Cash is still king.

[mmm....shiney!]

Well, fiat is no longer (if it ever was) a store of value. Thankfully here in Australia gold and silver are, and they are not taxed (and considered pretty much currency) so they are very much superior to fiat.

It's probably as much currency as BTC is ie it's not, therefore fiat is superior when it comes to facilitating exchange.

Gold is still below the high of 1980 when adjusted for inflation but it's above the high of 2011 on a real basis. It therefore is not a stable store of value historically, contrary to popular thinking. But, I would think the floating of the AUD in 1983 gives gold priced in AUD more upside as a store of value looking into the future.

Are you referring to GST on the purchase of gold/silver? At the other end PMs are taxed (CGT) depending upon the nature of the investment vehicle in which they're held.

 

[JohnnyBravo300]

Even with golds superpowers its not going to parallel a currency's ups and downs perfectly in a totally managed economy but in the end it will do it's job like it always does and always has.
History isn't written in a week or a year or a few short decades and people are free to cling to paper all they want while it depreciates.

They can keep their 2 cents purchasing power while they complain that gold has 70xed and hasnt done exactly what they think it should have haha.
I think you suffer from recency bias and you don't really understand time or history in a larger time frame.
It seems youre unable to comprehend anything beyond the last 50 years and you think it will stay like this forever. You make no sense sometimes!

 

[SilverNGold]

Hockey stick!
I see what you did there.
Raging, ha!

 

[mmm....shiney!]

Even with golds superpowers its not going to parallel a currency's ups and downs perfectly in a totally managed economy but in the end it will do it's job like it always does and always has.

And what I'm arguing is that's exactly what didn't happen. Gold and silver did not function as money for most of the past few thousand years. And when they were used as the basis of a currency system they were mostly used as units of account in the same way a $ functions today.

I think you suffer from recency bias and you don't really understand time or history in a larger time frame.
It seems youre unable to comprehend anything beyond the last 50 years and you think it will stay like this forever. You make no sense sometimes!

It's because I read articles published by anthropologists, historians and economists that I think I've got a pretty good grasp of the history of money - albeit at a rudimentary level mind you.

 

[JohnnyBravo300]

But gold and silver did function as money for the past few thousand years since long before Jesus. Yes units of account, same thing.

Our current fiat isn't a unit of account as much as an inflationary debt note and it's not really working at all.

 

[mmm....shiney!]

But gold and silver did function as money for the past few thousand years since long before Jesus. Yes units of account, same thing.

To quote Innes (1913) in regards to the universal belief on the origins of money ie barter evolved into coinage which evolved into credit:

none of these theories rest on a solid basis of historical proof—that in fact they are false.

https://www.community-exchange.org/docs/what is money.htm

Our current fiat isn't a unit of account as much as an inflationary debt note and it's not really working at all.

Yes, it is an inflationary debt note but it seems to be working very well as prosperity has been on a long term upward trend across the world. If it didn't function effectively then prosperity would not have risen as trade and exchange would have broken down. And just like other units we use to measure things, fiat money fits the definition of a unit of account:

A unit of account is a standard numerical monetary unit of measurement of the market value of goods, services, and other transactions.

https://en.wikipedia.org/wiki/Unit_of_account

 

[JohnnyBravo300]

Nominal prosperity maybe, not in real terms.
Sure it looks like we are rich that we can have a debt of 34 trillion but in real terms it's a disaster.
Fiat that is devalued from day one and requires interest isn't ever sustainable.
Sure the first 30 or 40 years of a fiat life cycle is always great until reality comes and people can see how poor they are, like right now.

 

[heartastack]

Kudos to anyone who can actually a imagine a world where we are trading slivers of gold for retail items. It would take up 80% of the day arguing about value to the point where you're limited to bargaining over a loaf of bread and some homebrew.

 

[mmm....shiney!]

Nominal prosperity maybe, not in real terms.

