For half a century friends and relatives have been telling me how bad fiat money is. I have heard most of the stories from history, at least back as far as 3000 years. Not all of them, maybe. The popular ones are repeated many times, new ones presented. Let's agree on this, no money system has lasted indefinately. Something always goes wrong. If it the fault of the money system, or other issues. Does it matter? Long story short I believe fiat money does an excellent job of transferring wealth. The shorter the storage factor, the quicker the turn around, the better it works. If 'Money' must be backed by hard goods, the problems created would be greater than the security provided. A failed system will result. A strong argument can be made for particular countries to operate on the gold standard in 1913, but not in 2013. The world is too small, nations are too interdependent. Fiat money is an absolutely terrible vehicle for storage of wealth. 'Put your money in a savings account and watch it grow.', is no longer good advice, as it was in 1913. This ceased to be true about the same time many countries went off the gold standard. Correlation is not causation. Personal items, such as houses are only slightly better. Storage of wealth is best accomplished by accumulation of particular goods, that have mass appeal, are easily recognized, have a long shelf life, are easily transferable, or have extreme value to the individual. Food, water, protection, security are excellent instruments for a storage of wealth, for the individual. This personal wealth is not meant to be transferred. Still, the individual retains wealth that has been acquired through fiat money. With a goods backed money system, money itself becomes a storage of wealth- equivalent with gold or similar. I do not see how this is 'good for the economy', except it offers some financial security, but only what any storage of wealth system offers. It seems to me, fiat money that is free to purchase various forms of wealth storage, (PM, rice and beans, brass and lead, real estate) is the best of all possible worlds. While I'm at it, I believe the stock market has much more in common with fiat, that any storage of wealth system. It is great for transference of wealth, but fails as a storage of wealth system. Pieces of figurative paper backed by promises and faith - just like fiat. JMHO others will disagree.
I broadly agree. basically, as a medium of exchange, fiat currencies as they currently stand work quite well. As a store of wealth, not so good.
That's pretty confused, but understandable considering that practically no one comprehends the nature of money any more. It starts with definitions being replaced with their derivatives and degenerates from there. As far as that goes, opinions don't count when definitions are confused because there is a matter of education to be addressed. It's good to consider the nature of money and the various means of, and motivations for wealth transference. You might want to watch the hidden secrets of money video series to figure things out. Perhaps then you might want to come back and explain why Money is a store of wealth, while fiat currency in a fractional reserve banking system steals wealth and is in fact a hidden tax on a population kept ignorant to the nature of money. Or why the necessities of life, such as food, water, shelter, security are not forms of wealth that can be stored but merely forms of consumption required in the process of living for which either work or the stored wealth of past labour in the form of money is used to acquire. And then perhaps you may like to consider how independent standards of stored value (wealth) such as gold are a source of freedom, while fiat currencies are a source of control and a form of slavery.
I do agree, that for transactions fiat works fine. In fact rich people don't keep their wealth tied up in cash... they're in & out of it lickity split. Problem is, no matter how 'bad' fiat is today... gold is even worse but people keep using it as the ultimate measure. As Intelligencer pointed out here http://forums.silverstackers.com/topic-41935-some-of-my-thoughts-on-gold.html
For your consideration: Say you are an expat that is endlessly travelling for work. How do you store your wealth? You may need it in any country at any time so it needs to remain liquid, but actually holding it on your person is near impossible.
Let's add Mike Maloney to that list. To figure things out? Really. When I heard Mr Mike say that wealth cannot be destroyed, my ears perked up. Cannot be destroyed? I stopped believing in magic a few years ago. I smelled a snake oil salesman right from the get go. It is generally recognized that money is officially issued legal tender, but Mr. Mike has none of this. He would tell us we are confusing currency with money. He would have us believe that gold and silver are money. Hogwash, everyone knows cow dung and butterfly wings are money. Mr Mike makes strong points, and wins arguments, by inventing meanings to words already in general usage. Okay, you don't like fiat, I get it. The old saying is, if you are not part of the solution, you are part of the problem. So you need to explain to us how the nations of G20 are to operate with a non-fiat money system, a gold (PM) backed money system, I assume. A goods backed system, as surely that is what non-fiat money means to most of us. Since you see gold as having magical qualities, I assume that is your first preference. Mr Mike lives in a fantasy world of his own creation, I will have none of it, but you are free to be a true believer. 'Wealth' is determined by society, Not Mr Mike. When food and water are scarce items, worth more than gold, even Mr Mike will consider a cheeseburger as 'wealth'.
Well, on a board PM 'fanatics' (in a good say), I hesitate to suggest diamonds. Ba Beers has spoiled the true worth of diamonds as far as I am concerned, but they are still recognized as a storage system for wealth. Five pounds of gold, four tubes, $100k. I would think I could carry that internationally. After that, diamonds. I'm guessing you thought of this and rejected it - because of liquidity?
The saying "Wealth cannot be destroyed" is a quote Mike himself heard from another person. It's been taken too literally. It's roots comes from the legal fraternity regarding the forensics of fiscal crimes. It really is about tracing where the money goes when a company/firm/individual goes kaput. The money alsways goes somewhere. A perfect example is of what's happening right now to the bitcoins that MtGox had. But we should heed it's warning. The wealth/money/dollars/value/potatoes eventually goes into someone's pocket... may as well be yours.
