What would the PP look like without fiat currency and central banks?

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blue_ruin17
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What would the PP look like without fiat currency and central banks?

Post by blue_ruin17 » Fri Aug 19, 2016 8:15 pm

What would the PP allocation look like if gold was the world-reserve-'currency'?

Right now there is a 25% allocation in "cash" (world-reserve-currency, unencumbered by long-term debt obligations) and a 25% allocation towards "gold" (the 'anti-dollar') ,but what if fiat currency did not exist, and "cash" (world-reserve-currency, unencumbered by long-term debt obligations) was gold?

It seems to me that the 'gold' allocation exists in order to protect against central bank shenanegans. But what if there was no central bank and interest rates were left to be set by the free market? And what if there was no central banks that artificially created inflation (or, sometimes, deflation)?

In other words, is the PP purely a product of, and a response to, a fiat world-reserve-currency system, a portfolio which would not/could not exist in a system in which gold was the world reserve money?
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Re: What would the PP look like without fiat currency and central banks?

Post by Xan » Fri Aug 19, 2016 9:05 pm

I think you're exactly right. That's why when most of us do backtesting, we only go back to 1974 or so. The financial regime was entirely different before then.
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Re: What would the PP look like without fiat currency and central banks?

Post by LazyInvestor » Sat Aug 20, 2016 4:42 am

I think we would use that Talmud portfolio 1/3 gold 1/3 land 1/3 equity.
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Re: What would the PP look like without fiat currency and central banks?

Post by ochotona » Sat Aug 20, 2016 7:43 am

LazyInvestor wrote:I think we would use that Talmud portfolio 1/3 gold 1/3 land 1/3 equity.
No government bonds?
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Re: What would the PP look like without fiat currency and central banks?

Post by MachineGhost » Sat Aug 20, 2016 8:22 am

It would be same as the PP now except gold would be some other real asset. I can't remember for sure what real asset was in vogue during the gold standard era (collectible silver coins?) but it was definitely something.
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Re: What would the PP look like without fiat currency and central banks?

Post by Kbg » Sat Aug 20, 2016 8:53 am

Not to be blunt, but hey you are :-)

It's a stupid hypothetical that's never going to happen. It eliminates the ability of governments to collect taxes effectively and efficiently.
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Re: What would the PP look like without fiat currency and central banks?

Post by MachineGhost » Sat Aug 20, 2016 9:58 am

Kbg wrote:It's a stupid hypothetical that's never going to happen. It eliminates the ability of governments to collect taxes effectively and efficiently.
Nowadays people are woefolly ignorant of history, especially libertards and rightwing nuts. They ignore the highly punitary and confiscatory, regressive nature that crony capitalist tarriffs on goods had on the working and middle classes. Indeed, we are not ever going back to that regime by scrapping the income tax. The modern, consumer-driven world as we know it would cease to exist.

I wouldn't say never, though. We're likely to use precious metals temporarily until we transition to the new world currency regime. Or cryptocurrencies. Normally it takes a crisis to get the masses to try and adopt something new.

Note to self: Don't try and write posts immediately after working out lest you want to edit your mistakes a few hundred times.
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Re: What would the PP look like without fiat currency and central banks?

Post by Kbg » Sat Aug 20, 2016 10:27 am

MG,

You are entirely missing my point. If the country government says, as they all do, we only accept taxes paid in our currency then you de facto and always convert to the system. Add in laws like large foreign currency transactions will be conducted "in the following manner" then the monopoly will continue and is enforced.

Bitcoin is a great example...a minor sub many decimal fraction of total global transactions. The world may very well go to crypto currencies, but the significant ones will be government backed and controlled. No government in its right mind is going to subvert its ability to tax. Categorically isn't going to happen. Find the first government leader ever and you will find taxes nearby. I know history pretty well and the first several thousand years of recorded human history is a lot of war over taxes. The words used though we're looting (one time rip off) and tribute/levies (continual and ad hoc taxes). Some thing though "the man" taking your stuff.
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Re: What would the PP look like without fiat currency and central banks?

