesar, Henry 1st, John Locke and Adam Smith to Keynes always (more or less) have.

FREE MARKET ECONOMICS isn't about what or how much a money is, nor really about how much or little of it is lying around. It's all about the very most important matter of "Who owns, controls the values and supplies of, rents-out and profits from it?"

When we use the word "wealth" all it means is "a lot of" any "one sort of" or "many sorts of" COMMODITY or RESOURCE.

Commodity = some sort of a generic asset (as in "fungible" meaning things that are "all the same".)

Resource = some sort of an action or limitation, a "renewable or non-renewable" source, asset or supply.

When we use the word "money" we are discussing some medium of VALUE exchange. (eg What'll we use for "money?")

Value = either or all of the intrinsic, utilitarian or exchange natures of any asset.

The first reason people confuse wealth with money has to do with assets. Since any asset can be a "money" for a given transaction this is understandable, so we need a more narrow definition of an "only-money" to distinguish it from other stuff.

The second reason people confuse wealth with money has to do with the confusion between Resource-assets and Commodity-assets. Very often we see them lumped together as "Commodity-Resources" which is also rather understandable but is DEFINITELY NOT all well and good!

In fact it is a fact of life that there is BUT ONE "Resource" that is SUPREME! All other resources are secondary.

Without the PRIME RESOURCE nothing happens, ever, at all, anywhere, to anything or to, for or between anyone, period!

Once again we return to Locke and Smith's three distinctly separated concepts of the loose-term "value". These are differentiated as utility-value, exchange-value and intrinsic-value. If we consider the Medium of Investment commodity of water and the Medium of Savings commodity of "emeralds"(gold) as examples, you can see where each can end up isolated into a single category depending entirely upon conditions of chance. During a long drought in a desert water has all three values, emeralds only one. At a feast next to the fountains of a palace garden, emeralds have all three values and water only maybe one.

In both cases above the "Prime Resource of Labour" alone ALWAYS stably retains at least two if not all three of the natures of value, as it usually does in most all scenarios. It is usually the prime function of a "money" that it be a suitably stable and reliable "Medium of Labour Exchange" value, first and foremost!

A good and useful "money" is always, first and foremost, a token of the Prime Resource, or, in other words a "standard" MEDIUM OF LABOUR EXCHANGE.

NATIONAL-SOCIALIST (NAZI) ECONOMICS 101:

1: Most economies are local. More-local economies of scale exist within them but the delineating factor that comprises them has usually been the "commonwealth" national, public Medium of Labour Exchange "currency" token that they share. International trade-exchanges themselves are NOT "global economy" they are a collection of marketplaces or the Global Marketplace that the New Economic World of the BTCitcoin Nation now truly first represents in "human economic", as opposed to mercantile "national-socialist (NAZI) or transnational-socialist (Bilderberg-Fascist) economic" history.

2: All labours and the (renewable) fruits of all labours are the Prime Economic Resource. Only "menial labours" can be regarded as a "commodity".

5: The main and principle mediums of all commercial exchange are local, public (national) Labor Exchange “Currencies”(money-tokens) which, although they may be possessed by all, are ALWAYS the sole and exclusive "properties" of the (trade-) wealths of national economies.  The conventional old-world Medium of Exchange which are a public economies "labor exchange currency" tokens, can be possessed by individuals but they are never "owned" by those individuals (only their exchange values are). To privately impose and "own, value/devalue and/or issue" the sole lawful Medium of Labour Exchange is to impose slavery.

3 The Prime Commodities (Labors and Labor’s-Fruits) are “fiat”, unlimited, and ever-growing in a healthy, growing economic system. Growth is a "fiat" choice. As the size and exported productivity of an economies labor force vary so must the well-proportioned quantities of it's labor exchanging tokens, otherwise inflation or deflation of the absolute value of those tokens occur. This well-regulation of a "money supply" is the duty and responsibility of a well-accountable system of public governance.