Real prosperity and it's not measured in money. Money is just a social construct it's not a source of wealth. We don't accumulate money for money's sake, we do so in order to exchange value and meet our needs and desires, whether that's wine, medications, touring bikes or blobs of bullion.

Prosperity is measured by access to health care, transport infrastructure, education, clean drinking water, leisure activities, social institutions, cultural and sporting pursuits, electricity, heating, refrigeration, communication, life expectancy... Do you want me to keep going?

The monetary unit is merely an arbitrary denomination, by which commodities are measured in terms of credit, and which serves, therefore, as a more or less accurate measure of the value of all commodities.

Fiat that is devalued from day one and requires interest isn't ever sustainable.

Why not? It's not as if it actually exists. There's an unlimited supply of the stuff. Sure there is a minute fraction of the physical representation of money moving around the economy in the form of notes and cash, but as has been the case for thousands of years the majority of exchanges take place on a ledger ie virtually. An economy that is restricted to using a finite supply of money based on a limited supply of hard currency is an economy that will stagnate and eventually disintegrate.

Sure the first 30 or 40 years of a fiat life cycle is always great until reality comes and people can see how poor they are, like right now.

As A Mitchell Innes in 1913 and others hundreds of years before him argued, how people tend to think of the way our monetary system is constructed is built on falsehoods. It's not what it seems. There's a lot of misconceptions floating around on what money is and what it has supposed to always have been.

Money, then, is credit and nothing but credit. A's money is B's debt to him, and when B pays his debt, A's money disappears. This is the whole theory of money.

 

[mmm....shiney!]

Kudos to anyone who can actually a imagine a world where we are trading slivers of gold for retail items. It would take up 80% of the day arguing about value to the point where you're limited to bargaining over a loaf of bread and some homebrew.

That's not even scratching the surface.

Even if hard currency was the sole means of exchange during the history of human trade, if we are restricted to only being able to exchange physical units of cash we will eventually run out of access to money to exchange as our population increases, the cost of production increases, as our wants continually expand as new products come to market and our needs constantly evolve as we age, start families or our health needs change etc.

For example the cost of health care is never going to reduce or even stabilise as new products and treatments come to market. Being restricted to exchanging slivers of silver is not going to increase society's access to smart chemo treatments nor make them cheaper.

 

[Michael Kay]

If it didn't function effectively then prosperity would not have risen as trade and exchange would have broken down. And just like other units we use to measure things, fiat money fits the definition of a unit of account:

yet why have incomes and living standards been in free-fall?

Global debt is 330% of global GDP. Most added since Covid. Completely unsustainable.

Gold is $3700 AUD
Silver is $45

 

[mmm....shiney!]

yet why have incomes and living standards been in free-fall?

Free fall? That's a touch dramatic. There are going to be periods where living standards/incomes are going to rise or fall above the long term mean. Prosperity has been on a steady increase for the past 200 years or so with a massive increase worldwide during the middle to latter part of the 20C thanks to technology, demographic changes and the profusion of credit. There is currently a marked slowdown in incomes and living standards outside of the US thanks to a number of factors, none of which can be attributed to a breakdown in the effectiveness of fiat currency as a tool for the exchange of value.

Global debt is 330% of global GDP. Most added since Covid. Completely unsustainable.

Why is it unsustainable?

 

[JohnnyBravo300]

All the prosperity you listed has dropped in quality in the last 50 years. Good job man!

 

[mmm....shiney!]

All the prosperity you listed has dropped in quality in the last 50 years. Good job man!

What a crock of ideological bullshit gramps.

What you're trying to argue is that 50 years ago we had less access to quality health care, transport infrastructure, education, cleaner drinking water, leisure activities, social institutions, cultural and sporting pursuits, electricity, heating, refrigeration, communication, life expectancy...

Let's pick a couple of examples in the US and OZ.

Life expectancy:



Communication:




Yeh man!

 

[mmm....shiney!]

And one more just for the hell of it, access to basic drinking water supplies.

 

[Michael Kay]

Shiney... I'm glad you are doing well for yourself; but you are out of touch with the Aussie battlers out there.

