Gold collapsing. Bitcoin UP.

[cypherdoc]

i hope you guys had a chance to read this about the Etsy Lab talk.

https://bitcointalk.org/index.php?topic=81642.msg910908#msg910908

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[miscreanity]

I don't think you know what you are talking about. Using a PM as a currency and 'monetizing' them are distinctly different things. I don't think you actually want PM's to be 'monetized' because that typically means they are confiscated.

I always like being told what others think I think I know

Investopedia: http://www.investopedia.com/terms/m/monetize.asp
The Free Dictionary: http://www.thefreedictionary.com/monetization

An item can function as a currency whether it is monetized or not. Dollars are a fiat that was introduced in a monetized state, whereas pebbles may be used as currency and become monetized (as an official currency) at any time. Gold is still technically monetized when stamped with a denomination, but it has been functionally demonetized.

Yes, I would prefer that precious metals be monetized, and gold will be, even in major western countries). There's no way for western nations to maintain control without re-monetizing it. Silver may or may not follow in the western world.

Yes, confiscation has occurred in the past, but there are no compelling reasons to do so today. A primary one being that control of available supply is possible, which is more important than direct ownership. That means potential confiscation of miners, refineries - the means of production. It's much more effective to attack the source than to enforce compliance from a distributed, amorphous supply.

In any case, gold will have at least [/i]some[/i] restraining effect on banking. That's better than none, and works in conjunction with a distributed power base of public banking.

[miscreanity]

For the record, I'm down with chodpaba and cypherdoc on this one.

My love/hate relationship with gold has a reasonable significant 'hate' component because I fear the potential for gold to be used even more distructively than our current fiat regimes.

I will state again that I like distributed crypto-currency solutions along the lines of the trail blazed by Bitcoin the best from a theoretical point of view because it can fail if it is abused by those who have achieved the power to do so.

From a practical standpoint, a publicly owned banking system run as a service to the citizens of a political state seems the most tenable near-term solution.  I 'one world currency' with no cash alternative is, I fear, the most likely near term outcome however.

Yes, regional & local banking is far more preferable to overwhelmingly concentrated authority.

What do you mean in regard to 'potential for gold to be used even more destructively'? I assume you're referring to concentration of ownership?

how's the first attempt at that working out?  uh, Euuuuro...

It could just be a stepping stone to SDRs, or something far worse (think genetic tagging). Never let a serious crisis go to waste...

no wonder they don't like Bitcoin, 'eh?

 

[tvbcof]

I 'one world currency' with no cash alternative is, I fear, the most likely near term outcome however.

how's the first attempt at that working out?  uh, Euuuuro...

The Euro was specifically NOT a 'one world' currency.  But it's very possible that it is working out exactly as planned...

Economic blocks such as the BRICs and various pesky S. American states could throw a stick into the works.  What bothers me is that a truly global solution through which all economic transactions are checkpointed is a pretty compelling solution to most nations of modest size and that trend is likely to steepen as we start running out of cheap resources.  It might even be the only possibility for retaining the reigns of power in a lot of countries so the pressure to cooperate here may be overwhelming.

but you know what i mean...

it's been impossible for the Euro region to combine their fiscal policies alongside their monetary policies.  and i don't see any evidence that it will happen; in fact, plenty evidence for the opposite.

it would be worse on a worldwide basis.

I dis-agree.  In a reasonably tight 'one world' solution a lot of the problems the EURO has (or pretends to have) would vanish.

[miscreanity]

This is a good point, assuming that the Federal government would ever give up fiat...  (roflmao)  

The US treasury does actually have silver reserves, however they are very small compared to gold.

Fiat doesn't have to be abandoned. Gold now acts best as a reserve for balance of payment transactions rather than a common transactional medium. Paper still has plenty of use for transactional purposes so long as its value remains stable during the period in which the transaction occurs, so instantaneous, days, months... months/years and longer is the point where gold would be a reserve for savings instead of fiat.

The silver reserves are so inconsequential, they may as well not even exist. They're also tagged as the reserves of rare earth metals are - for emergency and/or price stabilising industrial and military purposes.

[tvbcof]

For the record, I'm down with chodpaba and cypherdoc on this one.

My love/hate relationship with gold has a reasonable significant 'hate' component because I fear the potential for gold to be used even more distructively than our current fiat regimes.

I will state again that I like distributed crypto-currency solutions along the lines of the trail blazed by Bitcoin the best from a theoretical point of view because it can fail if it is abused by those who have achieved the power to do so.