4: All Non-Renewable Commodity Resources OTHER than ever-growing Labor and its Renewable Fruits are finite, limited and ever-shrinking in proportion, due to economic and labor population growth itself. All these "others" are, to certain labor and demand conditions, exchangeable "Mediums of Investment".   A medium of investment's commodity-resource value may increase or decrease, regardless of supply or demand, due to a host of other market factors. Certain exclusive, limited and highly specialized skilled-labor "specialties" are also "more finite resource" Mediums of Investment, but still, their added-values are still subject to market factors.

6: Rare Commodity Resources (arts, antiques, fuels, metal and mineral rarities) are less-exchangeable, but certain to appreciate in value "Mediums of Savings". Their long term values are far less affected by market conditions due to their exclusive irreplaceability and non-renewability.

7: The current value of a local (Central Bankster) Labour Exchange “Currency” token is the sum of the values of it’s exportable labours and labours fruits, divided by it's quantitive availability among and size of labour value exchanging populance. Its absolute "current" value is determined by its foreign exchange worth in/to the global marketplace. The New Economic World of the BTCitcoin Nation employs an "Over The Counter (OTC)" Derivative Swap Token who's ultimate (hopefully trading-convention stabilized) exchange value will be determined solely by the Global (or a local) Marketplaces demand for them.

8: One cannot represent the exchange value of an infinite, ever growing fiat quantity of the utility-value worths of all the labourers and all of their labours fruits with the increasingly rarer ever-shrinking intrinsic-value of any finite one, hence, the growth of the Medium of Labour Exchange "currency" money-supply (or at least growth of it's exchange value like BTCitcoin) must also be “fiat” or ever-growing along with the ever-growing economic outputs it represents (rather than ever shrinking!). This means that penny that's worthless and obsolete now might buy you a half a book of matches again if it wasn't for Ben Bernanke financing wars, till quarters are relics.

One must have adequate tokenage to put a bit into every labourers pocket, in exchange for their labours for them to conduct commercial exchanges with other labourers for their needs. At the same time, it is always valid to compare the value of the money supply to the value of "Mediums of Savings" such as gold, as a regulatory tool to discipline government socialists and their well regulating management and open public coinage of the public's own money supplies

9: A local Labor Exchange Currency is owned, issued and its value determined solely by and for the utility of the economic populance to who’s economy it belongs, It is NEVER owned by those who merely possess (hoard) it, such a "crony-capitol" tyranny is enslavement, save for the exception of the BTCitcoin "over the counter" (OTC) derivative swap which is private, worldwide and totally decentralized.

10: The prime socioeconomic conflict and corruption is always between the evil greed and corruptions of parasitic, unwilling to invest, commodity-monopolizing, lazy, unproductive usurers with hoarded “old” wealth (gold) who are desperate to "usure", hypothesize and re-hypothesize and thus parasitically live off the avails of their greed  and the good, freed market public economy’s continuous, accountably well-regulated public needs for a growing, steady and reliable supply of “new” money/credit for the values of their labors.  

--The public commonwealth's goodly national need for the profits from renting  (loaning as an investor of last resort)  such new money that it alone creates in the public's name, and its ever-growing requirement to responsibly and accountably maintain a  predictably stable token-utility supply with which to exchange  labors values and the fruits of labors with, is in direct conflict with the selfish (hoarded liquidity) interests of parasitic private bond-Shylocking usurers. The right to issue a national public labor exchange currency-token is a public right and responsibility that must never be delegated to any small corrupting, insider-manipulating and unaccountable gaggle of private-boardroom-socialist Pharaohs. (currently nobody could loan BTC since nobody knows what it will be worth in 15 minutes and it takes an hour to use it)

11: It is the Net Export Product that is the key economic indicator, not the Gross Domestic Product. The "currently internationally relativistic commonwealth value" (or "currency" value) of a national economy's Labor Exchange Currency tokens is determined by the comparative to import wealth of its EXPORTS alone. The relativistic global-market day to day value of a given "currency" vaies by the current (net-positive or net-negative) values of it's trades with other national economies in the global marketplaces, and can never be "pegged" to the value of anything else but what that current value is (unless it is just pegged to the supply and demand for it like BTCitcoins!).

