# Lifestyles & Discussion > Personal Prosperity >  Ditch Gold & Silver as an investment

## freedomordeath

I think its time that poeple ditch this idea of Gold and Silver as an investment. The truth is is they are metals that store value, so if you have a shoe box with $1000 and have $1000 worth of gold, the gold over 50years will hold its value.

Yes it is true that you can make money on the ups and downs if you know what you are doing, but it can also be dangerous if you bought in the peak of 1979 for example when gold went sideways for decades.

So whats the point of this post, it is simply to start using it as currency. Why wait for the crash to happen, why not have a working system up and running so poeple can be shown its a better system. Why not get the Armish for example on gold and silver, they live a voluteered based opt-in socialist system that uses very little money, but where they do transact with outside world convince them to use gold and silver instead.

Some states have past laws legalizing gold and silver as legal tender, are there any communties set up or markets set up where gold and silver is only currency allowed. Imagine a tourist coming to the market, they don't have gold and silver, guess what, there are friendly exchange booths ready to take their fiat dollars and exchange it for gold and silver. Then the tourists can go buy what they want. In these states, once markets are set up then private banks can allow digital gold for those not wanting to carry it around. The problem with digital gold is the government restricts it, but in states where it is legal, there should be no reason why banks can't be set up. Also businesses can pay their staff in gold and silver and deposit it in there account through digital gold. If we simply DO IT, INSTEAD OF WAITING then we take power away from the globalists.

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## freedomordeath

http://www.dailypaul.com/160734/merc...ilver-currency

they talked about it here at great length

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## rpwi

I don't buy the idea that gold is a stable store of value.

People buy gold now because they think...if I acquire 10k in gold now and the money supply goes up 10%, then my 10k gold will be worth 11k.  The problem with this is that there are multiple factors that affect the price of gold and silver...  Sure inflation will help...but if you don't know WHY gold was valued at 10k to start with, you could be getting yourself into a lot of trouble.

The two main factors that affect precious metals other than the supply of dollars....are fabrication demand and speculative demand.  True fabrication demand (which should would not include jewelry) is actually fairly paltry for gold.  There are uses for speaker wire, dentist work and other minor oddball uses.  Therefore the rest of the value of gold has to be speculative (and therefore significantly overpriced).  Can you make money buying an overpriced commodity?  Sure...if it becomes even more overpriced, but this is not a sound investment strategy and eventually the chickens will come home to roost.

Another reason to avoid gold, according to Steve Keen...the US has record debt to GDP levels.  Last time this happened was before the great depression.  It is doubtful we will grow our GDP to meet those levels...instead it is more likely that the debt will come down...and come down hard.  If this happens much of our money (which is debt) will vanish and this will increase the ratio of gold to dollars.  In such a case, precious metal investments would be disastrous.

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## LibertyRevolution

> If this happens much of our money (which is debt) will vanish and this will increase the ratio of gold to dollars.  In such a case, precious metal investments would be disastrous.


Nope, your gold would still buy as much stuff as it used too.
You may get less dollars back if the price falls, but that means the dollar will be worth more, and buy more.
Gold is a preservation of wealth, that is all, don't expect to make money by holding it.

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## rpwi

> Nope, your gold would still buy as much stuff as it used too.
> You may get less dollars back if the price falls, but that means the dollar will be worth more, and buy more.
> Gold is a preservation of wealth, that is all, don't expect to make money by holding it.


If dollar inflation is good for gold, then why isn't dollar deflation bad for gold?

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## TheGrinch

> If dollar inflation is good for gold, then why isn't dollar deflation bad for gold?


It's a comparison, not necessarily correlation... In other words, as the dollar becomes a worse investment, by comparison, gold is a better investment. I'm not sure the opposite holds true, but with it being a comparison, it doesn't have to, and when do we ever see deflation nowadays (honest question)?

More simply, the point is that it's value is relatively stable, if not a good investment when things are unstable and it's value goes up, but the fact that it's still a commodity means that is by no means a perfect relationship.

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## KCIndy

I agree that gold and silver are bad bets.

Do this:  SEND ALL YOUR GOLD AND SILVER TO ME.  I'll take it off your hands and send something even more valuable in return: toilet paper.  When TSHTF we'll all need lots and lots and lots of TP.  

Don't wait!  Time's running out!

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## Steven Douglas

> If dollar inflation is good for gold, then why isn't dollar deflation bad for gold?


The PM holders hit hardest would be those who didn't buy long, or anticipate catastrophic deflation. But let's look at that...




> ...instead it is more likely that the debt will come down...and come down hard. If this happens much of our money (which is debt) will vanish and this will increase the ratio of gold to dollars. In such a case, precious metal investments would be disastrous.


By what mechanism does the debt "come down"?  Defaults with no bailouts?  And if our debt/money vanished, forget the ratio of dollars to gold and look first at the ratio of future dollars to pay past, present and future debt.  More credit tightening, more defaults.  

