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Hard Currency? (a sequel to MonsterZero's thread)

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  • Hard Currency? (a sequel to MonsterZero's thread)

    Hello everybody,

    This got me thinking about the economics today due to MonsterZero's thread about the middle class as a viable force today in America (thanks, MonsterZero!)

    As I began to reflect on the history of economics, I realized a very important and potentially dangerous trend.

    Where is gold?

    Are you even aware that it is illegal to own a piece of gold in America? No, I am not kidding. Once again, where is gold?

    Are you even aware that the paper money (the greenbacks) is worthless itself? That it has no value whatever? No?

    Then consider this one: today in modern times, we are living in what is known as fiat (or is it fait?) economy where the government prints out paper money to match the value of gold stored somewhere. It is a dangerous thing to do. Because it lends toward abusing it and using it as a way to inflate the currency thus destroying the economy in process (whether it be intentional or not).

    The real key is gold -- despite the claims of Fort Knox storing caches of gold, it is no longer there, in fact, America is the world largest debtee (or is it debtor?).

    In the ancient times, it is absolutely crucial to have either silver or gold as a mode of hard currency to keep everybody honest and it's particularly foolproof, nobody could forge a piece of gold back then. However, it got clumsy to keep moving around these heavy precious metals, so the people placed them in storages all over their own countries or city-states. They had to send a party member to get out these hard money. Eventually, all the parties had to was to get a receipt from whosoever owning a storage with value of hard money owned on it. All of a sudden, the owners of these storage realized how value it was to make money off usurpary (sp? or interests, if you will). The fraud practices have been quite prevalant to this day. Because the parties had to trust the owners of these storage (read modern banking system), there was no way to vertify the fact of this matter.

    The new bankers can rip off the owners by offering interests and allowing the other people not owning a piece of gold to borrow off them, thus creating unavoidable debt with bankers in order to pay off. The bankers have no choice but to continue this fraudalent practice, creating a new class of paper currency which the government sees as a covenient way of keeping the values honest and legitimate (and a way to use this to its advantage like being able to start a few wars and racking up profits, economy, and slimulating higher taxes when nobody wanted to pay it).

    Now to the middle class and problems it is facing today. I am wondering aloud if it's true if the fait currency is the main problem behind all of these issues? Any thoughts or corrections?

    Any concerns for that matter?

    Major James Holden, Georgia Badgers Militia of Rainbow Regiment, American Civil War

    "Aim small, miss small."

  • #2
    The short version is that there isn't enough gold in the world to support it's use as a monetary exchange in an industrailized society.
    says that there are about 33,000 tonns of gold held in central banks world wide, and an estimated total of 145,000 tons of gold in the world.

    from hte CIA world fact book 2001 GDPs. Since it doesn't appear to be possible to generate a table with all of them to sum, I took the G8 plus several of what I'm guessing are the largest non represented economies. I'll freely admit my choice of what countries to look at is completely subjective, but unless someon wants to check all 100+ nations or can find a comprehensive table, this'll have to do.
    US $10 trillion
    UK $1.5
    France 1.5
    Germany 2.2
    Italy 1.5
    Canada .92
    Japan 3.6
    Russia 1.27
    china 6
    india 2.66
    s. korea .93
    australia .52
    brazil 1.34
    indonesia .69
    mexico .92
    south africa .41

    Anyway, for the 16 countries I selected have a combined GDP of ~36trillion dollars.

    To back just the economies of the countries I singled out with gold would take a price of $10k/ounce if all the worlds gold was being used. If instead only the total gold held by central banks were to be used it would jump to $45k/ounce. The current price is $335/ounce, and remember while I'm using all the worlds gold, I'm only looking at a fraction of the worlds econ, so actaul prices would be much higher.

    Pricing gold that high would have major repercusions thoughout the economy. Gold isn't just used in jewelry you know.
    "Lord... forgive me my actions, speech and thoughts. Because, Lord, I am seriously going to kick some unrighteous ass in Your Name, Amen."
    Princess of Wands by John Ringo (Jan 2006)


    • #3
      This is going to be very vague but i think the British tried going back to the gold or sterling standard in the twenties or thirties and the results were disaterous for their money.


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