The Prime Economic Lesson:

In the economics lesson in Genesis, we read of the 7 years famine in Egypt.  Joseph, a Tory-Bilderberg Trotskyite boardroom-socialist crony of his Pharaoh conveniently (greedily) sells Pharaoh’s stored grain so that Pharaoh accrues all of the gold which was then the only form of "money" in the first year of the famine. In the second year, the people were then forced to barter their animals and other holdings for the grain and then, thereafter, they end up bartering themselves as slaves for grain merely to survive the famine as they are all then finally left gold-rent-token debt-enslaved and "bonded in indenture" to Pharaoh for eternity.

Fortunately this "eternity" only lasted until a later, not too up on current events (King) George (or "W") Pharaoh mistakenly adopted himself a Crown Prince out of the bull rushes named thut-Moses....

Precious finite gold or any "rare finite something" like DaVinci paintings or '57 Chevy Bel Airs could not ever be used as a Free Market "Labor Exchange Currency" in any growing freed market economic system. A finite and privately hoarded “old money” (gold, silver, Quagga-skins etc) public Labor Exchange Currency supply system is slavery. In any commercial system by means fair or foul a "commercial" winner (or winners) will always eventually emerge to own nearly all of the available, finite Labor Exchanging "currency" resource (all the gold, DaVinci paintings, silver, Quagga skins etc) after which point the rest of the economy (all property) becomes their private chattel collateral, and all of it's participants become their rent-debt-slaves. In a private, finite currency system after that point everyone else has to go to them, cap in hand, to rent some flake of paint off one of their loaned-out and re-hypothesized a thousand times DaVinci paintings even just to use a pay-toilet!

Even if everyone had some tiny reserve of gold or DaVinci painting scraps set aside as savings the debt enslavers could drive prices up by raising rent-debt-prices (usury) or printing-dilution money-supply (monetization) inflation and thus force all the small gold holders to be forced to exchange their paltry holdings to eat or heat their homes or fuel their cars. (hoarded false-scarcities, engineered famines or pandemics). If you own an ounce of gold you ALREADY have more than your human lifetime of labours "share" of it. It's utility value as a money actually ended in the 17th-18th century, it just took it till the 20th to finally go off and die. It is still however still a fair third rate "bulk" Medium of Savings next to Antiques, Fine Art and Gems or truly rare metals. Even baseball cards are worth more than silver.

One "winning" consumer (Gold Pharaoh), no matter how audacious his corruptly consumptive lifestyle cannot "urinate down" a "Free Market" economy getting his yards cut or renovating his palaces. The power to counterfeit, loan and issue (from nothing) a fiat Labor Exchange Currency token is the power to corrupt. The Wealth of Nations is their public property expressed and represented by the foreign-export fruits of all labors value of their publicly owned and issued "Medium of Labor Exchange Currency".  Maintaining and growing the ongoing exchange-value of its own economic "currency" is the public work of a nation, it is not ever to be regarded as the private toy-hobby of some "beneficent" private gang of wealthy-socialist Pharaohs.


The stupidly foolish Mercantile "Austrian Fascist" notion of (only) using and hard-coding a limited, finite, precious resource (like DaVinci paintings, gems, antiques or gold) to represent the limitless ever-expanding and growing resource value of our Prime Resource (the "current national token" of our individual labor properties and the limitlessly ever-expanding fruits thereof)IS A RECIPE FOR GUARANTEED, INEVITABLE ECONOMIC SLAVERY AND EXHAUSTION FOR ALL, FOREVER.