Now forgetting the fact that the Fed is doing more and more buying of public debt from Treasury, let's assume further the unlikely scenario wherein the Fed pulls a Great Depression part II. It does not intervene, does not start up the hyper-inflationary gears, but instead allows us to spiral into a deflationary depression.  What happens then? 

The same thing as in the Great Depression, only on a much larger scale.  The old saying that anyone with two dimes to rub together could buy anything was countered by the fact that nobody had two dimes to rub together. The money supply was dependent on credit that had evaporated, and the money supply along with it.  Meanwhile, we have a public sector that has insulated it from reality woes by spending future promises to pay, so it keeps spending.    

The biggest problem with a dollar deflation (inflationary depression) scenario is a simultaneous tightening and eventual collapse of the debt system.  Deflation means falling prices everywhere except one:  past debts, and interest on the same.  Under a moderately inflationary regime, you're always paying off past debts in devalued future currency.  In a deflationary regime, debts become impossible to pay down, which leads to massive defaults as everyone finds themselves upside down. 

The dollar is only gaining in value because fewer people have them, so prices fall.  But those same prices that fall for the dollar fall for everything else that the dollar can buy, including gold.  So the while the ratio of dollars to gold has changed, the purchasing power of gold remains steady, regardless what the dollar does, as it always has. 

Once again back to the longterm dynamic for PM's -- if the dollar deflates appreciably, to the point where it's an actual deflationary depression, we're already in serious, REALLY serious trouble.  GLOBALLY.  That's a storm that has to be waited out, and a likely precursor to inevitable hyper-inflation, once that becomes the only remaining option, as a death rattle becomes a last dying gasp of an already mathematically doomed currency.

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## DEGuy

As stated in many other threads, owning gold is a primarily a hedge against a rapidly deflating dollar. Owning some PMs should be a part of any financial strategy to preserve buying power. In that sense, gold isn't really an investment.

I don't think we will see an increased use of gold as a common currency anywhere because people will want to offload any currency that they think will lose buying value more quickly, such as the dollar. For example, if I have savings in both gold and dollars and want to buy a nice suit, do I spend the gold or the dollars first? Suppose I also believe that the dollars will only decrease in value over time, and that a year from now will cost me 10% more in dollars to buy that same suit. But I think that the same amount of gold will still be needed in a year from now. Well, of course I spend the dollars instead of the gold since I believe the dollars are more likely to lose value.

And because retailers are required by law to accept dollars, there's no power for them to force the market to use a more stable currency like silver or gold. Even (and especially) in a hyper inflation environment, people will be motivated to spend dollars first, and only spend PM's when needed to exchange for dollars.

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## TruthisTreason

There is no safe storage of wealth with a Big Government on the hunt.

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## whippoorwill

". The use of money in a market economy is a praxeologically necessary fact. That gold, and not something else, is used as money is merely a historical fact and as such cannot be conceived by catallactics."— Ludwig von Mises, in Human Action

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## brandon

Why not just keep gold and silver as a small percentage of your portfolio?  say 5-10%

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## McChronagle

> If dollar inflation is good for gold, then why isn't dollar deflation bad for gold?


i asked peter schiff this question heres what he had to say.

http://www.youtube.com/watch?v=ngTi86EXfmo&t=1h31m54s

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## matt0611

> Why not just keep gold and silver as a small percentage of your portfolio?  say 5-10%


This. I go for a little more but I would definitely say diversify, who knows what this crazy government is going to do? 

I have metals, stocks, and yeah I even have some dollars (cash) too.

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## freedomordeath

> I don't buy the idea that gold is a stable store of value.
> 
> People buy gold now because they think...if I acquire 10k in gold now and the money supply goes up 10%, then my 10k gold will be worth 11k. The problem with this is that there are multiple factors that affect the price of gold and silver... Sure inflation will help...but if you don't know WHY gold was valued at 10k to start with, you could be getting yourself into a lot of trouble.
> 
> The two main factors that affect precious metals other than the supply of dollars....are fabrication demand and speculative demand. True fabrication demand (which should would not include jewelry) is actually fairly paltry for gold. There are uses for speaker wire, dentist work and other minor oddball uses. Therefore the rest of the value of gold has to be speculative (and therefore significantly overpriced). Can you make money buying an overpriced commodity? Sure...if it becomes even more overpriced, but this is not a sound investment strategy and eventually the chickens will come home to roost.
> 
> Another reason to avoid gold, according to Steve Keen...the US has record debt to GDP levels. Last time this happened was before the great depression. It is doubtful we will grow our GDP to meet those levels...instead it is more likely that the debt will come down...and come down hard. If this happens much of our money (which is debt) will vanish and this will increase the ratio of gold to dollars. In such a case, precious metal investments would be disastrous.


you missed the point of what I'm trying to say, central banking is simply one type of currency scheme in existance backed by a swat team, another interesting one is bitcoin, everyone bangs on about it not being backed by anything, yet it carries on and trading at $6 as we speak. Gold DOES HOLD ITS VALUE, what planet are you on. You can take a 1oz coin and travel in a time machine and probably buy similar stuff like a tailoured suit in the Byzantine era, the classical greece area the roman era and even today a tailor probably won't say no if you shove it in his face.