Most of us believe silver has utilitarian usage head and shoulders above gold - in the real world. Would you agree, does this change anything? I am amazed at very intelligent people who have tried to convince me that the difference between gold and fiat is that gold has intrinsic value. Silver is the same, but it does much better at earning it's keep, comes closer to having intrinsic value that gold. Still, in the end, they are just pretty, shiny metals.
Well, this would mean that when the housing bubble burst all of the 'wealth' in those mortgage derivatives ended up in someone's pocket. Not a big surprise. What I see from time to time is that what is identified as wealth, does not exist. It does not disappear, because it never existed. And yet it was collateral for loans, it caused bonuses to be given, this imaginary stuff acted just like wealth. It was bought and sold, but never existed. Fraud, disguised as wealth.
Well that's the whole wealth vs value vs dollars 'donut'. For me, ultimately the wealth exists in intrinsic things; land, oil wells, companies, potatoes...even stock holdings (bare with me here). after a 'reset' like the dot.com bubble collapse...many of the companies still remained (apple for instance). Their $ value dropped significantly, but the tangible asset (share in the company) still remained. If someone overpays by double for a sack of potatoes and potato futures plummet overnight, while a lot of $'s have been removed from people's bank accts. someone still is left with the potatoes.
So if I have an art collection, of old masters, worth millions, and they are exposed as fakes, I still have the oil, canvas, frames. Have I lost wealth? I own several hundred acres of shoreline near a famous resort. Tsunami, toxic waste, and now my shoreline is three feet underwater, and all life is dead, for decades to come. Has wealth been destroyed? Craftsmen take raw materials, and create useful and beautiful things, with market value far beyond the raw materials, and all that can be - destroyed - much quicker than it was created. If you are talking to a group of lawyers, 'Wealth cannot be destroyed.' has meaning. If you are talking to a bunch of potential silver stackers, that same phrase is deceptive, self-serving, and meaningless, IMO. On a certain level we agree. Buy what you like and you will always have it, just not the fiat it took to acquire it, or equivalent value.
:lol: if you think that demonstrates lucidity and comprehension of the subject you are mistaken. You clearly don't "get it", because you confuse every concept, attack "Mr. Mike" with juvenile ridicule, and can not differentiate between variable perspectives of subjective value versus an independent store of wealth. A cheeseburger is not a store of wealth, but an item of convenience for consumption by those who value them. As I said, there is a matter of education for you to address. If you don't like my suggestion of the Mike Maloney video series, there are other good resources out there. Bill Still's the Money Masters might be more your thing, but there are many others if you care to search. In fact, the early videos on this site's video forum listed quite a few. Here's a perspective on the concepts for you, the money myth exploded, but there other perspectives and resources that can assist enhance ones view.
I have rejected it because it's easy enough to carry, but hard to explain to border guards. I have nothing to hide (aside from my innocence, FFS) but I still like to fly under the radar whenever possible in airports/etc.
Petey have you looked at things like Singapore bullion exchanges which allow you to buy and sell without actually having to physical hold along with say a HSBC or similar bank account that is globally recognised for day to day expenses?
Indeed, it's actually #1 on my list right now, I was just keen to see what others came up with. Confidence inspiring that you were thinking the same thing.
Linking gold to a currency is always doomed to fail. When it comes to gold, the gold bugs argue that gold is money. Simply put, that is not exactly correct. It contains some interesting points, most notably Deutsche Bank addresses the most important Mainstream argument against a Gold Standard: that the economy grows quicker than the World's Gold supply. Meaning that there is a structural decline in the amount of Gold compared to total economic activity, which is deflation. This is something gold bugs like our Chris Martenson, and all those who follow the Austrian "school" of economics, don't understand. Money is not a thing. Money is a medium of exchange. Money is not the fish, it's the water the fish swims in. It's not a noun. It's a verb. This is an important point: Gold is not money. And in fact, it's not going to be money any time soon. Now, that's not to saygold isn't worth anything. It's clearly worth something. In fact, gold has a long history of being worth something. The problem is, it is impossible for us to say exactly what that something is. AND, The world is full of things worth more than gold ". But we dig the damn stuff up and then bury it in a different hole. Where's the sense in that? What are we, magpies? Is it all about the gleam? Good heavens, potatoes are worth more than gold!" "Surely not!," [said Ms. Cripslock] "If you were shipwrecked on a desert island, what would you prefer, a bag of potatoes or a bag of gold?," [replied Moist] "Yes, but a desert island isn't Ankh-Morpork!" "And that proves gold is only valuable because we agree it is, right? It's just a dream. But a potato is always worth a potato, anywhere. A knob of butter and a pinch of salt and you've got a meal, anywhere . Bury gold in the ground and you'll be worrying about thieves for ever. Bury a potato and in due season you could be looking at a dividend of a thousand per cent." "Can I assume for a moment that you don't intend to put us on the potato standard?" said Sacharissa sharply.
I don't know about Chris Martenson, but the Austrian School definitely understand the role of money in both a static as well as a dynamic sense whereas Terry Pratchett is a story teller who simply rehashed pop culture cliches. As Hayek said, just let the free market determine what the market wants to use to undertake market transactions.
As recently as a few months ago I worked with a young MBA who was gung ho Austrian. We had many interesting conversations. Exchanged many emails. I was not convinced. I favor more the Chicago school. We are talking about opinions, not facts. Yes, the opinions are based on facts, all three sides, with three different conclusions (Keynesian, Chicago, Austrian). 'Free market' is an illusion. 'No escape is possible, if you believe you are free.' ~ Ram Dass
