What Would You Rather Have During Severe Deflation: Silver or Cash?

[tmosley]

So now price determines whether or not a medium of exchange is "hard"? I thought you said it was it's liquidity.

The price indicates a high demand. During hyperinflation in other countries, you would find that merchants were willing to give deep discounts to those who paid in dollars. The price of a dollar went up for them. The same is happening now with gold and silver, on a worldwide scale.

Riiiiiight. I wish you would refute my arguments instead of cheap character slandering. What did I say that leads you to believe I am unfamiliar with a central bank?

This:

To think that these financial conglomerates are piking up gold here or there for posterity's sake is simply absurd. They openly admit to using "super computers" and complex algorithms to execute many trades in a short amount of time. They are money sucking machines that can be used to extract or add money into the market place whenever the programmers decide.

Heck, you don't need to be a conglomerate. Just go to startpage.com and search "MetaTrader4" and "expert adviser"

Central banks don't trade using supercomputers. They aren't financial conglomerates. They don't need fancy programs to suck up money. They do that by printing. You have central banks confused with investment banks. Sorry you don't know the difference. Might want to learn the definition of the word "slander" as well.

Doesn't the Fed attempt to keep the money supply constant, or at least in control? What happens when the money supply lowers and velocity into non-dollar assets increase? Deflation.

If they are trying, they are doing a piss poor job.

Notice how at no point on that chart does the money supply go down. The only drop in the price of goods is due to increased capital investment. This trend is countered by the money printing going on in the background. In a few cases, like electronics and computers, the capital investment lowers prices faster than inflation raises them. This is more than countered by trends in food and energy, which are not counted in inflation measurements.

Oh and price deflation? What is a price? An exchange rate for any given medium of exchange, like the dollar.

Congratulations, you know what a price is. You get a gold star.

 

[Jordan]

So, mosley, you want silver to protect against inflation and also to protect against deflation? Is there any circumstance where you wouldn't want to own gold or silver?

I thought I had heard it all.

 

[tmosley]

So, mosley, you want silver to protect against inflation and also to protect against deflation? Is there any circumstance where you wouldn't want to own gold or silver?

I thought I had heard it all.

The fact that you don't understand that concept says it all.

Dollars never deflate. Period. End of story. When capital seeks safety in times of uncertainty, it goes to gold (and silver). Little pieces of paper can be endlessly reproduced. Gold and silver can not. I don't know how anyone could be so thick as to fail to understand that.

According to the CPI, gold, which was valued at around $20 an oz back in 1920, should now be in the mid $400 range. But it isn't, it is $1200. It has KICKED THE CRAP OUT OF INFLATION, as I have said before.

I'm not interested in anything you could ever have to say, so I am putting you on my ignore list. I'm tired of arguing with idiots all the time. Don't come begging to me for so much as a silver dime when you are starving. You'll be swallowing your teeth if you do.

 

[Jordan]

The fact that you don't understand that concept says it all.

Ok.

Dollars never deflate. Period. End of story.

Dollars could deflate, they just aren't.

When capital seeks safety in times of uncertainty, it goes to gold (and silver).

Need I remind you that in 2008, during uncertainty and fear of deflation, gold dropped hard. So did silver. Did you know the dollar went up in value?

I'm sure you'll say that was just manipulation. Anything that happens that goes against your view is manipulation.

Little pieces of paper can be endlessly reproduced. Gold and silver can not. I don't know how anyone could be so thick as to fail to understand that.

Yeah, I get that. They CAN be endlessly reproduced. Doesn't mean they have to be.

According to the CPI, gold, which was valued at around $20 an oz back in 1920, should now be in the mid $400 range. But it isn't, it is $1200. It has KICKED THE CRAP OUT OF INFLATION, as I have said before.

So NOW you trust CPI numbers.

I'm not interested in anything you could ever have to say, so I am putting you on my ignore list. I'm tired of arguing with idiots all the time. Don't come begging to me for so much as a silver dime when you are starving. You'll be swallowing your teeth if you do.

Tmosley, I'm sorry you couldn't stand the heat, but I'm happy you're getting out of the kitchen. Again, your scare tactics are getting worn out and old. If I were to believe everything you said, I'd starve, die, etc if I didn't buy gold.

Now, apparently, if I don't buy gold I'll be eating my own teeth?

edit: Oh! I get it! You're going to punch me in the mouth. Violent person you are.

 

[CAKochenash]

How did I know you would post that graph of the monetary base?

You must realize that the money is still sitting in the banks. The banks don't want to lend and the people don't want the risk. The second that attitude changes, we will inflate ourselves to the moon.

I am well aware of central banks. I am well aware of the secrecy and their continued efforts to keep data private. It's to the point where I don't trust most of the Fed's numbers. What reason have they given me to trust them?