Gold is a supperior currency system hands down because it can't be printed and unless they invent a maching that can make gold, it will hold its value relative to other hard assets and services like tailouring.

So again my question... LETS USE IT FOR CRYING OUT LOUD. In Utah its legal, lets start the ball rolling, everyone playing around with moutain hours, bitcoins why not gold and silver. Poeple can start paying their employees in gold and silver.

Yes your right.. WE ARE MEAN'T TO HAVE A DEFLATIONARY DEPRESSION as credit contracts, but where is the deflation. The reason why you don't see it is because these bastards are inflating in sync to keep it flat lining. Its not uniform thats why different asset classes behave differently in price.

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## PierzStyx

> If dollar inflation is good for gold, then why isn't dollar deflation bad for gold?


Because historically gold has always had worth as a commodity, while paper has not. The idea is that unless we're at a point where food is a more precious commodity than anything else (something not even assured by starvation and post-civilization conditions as history has shown) gold will always be accepted by someone as trade for something else. This is not the case with paper dollars.

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## Zippyjuan

> Gold DOES HOLD ITS VALUE, what planet are you on.


Not always. It depends. The price of gold declined for over 20 years prior to 2002 (off a peak in 1980). Some ups and downs but definately downward trend over that time. 

And if it's value is stable, when adjusted for inflation a chart of gold prices should be pretty flat. It isn't. 

http://inflationdata.com/inflation/i...tion_chart.htm


It should be noted that Nixon closed the "Gold Window" in 1972 so gold was freer to move after that point in time.

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## freedomordeath

> I don't think we will see an increased use of gold as a common currency anywhere because people will want to offload any currency that they think will lose buying value more quickly, such as the dollar. For example, if I have savings in both gold and dollars and want to buy a nice suit, do I spend the gold or the dollars first? Suppose I also believe that the dollars will only decrease in value over time, and that a year from now will cost me 10% more in dollars to buy that same suit. But I think that the same amount of gold will still be needed in a year from now. Well, of course I spend the dollars instead of the gold since I believe the dollars are more likely to lose value.


What if you are paid in gold and silver and live in a town where many of the stores only accept gold and silver, the psychology changes when in that type of situation. Say there is this awesome university in Utah, its relatively cheap but only accepts gold as payment.. will it not be feasible seeing a situation where a parent out of state exchanges their fiat dollars for gold to complete the transaction because the service on offer is a superior in the open market. This could be so for hospitals, machines anything that is in demand.

What we need is a base, get the base up and running and the success will spread like wildfire. Hell take over a little town popular with tourists and start from there.

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## rpwi

> i asked peter schiff this question heres what he had to say.
> 
> http://www.youtube.com/watch?v=ngTi86EXfmo&t=1h31m54s


I don't understand.  Peter explains that gold would hold up in a deflationary period because it would retain its real value over its nominal value which is more important.  Fine.  Then this means there is no point to buying gold as an inflation hedge.  If the money supply doubles and prices double (not a realistic correlation factor)...Peter seems to be saying there would be no point in having your gold...because even if you sold it at twice the price, the price of everything else went up twice as much.  Sure I have twice the dollars...but everything is twice as expensive.  This is the justification for Peter in reverse defending gold against deflation.

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## freedomordeath

> Not always. It depends. The price of gold declined for over 20 years prior to 2002. Some ups and downs but definately downward trend over that time.
> 
> And if it's value is stable, when adjusted for inflation a chart of gold prices should be pretty flat. It isn't.


I would rather take my chances with the ups and downs of gold currency then fiat up and downs where I'm some living battery in the matrix.

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## freedomordeath

> I don't understand. Peter explains that gold would hold up in a deflationary period because it would retain its real value over its nominal value which is more important. Fine. Then this means there is no point to buying gold as an inflation hedge. If the money supply doubles and prices double (not a realistic correlation factor)...Peter seems to be saying there would be no point in having your gold...because even if you sold it at twice the price, the price of everything else went up twice as much. Sure I have twice the dollars...but everything is twice as expensive. This is the justification for Peter in reverse defending gold against deflation.


thats why gold sucks as an investment but is the most supperior form of currency known to man if you live in a city where everyone only deals in gold and silver and refuses fiat currency.

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## Dr.3D

> I don't understand.  Peter explains that gold would hold up in a deflationary period because it would retain its real value over its nominal value which is more important.  Fine.  Then this means there is no point to buying gold as an inflation hedge.  If the money supply doubles and prices double (not a realistic correlation factor)...Peter seems to be saying there would be no point in having your gold...because even if you sold it at twice the price, the price of everything else went up twice as much.  Sure I have twice the dollars...but everything is twice as expensive.  This is the justification for Peter in reverse defending gold against deflation.


