Posted on 01/10/2011 10:22:36 PM PST by dollarbull
NEW DELHI: India is determined to ensure steady crude oil supplies from Iran and is even considering settling payments with gold in the short term before the two countries agree on a mutually accepted currency and a bank to clear the transactions.
(Excerpt) Read more at economictimes.indiatimes.com ...
There isn’t enough gold on the planet to pay for even one years worth of a countries oil. If the gold commercials can believed, and all of the gold ever mined can fit into two olympic swimming pools, then based on that volume, the value of ALL gold ever mined assuming $1500 per ounce would be about 21 trillion dollars. India does not possess all of the gold ever mined even assuming they have 5% (ridiculously high estimate) that gives them 1 trillion dollars worth of gold.
In 2010 India consumed 2.98 million barrels of oil per day or about 1 billion barrels for the year. Assuming a barrel of oil at $100 bucks, that is 100 billion dollars of gold. Which is about 1/10 of the ridiculously high estimate that they have on hand.
Assuming as everyone is that we are going to go into a fiat currency crisis, giving away even one tenth of their ridiculously high gold estimate, simply for a years worth of gasoline, would be the biggest excercise in financial folly ever made...and given to fanatical muslims nevertheless.
The other point to make about gold is there is much less of it than the current GDP of the world by a large margin. I have no idea the solution to that particular conundrum, but returning to a gold standard will cause the entire economy of the world to crash to a halt, except for the well connected as it was in the days of the serfs.
Can’t really blame the parties for trying to ensure proper compensation (value) for their products.
Of course while the US$ is still up relative to other currencies, it is still the most viable world reserve currency for the time being.
With Red China and Russia recently agreeing to use each others currencies in trading between them besides bartering some commodities and with BRIC (Brazil, Russia, India, China plus a few others) agreeing to trade amongst themselves without using US$ values, you can see the tendency and where this might be headed in the long run.
That is the whole point of gold backing. You cap paper (fiat) printing according to your gold storage to show you are a responsible government not incurring runaway debt/spending. Of course you have to stop spending to do that and slow or control your growth. That’s why bankers always want off the gold standard so they can make tons of money with uncontrolled growth at the little people’s expense.
Bankers would hate to only to be able to grow at 1% or 2% a year. They would rather die first than cap their spending sprees, which would be okay with me, die I mean.
Who decides what the value of paper money is and what is money?Is debt paper money?Why are people led to believe what money is?Who controls money in the world and who has a monopoly? Why would the federal reserve come to America in 1913 to set up a monopoly of worthless debt paper to loan to a wealthy country?Isn't paper money a fiction of what one believes?Is debt paper money really a scam dreamed up by bankers and governments to enrich themselves at the publics expense?All Governments have one agenda,STAY IN POWER AT ALL COST!
That is all true, and a good argument for the worthlessness of paper money.
On the other hand, why is gold of any value? In olden times it was valued because it was rare, did not oxidize, and was malleable. Today, its only real value is it’s electrical properties. The original properties that made gold valuable can now be replicated with technology. Why gold, why not something else.
The value of anything is how much somebody will pay for it. You cannot eat metal, you cannot plant metal. Gold only has value because people think it has value and will pay for it. Human labor also has value, actually the only thing that has real value, but the difference is human labor will create buildings, roads, televisions, I-Pods, and donuts. Gold and fiat money are both simply a numerical value assigned to human labor. Over time the value of an hours work will be figured out in “fake fiat money”, or “fake metallic money”, or even beads or sea-shells. The concept of money is simply to simplify trading for chickens or cows. Short term, yes you can make a killing in gold, long term, there is not enough gold accessible on the planet to sustain the economy we are accustomed to.
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