Posted on 11/28/2008 11:39:29 PM PST by rabscuttle385
Someone posted the video from this speech a few days ago, and it got pulled. Today it appears to be greeted with open arms. I wonder why that is.
You don’t have to carry gold under a gold standard. You carry around paper receipts redeemable in gold. That’s what the dollar originally was. It was a weight of gold, equal to about 1/20th of an ounce. (Way back when the dollar was actually an ounce of silver)
Gold is very valuable now and every bit of mining that can profitable be done is already being done.”
Barrick mining out of Canada has 2 mines running near Battle Mountain, in Northern Nevada. One is above ground—Barrick Company and the other is underground-—Newmont mining Co.
Barrick is trying to open another mine near Crescent Valley further east, and has passed all the enviro rules. Now the Indians are trying to stop it.
While I want to respect the truly “sacred” areas of the Indians, I do not believe that EVERY MOUNTAIN is or was a “sacred area”.
But there was the National Banking Act which created a quasi centralized banking system with money being pyramided on top of reserves. In practice, the system functioned much the same as if there were a central bank.
Economics on One Lesson is a brilliant book.
As for gold, yes mining will decrease the value since there is a now a higher supply, BUT in order to mine in the first place, it must be profitable and thus gold has to be relatively high for miners to consider it worthwhile. Presumably, this means many goods are being produced and gold’s supply is staying relatively stable. Mining then looks profitable because gold is gaining value. As supply catches up with the amount of goods being produced and the new gold circulates through the economy, it will become slightly less valuable and likely the mining business will be slightly dampened.
Most of the time gold fluctuations aren’t a big deal (2-3% from what I understand, some of which goes to industry, manufacturing, dentistry, jewelry, etc.). There will of course be gold rushes that put more gold in the economy than is “desirable”, but in the long term, prices will stay relatively consistent.
[It leaves me to wonder however, who we should give it to? Bernake? Paulson? The gold miners? I don’t like any of the above choices. ]
Hong Kong money is or was printed by their banks. Go back to a free market of money, backed by whatever assets make sense.
So the denomination was the weight of gold it represented?
Used to be. The way it works under 100% reserve banking or 100% gold backed dollar from what I understand is basically that a bank or the government gets gold, it can only issue receipts in the amount it has. So if a bank has one ounce of gold, it can issue (about) $20 in bank notes. Once the gold is redeemed, the paper ticket(s) is destroyed (or stored so they don’t have to print any more, using it later when they receive a deposit of gold).
Any bank note would be accepted in trade because they can all be redeemed in gold. If John has Bank A Notes and he buys something, transferring the bank notes to Will, Will can deposit those notes at his bank (bank B) and his bank will go to bank A with the Bank A Notes and exchange them for gold. Or Will can even hang on to the Bank A Notes even though he is not a customer. Usually however, once a bank receives a different bank’s notes, they will go to that bank and demand gold exchanging it for the bank notes.
Problems arise when a bank prints more receipts than it can back by gold because once it does, it will owe more gold than it can pay out and eventually it will be exposed and be forced out of business for fraud. The history behind this is a little more complicated, but this is basically fractional reserve banking (where you only have a fraction of the reserves in relation to how much you owe to depositors) generally this isn’t a problem, but if everyone tries to pull out their money the bank will go bankrupt (a bank run).
That’s why we “need” a central bank as a lender of last resort to make sure the banks don’t go bankrupt (even though they are participating in nothing less than legalized fraud). Fractional reserve banking is inherently inflationary because it increases the money supply (it also distorts interest rates, but that’s a WHOLE other topic) and to back up the deposits would require the use of the proverbial printing press.
That’s probably more than you wanted but for clarification, yes the denomination was originally the weight. Think of the pound sterling. It was called ‘pound’ for a reason, not just by some coincidence, as I believe most people think.
Glen Beck is very good on the present economic mess. But when he gets into preacher mode I turn him off
Yeah I was once confronted by someone who asked why there were panics/depressions before the federal reserve and at the time I couldn’t answer, but then I found out about the National Bank Act. And prior to that during the so called “free banking era” the government constantly let the banks suspend specie payments, meaning they didn’t have to pay gold when presented with bank notes (because the banks had overinflated their bank notes they couldn’t pay their depositors so the government stepped in).
Many of Murray Rothbard’s books go into the banking and monetary history of the US. It’s not the stuff they teach in school, that’s for sure. I’m actually bitter about my poor public education and I came from relatively “good” schools.
A really good book that shows how strict bankers used to be. The banking excesses (S&L crisis) of the 1980s provoked him into writing this book-—>>
Mr. Grant writes a book now 15 years old that could be redone with a new chapter of the subprime follies. Hardly necessary as he goes over the last 100+ years of similar booms and busts of which subprime is the latest flavor. Knowing that America has recovered from all those busts actually provides some optimism versus the press’s gloominess. When it seems darkest means its time to buy. Looking forward to a revised edition in a few years. Mr. Grant is an old time American not an anti-American, he’s on record as Cleveland being his favorite President, hardly an anti-American.
This book is well worth the time providing some perspective on today’s headlines.
http://www.amazon.com/Money-Mind-James-Grant/dp/0374524017
Thanks for all that. For me gold is money. That is my starting point. Then I see how far our currency can get abstracted from this via paper currency, via plastic credit cards, via loans, via derivatives, via other clever means. How creative the Fed, bankers and Wall Streeters can get at creating money
Money is definitely determined by the free market and gold and silver have traditionally filled the role. It’s interesting that paper money in itself isn’t a bad thing because it means one can carry around paper instead of coins, but the problem arises when paper is severed from it’s metallic backing.
Funny how FReepers were calling Ron Paul a kook during the election, but now when the shit is hitting the fan, he’s getting a 2nd look. Paul predicted all of this crap. I bet if he was elected the Dow would jump 100,000 points.
A bit late but you might be interested.
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