Well, if you had held dollars instead of gold, you would have half as many dollars as you would had you held gold and sold it for twice as many dollars.
In other words, $1000 dollars in gold = $2000 dollars when everything was twice as expensive.  If you had held $1000 in currency it would = $1000 when everything was twice as expensive.   That means you would have lost half the value of your savings.   Wouldn't it be better to have saved in gold?

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## rpwi

> you missed the point of what I'm trying to say, central banking is simply one type of currency scheme in existance backed by a swat team, another interesting one is bitcoin, everyone bangs on about it not being backed by anything, yet it carries on and trading at $6 as we speak.


Bitcoin is a sham and will collapse.  It only has value now because of speculative/ponzi demand.




> Gold DOES HOLD ITS VALUE, what planet are you on. You can take a 1oz coin and travel in a time machine and probably buy similar stuff like a tailoured suit in the Byzantine era, the classical greece area the roman era and even today a tailor probably won't say no if you shove it in his face.


Gold's role in antiquity is actually an interesting one.  Many have suggested that it was not gold's commodity demand that raised it to  prominence but rather its ability to satisfy tax debts.  Tell some people on a tropic island that you want to sell them gold for coconuts and they'll probably laugh at you.  Tell them they have to pay a tax in gold or go to jail and they will be scampering to sell you whatever they can for gold.  Taxation's role in determining extrinsic demand is IMO what the most determinants of whether a currency catches on or not.




> Gold is a supperior currency system hands down because it can't be printed and unless they invent a maching that can make gold, it will hold its value relative to other hard assets and services like tailouring.


If gold is to hold its value as is...one as to ask why gold is priced the way it is now.  Sure the supply of gold won't change significantly...but that is far different from the price of gold.  The price for a fixed supply of anything can vary tremendously....  If a good portion of that price is due to genuine fabrication demand...then gold is not likely to fall in price.  But if a good portion of demand is because governments are demanding it or because there is speculative demand (I'll buy something just to resell it as the same or high price), then that is an issue.  In fact for gold to circulate as a currency, the speculative demand has to be higher than fabrication demand, otherwhise the gold would be consumed and the 'money supply' would vanish.  I mean if the price of gold is $1500 per ounce and industrial demand for gold is $1700...then why would there be a gold standard?  Gold has to be priced more than industrial/fabrication demand for it be a currency which means it HAS to be overpriced.




> So again my question... LETS USE IT FOR CRYING OUT LOUD. In Utah its legal, lets start the ball rolling, everyone playing around with moutain hours, bitcoins why not gold and silver. Poeple can start paying their employees in gold and silver.


You can use gold and silver...and euro's, pesos,  bus coins, ithica hours, etc...  The IRS just rules that you have to count the transaction as barter and pay the fair market value for the gold/currency.

If we did not tax payments in dollars the same as the fair market-value of gold, then people would acquire and trade gold to avoid taxes.  This would give gold an artificial privileged status as a tax-avoidance vehicle.




> Yes your right.. WE ARE MEAN'T TO HAVE A DEFLATIONARY DEPRESSION as credit contracts, but where is the deflation. The reason why you don't see it is because these bastards are inflating in sync to keep it flat lining. Its not uniform thats why different asset classes behave differently in price.


Yeah...it's complicated.  MB is rocketing upwards and M1 really crashed (although the higher aggregates are steaming on).  The following is a graph of historic private debt to GDP ratios...you can see the dilemma we are in.  The cure the Fed proposes is more debt or the public taking on some of the private debt...and this will only make the situation worse:



We still could have some serious deleveraging to do...which might not bode well for gold

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## deadfish

> Bitcoin is a sham and will collapse.  It only has value now because of speculative/ponzi demand.
> (


You lost me here... why is it a sham? Seems pretty ingenious concept - Currency based on the future work of powerful processors. The whole world would become a giant goldmine. Whoever can build the most processing power, wins the "free" money. But, since running a GPU factory is a tough business, the incentive for innovation would be enormous. It does not take much imagination to picture a new technological golden age akin to the industrial revolution and internet revolution.

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## rpwi

> Well, if you had held dollars instead of gold, you would have half as many dollars as you would had you held gold and sold it for twice as many dollars.
> In other words, $1000 dollars in gold = $2000 dollars when everything was twice as expensive.  If you had held $1000 in currency it would = $1000 when everything was twice as expensive.   That means you would have lost half the value of your savings.   Wouldn't it be better to have saved in gold?


But wouldn't the opposite be true?  During deflation, wouldn't it be much better to hold dollars over gold?  If gold were a mere inflation indexed hedge...wouldn't be more practical to hold commodities on consumables instead?

