Where does money come from ? - Page 1
Forum section: electronics / general

author: TheElectricChicken
author_rank: Frequent Contributor
timestamp: August 14, 2015, 08:38:27 am
content: I just wonder if people know how the amount of dollars in the economy is increased. Not cash, but electronic money.

author: MikeW
author_rank: Regular Contributor
timestamp: August 14, 2015, 08:43:14 am
content: Banks are licensed by the government to create money in the form of loans at a government specified ratio against the capital they hold.I deposit ten real pounds into the bank. The bank is then able to loan out (create) 100 pounds to whoever they feel can pay it back.It's literally created out of thin air against the promise of repayment.

author: Deathwish
author_rank: Unknown
timestamp: August 14, 2015, 08:45:25 am
content: I read somewhere that it is decided by the amount of gold reserves a country has and that they can then mutiply it by 200% ( I think it was that much ) and print or electronicaly make money to that amount on the international financial market.

author: MikeW
author_rank: Regular Contributor
timestamp: August 14, 2015, 08:49:27 am
content: Quote from: Deathwish on August 14, 2015, 08:45:25 amIt used to be linked to gold reserves, but not anymore.https://en.wikipedia.org/wiki/Fiat_money

author: wraper
author_rank: Unknown
timestamp: August 14, 2015, 09:50:03 am
content: Quote from: Deathwish on August 14, 2015, 08:45:25 amThere is no real backing of the money for a very long time. Like MikeW said it is created out of thin air both on the country and bank level. In most countries, banks are allowed to create about 10x of the assets they possess. So if someone says that banks loan the money from what they receive as deposits, it is a complete bullshit.

author: wraper
author_rank: Unknown
timestamp: August 14, 2015, 09:59:27 am
content: Why do you think banks promote payment cards and transfers, not cash? Not only because they receive some fee in the process. If they can keep in/out balance of the flow of real money above zero, they can create a huge amount of virtual money. If all the money transfers are inside the bank, or between banks in about the same amount in both ways, they can create a virtual money bubble in unlimited amount. The only thing that keeps them not going unlimited, is regulations.

author: McBryce
author_rank: Super Contributor
timestamp: August 14, 2015, 10:01:18 am
content: I've never wondered where money comes from, rather "Where did it all go!?". This usually happens around the end of the month.McBryce.

author: Macbeth
author_rank: Super Contributor
timestamp: August 14, 2015, 10:13:57 am
content: I've got a little pile of gold sovs and some 1oz bullion coins. Thats real money. Shame its depreciated so much recentlyActually I've been thinking I could sacrifice a bit of them for electroplating. I've got some copper bar that I plan on turning into 4mm banana plugs. I reckon I could go through all my coins stealing a little bit from each in the plating process.I reckon I could get away with itActually would the sovs/krugers/eagles be better as 22 carat, or my maples & philarmonics as they are 24 carat?

author: TheElectricChicken
author_rank: Frequent Contributor
timestamp: August 14, 2015, 10:16:20 am
content: Quote from: McBryce on August 14, 2015, 10:01:18 amHere is an observation, how the rich people's TV channels all talk like "Billions of dollars was wiped out on the stock Market" "Everyone lost their money in a stock market crash" "The money all disappeared" ....it's like a magicians trick where they play 3 card monty and want you to think that the money has not gone anywhere, not been transferred to someone else, but in fact disappeared. Where did it go, up in smoke ?

author: MikeW
author_rank: Regular Contributor
timestamp: August 14, 2015, 10:56:22 am
content: Quote from: TheElectricChicken on August 14, 2015, 10:16:20 amThat's billions of dollars inagreed value. Not actual cash. So yes, it disappeared.

author: KJDS
author_rank: Super Contributor
timestamp: August 14, 2015, 10:59:36 am
content: Quote from: Macbeth on August 14, 2015, 10:13:57 amYou're probably better off plating with 9 carat which is much harder, unless you mind it all scraping off on the first couple of insertions.I've been peripherally involved in a couple of high performance relay designs. Various bits of titanium, rhodium, platinum and gold ended up being used in a multiplate process.