Post by MachineGhost » Sat Aug 20, 2016 10:52 am

Kbg wrote:You are entirely missing my point. If the country government says, as they all do, we only accept taxes paid in our currency then you de facto and always convert to the system. Add in laws like large foreign currency transactions will be conducted "in the following manner" then the monopoly will continue and is enforced.

Bitcoin is a great example...a minor sub many decimal fraction of total global transactions. The world may very well go to crypto currencies, but the significant ones will be government backed and controlled. No government in its right mind is going to subvert its ability to tax. Categorically isn't going to happen. Find the first government leader ever and you will find taxes nearby. I know history pretty well and the first several thousand years of recorded human history is a lot of war over taxes. The words used though we're looting (one time rip off) and tribute/levies (continual and ad hoc taxes). Some thing though "the man" taking your stuff.
Oh, you're talking about legal tender laws? Well, that doesn't really have any impact if the free market decides its full of shit. Force only works up to a certain point since it is always and everywhere tenuous. History is replete with that. What's more at practical risk to you or me when the government loses the ability to effectively tax the proles is the Preatorian Guards looting the civilians that they're supposed to protect. That's Rome's legend of the fall. It's already going on in the EU where you can no longer transport any financial asset or real asset across borders whether by car, train, plane or boat or it will be confiscated by the pigs without recourse.

I don't have a problem with income taxes per se because it is necessary for the Citizen's Dividend to work (which is arguably necessary to prevent civil war from disadvantaged minorities and/or technologically unemployed). What's abusive is when the revolving door of government privilege starts acting like crony elitists for self-preservation purposes as we have going on nowadays. Revolution commences shortly thereafter. All the taxes in the world won't help them then.

In other words, government only gives it tactic approval to what the free market has already decided, less the bonus of standardization and centralization. They're parasites, not innovators!
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

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Re: What would the PP look like without fiat currency and central banks?

Post by Kbg » Sat Aug 20, 2016 11:48 am

Sorry dude, my read of history indicates the guys with guns always win. If government doesn't matter why are there so many lobbyists? Any thinking person understands government defines the capitalist goal posts and field size. This has never not been true. So back to my initial comment: useless hypothetical.
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Re: What would the PP look like without fiat currency and central banks?

Post by Kbg » Sat Aug 20, 2016 11:55 am

OBTW, we are entirely in sync about revolving doors. But that only means if it gets to an unacceptable level then government B replaces government A. Whether that is B kills the important people in a dictatorship A or a lawful election makes a change the government context remains. Maybe some details change but the government still gets whatever it decides is its due and the new B team is the relative beneficiary.
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Re: What would the PP look like without fiat currency and central banks?

Post by MediumTex » Sun Aug 21, 2016 7:43 am

Kbg wrote:Sorry dude, my read of history indicates the guys with guns always win. If government doesn't matter why are there so many lobbyists? Any thinking person understands government defines the capitalist goal posts and field size. This has never not been true. So back to my initial comment: useless hypothetical.
I agree that it's true that the nature of government will always involve the monopolization of the use of force in society, but it seems like there are many examples of the private sector's financial and cultural elite basically capturing government through their influence, which then basically turns the government into a servant of certain private sector interests in society.

For example, I think that the financial services industry in the U.S. has captured many functions of the U.S. government through its lobbying and campaign contributions. When they chose to really flex their muscles in 2008, the degree of power they wielded became apparent. I have always thought the only reason that Bear Stearns was allowed to expire while everyone else (except Lehman Brothers) was bailed out was that the Bear Stearns CEO had repeatedly called Timothy Geithner a faggot. Sometimes even a person who is bought and paid for can act out if sufficiently provoked.

I don't know the significance of viewing the government as essentially a puppet of the most powerful private sector interests, rather than as a dim-witted and heavily armed referee simply churning out dumb rules that the rest of us have to live by, but I think that the former is a more accurate description than the latter.
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