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## tribute_13

Would it be safe to buy lets say a tube of silver rounds in anticipation for selling right after the election? I could see silver bumping up as a result of the initial post election panic when Obama wins re-election. Probably wouldn't be anything substantial but could we possibly see a temporary rise in the days after the election? With silver hovering around $28~$32 an ounce right now, would it be safe to invest now?

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## Dr.3D

> But wouldn't the opposite be true?  During deflation, wouldn't it be much better to hold dollars over gold?  If gold were a mere inflation indexed hedge...wouldn't be more practical to hold commodities on consumables instead?


Probably so.  It's all about what you believe is going to happen.   Is the government printing more dollars every day going to cause deflation?

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## rpwi

> You lost me here... why is it a sham? Seems pretty ingenious concept - Currency based on the future work of powerful processors. The whole world would become a giant goldmine. Whoever can build the most processing power, wins the "free" money. But, since running a GPU factory is a tough business, the incentive for innovation would be enormous. It does not take much imagination to picture a new technological golden age akin to the industrial revolution and internet revolution.


Processor work...digging holes in the yad...building mud pies...all the same thing.  Scarcity does not give something value.  If there are only 10 mud cupcakes in the world instead of 20...that doesn't mean they are that much more or less valuable.  The value that bitcoin now is not logically assigned to any real value...so it's market value now is equal to the credit used to acquire it from the outside world plus speculative value.  In other words its a big debt scheme.  People have traded 'real wealth' for bitcoins...only because they expect to get real wealth back in the future.  This is a debt from bitcoin to those who acquired bitcoins.  Because the production of bitcoins is not tied to the production of real wealth but of computer algorithms this can't be possible.

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## LibForestPaul

> The biggest problem with a dollar deflation (inflationary depression) scenario is a simultaneous tightening and eventual collapse of the debt system.  Deflation means falling prices everywhere except one:  past debts, and interest on the same...


Slavery?
That would be one sick scenario...

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## rpwi

> Probably so.  It's all about what you believe is going to happen.   Is the government printing more dollars every day going to cause deflation?


The thing that has us in trouble now is debt to gdp ratio...but the government can't really fix this by expanding the money supply because this just creates more debt (Fed only introduces MB into the economy if they get somebody's debt in turn).  The private banks only create money if they also get debt in turn...so it is a big mess.  How can you pay off debt with more debt?  If guys like Steve Keen are right, we will have to correct this and it will result in mass debt write-offs or bankruptcy which will in turn wipe out the higher aggregates and will in turn cause deflation.  

A cure would be debt-free money...both from the Fed and from banks.  In this matter...although MB would grow...it could grow to replace defaulted bank deposits so we could have our cake and eat it too.

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## Steven Douglas

> A cure would be debt-free money...both from the Fed and from banks.  In this matter...although MB would grow...it could grow to replace defaulted bank deposits so we could have our cake and eat it too.


For a time. Debt money and debt free money, when it comes out of thin air, are both exponential propositions, both untenable in the long term.  The more debt free money is created, the more downward pressure is placed on the value of the currency.  Even if we bought into the illusion of "maintaining" the value of the currency with a constant, moderate influx of new thin-air currency (debt money or debt free), it absolutely REQUIRES an economy that also "maintains growth" (given that is where value is siphoned to maintain the illusion of "currency value stability").  If the economy stops growing, which SHOULD be a perfectly healthy phenomenon, as it merely maintains itself, any new money introduced would be strictly inflationary, with an attendant spiral.  Any artificial influx of new currency into an otherwise stable economy (no growth, no decline) acts as a stimulus that forces growth that is neither necessary nor sustainable.  It's growth, but not of the economy, but whatever cysts and parasitic elements exist to siphon off that growth - value that should have accumulated and recirculated privately.

Debt money is unsustainable because while there is a mechanism for destroying debt currency, it is always less than the mechanism for creating the new debt currency required to inflate it so that prior debts can be serviced.  So it's just an ever-widening circle of debt that can never be paid down in the aggregate, and cannot deflate without catastrophic consequences.  A debt-free money regime isn't much better, as it doesn't even have a mechanism for destroying currency in an economy that no longer needs to grow, but can maintain itself if the currency isn't $#@!ed with.  The idea that taxes are going to be levied for the sole purpose of destroying excess currency (to stabilize value in the other direction in an economy that no longer requires growth) would never enter a politician's mind, let alone pass if it did.  At the point where the productive economy stops growing and simply maintain, government must also stop growing -- and perish that thought. 

Hence, Kenneth Boulding's famous saying, "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist".

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## rpwi

> A debt-free money regime isn't much better, as it doesn't even have a mechanism for destroying currency in an economy that no longer needs to grow, but can maintain itself if the currency isn't $#@!ed with.


Not sure I understand why a debt-free currency has to be destroyed at times?




> The idea that taxes are going to be levied for the sole purpose of destroying excess currency (to stabilize value in the other direction in an economy that no longer requires growth) would never enter a politician's mind, let alone pass if it did.