author: timofonic
author_rank: Frequent Contributor
timestamp: August 14, 2015, 11:04:01 am
content: Quote from: MikeW on August 14, 2015, 10:56:22 amSo it's like gambling? What's the reason behind stock change and such? I fail at economy 101 concepts, I fail to make sense of them.Despite my difficulty learning electronics, physics and mathematics concepts... I find it easier than economy and many social ones.

author: EEVblog
author_rank: Unknown
timestamp: August 14, 2015, 11:09:30 am
content: It's called Fractional Reserve Bankinghttps://en.wikipedia.org/wiki/Fractional-reserve_bankingIf you want to try to understand how the US monetary system works visually, try this:

author: TheElectricChicken
author_rank: Frequent Contributor
timestamp: August 14, 2015, 11:12:33 am
content: Quote from: MikeW on August 14, 2015, 10:56:22 amThe magician got you good. The rabbit is gone for you.Quote from: Circuiteromalaguito on August 14, 2015, 11:04:01 amIn poker machines people come home grumbling that the poker machine took all their money. Or the shirt at the casino table sweeps it all into a hole and then it goes into a cart and a vault where Ocean's 11 is waiting for it. Only for the stock market do people think it is some kind of magic puff of smoke and the money no longer exists on planet earth. It's a great trick, unless you realize what is going on.

author: MikeW
author_rank: Regular Contributor
timestamp: August 14, 2015, 11:13:52 am
content: Right, if I buy shares in a company, it's no longer in the form of cash.However everyone agrees that the shares are worth a certain price and if you want you can sell them to someone at (near enough) that price.This is good because if the company suddenly develops a whizz bang invention that is going to make loads of money and pay lots of dividends on the shares owned, everyone wants a piece of your pie and you can start charging more for it. So your shares are worth more money and when you later sell them you will have turned your money into more money way faster than any bank can pay interest on it.This is bad because if the company suddenly reveals their oil well has dried up or their product is slowly killing everyone and profits are down and won't be paying dividends this year then nobody wants a piece of your pie and you have to lower your price more and more to get rid of it. When you later sell these shares you will have lost your money way faster than inflation will ever devalue it.So yes, you are gambling your cash by purchasing an asset, the value of which can rise or fall, and then later selling that asset.The value of a stock market is basically the value of all the shares being traded on it. If times are good and the economy is growing, everyone is profiting then stocks are generally rising and value (and thus eventually money) is being created.If times are bad then stocks are generally falling and value (money) is being destroyed.

author: MikeW
author_rank: Regular Contributor
timestamp: August 14, 2015, 11:16:16 am
content: Quote from: TheElectricChicken on August 14, 2015, 11:12:33 amGo on then, enlighten us as to where the money 'really is'. As I have explained above, the stock market is not money. It's assets changing in value.

author: Circlotron
author_rank: Super Contributor
timestamp: August 14, 2015, 11:19:20 am
content: When a bank loans me money, it does not reduce your account balance. They create it out of thin air, as has already been stated. An even greater trick is to then charge me interest on the money they created. Say there is just you and me living on planet X. I loan you $100 (all the real money that actually exists on planet X) and require that you pay me back $110. Where is the extra $10 going to come from? Houston, we have a problem. You demand higher wages. That creates inflation, the "other side of the coin" of interest. Eventually there is a war, bankruptcies, and general non-payment of debt. In short, over the long term the money system doesn't really work.

author: Circlotron
author_rank: Super Contributor
timestamp: August 14, 2015, 11:26:40 am
content: Several years ago this was worth one US dollar! And changing very rapidly at the time too.

author: AndreasF
author_rank: Frequent Contributor
timestamp: August 14, 2015, 11:30:16 am
content: As others have stated, money, or better "currency" is simply an artificial way of expressing value. So the question should not be "where does money come from?" but rather "where does value come from?"One answer is quite simply by what that what we're all currently not doing: work! Work/labour takes less valuable things and (hopefully) makes them into more valuable things, thereby creating value, i.e. "money".Other ways are mentioned above (stock market).