From a practical standpoint, a publicly owned banking system run as a service to the citizens of a political state seems the most tenable near-term solution.  I 'one world currency' with no cash alternative is, I fear, the most likely near term outcome however.

Yes, regional & local banking is far more preferable to overwhelmingly concentrated authority.

What do you mean in regard to 'potential for gold to be used even more destructively'? I assume you're referring to concentration of ownership?

In a nutshell, yup.  That would be at the root of the problems I would expect.

[silverbox]

This is a good point, assuming that the Federal government would ever give up fiat...  (roflmao)  

The US treasury does actually have silver reserves, however they are very small compared to gold.

Fiat doesn't have to be abandoned. Gold now acts best as a reserve for balance of payment transactions rather than a common transactional medium. Paper still has plenty of use for transactional purposes so long as its value remains stable during the period in which the transaction occurs, so instantaneous, days, months... months/years and longer is the point where gold would be a reserve for savings instead of fiat.

If fiat isn't abandoned, and the gold to fiat ratio is floating and not set by the gubament, then its no different then the system we have now . 

[miscreanity]

i hope you guys had a chance to read this about the Etsy Lab talk.

https://bitcointalk.org/index.php?topic=81642.msg910908#msg910908

I haven't had the opportunity to read it yet (everyone here keeps posting great perspectives ) but what I've seen so far is exactly what I've been talking about as far as gold and its history in the banking system, and what several participants in this and your other gold thread have discussed on how Bitcoin solves or reduces so many of the problems.

[miscreanity]

If fiat isn't abandoned, and the gold to fiat ratio is floating and not set by the gubament, then its no different then the system we have now . 

It's done for the Euro - marked to market daily. The ratio of the Euro to gold is monitored, and additional supply is supposed to be created to maintain a steady ratio to gold. At least, that's the idea. In practice, USD inflation has threatened international price stability, so the dollar has to be taken out of the picture before gold can be used as a basis - a floating ratio range tied to gold as the foundation.

If the Euro fails, the US dollar almost certainly will also, and vice versa. Next step: SDRs based on the same principle of a gold ratio.

My concern remains management. Bitcoin has no direct management, whereas the Euro and all other fiat currencies do (although the Somali shilling is an interesting case).

[cypherdoc]

I dis-agree.  In a reasonably tight 'one world' solution a lot of the problems the EURO has (or pretends to have) would vanish.

let me give you several reasons why there will never be a one world currency:

N.Korea vs S.Korea
Taiwan vs China
USA vs Russia
USA vs China
Iran vs Israel
Palestine vs Israel
Israel vs The entire Middle East

did i miss any?

[cypherdoc]

This is a good point, assuming that the Federal government would ever give up fiat...  (roflmao)  

The US treasury does actually have silver reserves, however they are very small compared to gold.

Fiat doesn't have to be abandoned. Gold now acts best as a reserve for balance of payment transactions rather than a common transactional medium. Paper still has plenty of use for transactional purposes so long as its value remains stable during the period in which the transaction occurs, so instantaneous, days, months... months/years and longer is the point where gold would be a reserve for savings instead of fiat.

If fiat isn't abandoned, and the gold to fiat ratio is floating and not set by the gubament, then its no different then the system we have now . 

uh oh, you'd better duck.  here come all the conspiracy theories from miscreanity!

[miscreanity]

In a nutshell, yup.  That would be at the root of the problems I would expect.

Ok, and Bitcoin is susceptible to the same type of concentration. That comes back to what we were discussing as the potential for merged mining blockchains to develop into a "lateral reserve" system. By using merged mining, an alt chain can start at nearly full-strength by utilizing the same processing for security and stability as Bitcoin. Adoption of the alternative could follow rather than be a pre-requisite for growth. Try that with fiat

[silverbox]

If fiat isn't abandoned, and the gold to fiat ratio is floating and not set by the gubament, then its no different then the system we have now . 

It's done for the Euro - marked to market daily. The ratio of the Euro to gold is monitored, and additional supply is supposed to be created to maintain a steady ratio to gold. At least, that's the idea. In practice, USD inflation has threatened international price stability, so the dollar has to be taken out of the picture before gold can be used as a basis - a floating ratio range tied to gold as the foundation.

If the Euro fails, the US dollar almost certainly will also, and vice versa. Next step: SDRs based on the same principle of a gold ratio.

My concern remains management. Bitcoin has no direct management, whereas the Euro and all other fiat currencies do (although the Somali shilling is an interesting case).

Uh ok..  So how does this mean that gold will be somehow adopted into the current system in some way that silver won't that leads to 100 to 1 silver to gold ratio??  