MMT holds that taxes destroy currency...but to me this makes no sense.  If google recieves 1 billion in dollar and doesn't spend it for a week...does that mean the currency was destroyed for that time?  If the treasury collects the same amount (not counting TT&L) and does the same...did that destroy currency?  It's a popular concept...I just haven't wrapped my head around it.

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## freedomordeath

> But wouldn't the opposite be true? During deflation, wouldn't it be much better to hold dollars over gold? If gold were a mere inflation indexed hedge...wouldn't be more practical to hold commodities on consumables instead?


The only reason why it will be better to have dollars is as Robert Pretcher said is because poeple will have to sell gold to pay off debt denominated in dollars, gold will be an asset and like any asset has to be sold off to pay the man. BUT WHY DO WE HAVE TO SELL GOLD, BECAUSE WE ARE FORCED TO BY GOVERNMENT BECAUSE OF LEGAL TENDER LAWS. Central banking leads to skimming off the top by fat poeple that DO NOT WANT TO WORK.. GET IT. If you want to be a living battery in the Matrix, by all means keep the fiat, what we are trying to do is start communities in Utah that deals only in gold and silver, get a working model together so others can follow.

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## Seraphim

> *Not sure I understand why a debt-free currency has to be destroyed at times?*
> MMT holds that taxes destroy currency...but to me this makes no sense.  If google recieves 1 billion in dollar and doesn't spend it for a week...does that mean the currency was destroyed for that time?  If the treasury collects the same amount (not counting TT&L) and does the same...did that destroy currency?  It's a popular concept...I just haven't wrapped my head around it.


Nevermind. Misread what you wrote.

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## anaconda

My girlfriend is buying rental properties in MS, GA, and TN for nothing down and that all have net positive cash flows. The returns on investment are very very large. I mention it from time to time on the forums because it appears that quite a number of people are looking for investment opportunities. Very few seem interested, however. A nice fellow I used to work with is now in real estate and he walked my g/f through the process. He earns a small commission out of the deal. He would be happy to explain it to anyone who is interested.

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## Steven Douglas

> Not sure I understand why a debt-free currency has to be destroyed at times?


The effect of money that is "lent into existence" is inflationary at first, then deflationary as the debt is paid down.  Currency that is simply "spent into circulation" (as Kucinich envisions) is strictly inflationary. The value of all existing currency is permanently diluted, as that currency remains permanently in circulation. 




> MMT holds that taxes destroy currency, but to me this makes no sense.  If google recieves 1 billion in dollar and doesn't spend it for a week...does that mean the currency was destroyed for that time?  If the treasury collects the same amount (not counting TT&L) and does the same...did that destroy currency?  It's a popular concept...I just haven't wrapped my head around it.


The only taxes that destroy the currency (value) are the hidden taxes brought about by money creation.  Other taxes destroy private wealth directly, but not the currency itself. It just distorts the natural dynamics of an otherwise free economy. Resources that would have otherwise been allocated to other uses are redirected in favor of reallocated demand preferences of the public sector.

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## PaulConventionWV

> I think its time that poeple ditch this idea of Gold and Silver as an investment. The truth is is they are metals that store value, so if you have a shoe box with $1000 and have $1000 worth of gold, the gold over 50years will hold its value.
> 
> Yes it is true that you can make money on the ups and downs if you know what you are doing, but it can also be dangerous if you bought in the peak of 1979 for example when gold went sideways for decades.
> 
> So whats the point of this post, it is simply to start using it as currency. Why wait for the crash to happen, why not have a working system up and running so poeple can be shown its a better system. Why not get the Armish for example on gold and silver, they live a voluteered based opt-in socialist system that uses very little money, but where they do transact with outside world convince them to use gold and silver instead.
> 
> Some states have past laws legalizing gold and silver as legal tender, are there any communties set up or markets set up where gold and silver is only currency allowed. Imagine a tourist coming to the market, they don't have gold and silver, guess what, there are friendly exchange booths ready to take their fiat dollars and exchange it for gold and silver. Then the tourists can go buy what they want. In these states, once markets are set up then private banks can allow digital gold for those not wanting to carry it around. The problem with digital gold is the government restricts it, but in states where it is legal, there should be no reason why banks can't be set up. Also businesses can pay their staff in gold and silver and deposit it in there account through digital gold. If we simply DO IT, INSTEAD OF WAITING then we take power away from the globalists.


Are you aware of a thing called legal tender laws?

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## PaulConventionWV

> Nope, your gold would still buy as much stuff as it used too.
> You may get less dollars back if the price falls, but that means the dollar will be worth more, and buy more.
> Gold is a preservation of wealth, that is all, don't expect to make money by holding it.


The problem is that nobody will take gold as currency right now.

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## PaulConventionWV

> If dollar inflation is good for gold, then why isn't dollar deflation bad for gold?


