Tag: silver

Money Masters

Joseph Dewey
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

Golden Thoughts

Joseph Dewey
This entry is part 23 of 62 in the series 2010

Posted Aug 9, 2010
Blayne:
Which is also why I do not advocate a gold standard. I advocate a free market on currency. This is also not what is being advocated even by those who want a pure gold standard.

JJ
If I recall on our last discussion on this you were for a strict gold standard so it appears your views have changed somewhat.

Actually then we seem to be close to the system you advocate as one can now turn his fiat money into gold silver, copper or whatever and then exchange that for what he wants. There are many merchants on the internet now that accept gold and silver for merchandise.

I support your competing money idea to a degree, but think we need a universal money system that is accepted by all. Without this we could have a thousand currencies all having different exchange rates making normal transactions a nightmare. This was one of the problems we had with early currencies that would be exacerbated in this age.

Today we have a general currency and still have the freedom to exchange in gold and silver. This is good. To his we could allow people to experiment with other paper currencies, which are now illegal. These currencies could be backed by a number of different commodities or services and if one or two prove successful it would force the government to adjust its own currency to make it more desirable and stable.

Blayne
As I have said the safest IMO to simply repeal legal tender laws, end the monopoly, and let the market decide if it wants sound money or fiat currency.

JJ
I think we need to keep the law making the main currency legal but loosen the laws to allow citizens to print their own money to compete with it.

Blayne:
If the US did go on a gold standard and the rest of the world did not, we would soon be the economic powerhouse and more we once were as all the nations of earth would store their wealth with us and invest with us because they know the stability it would bring.

JJ
It looks to me that the opposite would happen. If China, Japan, Saudi Arabia, Taiwan etc could redeem their dollars for gold then all our gold would be gone in about two days and then there would be no gold standard for us because there would be no gold.

Blayne;
what is that scripture where all the nations of the earth would bring their gold and silver up to Zion or something to that effect?

JJ
But we want the nations to bring us their gold, not cart all our gold away. This can only happen when prosperity and unlimited expansion is produced. Just as the universe itself expands in nature even so must our creations have the power to expand with an expanding money supply, not a contracting one. This statement does not support the current system of excessive debt, however.

JJ Quote 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.

Blayne Only in terms of the current astronomically inflated currency but not necessarily.

JJ
The current inflation has no bearing on this whatsoever. $20 worth of goods and services is what it is. If you buy a watch for $20 then it is worth what it is. If we switched to gold, all things being equal the watch still maintains it’s value and if gold coinage were adjusted to the demand of goods and services you could then buy the watch for a very small piece of gold. This would happen because a universal gold standard would make the price of gold artificially high.

JJ If we somehow agreed 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?

Blayne That is what you have silver, copper, and nickel etc for.

JJ
Then we’d have the problem of taking valuable metals out of the manufacturing system creating shortages and causing metal prices to artificially skyrocket.. Carrying around tiny metal coins to use in all exchanges does not sound practical to me.

Blayne:
I forgot to address this part. It is still apples and oranges, why does the current fiat bubble have to be the measuring rod?

JJ
That is the only one available. There is no other. We have to deal with reality and use what is, not what is not. Despite its flaws the value of the current monetary system still depends on goods and services which does have intrinsic value.

Blayne
The answer is it doesn’t it is irrelevant to what gold is worth today in terms of inflated fiat currency.

JJ
Why??? I see no reasoning here, just a declaration of belief..

Blayne
The real price is probably 5-10 thousand an ounce due to manipulation of the metals markets.

JJ
If we had a crash this could happen but I see no evidence that your statement applies in today’s market. The value of gold is determined by supply and demand. There is always some manipulation in all money throughout all history.

Blayne:
If we wanted to use puca shells for a currency we could and they would be more stable then fiat money because they can’t be printed, then how would you measure the value in terms of current fiat money? You can’t because there is no value assigned to in current fiat currency. Point is the idea we have to adhere to the current illusions of price and wealth and equal it even scaled down somehow is not necessarily so.

JJ
And how would you assign a value to the puca shells? If you did this and then the production suddenly doubled that value would go out the window.

lwk
A person could live very well on $2400 a year if that currency was a “hard currency” and had sufficient purchasing power.

JJ
But I was talking about $2400 in the value today’s dollars so your point is moot.

lwk
Again purchasing power is not some magical number but the objective result of supply and demand. The “supply” of currency represents the total demand and if somehow we could wipe out 90% of the currency the demand would not change – rather the purchasing power of every dollar would increase to balance the supply/demand equation.

JJ
Agreed. This supports my point that switching to a 100% gold standard, (or several metals) would change the value of gold so $20 of current purchasing power may only require a piece of gold the size of a grain of sand making it impractical to use as gold coins and causing technology that uses gold, silver and copper to rise to obscene prices.
Copyright 2010 by J J Dewey