Posted on 06/16/2007 1:07:44 AM PDT by bruinbirdman
Good question. The way I understand it, they take the cost of comparable goods, mostly perishibles (meat, veggies, milk, eggs), and compare yesterday's cost with today's.
But, imo, even this doesn't measure the difference in productivity in, for instance, the agricultural sector. For example, tomatoes could benifit from advances in fertilizers, thus yielding more on a per acre basis and making them cheaper, while at the same time the government printing press churning out greenbacks makes them more expensive.
OTOH, I'm just a simple carpenter and getting simpler by the day. I guess that as long as they keep printing money, I'll just keep on spending all that falls my way. Like on late spring afternoon cocktails over on the patio of the Brewer Inn...
:O)
I’m glad I put all my savings into gold and silver back in 2000. I’m up from a gold price of $250 and a silver price of $4.20 to a current value of around $650 and $13. And the best part is it is all TAX FREE.
I can take my coins down to my dealer and walk out with cash any time with no paperwork as long as I cash in under $10k in coins. As far as the IRS is concerned I spent all my savings 7 years ago.
I disagree. Even though gold is always a relatively scarce commodity, the demand for it still fluctuates. Scarcity in and of itself is not enough to keep its price high.
Right now, demand for gold is high because of the expectation that the dollar will continue to drop in value. If that change and the dollar were to increase, some gold-holders would start to sell and the price would likely drop.
Until the IRS uses alternative methods of estimating your income, calls your precious metals stockpile an investment, and comes after you for capital gains, etc.
No economic, historical, literary, or political idea ever dies. It gets a fresh coat of paint now and then.
Those changes are also reflected in the price of gold.
Just because the demand for gold goes up and the price goes up doesn’t mean everything else not gold becomes less valuable as stated by this author - as in all things are relative to gold.
But you knew that... You’re just being specious...
Those changes are also reflected in the price of gold.
Make that deletion and I'm on board.
As for your next paragraph, if the price of gold goes up, then, in fact, everything else DOES become less valuable, at least as their value is expressed in gold units.
That's the very definition of the word "valuable".
All values have to be expressed in some unit other than the thing itself. You can't say that ten goats are worth ten goats. That statement fails to convey any information about the value of goats. But you CAN say that ten goats are worth one "talit" of gold. If some time later one talit of gold will buy 15 goats, then clearly goats are worth less in terms of gold. At the very same time, they might become worth MORE in terms of some other valuing index.
Almost anything can be used a a valuing index for anything else, but not all things are equally useful as a valuing index. The beauty of gold is that it is easily stored (hidden) and transported, does not deteriorate, is the same from place to place, etc... i.e. it has the characterisitcs of a good standard. There isn't anything holy about it, it's just useful and convenient. So. I'm afraid I can't concede the point. And I'm not being specious although I do appreciate the pun.
Yes, in terms of gold things would be less valuable.
But choosing gold as the reference is arbitrary.
You could just as easily choose crude oil.
“Value” is a human defined quantity. Ultimately value is based on a person’s time/labor.
If it takes 1 hour of labor to feed ones family for the day that labor and food “value” exchange has little if anything to do with the current value of gold.
The point is, you could choose ANYTHING. Anything at all.
But, not just as easily. Your crude oil example is good. Can you imagine the inconveneince of toting around barrels of crude oil every time you went out for groceries or to have a nice meal?
You'll have to use certificates. There again, no problem. I'm sure it could be done and it would make a lot of sense in certain economies.
But we've been talking not about gold certificates, but gold itself as a medium of exchange. And on that count, gold excels for all the reasons I gave. The preeminence of gold is anythig but arbitrary. Of course you can use other things and historically, people have used shells, woven bits of cloth, other precious metals, and gems. Whatever you use has to have an intrinsic rarity and compactness, durability, concealability, and acceptablity in the market.
Gold outmatches anything else, and you won't find much of anything else used these days as an alternate to money except in socialist dogpiles like Ithaca, New York, where some people use labor scrips, just to prove their liberal credentials, and enhance their feelings of superiority.
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