To say that the Fed doesn't have allies at some of the worlds largest financial institutions is to deny reality. The Fed has many tricks up their sleeve to alter the supply of money in this world, not just "They way they are supposed to."

 

[Zippyjuan]

The price indicates a high demand. During hyperinflation in other countries, you would find that merchants were willing to give deep discounts to those who paid in dollars. The price of a dollar went up for them. The same is happening now with gold and silver, on a worldwide scale.





This:



Central banks don't trade using supercomputers. They aren't financial conglomerates. They don't need fancy programs to suck up money. They do that by printing. You have central banks confused with investment banks. Sorry you don't know the difference. Might want to learn the definition of the word "slander" as well.



If they are trying, they are doing a piss poor job.

Notice how at no point on that chart does the money supply go down. The only drop in the price of goods is due to increased capital investment. This trend is countered by the money printing going on in the background. In a few cases, like electronics and computers, the capital investment lowers prices faster than inflation raises them. This is more than countered by trends in food and energy, which are not counted in inflation measurements.



Congratulations, you know what a price is. You get a gold star.

Montary base is not the money supply. Montary base effects the money supply when it is getting loaned out and borrowed and spent. During the recent spike in the base, it was not getting loaned out so the money suppply was not growing. I posted actual money supply graphs earlier in this thread. Or maybe it was another thread. Here is the M2 money supply for the last five years (M2 is the most commonly used measure of US money supply- not the base):
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=M2&s[1][range]=5yrs

Originally Posted by tmosley
According to the CPI, gold, which was valued at around $20 an oz back in 1920, should now be in the mid $400 range. But it isn't, it is $1200. It has KICKED THE CRAP OUT OF INFLATION, as I have said before.

In 1920, the price of gold was set by the government- not by any free market forces so you cannot really compare the price of gold in the 1920's with gold today. It was not allowed to inflate or deflate with supply/ demand or other factors. It stayed at $20 an ounce whether there was high inflation or high deflation in prices. (In june 1920 the annual rate of inflation hit 23.67% and exactly one year later it deflated at over 15% but the price of gold was unchanged). http://inflationdata.com/inflation/Inflation_Rate/HistoricalInflation.aspx?dsInflation_currentPage=7

http://www.wisegeek.com/what-is-the-historical-price-of-gold.htm
Historic gold prices:

1930 $21
1925 $21
1920 $21
1915 $21
1910 $21
1905 $21
1900 $21
1895 $21
1890 $21
1885 $21
1880 $21

But it isn't, it is $1200. It has KICKED THE CRAP OUT OF INFLATION, as I have said before

Adjusted for inflation, gold has lost 50% of its value since its peak in 1980. Is that "kicking the crap out of inflation"? Between 1980 and 2000 it lost more than 75% of its value. Is that another example of it "kicking the crap out of inflation"?

 

[AcousticFoodie]

Is silver really that great for fighting inflation? From 1981-2003 Silver had a few spikes everynow and then but it remained pretty much level.

 

[Jordan]

How did I know you would post that graph of the monetary base?

Because he's such an unbashed metals bug that he's willing to go completely out of his way with intellectual dishonesty to prove a point. Hell, he even thinks you should own gold and silver during deflation AND goes on to say that silver is more liquid than the dollar.

That is on top of other nonsense like the time he claimed prop traders were "literally propping up the market." And don't forget his Dow 3000 call. And definitely not that he either approves or disapproves of CPI numbers based on how it fits his current argument. Oh, and if gold or silver is trending against his predictions, it's manipulation.

He'll even go so far to wish death on people that disagree with him. And I just love the new term he coined... "anti-gold trolls."

FTR: I'm going to have a lot more fun now that tmosley put me on his ignore list.

 

[tmosley]

Montary base is not the money supply. Montary base effects the money supply when it is getting loaned out and borrowed and spent. During the recent spike in the base, it was not getting loaned out so the money suppply was not growing. I posted actual money supply graphs earlier in this thread. Or maybe it was another thread. Here is the M2 money supply for the last five years (M2 is the most commonly used measure of US money supply- not the base):
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=M2&s[1][range]=5yrs

In 1920, the price of gold was set by the government- not by any free market forces so you cannot really compare the price of gold in the 1920's with gold today. It was not allowed to inflate or deflate with supply/ demand or other factors. It stayed at $20 an ounce whether there was high inflation or high deflation in prices. (In june 1920 the annual rate of inflation hit 23.67% and exactly one year later it deflated at over 15% but the price of gold was unchanged). http://inflationdata.com/inflation/Inflation_Rate/HistoricalInflation.aspx?dsInflation_currentPage=7

http://www.wisegeek.com/what-is-the-historical-price-of-gold.htm
Historic gold prices:



Adjusted for inflation, gold has lost 50% of its value since its peak in 1980. Is that "kicking the crap out of inflation"? Between 1980 and 2000 it lost more than 75% of its value. Is that another example of it "kicking the crap out of inflation"?