To use a limited, finite resource like gold (global Medium of Savings)  as money (national economic Medium of Labor Exchange) all nations wages and incomes would have to continually decline to allow for any and every new person or economic growth.

WHAT IT IS, IS WHAT IT IS, - IT CANNOT ALSO BE SOMETHING ELSE THAT IT IS NOT!

The value of nation’s Labor Exchange Currency is a fractional token of the values of all of it’s laborers EXPORTABLE labors – PERIOD!

There would never have been the tyrannical corruption of an unconstitutional private Federal Reserve "They-Owe-Us Note" printing company if the criminal, treasonous, global Trotskyite moron Wilson had ever understood the intrinsic difference between gold wealth and human resource "money".

It you want to save your nations "medium of labour exchange" tokens you must exchange it's current value for the current value of a "Medium of Savings", if you want to spend it you spend the labor (Prime Resource) it represents. You must never be forced to go cap in hand to some Gold-Pharaoh to beg or borrow some of "his tokens" of his hoard (private FED currency) just so you can use a pay-toilet..


The global depression we all now must face is one created solely by and for the benefit of the private old-money (private Gold Fed-Pharaoh paper labor-exchange "currency") usurer-hoarders, WHO KNEW that it was totally obvious and inevitable that from the moment that they, themselves treasonously coined and disseminated the depraved, corrupt imperial-global-corporate--Shylock-fascist political expressions "Deregulation", Global Economy"  and “Free Trade”, to corruptly sell us, for the sole benefit of them and to finance their soulless corporatist transnational-socialist fascist cronies, that we and our Labor Exchange Currencies would be dead. When a Free Market's economic outputs and means of production are maliciously and deliberately exported to slave labor camps and shrunken by corruptly ill-regulated policies, growth of a nation's currency supply, growth of Keynesian public infrastructure stimulus spending, growth of war-communism spending, growth of destructive, parasitic war-communist-debt and the growth of labor populance and debt-tax enslavements are all totally inflationary.

Even the growth of consumer spending on foreign slave goods and growth in hiring people to use cheap foreign slave-tools and slave-goods to build things at home is pure inflation.

The corrupt private Fed "old-money" Gold Mafia knew they were engineering this result. Due to their maliciously inflationary program everything else shall ultimately deflate except "Mediums of Savings"...

If you have nothing unique nor in broad foreign demand built at home to export, nobody needs your currency and it is thus devalued.


The “globe” cannot have a “global economy” nor (save until BTCitcoin came along) its own labor exchange “currency” since it has no unified labor participants (save for us independent "New Economic World" BTCitcoiners) of its own nor does it produce nor exchange anything for nor with any other globe. A world of economies enslaved into exporting all of their economies net-new wealth profits to a group of tax evading, debt not printing Gold Pharaohs in Switzerland, Liechtenstein and the Cayman Islands is not "trading with" some other "globe". ((excuse this older pre-BTCitcoin generality of mine, but it's nonetheless still meaningful to mercantilist Tory-Trotskyite Nazis and Pentagon-Communists)

Greedy, corrupt, ennobled Pharoah-welfare parasites who merely lend-out worthless tokens for  the "old money" that they have happened to possess the most of and criminally buy themselves our politicians with are not another economic planet. The ludicrous notion of a "GLOBAL ECONOMY" is the BIGGEST LIE ever sold. We Humans of the Nation of BTCitcoin however, are a whole other New World again! But they, the parasitic global-mercantilist tax-evading money-bond enslaving Shylocks are not "another planet".

Gold, as a very finite resource and rare antiques and art are always certain to appreciate "mediums of savings" that merely suffer from being somewhat more illiquid forms of real, portable, own-able asset possessions. By contrast, as common "mediums of exchange" in ever-growing exchange systems, publicly owned and issued Labor-Exchange "Currencies" must always consistently marginally decline in "gold" value over time since they also must represent the ever-growing anticipated future Prime Commodity-Resource of "the new fruits of all new labors" as well as those extant. This provides the incentive to invest or save, rather than to hoard or live off the avails of the usury of "labor exchanging currencies".

