Looks like this topic is starting to gain some momentum as the main stream media is starting to talk about it. http://www.bloomberg.com/video/this...andard-looks-like-RBpZnJY1SHyf4_6lmKhEig.html just saw someone had already posted it in the last thread.
Interesting that the MSM is talking about it but their interpretation of HOW the US would go back is that of a pre-schooler and unfortunately probably does more damage than good. If I have time tonight I might start a thread discussing how a transition could be feasibly enacted (or someone else can - we have enough other people on here who have probably read up on this sort of thing).
OK, so they talk about how 'getting the gold in the reserve to match the number of dollars in circulation' would mean buying up bigtime, at least while the current value of gold is so high.... But it would be impractical to buy gold in this fashion, since so much currency is in the hands of private individuals and organisations.... Which leads me to my question: Wouldn't it be simpler just to take the number of ounces [or units of measure] held in storage, divide it by the total amount of currency in circulation (including revolving credit) and THAT becomes new value of the dollar? Then if you want to create more currency, go dig up some more money first and then print the equivalent amount of currency to match it. Similarly, if you hold gold/silver/whatever money the currency is measured in, take it to the reserve where they accept your units in exchange for the comensurate number of dollars and cents which now become part of circulation. It would mean an end to the whole 'fractional reserve' lending thing... which I can only see as a good thing.
Grimnar - so you mean the dollar would only be worth about 10 cents? Sorry I just guessed that figure. Someone else can do the maths and dont forget the next round of printing coming up! Wouldn't that throw the whole US economy in turmoil as well as all commodity pricing? I cant see how the US dollar would remain as the reserve currency after that.
Yeah I dunno hey... bit of a green question that I am keen to hear feedback on myself. Haven't really put that much thought into it before. I mean, problem as I see it is that sooooooo much money has been printed that it seems impossible to peg it to gold+silver+platinum+whatever else at ANY value.... And the reason for that is the 'revolving credit' and fractional reserve lending... money just breeds money completely outside of the controlled distribution channel (i.e. stuff that is actually printed, or at least centrally RECORDED!!). The only solution I can see to make the currency 'make sense' would be creating a 'swap rate' like when we ditched the pound for the AUD..... except in this case you would be using gold plus silver plus whatever other materials they choose to use as the basis for their currency to establish what the swap rate would be.... Could be $100,000 old to $1 new at the rate they're going... But is that really a big deal? I went to vanuatu recently, and it was pretty much 1000 vatu to 1 AUD.... what did a meal cost in a restaurant? 35000 vatu. What does it cost here? $35... In its most complicated form, it's still just a ratio. Would it affect their ability to be the 'reserve currency'? Probably not... but the real question is: Do we really need a reserve currency? If all countries have based their available monetary supply on a fixed ratio to the [units of measure] they hold, then currency itself becomes a self levelling mechanism and exchange should be easy to calculate.
After looking at the video she does the maths assuming the price of gold is $1660 oz with total value of $650 billion.. The answer is if you want to cover the $2.1trillon in circulation is to raise gold's price up four or five times to around $9000oz..Would that work. I don't think so. All the bond holders would cash out to buy gold. The US$ would be toilet paper and the USA would be a third world economy. Havn't got a clue what they will do be it ain't going to be pretty. Maybe a war??? Regards Errol 43
It doesnt necessarily need to be backed 100% with gold, watched a vid of Rickard and i think he said it was 40% back when the gold standard was around.
don't forget about total credit... since that 'currency' would need to be backed by something too.... otherwise you have defeated the entire purpose of the exercise. And what is total credit at now? like 50 trillion???? So if you divide total credit by the total number of tons they hold in storage, each ton would be worth like $6,147,415,011.98 Which would make each ounce equivalent to $191,210.42 (Interestingly, this would be almost enough to pay off my house... which is about what it should be in my opinion) Even at 40% backed, that would still be over $76k per oz. I haven't included silver holdings, which could also be used for basing monetary supply on.... the impact of this would reduce those numbers some. But hey, at the rate they're going a carton of milk will cost $500 in no time... So is that really disproportionate as-is? Not so many years ago, it wasn't uncommon for a person to never hold a gold coin in their life.... It should be worth a bucket load more than it is now.