This article below is pretty much check and mate regarding your arguments. There are plenty of articles in the media showing that Aussie living standards are in absolute freefall. I can link them after you read the Australian Institute report.

Imagine being an 18 year old out of highschool without moneyed parents? They are screwed and will never own property. The working poor

https://australiainstitute.org.au/p...-90-get-just-7-of-economic-growth-since-2009/

 

[mmm....shiney!]

@Michael Kay, you're missing my point, I'm not discussing income inequality. I'm arguing that the use of fiat has contributed to the rise in long-term prosperity we have witnessed over the past couple of centuries across just about the entire world. I also made the point above that there will be periods of economic growth and decline above and below the long term mean.

Finally I said that we are experiencing an economic downturn (hardly the "absolute free-fall" as you like to believe, though for those most exposed it has been awful), none of which though can be attributed to a breakdown in the effectiveness of fiat currency as a tool for the exchange of value. A point touched on by the authors of the article to which you linked which I would argue validates my position.They write that from 2009 we entered a 10 year period where the benefits of economic expansion have not been shared equally across the community. They don't lay the blame at the feet of fiat currency but rather:

This result seems to be the product of a fairly weak expansion together with a significant redistribution of income towards the top tenth. Of course, these outcomes reflect much deeper forces, such as the concentration of Australian businesses into oligopolies and the weakening of unions in the Australian labour market.

https://australiainstitute.org.au/w...-Economic-Growth-in-Australia-WEB511-copy.pdf

I'd agree with him about the weak expansion bit. However as far as his other two points go - well being a left-leaning public think tank it's entirely natural for The Australia Institute to publish a paper criticising big business and falling union participation. I'll stay out of that argument thank you very much and instead apportion blame to successive governments on both sides of the political divide for their failure to take control with fiscal policy (exacerbated by the current government's obsession with population growth), effectively washing their hands of any notion of economic management and handing the reigns to the monetarists, neo-classical and neo-whatever-else boofheads over at the RBA. What has become increasingly absent over the past decades is long term fiscal policy responses that were similar to those adopted in the expansion periods 1950 - 1981 Richardson and Grudnoff identified.

So it seems that the authors may have more in common with my position than at first glance.

Edit to add: And I'll have to remember that when I drop off our donations to the emergency food relief shelter in town next week to not talk to anyone. God forbid that I may accidentally get "in touch" with any Aussie battlers out there.

 

[Michael Kay]

@Michael Kay, you're missing my point, I'm not discussing income inequality. I'm arguing that the use of fiat has contributed to the rise in long-term prosperity we have witnessed over the past couple of centuries across just about the entire world.

It'll take me a bit to digest what you've said, but I start with this.

The past couple of centuries have seen Napoleon rise and fall, Korea get turned to ash, WW1, WW 2, the Boer War, hyperinflation and total collapses!

What are you talking about? The current fiat regime in the started in 1970. The West did well in the 40s and 60s and living standards have been getting worse since then. It's about haves and have nots. Not sure if you have kids, but I shudder to think what they face. My boy wants to become a teacher and I told him it's a dead end profession.

 

[mmm....shiney!]

The current fiat regime in the started in 1970.

Not really, though on the surface it appears so, but in reality more like since the dawn of money with the first IOU ever written.

 

[mmm....shiney!]

The past couple of centuries have seen Napoleon rise and fall, Korea get turned to ash, WW1, WW 2, the Boer War, hyperinflation and total collapses!

And despite all of the atrocities, life expectancy has risen thanks to rising incomes, technology, demographic change and the expansion of credit, and the spread of democratic values and legal systems codifying property rights.

Are we there yet? No, we've still got a long way to go.

Edit to add: mate, I've got grandkids and the future for them doesn't faze me. I've started my granddaughters early: https://www.superhero.com.au/product/minor-account-superhero. They've even got exposure to a gold etf in there, not that they can read yet, but the older one can count to ten mostly, though she does throw the odd 11 in after 8.