Inflation was falling at that time.

But fine. Buy government paper and stick it in your ears for all I care. Enjoy the grinding poverty.

 

[LibertyIn08]

Because he's such an unbashed metals bug that he's willing to go completely out of his way with intellectual dishonesty to prove a point. Hell, he even thinks you should own gold and silver during deflation AND goes on to say that silver is more liquid than the dollar.

That is on top of other nonsense like the time he claimed prop traders were "literally propping up the market." And don't forget his Dow 3000 call. And definitely not that he either approves or disapproves of CPI numbers based on how it fits his current argument. Oh, and if gold or silver is trending against his predictions, it's manipulation.

He'll even go so far to wish death on people that disagree with him. And I just love the new term he coined... "anti-gold trolls."

FTR: I'm going to have a lot more fun now that tmosley put me on his ignore list.

Anti-Gold Trolls?

In most cases, they'd be rightly called Reality Trolls.

 

[LibertyIn08]

Inflation was falling at that time.

But fine. Buy government paper and stick it in your ears for all I care. Enjoy the grinding poverty.

If you were to post personal net asset values (start at 100, so as not to reveal your actual asset amount) for the past 15 years, it would perhaps go a long way to ameliorate the distaste towards you.

That you would be willing to not do so, out of concern not for privacy but for embarrassment, shows your true reason for perpetual ad hominems and logical fallacies: you must protect the falling house of cards that was your predictions.

How quaint.

 

[tmosley]

Gold and silver ARE hedges against both inflation and deflation. At least this guy agrees with me: http://seekingalpha.com/article/208023-is-gold-the-magic-hedge-against-both-inflation-and-deflation There is plenty of evidence for this, not just what is posted in that article.

Further, silver will buy products in more countries than the dollar will, and appears to have held its value much better over the last decade.

The trading algos have been ramping up the market on no volume for a year, using money given to them by the Fed. The only major volume is when the market is going down. When the algos stopped working properly, we had a flash crash. But then, in Jordan's world, a market that can lose 10% of its value in 5 minutes is perfectly normal, healthy even.

The DOW would have been 3000 had the Fed not instituted QE. It started going up when they opened the program, and stopped rising when they shut it off.

I don't wish death on anyone. I just point out that you are going to die because of your stupidity. I can't say that I will be saddened.

I did not coin the term anti-gold trolls. They are on every major financial blog I have found, and all argue the same thing over and over again, and are immune to logic.

I am reading your post from the quote in LibertyIn08's post, by the way.

In case you are wondering why I suddenly got so pissed off, it's because I've been dealing with about five of you people at once on different blogs and forums.

 

[Zippyjuan]

Inflation was falling at that time.

But fine. Buy government paper and stick it in your ears for all I care. Enjoy the grinding poverty.

Adjusting for inflation, I would have done better over the past 30 years buying stocks than buying gold. Even with the recent rise in gold prices and relative decline in stocks.

The gold chart has been posted previously. Here is the S&P 500 chart:

http://www.simplestockinvesting.com/SP500-historical-real-total-returns.htm

 

[tmosley]

If you were to post personal net asset values (start at 100, so as not to reveal your actual asset amount) for the past 15 years, it would perhaps go a long way to ameliorate the distaste towards you.

That you would be willing to not do so, out of concern not for privacy but for embarrassment, shows your true reason for perpetual ad hominems and logical fallacies: you must protect the falling house of cards that was your predictions.

How quaint.

Sorry, who are you, and why should I care what you think? I've never once seen you post before.

You wouldn't believe me if I posted how much I had made, considering I started buying gold in 2001 (a happy coincidence, mind you--I didn't know much about the markets back then), and it's hard to calculate, as I have been adding in a lot more newly earned money since then. Not to mention I also took a lot out to buy land and build buildings and a business (which I never got off the ground, government regulations are not friendly towards non-established types of fermented beverages like mead).

That said, I'll humor you. My net assets are currently worth, assuming a start value of 100 in 2001, something like 1200, including some 400 or so in further inputs from earnings. I've only had one really bad trade, when I tried to go short financials last April-May. Of course, my house also lost value, as I bought it near the peak of the RE boom, before I knew about Austrian economics. That was because I didn't realize that money was being printed like mad and finding its way into the markets.

Of course, this is just what some guy on the internet said. Maybe I'm a big fat liar. After all, I'm apparently intellectually dishonest (despite the fact that I don't intentionally misinterpret what other people say like SOME people).

 

[Zippyjuan]

Gold and silver ARE hedges against both inflation and deflation. At least this guy agrees with me: http://seekingalpha.com/article/208023-is-gold-the-magic-hedge-against-both-inflation-and-deflation There is plenty of evidence for this, not just what is posted in that article.