The problem with the private Fed Mafia is not with what it happens to be doing today, it's with its corrupt insider-secrecy and with those who corruptly claim to illegally "own" our public Labor Exchange Currency and by extension all of us, all of our properties and all of our labors. It is an unconstitutional, private, insider-trading and gold enslavement monopoly! If our government was abiding by the Constitution and doing these (money-issuing and money renting) things itself for all of our common good and profit the abominations of taxation would be unnecessary and obsolete.

What The Private Fed Mafia Dictatorship are doing with their criminally forged They-Owe-Us Notes is selling us into slavery to their fellow Rothschild/Bilderberg Bretton Woods Gold Pharaoh cronies, and we are paying for it with our great, great, great grandchildren's slavery.

It's about which Old Gold Pharaohs are getting away with "owning" and have stolen most all of our nation's people's "Labor Exchange Currencies", dummies.

Adam Smith noted at the core of the mercantile system was the "popular folly of confusing wealth with money,"

And so finally it is that all of we, ourselves alone, digitally become the prime resource of all real wealth that shall never ever again be wrongfully confused with "any other wealth" that's far too often "confused with money".

BTCitcoins finally happen to be what we are doing about THEM, using their own OTC Derivative legal-loopholes, and it has been the genius of Sitoshi that we must jealously now all carefully improve, protect and defend that has created us all a New Economic World with the power to save us all from those who would enslave us by defrauding us all of the fruits of our labours, and corrupting our governments on their profits.

[townf]

Somebody said the US went off the gold standard in 1933. The US didn't go off the gold standard in 1933. FDR basically just confiscated people's bullion temporarily in order to repeg the price of gold at a higher dollar price. This was nothing but a bank bailout. The banks were broke because they issued too many notes during the 20's which were defaulted on, and all the gold was at risk.

The path away from the gold standard is really a series of morally hazardous bank bailouts, ending globally in 1971. The major events was FDR executive order in 1933, Bretton Woods in 1944, and Nixon severing dollar from gold completely in 1971. The banking system now essentially uses monetized government debt as "reserves" which is kind of a hilariously conflicting hybrid between real fiat and a commodity reserve system.

Since there is no true physical reserve backing all the "money" floating around, then there is no way to honestly contain the amount of money in the world, nor any way to continue bailing out the irresponsible and insolvent banking system other than more government borrowing, taxes, asset confiscation, austerity, and money printing. There is no way this is going to last. This is not even a real system. This is a broken farce that is going to cause a lot of pain as it disintegrates.

A precious metal standard is superior the this current farce as long as we don't slide off of it to bail out banks, but we already did. A cryptocurrency can serve as a reserve, as it is fungible and not arbitrarily inflatable. It is actually superior to metal in some ways in that it is more easily redeemable and transportable, which could keep banks more honest than they would be with metal.

Debt free, government issued fiat might be superior even to a reserve standard, whether it is gold or bitcoins, controlled by private entities. We just need to try it. It will give us our democracy back. A lot of people think that's what we have now and the government already issues our fiat money supply. They don't. The government is actually the finance bloc's bitch and needlessly borrows money from it and takes orders from it, which undermines the democratic process. Money is created by private sector banking corporations as debt, so basically we all pay rent simply to use money. The gold standard works the same way, but at least with a finite reserve with no bailouts, the banks are kept honest, and the money supply has a lid on it.

[agentbluescreen]

Debt free, government issued fiat might be superior even to a reserve standard, whether it is gold or bitcoins, controlled by private entities. We just need to try it. It will give us our democracy back. A lot of people think that's what we have now and the government already issues our fiat money supply. They don't.

The Soviet Union kicked out Trotsky and did it, fortunately none of them got assassinated, because they killed the banksters first. Julius Caesar, Abe Lincoln and John F Kennedy weren't so lucky...

