Pros and cons of gold

[SeanEdwards]

my point is

the problem is : we DON'T have much say today over how we can control our money policy, but once we do, it won't matter if we base it on gold or trust or toilet paper.

when we DO, we can argue what's best later (today people arent even outraged enough to say they want control over their money, so how can you trust they'll be better judge than the Fed Res?)

I hear you and I mostly agree. We don't have much say, but in theory at least, the American people could have rejected all the bullshit and rallied behind Ron Paul, for example. And I really don't think a Ron Paul Presidency would abuse the fed printing presses like the current management does. So I think there is at least the possibility of the people someday imposing sanity on monetary policy.

The problem I see with gold is that we are throwing away the possibility of our political system ever being able to react to and influence economic crises. The very advantage of gold, in that it limits government power, can also be seen as its greatest disadvantage.

 

[Josh_LA]

The problem I see with gold is that we are throwing away the possibility of our political system ever being able to react to and influence economic crises. The very advantage of gold, in that it limits government power, can also be seen as it's greatest disadvantage.

But like today, when people don't have money or gold, they make other things. Like books, computers...etc. And that's another REAL problem with America, we have outsourced lots of our production, so when our moeny is worthless, we have nothing to export to other countries.

 

[Josh_LA]

That isn't hyper-inflation, it's hyper-deflation.

it's inflation of money supply and prices, deflation of currency value, is it not?

 

[forsmant]

These crisises that you speak of are caused by fractional reserve banking. It doesn;t matter what you use as money but throughout history gold and silver have been the chosen medium of exchange. Paper was introduced and now credit cards, but those are sopposedly backed by dollar bills.

What would we use for small transactions? The same thing we use now, copper and nickel. Silver would be used as well and gold would be reserved to large purchases and saving. These metals have value as a medium of exchange as well as many other industrial applications. Their value will be determined just as the paper dollar is determined everyday in what people will exhange for it. Value is subjective and everyone values things differently.

 

[Fox McCloud]

gold has always won, at the end of the day:

http://mises.org:88/Paul-Partee

 

[nate895]

it's inflation of money supply and prices, deflation of currency value, is it not?

I was talking about one dollar being worth that much gold, not Zimbabwe, that is hyperinflation.

 

[Josh_LA]

I was talking about one dollar being worth that much gold, not Zimbabwe, that is hyperinflation.

Ok, then you are right.

However, both inflation and deflation will hurt dearly if you don't have some assets or production.

 

[nate895]

Ok, then you are right.

However, both inflation and deflation will hurt dearly if you don't have some assets or production.

Yes. Deflation can actually, theoretically, be much worst than inflation if it happens at a rapid rate, which is why we can't just wake up tomorrow and have the gold standard with a dollar valued at 1/20 an ounce of gold.

 

[FreeMarketEconomy]

But like today, when people don't have money or gold, they make other things. Like books, computers...etc. And that's another REAL problem with America, we have outsourced lots of our production, so when our moeny is worthless, we have nothing to export to other countries.

Americans outsource because it is cheaper to produce in another country. It helps US corporations remain globally competitive. Inflation signifies a weaker US economy and thus helps US exports by making them cheaper. This helps the domestic manufacturing industry and reduces outsourcing to places like China.

The US is also a high tax jurisdiction, and obama wanting to increase taxes, such as almost doubling the capital gains tax, will just force more money to flow out of the US, which will hurt our economy especially right now when the US needs a lot of capital inflows.

If the US dollar becomes more inflated the pegged Yuan would likely be revalued and allowed to float helping the US trade deficit with China, whilst attracting FDI to our country.