Further, silver will buy products in more countries than the dollar will, and appears to have held its value much better over the last decade.

The trading algos have been ramping up the market on no volume for a year, using money given to them by the Fed. The only major volume is when the market is going down. When the algos stopped working properly, we had a flash crash. But then, in Jordan's world, a market that can lose 10% of its value in 5 minutes is perfectly normal, healthy even.

The DOW would have been 3000 had the Fed not instituted QE. It started going up when they opened the program, and stopped rising when they shut it off.

I don't wish death on anyone. I just point out that you are going to die because of your stupidity. I can't say that I will be saddened.

I did not coin the term anti-gold trolls. They are on every major financial blog I have found, and all argue the same thing over and over again, and are immune to logic.

I am reading your post from the quote in LibertyIn08's post, by the way.

In case you are wondering why I suddenly got so pissed off, it's because I've been dealing with about five of you people at once on different blogs and forums.

Thank you for the link. One reason for the rise in the price of gold in London during the time cited may have been it going towards its natural level- which was depressed by having the price of gold fixed during the gold standard period. Since we no longer have a gold standard, that effect would not be seen and as you pointed out a couple of times already, the price of gold has in recent times gone down as inflation went down- and deflation is simply a further decline in the rate of inflation to a negative point so it would seem to follow that the price of gold would be going down in a deflationary period but we will not know for sure unless we get such a condition.

But I do not expect any major deflation coming up so the argument is academic anyways. It was posited as a hypothetical and remains that. Obviously you see an upside to investing in gold and that is fine. You may turn out to be quite correct on that. We will only know in the future.

If gold is a good hedge against both inflation and deflation, then it sounds like the price of gold should never go down in inflation adjusted terms- and yet it goes both up and down. More like a commodity- not any magical hedge. Another problem is that gold has a global market while inflation or deflation can be a more local event. Japan had deflation in the 1990's but their economy was not big enough on a global scale to have any significant impact on the global price of gold. Nothing goes up in all markets.

 

[tmosley]

Adjusting for inflation, I would have done better over the past 30 years buying stocks than buying gold. Even with the recent rise in gold prices and relative decline in stocks.

The gold chart has been posted previously. Here is the S&P 500 chart:

http://www.simplestockinvesting.com/SP500-historical-real-total-returns.htm

Fine. Buy stocks then. Make sure that you take delivery of the certificates so when they turn out to be worthless you can stick them in your ears. Then you can stick your tongue out and roll your eyes, and just generally look silly.

 

[tmosley]

Thank you for the link. One reason for the rise in the price of gold in London during the time cited may have been it going towards its natural level- which was depressed by having the price of gold fixed during the gold standard period. Since we no longer have a gold standard, that effect would not be seen and as you pointed out a couple of times already, the price of gold has in recent times gone down as inflation went down- and deflation is simply a further decline in the rate of inflation to a negative point so it would seem to follow that the price of gold would be going down in a deflationary period but we will not know for sure unless we get such a condition.

But I do not expect any major deflation coming up so the argument is academic anyways. It was posited as a hypothetical and remains that. Obviously you see an upside to investing in gold and that is fine. You may turn out to be quite correct on that. We will only know in the future.

If gold is a good hedge against both inflation and deflation, then it sounds like the price of gold should never go down in inflation adjusted terms- and yet it goes both up and down. More like a commodity- not any magical hedge. Another problem is that gold has a global market while inflation or deflation can be a more local event. Japan had deflation in the 1990's but their economy was not big enough on a global scale to have any significant impact on the global price of gold. Nothing goes up in all markets.

Gold goes down when the currency is stable. This is why it fell so sharply when Volcker raised rates to 20%.

People can't seem to understand that that is what saved the dollar, and that it is a trick that can't be repeated.

 

[Zippyjuan]

Fine. Buy stocks then. Make sure that you take delivery of the certificates so when they turn out to be worthless you can stick them in your ears. Then you can stick your tongue out and roll your eyes, and just generally look silly.

Thank you for the suggestion! That could be good for a few laughs!

I did not intend my responces in this thread to be personal. Sorry if they were taken that way.

Nothing in history repeats exactly so we can only speculate what might happen in the future.

 

[tmosley]

Thank you for the suggestion! That could be good for a few laughs!

I did not intend my responces in this thread to be personal. Sorry if they were taken that way.

Nothing in history repeats exactly so we can only speculate what might happen in the future.

Thanks for that. I'm trying to push in some humor. I've been stewing in anger over a lot of these people, especially the real trolls like YumYum. Jorden just happened to catch me as I was coming off of dealing with that guy and one almost as bad on another board. I don't think he is a troll, at least not all the time; he's just not as smart as he seems to think he is, and his experience has left him with a trust of the system that will cause him a lot of problems in the future.

 

[Zippyjuan]

I did notice a lot of that going on and would like to stay away from it.