BTCitcoin finally uses their own Over the Counter Derivative "Credit Swap" medicine against them. It is all always solidly "backed" when we buy it.

[townf]

If we had just heeded andrew jackson...

[agentbluescreen]

If we had just heeded andrew jackson...

indeed A.J. held them off, and gold was still a far more seriously threatening economic disease back then too. Endogenous money is the only way to go. Sure I have savings in gold, but that's because it's a giant pain in the butt to spend it

Well the people of Iceland did it, but you have to keep thinking to stay alive there.

[johnyj]

The core question is: Who give them the right to print fiat money without anything valuable backing it?

If one party have a promise of always print money with some real value backing, that party will surely win lots of votes. But unfortunately the money printing is central bank's monopol, and they have invented so many misconceptions that are enough to confuse even the smartest people from economy schools

[agentbluescreen]

The core question is: Who give them the right to print fiat money without anything valuable backing it?

That's a matter of opinion.

Do you say that when any person does any work of any value that is not represented by what he is payed?

When you get paid your valuable efforts alone are all that is needed to "back the value" of the Medium of Labour Exchange token that you receive for it. Everyone else who works for those same tokens will recognize your work that your "money" represents, by virtue of it being in your possession to use.

Do not confuse wealth (diamonds, emeralds, rubies, daVinci paintings, 57 Chevy BelAirs, gold, silver, Quagga skins) with "money"!

A "money" is simply a medium of exchange that is "the" Medium of Labour Exchange "Currency" that your local economy uses and supports the value of, by the values of all that it's labour's produce.

Rare, antique "wealths" are uncommon (hoarded and monopolized) Mediums of Savings-Curiousities, not common (broadly strewn about) Medium of Exchange-Tokens

Face it, very, very few "jobs" anyone ever does, are ever worth a "wealth"!  

Why not "back" your sort of "loaned-wealth-money" with sirloin steaks, or concrete, or gasoline, or Viagra, or steel, or leather, or travertine marble, or Toyotas, or Rolls-Royce Wraiths? Why does a Labour Exchange Currency also need to be something else, that it is not, to you?

The PRIME RESOURCE is labour and that is what a "money" pays for, and that alone is what "backs it" and what it represents. Being able to exchange it for other things both common and rare is just a bonus. Utilizing a "money" affords all with a choice of what "wealths" they prefer to earn for themselves through their labours.

Would you rather that your employer paid you in scrap aluminum or vegetable oil?

Believe it or not lots of people have zero use for gold, they don't need it, don't like it, don't want any and would much rather have their "money backed by" something they can watch The Simpsons on. (like a wikked GPU)

[Impaler]

You know I've been considering this definition of yours and I don't think Labor exchange is really the defining quality of money.  Simply consider the case of an economy ware no one is a wage earner, everyone is self employed and sells goods or services to each other (such as a butcher, a backer and a candle-stick maker).  No one pays or receives wages but money is self evidently possible.

Rather I favor the definition as "A universally accepted extinguisher of all dept in a society", now the universal part is key because that means it's accepted in payment of taxes and in reality taxes will always be the driver behind a money system.  Any society with enough complexity to need money is going to have some kind of taxation even if it's very informal like "The chieftain calls upon the people to give", and you need to have some liquid token you can pay that debt in.  And once the chieftain will take it then everyone else will too because everyone's going to eventually have a need to pay a dept to said chieftain.

Sure in TODAY'S economy the buying and selling of labor is the single largest 'market' in the whole economy, so big we don't even recognize it as such and nothing could be considered money if it didn't exchange for labor but it needs to be bigger then that to really be money.  If I could get payed in a token but not pay my taxes in it then its not money.  Many old turn of the century mill operators would pay employees with some kind of company script that was not usable to pay taxes and was not by my definition money (such practices are fortunately outlawed now).