Money Masters

This entry is part 21 of 62 in the series 2010

Posted Aug 7-9, 2010

Blayne:
The links I posted on mining in my last post before this one show otherwise However lets look at the idea this conveys.

JJ
The link mention adds about 2 billion dollars worth of gold. $2 billion is peanuts in today’s economy.

Blayne
When it is said “$300 worth of gold” I am assuming you mean at the current exchange rate to FRN’s? If so then at around $1200 an ounce your looking at about a quarter ounce of gold. Little bit more then a grain of sand.

JJ
If the whole world went on the gold standard the price would skyrocket and a piece of gold about the size of a grain of sand would be worth about $20 making it impractical as exchange without some type of fiat or fractional money.

Blayne
Second this evokes the idea that everyone would be poor.

JJ
I didn’t say anything to indicate that.

Blayne
Again based on the myth of credit expansion being necessary for a healthy economy. This is based on the current Keynesian model which is failing miserably.

JJ
I didn’t say anything about this, but expansion of production as well as the money supply is essential for a growing economy.

Blayne:
It also does not take into account silver and other monetary metals that could
and would be used and appears to be coming from a strict gold standard
standpoint of government fixing the amount. . When you say not very practical
certainly not in an “inflated” economy such as ours where $300 is a pittance in
terms of purchasing power and trade where all prices are based on this massive
inflation.

JJ
If gold is practical then whether it works should not depend on whether the economy is inflated or not.

Blayne
If we look at it from a different angle where gold is currently at about $1200
on ounce then 300 ounces of gold or 15 $20 gold pieces (what fiat money tries to
mimic) would be equal to $3,600,000 current FRN’s.

JJ
No argument there, but I don’t see this fact making a case for the gold standard.

Blayne
Indeed economy expansion would be much slower but would be stable and there
would be less poor as people would be more likely to have sufficient for their. needs. More on this later.

JJ
Yes, it would be slower, but a stifling of the economy and production is not a necessary thing.

It doesn’t matter what standard we use for corrupt people will try to take advantage of it of it. The gold standard was abused just as the fiat one is. The new financial system needs to be transparent as well as understood by the people for it to operate successfully.

Did you check out that video series that Susan posted? Did you find anything you disagreed with?

***

Blayne:
The links I posted on mining in my last post before this one show otherwise However lets look at the idea this conveys.

JJ
The link mention adds about 2 billion dollars worth of gold. $2 billion is peanuts in today’s economy.

Blayne
When it is said “$300 worth of gold” I am assuming you mean at the current exchange rate to FRN’s? If so then at around $1200 an ounce your looking at about a quarter ounce of gold. Little bit more then a grain of sand.

JJ
If the whole world went on the gold standard the price would skyrocket and a piece of gold about the size of a grain of sand would be worth about $20 making it impractical as exchange without some type of fiat or fractional money.

Blayne
Second this evokes the idea that everyone would be poor.

JJ
I didn’t say anything to indicate that.

Blayne
Again based on the myth of credit expansion being necessary for a healthy economy. This is based on the current Keynesian model which is failing miserably.

JJ
I didn’t say anything about this, but expansion of production as well as the money supply is essential for a growing economy.

Blayne:
It also does not take into account silver and other monetary metals that could
and would be used and appears to be coming from a strict gold standard
standpoint of government fixing the amount. . When you say not very practical
certainly not in an “inflated” economy such as ours where $300 is a pittance in
terms of purchasing power and trade where all prices are based on this massive
inflation.

JJ
If gold is practical then whether it works should not depend on whether the economy is inflated or not.

Blayne
If we look at it from a different angle where gold is currently at about $1200
on ounce then 300 ounces of gold or 15 $20 gold pieces (what fiat money tries to
mimic) would be equal to $3,600,000 current FRN’s.

JJ
No argument there, but I don’t see this fact making a case for the gold standard.

Blayne
Indeed economy expansion would be much slower but would be stable and there
would be less poor as people would be more likely to have sufficient for their. needs. More on this later.

JJ
Yes, it would be slower, but a stifling of the economy and production is not a necessary thing.

It doesn’t matter what standard we use for corrupt people will try to take advantage of it of it. The gold standard was abused just as the fiat one is. The new financial system needs to be transparent as well as understood by the people for it to operate successfully.

Did you check out that video series that Susan posted? Did you find anything you disagreed with?Copyright 2010 by J J Dewey

Good comments on money from both sides. There is a lot I could say on the subject, but we tackled this once before through general posting and nothing got resolved. What i’ve decided to do is to write a treatise on the subject giving a step by step approach to substantiate my views. I may make this a section in my book since it is an important subject.

I figure that those who provide criticism can only help to make the final treatise more sound.

***
Larry W writes:
I questioned whether JJ actually did use the spiritual connection he claims. But, again, as I got into it the gravity of
that program it confirmed JJ’s process validity and probably confirms his spiritual Internet access.

JJ
Thanks for your faith in my Larry but I want to make it clear that no one should have faith in my writings because they see me as having a connection beyond that which they have themselves. The most I expect is to be respected as an earned authority. This means that if they disagree they will look twice at my reasoning and ask themselves if they missed something – that perhaps i knew what I was talking about. If, after doing this the person cannot accept what i say then they can either reject it or put it on the shelf. It matters not to me.
***

Larry Woods says, Blayne, let me spell it out very simple. The total amount of monetary gold today in the whole world is about 3.4 trillion dollars worth in today’s inflated dollars. Compared to annual world economy of about 60 trillion dollars (inflated exaclty the same) there is NO POSSIBLE WAY 3.4T can directly cover 60T. That is 17 to 1 even if China had not already horded 80% of the world’s monetary gold supply. GET REAL!

Blayne Why would it have to cover 60 trillion? This has been explained several times. Perhaps you can explain why it must cover the inflationary bubble of credit in light of the fact and fundamental law of economics that prices are relative to the amount of currency in circulation regardless of production? Prices would simply adjust to the amount of currency in circulation.

JJ
You’re overlooking something important here that is not even disputed by the Austrian school as far as I know.

We have 3.4 trillion dollars worth of gold. This value is by the standard of dollars as they exist today. In other words, all the gold available can buy 3.4 trillion dollars worth of real estate, oil or whatever.

On the other hand, the amount of money in dollars can buy $60 trillion worth of assets.

If we went on the pure gold standard tomorrow then the people would only have the purchasing power of 3.4 trillion or about 6% of what we have today. This means that if you are making $40,000 a year now in purchasing power that you would only be making $2400 if we suddenly switched to a pure gold standard. Just imagine if the average person had to live on $2400 a year in purchasing power. Not too desirable.

Then if China corned the market on gold, things could be even worse than this.

Let me add one more thing. For there to be a adjustment in prices that you mention then the whole world would have to go on the gold standard. If just the United States did then there would be little adjustment except to lower purchasing power.

If a true adjustment was made then the price of gold would be so high that a $20 gold piece might be as small as a grain of sand like I said.

If we somehow decreed that a $20 gold piece would be equal to one ounce of gold then in the adjusted world you could buy a car for $20. How would you go about buying an ice cream cone in such a system?
Copyright 2010 by J J Dewey

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