It's not a question of "good" or "bad".  When the dollar goes down in value, gold _appears_ to go up, but it's actually just maintaining its value.  It only appears to go up because there is more dollars relative to gold, making gold worth more dollars.  It does the same thing when there is deflation.  It holds its value.  

Gold isn't going to make you money.  That is, it won't increase your net worth.  It is more of a safe store of value for when the SHTF because, until then, it is not acceptable as US currency.

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## PaulConventionWV

> There is no safe storage of wealth with a Big Government on the hunt.


Good point.  The 'safe storage of wealth' refers more to the immunity that gold has to the ravages of the market when it comes to speculation and faith-based money.  The only thing that really affects its value anymore is supply and demand.  What affects its value in dollars is a different question entirely.

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## PaulConventionWV

> Why not just keep gold and silver as a small percentage of your portfolio?  say 5-10%


That's okay if you feel like it's worth it to put 5-10% of your money into keeping value, as opposed to increasing it.  The stock market is more likely to increase your net worth because it regularly beats inflation.  If you feel you have enough money to put a significant amount of money into merely keeping value, that's your decision.  However, 5-10% seems like a rather paltry number that wouldn't really pose as much of a hedge because, if you lost 90% of your wealth due to hyperinflation, it would still be completely devestating to you.

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## PaulConventionWV

> My girlfriend is buying rental properties in MS, GA, and TN for nothing down and that all have net positive cash flows. The returns on investment are very very large. I mention it from time to time on the forums because it appears that quite a number of people are looking for investment opportunities. Very few seem interested, however. A nice fellow I used to work with is now in real estate and he walked my g/f through the process. He earns a small commission out of the deal. He would be happy to explain it to anyone who is interested.


Real estate investments  can be quite lucrative.  That's what I'm getting into now.

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## P3ter_Griffin

> My girlfriend is buying rental properties in MS, GA, and TN for nothing down and that all have net positive cash flows. The returns on investment are very very large. I mention it from time to time on the forums because it appears that quite a number of people are looking for investment opportunities. Very few seem interested, however. A nice fellow I used to work with is now in real estate and he walked my g/f through the process. He earns a small commission out of the deal. He would be happy to explain it to anyone who is interested.


We haven't had the correction we need in housing.  Fed still holds ~ $1 trillion in MBS, Fannie and Freddie are still operating, FHA is still backing new loans, etc etc.  That said, rentals are the foundation of my investment plan, but I'd suggest paying in cash or staying away.  That way even if market rates for rent drop enormously your not underwater and can afford to drop rent prices where they need to go.  You miss out on mortgage interest deductions and the ability to use the capital elsewhere, but the increased cash flow makes a second fully paid for rental attainable in much shorter time.  Tis my $.02 at least.

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## LibForestPaul

> That's okay if you feel like it's worth it to put 5-10% of your money into keeping value, as opposed to increasing it.  The stock market is more likely to increase your net worth because it regularly beats inflation. .


over what time from 500 years, 1000 years, hell 30 years. why is it suddenly having exponential growth spurts and then levels off...hmm, yes _regularly_ beats inflation. "regularly" such a subjective term...

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## LibertyRevolution

> If dollar inflation is good for gold, then why isn't dollar deflation bad for gold?


When gold is up, the US dollar is down, and when dollars are up, gold is down.
That is just how it works most times...

You got to remember, as $#@!ty as our dollar is, the euro is a $#@!ing mess...

I love this sign.. It pretty much sums it up.

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## DEGuy

> That's okay if you feel like it's worth it to put 5-10% of your money into keeping value, as opposed to increasing it.  *The stock market is more likely to increase your net worth because it regularly beats inflation.*  If you feel you have enough money to put a significant amount of money into merely keeping value, that's your decision.  However, 5-10% seems like a rather paltry number that wouldn't really pose as much of a hedge because, if you lost 90% of your wealth due to hyperinflation, it would still be completely devestating to you.


http://www.multpl.com/s-p-500-price/

Not so much, for the average investor (S&P 500) at least. With the recent IPO disaster's, like Facebook, I've lost a lot of faith in the stock market and it's ability to be free from manipulations from the big banks and the upper 1% of the wealthy. Maybe that's a little bit too conspiracy theorists, although when it comes to gold, you should really read about....

http://en.wikipedia.org/wiki/Gold_An...tion_Committee

Basically, they maintain that the majority of gold that is traded is not backed by anything physical - also known as fractional reserve banking. What does that mean? Well, the "market" that determines the "price" of gold is flooded with imaginary gold supplies, which acts to suppress the price of physical gold. If enough individuals trading on that market asked for physical delivery of gold, the prices of gold would skyrocket. The volume of gold traded every single day is about equal to the amount of gold mined in a year. Either the majority of large investors are day traders who enjoy fees eating away their principal, or there majority of traded gold doesn't physically exist.