author: EEVblog
author_rank: Unknown
timestamp: August 14, 2015, 11:50:14 am
content: Quote from: Circlotron on August 14, 2015, 11:26:40 amCollest mailbag item ever if someone sends in a wad of those

author: TheElectricChicken
author_rank: Frequent Contributor
timestamp: August 14, 2015, 11:57:57 am
content: The video is a little deep for some people, but it's a great effort and a good video to explain it. I think Max Keiser explains it well too. he says there is a limited amount of stuff in the world, so when you keep inventing electronic money, then there is more money chasing the same amount of stuff. That causes inflation, which is constantly hidden in 'official' numbers but you see it in bills for service all the time. End result, well, it's inevitable.I'm still watching it.18:35 Shim-salabim ! ShaZAM !!! Presto !!!!!where did it go ? it disappeared !!!

author: MikeW
author_rank: Regular Contributor
timestamp: August 14, 2015, 12:15:36 pm
content: Quote from: TheElectricChicken on August 14, 2015, 11:57:57 amI can't see the video on this (work) pc but it sounds like you are talking about the money system in general, the stock market is not the same.

author: TheElectricChicken
author_rank: Frequent Contributor
timestamp: August 14, 2015, 12:21:22 pm
content: Quote from: MikeW on August 14, 2015, 12:15:36 pmIts a different magic trick in the same magic show.

author: TerraHertz
author_rank: Super Contributor
timestamp: August 14, 2015, 12:49:02 pm
content: Quote from: EEVblog on August 14, 2015, 11:50:14 amYou can buy them very cheaply in coin collectors shops or online. There's a coin shop in the Wynyard station arcade, where I bought the ones in the pic below. Along with plenty of other worthless paper currency notes from around the world, present and past. I was making a 'worthless paper money tree' as a joke present. With several 1oz silver coins under the roots.Pretty ironic and funny to see you enjoying this thread, considering the world's current fractional reserve banking, privately owned central banks, fiat money system, and how things came to this, is possibly the largest and most harmful high level conspiracy in existence. The real 'conspiracy central.'A book I recommend: The Creature from Jekyll Island, by G Edward Griffin. A history of banking, nature of money, and the creation of the US Federal Reserve Bank in particular. Despite being about 'economics' its a gripping read.Curiously, the Bank of England recently published a paper detailing the truth that banks create money from nothing. Links:20150623http://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerityThe truth is out: money is just an IOU, and the banks are rolling in itLast week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called "Money Creation in the Modern Economy", co-authored by three economists from the Bank's Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdfMoney Creation in the Modern Economy (by Bank of England)Btw, the ratio of money banks can create as loans, to 'assets' is not 10:1 as someone earlier stated. It's more like 98:1, since when a bank creates a loan, that loan is then counted as an asset! Thus increasing the total amount possible to loan. This compounds, hence the very high true ratio.Up till around 2000, I'd been trying to comprehend world politics while ignoring the underlying banking/money structure. Then gradually realized it's impossible to model things that way, as the deep conspiracy of money creation from nothing rules the world, underlying everything. Everything - all wars, all revolutions, all political process, are all ultimately driven by the bankers.Some link collections about money and banking:http://everist.org/archives/links/__Banking_links.txthttp://everist.org/archives/links/__Banking_quotes.txthttp://everist.org/archives/links/__Banking_fractional_reserve.txthttp://everist.org/archives/links/__Economics_links.txthttp://everist.org/archives/links/__FED_US_Federal_Reserve_links.txthttp://everist.org/archives/links/__gold_info_and_links.txtIf you want to see what REAL paper money once looked like, ebay search for 'federal reserve silver gold certificate'These are bits of paper that are guaranteed to be exchangeable for stated amounts of precious metals. So they are silver and gold bearer certificates. This is the way money was constitutionally supposed to be. (Well sort of. Actually it was supposed to be silver and gold coin ONLY, but bearer notes were a convenience.) The story of why it isn't that way any more, and the implications and inevitable end result is very interesting. Though depressing.I keep meaning to buy some of those and frame them. Just as a reminder of how the world was, before the arseholes took over and ruined everything.Questions to think about:* If all debts were repaid, how much money would remain in the economy? (This includes all accounts and cash in circulation.)* Is itpossibleto repay all debts? If not, why not?More such research starting points inhttp://everist.org/archives/links/__Economics_Awareness_Qs.txt