I don't get it.

I still fail to see how silver to gold ratio is going to 100 to 1.  When the fundamental ratio is 10 to 1.  and its trading at 50 to 1..  Again I'm betting it will move towards 10 to 1, not towards 100 to 1.

Nothing you have said has convinced me that its going to 100 to 1...

[miscreanity]

uh oh, you'd better duck.  here come all the conspiracy theories from miscreanity!

It's all because of Murphy's Law.

[cypherdoc]

In order for any of that to happen you really must have a banking system set up to serve a functioning economy with the use of the metal. Which is where Utah has thus far fallen short, which will relegate the use of PM's there to the role of a novelty.

there is no way today's modern economy or banking system could function with a gold standard.  you couldn't move the metal fast enough. 

centralizing it at the LBMA or Comex introduces all sorts of accounting problems.  once you have a fiat representation of the metal the very function of the gold reserve can be manipulated.

[miscreanity]

It is cute that you would link to Investopedia in order to put some authoritiative weight behind your opinion.

I don't care what you think is 'cute'. You didn't provide a definition yourself, so unless you're going to do so, troll elsewhere.

No, monitization in this case would make gold and silver subject to the same kind of controls that are now placed upon currencies. And it would most likely mean that governments would confiscate a goodly chunk of them as occurred in 1933. In order for any of that to happen you really must have a banking system set up to serve a functioning economy with the use of the metal. Which is where Utah has thus far fallen short, which will relegate the use of PM's there to the role of a novelty.

Yes, liable to taxation, etc. So what? The supply cannot be fabricated the fiat is, which means theft is not possible in the manner it is with a strictly fiat system. Nor does it imply confiscation. And it certainly isn't as though the banking system is incapable of accommodating another foreign exchange unit, because that's all gold's representation would be - another currency. Stored in a vault, the amount digitally credited to an account, digitally accessible, and digitally transferable regardless of where the metal is stored.

[silverbox]

In order for any of that to happen you really must have a banking system set up to serve a functioning economy with the use of the metal. Which is where Utah has thus far fallen short, which will relegate the use of PM's there to the role of a novelty.

there is no way today's modern economy or banking system could function with a gold standard.  you couldn't move the metal fast enough. 

centralizing it at the LBMA or Comex introduces all sorts of accounting problems.  once you have a fiat representation of the metal the very function of the gold reserve can be manipulated.

That's right. Heavy metal is still heavy. Unless you control it physically (either in your pocket or in a vault) you can not be assured that what you are transferring is fully backed by the metal, i.e. the metal itself. Practical, daily movements will require the addition of an abstraction layer and that will be vulnerable to fractionalization. The direct transfer of value in the form of the metal itself will always be relegated to a backwater of economic functionality.

So long as there is a mechanism to take delivery expeditiously at the stated rates of exchange, then its not fractionalized.  

[hazek]

I dis-agree.  In a reasonably tight 'one world' solution a lot of the problems the EURO has (or pretends to have) would vanish.

let me give you several reasons why there will never be a one world currency:

Just because you don't think gold is not a world currency doesn't mean it's not.

[silverbox]

I dis-agree.  In a reasonably tight 'one world' solution a lot of the problems the EURO has (or pretends to have) would vanish.

let me give you several reasons why there will never be a one world currency:

Just because you don't think gold is not a world currency doesn't mean it's not.

Word. 

[miscreanity]

In order for any of that to happen you really must have a banking system set up to serve a functioning economy with the use of the metal. Which is where Utah has thus far fallen short, which will relegate the use of PM's there to the role of a novelty.

there is no way today's modern economy or banking system could function with a gold standard.  you couldn't move the metal fast enough. 

centralizing it at the LBMA or Comex introduces all sorts of accounting problems.  once you have a fiat representation of the metal the very function of the gold reserve can be manipulated.

Centralization does introduce additional risks. Decentralization, just like with public banking, modifies the incentive structure at a cost of redundancy. The greater the number of relatively equal participants, the harder it is to game the system. It's easier to work with the system than force it to submit. Distributed storage of gold at local or regional public banks would be the same as distributed fiat holdings, with the same effect.

Gold alone cannot be divided to a high enough degree. Fiat alone, in the hands of a central and insulated authority, cannot be prevented from diluting to too high a degree. Neither can be used alone in the context of growing human social structures. Of course, Bitcoin is proving that it can take the place of both, but in reality there is going to be a transition period - that is best handled by a modernized gold ratio system integrated with the fiat system.