My Book: Need opinion on whether gold is money?

Hi Brother and Sister,

For those who are interested in my book , i am making progress on it.
I would like to include a section in Chapter 3 of my book: Foundation of Money

One of the section i want to talk about is
Does our government know what Money is?

I include the following as one of the example as an opening

[youtube]http://www.youtube.com/watch?v=2NJnL10vZ1Y[/youtube]

I want to find out
1) Do you guys think gold is money?

If so
what is your take on Jim Rogers conversation with Mike Maloney

[youtube]http://www.youtube.com/watch?v=RVSRwBHXNu0[/youtube]

 

Other marketing slogans Mr. Paul didn't have time to ask Mr. Bernanke about:

Mr. Bernanke, is Budweiser "The King of Beers"?
Are Wheaties "The Breakfast of Champions"?
Mr. Bernanke, is it true "A diamond is forever"?
Is Maxwell House coffee "Good to the last drop"?
Mr. Bernanke, regarding perfume, is it true "Between love and madness lies Obsession"?

 

Mr. Bernanke, is the sky blue?
Mr. Bernanke, does the sun shine?
Mr. Bernanke, does saving increase capital?
Mr. Bernanke, does printing currency steal savings?
Mr. Bernanke, is saving a depreciating currency wise?
Mr. Bernanke, do you print currency and giving it away to cronies?
Mr. Bernanke, does a bear sh!t in the woods?

How confused are we when we have to ask the biggest counterfeiting fraudster in the history of the world if what he prints is authentic and trustworthy?

 

I am married to a Thai Lady and will be retiring in Thailand, Gold is money in Thailand.

 

Indeed it is greyman. The culture of gold ownership really is pervasive over here.

 

You should fit right in then!

How's the weather?

As to the original question, gold isn't money over here, we have gold with a dollar amount stamped on it but you would be a fool to spend it and good luck finding any checkout that will accept it.

Even gold sovereigns, with their history of being used as money, are seen as collectibles rather than money, judging by the premiums on new editions.

However if banks start buying up gold then we might see a change but until I can pay my tax with gold it won't be money. Unless the government says it is money it isn't.

 

Just because the government says something doesnt make it true. But I know what you mean

 

I do fit right in, except for the whole being white thing... easily fixed by a few more holidays at the beach though

Weather right now is shitty, the rainy season has finally arrived.

To expand on what me and greyman are talking about: Because the thai baht suffers some pretty severe inflationary pressures, people here use gold as a savings mechanism. 23kt (or 'Thai gold') chains and bars can be had for very low premiums to spot. They are measured in a unit of weight that is confusingly called a baht as well. 1 baht of gold is basically 1/2 an ounce.

Whenever someone needs to withdraw money from their gold 'savings account' they can take their chains/bars back to the same shop they bought it from and get a loan of money based on the value of the gold... if they dont pay it back they dont get their gold back, simple. Also between individuals gold can be used for trading of basically anything, because its value is well recognised.

 

Really?? you have a lot of misplaced trust in the government my friend.

Past history of fiat currencies go against what you say - the latest being Zimbabwe.

You seem to be confusing 'money' with 'currency' ...

 

What is money? Money is any good that is widely used and accepted in transactions involving the transfer of goods and services from one person to another. Economists differentiate among three different types of money: commodity money, fiat money, and bank money. Commodity money is a good whose value serves as the value of money. Gold coins are an example of commodity money. In most countries, commodity money has been replaced with fiat money. Fiat money is a good, the value of which is less than the value it represents as money. Dollar bills are an example of fiat money because their value as slips of printed paper is less than their value as money. Bank money consists of the book credit that banks extend to their depositors. Transactions made using checks drawn on deposits held at banks involve the use of bank money.
http://m.cliffsnotes.com/study_guide/topicArticleId-9789,articleId-9744.html>.

I think gold is money, but the general population (esp. Western countries) wouldnt. Money is something you exchange for goods and services, not many places would accept gold. Usually convert gold to fiat to then use in transactions. Gold would be the foundation of my wealth which sometime in the future I may need to draw upon and convert to the more widely accepted form of money which is paper fiat.

 

Apologies! Yes I do mean currency. If we can just stick to calling it filthy fiat then I would get less confused.

But don't worry, I wouldn't trust the government as far as I could throw them

 

Money is any good that is widely used and accepted in transactions involving the transfer of goods and services from one person to another.

Thats a carton of beer in Kalgoorlie!

 

That will change very quickly once the music stops...

Something that has no intrinsic value - aka fiat currency - can never be real money.

 

Fiat Currency = Legal Tender and pretty much the only way to pay off government debts, unless you have anything like land or property, they will accept that if you haven't any fiat.

In the eyes of the law fiat is real money and as they make the rules and you are playing their game it is probably best to learn to live with it. Just keep the bare minimum as fiat and the rest in something that doesn't inflate away to nothing.

 

When the shtf people will not accept fiat currency as payment for anything - at least not those who have more than a thimble full of brains.

People are there to drive government policy - not the other way around. When the system collapses - which it will - governments can decree til their hearts content and it wont make one bit of difference.

 

The answer to this question will depend on what definition of money we are using.

The common understanding is that money came from barter and is defined by exchanges. This is in fact the main fallacy that has lead economists to think that massive Quantitative Easing is a good idea.

Historical research shows that money came from debts which needed to be recorded over time. The value of money comes from the credibility of the debtor. See . . http://en.wikipedia.org/wiki/Debt:_The_First_5000_Years . . for this historical analysis.

With this in mind all transactions involving money are one half of a barter transaction. You work and get cash as one transaction then you spend cash and get food another transaction, both of these transactions together form one complete barter transaction from work to food.

Gold is money when used to complete two transactions to form a full barter exchange but it is also an object of value itself unlike other forms on money.

Therefore gold is more than money when used as a store of value in final settlement of debts. But it is also less useful than digital money for example when trying to buy a pasty or a hotdog or transfer a payment to overseas.

Therefore gold is money but sometimes not money.

 

^^^ In case anyone is interested the link provided by bubbleboy to Graeber's book is an interesting one. A critique of the extent that Graeber's extensive research "overthrows" traditional economic thinking can be found at:

http://mises.org/daily/5598/Have-Anthropologists-Overturned-Menger
and
http://archive.mises.org/18371/murphy-replies-to-david-graeber-on-menger-and-money/

Note: not attacking Graeber's research just adding some perspective.

 

Ron Paul was full of leading questions, and not a bit interested in Bernake's answers - this type of grandstanding is annoying to me.

What I don't understand is why people scoff at Bernake for saying Reserve banks hold gold due to tradition, yet it's OK for Ron Paul to claim that due to 6000 years of tradition, gold is money. Their arguments are essentially the same.

Maloney is unable to ask a question that isn't leading.

 

What I find weird at times is the short time limit senators have to ask questions in these things which forces them to push certain agenda's (or grandstand) rather than actually try to probe an issue in any real depth.

RE "Arguments are essentially the same" - I would say the difference is Bernanke doesn't give two figs that the Reserve banks happen to have gold on their balance sheets which they inherited. No doubt he'd do a Gordon Brown given the opportunity.

 

If gold is not money, why is it quoted and traded by the currency trading desks alongside USD, Euro and AUD?