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## papitosabe

> I agree that gold and silver are bad bets.
> 
> Do this:  SEND ALL YOUR GOLD AND SILVER TO ME.  I'll take it off your hands and send something even more valuable in return: toilet paper.


LMAO!!!

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## Simple

The central banks of the world have been buying gold and now Turkey is using gold to pay for Iranian oil. Both actions indicate to me that gold is replacing the dollar as the reserve currency of the world and the demand for gold is not going to plummet any time soon.

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## Bossobass

I believe there's veracity to the claims that some elite banking cartel has planned a single global currency. I also believe personally that in order to sell this ridiculous idea of trading many fiat paper currencies for a single one, something has to be thrown into the pot to sweeten the out-of-the-frying-pan-into-the-fire opposition to such a massive move.

That something will definitely involve gold/silver, as well as, I suspect, other natural resources like water, timber, coal, oil, etc. Each country will have to pledge a certain percentage of the resources basket to buy into the new currency, giving it the appearance of having actual asset-backing.

That's just a wild speculation on my part. The bottom line here is that, since 2000, the DJIA is up 15% while silver is up 600%. Many here talk about silver as though it's a bubble and overpriced, or at least gone flat. Bull Snot. It's worth at least 2-1/2 times what it's currently selling for against the dollar.

Buy it cheaply while you can.

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## freedomordeath

> Are you aware of a thing called legal tender laws?


Have you heard of Utah, we work with what we've got.




> The problem is that nobody will take gold as currency right now.


Thats the point of this post, we need to start somewhere, I was looking at some farmer markets in Utah and was thinking of phoning a couple of poeple and running the idea past them. Have some gold sellers near by and convince farmers to lower prices slightly to take the hit above spot. Run the 2 currencies prices intially to get poople used to the idea and then phase out fiat. Also convince them to pay the stall workers in gold and silver, ideally it would be better in a small town esp with tourists and evenetually turn a small town into only taking gold and silver. With so many nutters aroiund the world, surely we can find enough of them in Utah keen to take this on. I mean if mountain hours can do well, gold and silver sure as hell should do even better in a state like Utah.

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## LibForestPaul

> I believe there's veracity to the claims that some elite banking cartel has planned a single global currency. I also believe personally that in order to sell this ridiculous idea of trading many fiat paper currencies for a single one, something has to be thrown into the pot to sweeten the out-of-the-frying-pan-into-the-fire opposition to such a massive move.
> 
> That something will definitely involve gold/silver, as well as, I suspect, other natural resources like water, timber, coal, oil, etc. Each country will have to pledge a certain percentage of the resources basket to buy into the new currency, giving it the appearance of having actual asset-backing.
> 
> That's just a wild speculation on my part. The bottom line here is that, since 2000, the DJIA is up 15% while silver is up 600%. Many here talk about silver as though it's a bubble and overpriced, or at least gone flat. Bull Snot. It's worth at least 2-1/2 times what it's currently selling for against the dollar.
> 
> Buy it cheaply while you can.


SDR's already require a gold subscription.

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## anaconda

> We haven't had the correction we need in housing.  Fed still holds ~ $1 trillion in MBS, Fannie and Freddie are still operating, FHA is still backing new loans, etc etc.  That said, rentals are the foundation of my investment plan, but I'd suggest paying in cash or staying away.  That way even if market rates for rent drop enormously your not underwater and can afford to drop rent prices where they need to go.  You miss out on mortgage interest deductions and the ability to use the capital elsewhere, but the increased cash flow makes a second fully paid for rental attainable in much shorter time.  Tis my $.02 at least.


But aren't the conditions you're referring to potentially highly inflationary? Which in themselves would not cause nominal rents to drop. But maybe I'm missing something.

If aggressive inflation comes at some point (like Peter Schiff and Ron Paul suggest) you end up paying back your low interest, fixed rate mortgage with increasingly worthless dollars. Also, my g/f is buying rehabilitated foreclosures that appraise for about $70-90K, so the downside is not so large in terms of magnitude. My naive layman's assessment is that it's a trade off right now between the housing market dropping a bit more in value over the coming months, versus interest rates skyrocketing at some point. Inflation will obviously also have an upward pressure on rents.

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## freedomordeath

> That's just a wild speculation on my part. The bottom line here is that, since 2000, the DJIA is up 15% while silver is up 600%. Many here talk about silver as though it's a bubble and overpriced, or at least gone flat. Bull Snot. It's worth at least 2-1/2 times what it's currently selling for against the dollar.
> 
> Buy it cheaply while you can.


Wouldn't it be nice to earn in silver and spend in silver, then you need not worry about waiting for silver to go up 2 1/2 times. Utah is like a gift, where are socialists when you need them, we can trick socialist to set up self-sustaining towns in Utah, using only gold and silver, to help pave away for the rest of the country.

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## Zippyjuan

> SDR's already require a gold subscription.


No, actually they don't.  http://www.imf.org/external/np/exr/facts/sdr.htm/  It used to but does not anymore.

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