Posted on 08/13/2011 5:20:28 PM PDT by PotatoHeadMick
Roll out the bunting. Tomorrow is the 40th anniversary of the modern global economy.
That's right: come Monday morning we will have managed to survive four decades of fiat money – though, given the chaos in markets in recent weeks, it is anyone's guess how much longer it will last.
On 15 August 1971, with the US public finances straitened by the cost of the war in Vietnam, Richard Nixon finally cut the link between the US dollar and gold. Until then, the US Treasury was duty bound to exchange an ounce of gold with central banks willing to pay them $35.
Suddenly, for the first time in history, the level of the world's currencies depended not on the value of gold or some other tangible commodity but on the amount of trust investors had in that currency. Central banks were allowed to set monetary policy based on their instincts rather than on the need to keep their currency in line with gold.
(Excerpt) Read more at telegraph.co.uk ...
****I remember asking my father why didn’t we use chickens, but I forget what he told me.****
I remember reading some si-fi books back in the 1960s that I have forgotten their names.
One delt with a planet where there was lots of unused gold but the medium of exchange was red headed woodpecker scalps. Needless to say there was a real shortage of woodpeckers.
Another book had a strange planet where the creatures were not flesh and the highest medium of exchange was leather, meat, flesh, and they had captured a starship full of humans.
“Wow, those are two wildly contradictory statements. The first supports freedom, the second denies it.”
Don't want to hijack this but the draft is perfectly legit and constitutional.
In the old days the locals would form a militia to protect themselves from Indians and other troublemakers. In a time of war the Army would raise a “levy” (draft) on the militias and they would send men to become part of the army.
Today we have the Organized Militia (National Guard) and the UNorganized militia, (everyone else). When the US Army needs troops they call up some of the Organized Militia and can raise a draft on the UNORGANIZED MILITIA.
***And they (the Spanish) minted coins by the boatload, and they devalued their coins as they needed more and more of them.***
I read that when a treasure ship from the New World landed in Spain, the price of everything would go up because of the excess gold brought in. The inflation would start at that particular port where the lsip landed, and spread put as the excess gold was spent.
Makes one wonder what our monetary supply would look like if Lead was rare and Gold was plentiful.
The problem with the gold standard is that there is a fixed amount of gold. We went off the gold standard because we were printing more cash than we had gold. Right now there is more cash out there than there is gold in the world, even with gold at $1600 an ounce.
And the problem with the draft is that draftees are not like they were in WWII and Korea. They are more like the Vietnam draftees who could not be trusted with anything more complicated than picking up trash. And then they have to be watched constantly. You sure as hell don’t want them working on a helicopter rotor head or fighter engine.
Not necessarily advocating for, or against, “the gold standard” but something needs to be pointed out - The US went off gold in 1933, not 1971. When someone talks about gold “backed” currency, that doesn’t make any sense and would be subject to the same nonsense that got us where we are today if one follows that line of thinking to begin with.
IF, and by that meaning IF one believes in a gold standard, then paper money is not money, but the ghost of money. The system in place from 1933 to 1971 was where Americans were prohibited from owning monetary gold or, specifying payment in gold contracts.
Foreign central banks could exchange dollars for gold, until the supply ran out. Be very skeptical of anyone who today talks about a return to “the gold standard” because you can bet they don’t mean gold coins in the hands of the public ( no way) and someone should point out to have a “gold standard”, ya gotta have some gold. I’d like a pony, too as long as we’re dreaming.
Centralizing the printing of currency with the Treasury Department was a terrible mistake. Only states should be printing currency!
Those sound pretty creepy!
You should check out the 100 best sci fi books thread.
I was actually thinking about it when Korn said “why not blades of grass” because on that thread I remembered reading the book “No Blade of Grass”. Which I can’t remember what it was about, but I’m pretty much sure it wasn’t about monetary policy.
Not on FR.
The danger for America is also devaluation, of U.S. dollars. “Backing” them with gold or anything else will not prevent the government from devaluing dollars relative to what they are “backed” with; they could just adjust the ratio.
Devaluation is caused, of course, by the government creating new money faster than it is needed, i.e., faster than GDP, and therefore, the dollar volume of transactions per year, grows. No matter what is considered “money”, creating too much needs to be avoided.
The Federal government spending far more than it collects in taxes and to make up the difference is issuing new Treasury bonds, i.e., borrowing, so fast that there really are not enough buyers who want to or can buy the bonds. The Federal Reserve, ever helpful, is getting to the point of basically creating money to buy the debt.
All of government is counting on increases in GDP to somehow happen by magic and cause government revenue to “catch up” to spending.
There’s only one thing that will cause that; people knowing that the government was permanently shrinking it’s scope.
Get over it. The honorable Vietnam vets know exactly who I am talking about. Would YOU like to trust your life to a dope smoking, meth using moron that is like many of the draft age? Not me.
The fourth big gold strike in former Spanish territory was California, then Indiana, then Colorado, then Alaska, and then Alaska again.
Today we are far more sophisticated and obtain much more of our gold reworking old tailings and with secondary recovery.
E.G. http://www.goldingravel.com/why_us.htm
There are yet other sources. You'll notice the guys with the gravel beds don't make much noise about it. That's because when you make a strike for a gold source of any size the best course of action is to keep your mouth shut!
Gold is still worth what it will buy. For Saudi princes and Big China entrepreneurs it buys security (maybe) so they have bid up the price!
About now ancient Indian temples filled with gold should be surfacing ~ and, lo and behold, they are! One found recently had in just one of its many chambers about 10% as much gold as the US government.
BTW, do you think that ALL Vietnam vets served honorably? Hell, a lot of them TRIED to get thrown out of the military by screwing up! They couldn’t be trusted for anything.
Frankly i don't really care who went to jail or who screwed up. I have 14 friends who went to the Nam and died.
*** because on that thread I remembered reading the book “No Blade of Grass”. ****
I saw that movie 40 years ago at the theater.
So what? There were way too many draftees in Vietnam who were total screw ups and some of your friends may have died because of them.
And I don’t give a damned how much of a hissy fit you have, you will get a much lower quality of soldier, sailor, airman, or Marine if you have the draft.
If it's not redeemable, it's not "gold-backed."
I think it was FDR that originally put a stop to paying in gold for gold certificates that you wanted to redeem for gold....
1. Gold is durable ... chickens aren't2. Chickens reproduce ... gold doesn't
3. There is significant demand for chicken; humans eat nearly all chickens produced annually, therefore demand affects price ... there isn't significant demand for gold (beyond its use as a store of value); the world could meet its net uses of gold for a century or more without increasing gold production; the price of gold is driven by its use as a store of value.
4. New supply of chickens can easily and immediately be increased ... despite advances in alchemy, creating new supply of gold is extremely difficult.
(Feel free to add to this list)
Gold demand for jewelry and industrial uses is currently 3,000 tons a year. New gold supply from mining is 2,500 tons a year (another 1,000 tons per year is recovered through recycling). With well over 100,000 tons of gold mined and in existence, it is easy to see that supply (mining) and demand (jewelry and industrial use) don't affect the price of gold. This makes gold an extremely good store of value. If you see the dollar price of gold change, you can be sure that something is going on with the dollar (printing dollars faster than the economy can absorb or not printing them fast enough*) and not gold (stable, stable, stable).
* Given our political class, guess which of these scenarios is more likely.
John Kerry served in Vietnam....
And he got three Purple Hearts for two owies and a booboo. What a total loser.
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