Gold as Actual Money - Sucks

Discussion of the Gold portion of the Permanent Portfolio

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Kbg
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Gold as Actual Money - Sucks

Post by Kbg » Sat Jul 13, 2019 6:18 pm

This might be fun...rebuttals encouraged. :)

Quoting Cullen Roche: We tried the classical gold standard from 1880-1914. We had TEN recessions and FOUR financial panics. During SIX of those recessions GDP fell over 20%.

And we were basically on the gold standard until 1932-33 and we can add one to each tally.

Inflating our money slowly away isn’t great either but assets and wages generally keep pace.
drumminj
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Re: Gold as Actual Money - Sucks

Post by drumminj » Sat Jul 13, 2019 8:09 pm

Are recessions inherently bad? Panics, perhaps, but recessions keep the economy more..honest, and flush misallocation of capital. These seem like good things over the long term, no?
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Re: Gold as Actual Money - Sucks

Post by shekels » Sun Jul 14, 2019 8:59 am

Kbg wrote:
Sat Jul 13, 2019 6:18 pm
This might be fun...rebuttals encouraged. :)


Inflating our money slowly away isn’t great either but assets and wages generally keep pace.
If you are on fixed income, Inflation is a killer. (I am thinking of the elderly and the poor in this situation)
Inflation numbers are aligned with whomever is in political office, also Minimum wage does not increase every year.

We could do much more before resorting to Gold as Money first although
Gold backed currency might stop uncontrolled Government debt.

Switching from a Debt Based money system with Fractional Reserve lending
also ridding ourselves of the Fed Reserve Note Fraud would be a start.
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Re: Gold as Actual Money - Sucks

Post by dualstow » Sun Jul 14, 2019 4:46 pm

Your tungsten bars are not welcome here
.
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Kbg
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Re: Gold as Actual Money - Sucks

Post by Kbg » Mon Jul 15, 2019 2:07 pm

Agree on fixed income for the elderly (and hence why pretty much all that stuff is inflation indexed now if it is from the govt)
shekels wrote:
Sun Jul 14, 2019 8:59 am
Gold backed currency might stop uncontrolled Government debt.
On the above...categorically no unless you can talk the entire world into it. Read up on why Bretton Woods blew up during the Nixon years.
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Smith1776
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Re: Gold as Actual Money - Sucks

Post by Smith1776 » Mon Jul 15, 2019 8:18 pm

Gold can indeed absolutely suck as a form of money.

The fact that it's fairly cumbersome means that it's too tempting, it's too convenient, to start using money substitutes. It becomes too easy to entrust your gold with a "reliable" third party.

That's where the trouble comes.

Honestly, I'm not on any crusade when it comes to going back on the gold standard. All I care about is that it's legal for me to own gold personally. I'm on my own personal gold standard. Let the politicians print as they might.

I'll fondle my gold and silver coins in private and watch as the fiat world might burn. If I need to spend? I'll just liquidate a few. Easy peasy.
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Re: Gold as Actual Money - Sucks

Post by shekels » Tue Jul 16, 2019 8:44 am

Kbg wrote:
Mon Jul 15, 2019 2:07 pm
Agree on fixed income for the elderly (and hence why pretty much all that stuff is inflation indexed now if it is from the govt)
shekels wrote:
Sun Jul 14, 2019 8:59 am
Gold backed currency might stop uncontrolled Government debt.
On the above...categorically no unless you can talk the entire world into it. Read up on why Bretton Woods blew up during the Nixon years.
I think it was over 70 years the gold standard was in effect, until NIxon closed the gold window. Because other countries wanted Gold. So the Dollar may lose World reserve status, but Reserve status is slowly going Bye Bye anyway. We are essentially doing it again. where China is using Dollars to buy Gold.
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ochotona
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Re: Gold as Actual Money - Sucks

Post by ochotona » Tue Jul 16, 2019 8:49 am

Luke Gromen pointed out on a podcast recently something really though provoking... the entity which is most short the US Dollar is the US Government itself. So much winning
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jhogue
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Re: Gold as Actual Money - Sucks

Post by jhogue » Tue Jul 16, 2019 10:11 am

Is there something wrong with China (and many other countries) being long on the US dollar?
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Smith1776
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Re: Gold as Actual Money - Sucks

Post by Smith1776 » Tue Jul 16, 2019 2:23 pm

I personally don't think that countries like China are really long the U.S. Dollar. They've got a whole bunch of gold holdings that effectively act as a hedge. So, maybe they've got a long-short position that is relatively small on a net basis.
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jhogue
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Re: Gold as Actual Money - Sucks

Post by jhogue » Tue Jul 16, 2019 2:52 pm

Uhh, well, China really is long on the US dollar. At the moment, it has no choice:

China's central bank currently holds about $2 trillion foreign exchange reserves denominated in US Treasurys. It is the largest holding outside the US. The precise amount of US Treasurys held by the PBOC is an official state secret in China, as is its holding of gold bullion.

https://en.wikipedia.org/wiki/Foreign-e ... s_of_China

China has massive holdings in US Treasurys because of the size of its trade with the USA, as well as its reliance on Middle Eastern oil (which is priced in US dollars).

China's expansive gold buying program, on the other hand, is probably directed toward a future day in which China hopes to replace the US dollar as the global reserve currency of choice. No reason to be alarmed (not yet, anyway) but it is one more solid reason to hold gold as part of a diversified portfolio.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Gold as Actual Money - Sucks

Post by boglerdude » Wed Jul 17, 2019 1:46 am

> China hopes to replace the US dollar as the global reserve currency of choice

Maybe. Yuan devaluation keeps real wages low, so you can employ more people. $15 minimum/mcdonalds wages in the US means the guy building US rail demands 30/hour, so infrastructure in the US is overpriced and therefore some of it just never gets done.
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