Hey all, Just wondering if anyone is following the blog FOFOA? If so what are your thoughts on his concept "freegold" Seems like a very interesting concept, his thoughts on silver seem to be that It isn't going to play a role in the coming paridigm shift. Thoughts? Cheers Jimmy
I discovered the FOFOA blog a couple of years ago and have been following it ever since. Like Bullion Baron, I often get lost in the length and complexity of some of his blog posts. The following link provides a beautifully succinct overview of Freegold: http://flowofvalue.blogspot.com/2010/10/freegold_41.html I believe that Freegold could well end up being the final solution after the current system blows up. For this reason, my stack is weighted 90% gold / 10% silver (by purchase price). There's the potential to make much bigger paper gains on the way up by investing in silver (let's just hope you can swap it for gold at the right time), but there's no monetary use for silver in a Freegold system. For this reason, silver would return to its industrial value (which could be something like $5 with the state the global economy would be in when the system collapses), while gold would be revalued an order of magnitude higher. I'm not here to try to convince anyone that's what will happen, just answering the question.
I would HIGHLY recomend the following discussion for an introduction: http://www.usagold.com/halldiscussion.html And would also make note that FOA is by far the easiet of the three to read (ANOTHER (Thoughts!), FOA, FOFOA) and writes as 'Trail Guide' on the above discussion. Here is his original Thoughts!: http://www.usagold.com/goldtrail/archives/goldtrailone.html Also +1 for Vtc.
how is freegold going to work? if you get rid of the spot value, people will naturally determine a $ value /oz of gold when they determine if theyre better off storing their wealth in gold/currency/real estate/stocks etc. unless currency doesn't exist (or has a predetermined value) i cant see it working
i see, so gold would essentially have a spot value for all currencies (rather then the spot price in USD and its value in other currencies are determined by the exchange rate)? obviously this is against the US' best interest, and would probably lead to war if this were to start to take place
what would happen when there is a housing bubble (for example) in a country, and its citizens decided to store their wealth in real estate rather than gold? that would lower the value of their currency. places like india will have an extremely high valued currency as people there tend to spend a larger portion of their income on gold, culturally.
I don't see how Freegold is any different to the current situation, apart from the fact that most people don't at this point regard Gold as a store of value. The thing about it being valued differently in different currencies? Well, you can do that today. Calculating the difference between the spot price in AUD and USD will give you the current AUD/USD exchange rate. Am I missing something here?
currently the spot value in AUD is determined by the exchange rate between AUD/USD the freegold concept values gold in AUD. determined by supply/demand of gold from AUD transactions (afaik - correct me if im wrong)
On first read, the difference is that each currency is backed gold (ie no longer fiat based). As per the 'return to sound money' thread I'm still wondering what it really means for the currencies that move second, third etc (besides a lump sum wealth transfer between random govts & central banks - which politically probably means it won't happen). Also the central banks still exist. Why? That doesn't bode well for sound money.
^ FOFOA isn't advocating that the central banks remain, but rather that it is most likely they will. I don't think countries will be willing to give up their central bank.
The whole point of being "backed by gold" means that the gold price is fixed. Yet, he says the gold price is floating. That doesn't make any sense to me. I could say that the currency is backed by wheat and that the price is floating and exchanged on the free market and it would mean the same thing. Further, if each country was to back their currency by gold, (which I don't see how is possible, but let's pretend for the sake of argument) it would be a drastic change on the exchange rates around the world and upend world trade as a whole. And furthermore, he seems to imply that currencies will be valued by the market according to the reserves of Gold held by such country, even though, once again, the Gold price isn't fixed. I see no reason for this to be true. The market certainly doesn't value currencies that way now.
Hmm. I think I am misunderstanding what they really mean by the concept and will have to do more background reading. As an alternative starting point to the FOFOA site the font of all information has a page http://en.wikipedia.org/wiki/Freegold On first read it doesn't provide any insight and is probably as [in]accurate as always but I was interested in following up some of the links when I have more time.
One key FOFOA concept is that the medium of exchange and store of value roils are separated. Gold is the store of value and not used as currency nor backs any paper. Fiat is used just as a medium of exchange but nobody stores value/saves in it.
But how is that different from today? Gold is today used as a store of value. Not by everybody, but then Gold is not the only thing that can be used to store value. Nor will it ever be the case that it will be the only thing. It's popularity may wax and wane depending on various factors.
Think about the current difference being that fiat would not be used as a store of value anymore. Gold is used as a store of value now, and under freegold would be used more widely. Also there would be no taxes on gold at all.
Paper representations of gold will have been incinerated, leading to discovery of gold's non-manipulated price. However freegold is a fanciful further step beyond this that must be backed by govt laws to 'save the lemmings' ie stop people 'leasing out' their gold whereby returning to a fractional bullion system, etc, etc, etc. In reality it is decreegold, and it is neither elegant nor 'free'. I have called it decreegold, because it is 'a system' without historical precedence that must be legislated into existence by govt decree, on a global scale. Backpeddling aside, there is a refusal to consider realities on the blog by most on there. VTC is a smart guy. In effect, fofoa is the (monetary) John Lennon equivalent of singing in the face of the world's military, "All we are saying, is give peace a chance." http://www.zerohedge.com/news/2012-...strike-sudan-missile-base-dry-run-iran-attack In a world where transfer of wealth is the big game, who knows whose side he is on. Maybe those European bodies/families who hold gold ;]