author: Delta
author_rank: Super Contributor
timestamp: August 14, 2015, 01:52:14 pm
content: I found this video a few years ago when I was reading up on economics after the crash - it explains it quite well I think.In short - all money is debt. The initial money is created by the State issuing a bond to the central bank and borrowing a sum of money. This money is deposited in a commercial bank, and then due to the magic of fractional reserve banking, the money is then loaned out again ten times(ish) over, multiplying the money supply dramatically.https://www.youtube.com/watch?feature=player_detailpage&v=AgKFLk9xffA#t=150

author: MikeW
author_rank: Regular Contributor
timestamp: August 14, 2015, 02:03:42 pm
content: Quote from: TheElectricChicken on August 14, 2015, 12:21:22 pmRegardless of your opinions about it, in the stock market 'money'candisappear because it's not really money. It's value represented by a number and value can go up or down.

author: tom66
author_rank: Super Contributor
timestamp: August 14, 2015, 02:09:42 pm
content: The engineer in me is disappointed that Zimbabwe didn't start using scientific notation on the bills. A lot more compact than writing one hundred trillion down.

author: Macbeth
author_rank: Super Contributor
timestamp: August 14, 2015, 02:15:46 pm
content: It's utterly insane when you think about it. But then again the human race is blinded by faith in false gods and false money. But like all bubbles its got to burst at some point.So yeah, I always keep a buffer of tinned food in the cupboards to see me through the first few months. I live right next to some supermarkets so will raid them too. I got me three dogs to guard the homestead and my gold of course. A few water butts in the shed and a half dozen jerry cans for petrol.I'm not allowed weapons for self defense in the UK, but I learned how to make all that stuff as a teenager when it wasn't considered an act of terrorism. I do need to practice my zombie slaying - whats the best FPS the kids play these days? DayZ or something?

author: TheElectricChicken
author_rank: Frequent Contributor
timestamp: August 14, 2015, 02:19:40 pm
content: Quote from: Macbeth on August 14, 2015, 02:15:46 pmAll the people living in holes in the ground would come out to die. To survive you'd need to move away from city and live self sufficient so that you know how, and so that you can, live self-sufficient after first few months/years/decades of tinned food.plus, fresh air organic food is good too.

author: TheElectricChicken
author_rank: Frequent Contributor
timestamp: August 14, 2015, 02:24:38 pm
content: Quote from: Macbeth on August 14, 2015, 02:15:46 pmPlants Vs Zombies is best

author: SeanB
author_rank: Super Contributor
timestamp: August 14, 2015, 05:55:56 pm
content: Quote from: tom66 on August 14, 2015, 02:09:42 pmZimdollars are getting scare, as they are no longer used as cash in Zim. The Zim diaspora looks at you very strangely if you actually want the stuff, as to them it is actually worth more as toilet paper than as money. I had some, but sent them away to Jerry Pournelle. Still have some 20 and 50 thousand dollar bills, which when they were issues as bearer cheques ( not money, they have an expiry date) were worth less than one South African cent.

author: zapta
author_rank: Super Contributor
timestamp: August 15, 2015, 10:30:36 am
content: Quote from: EEVblog on August 14, 2015, 11:09:30 amYa, sure. That guy claims that paper money is a scam and at the same time tries to sell gold and silver in exchange for paper money.http://goldsilver.com/about-mike-maloney/http://goldsilver.com/buy-online/

author: Macbeth
author_rank: Super Contributor
timestamp: August 15, 2015, 10:40:51 am
content: Quote from: zapta on August 15, 2015, 10:30:36 amWell he's not keeping it a secret is he? Guys gotta live and feed his children.The main point is that fiat is a useless store of wealth. Real money isn't. Of course those bits of paper are handy to trade with. It would be nicer if they were backed by something solid rather than faith.Incidentally when did the USA start printing "in GOD we trust" on all its currency? Was it when they left the gold standard?

author: TheElectricChicken
author_rank: Frequent Contributor
timestamp: August 15, 2015, 10:55:03 am
content: Quote from: zapta on August 15, 2015, 10:30:36 amBuying silver and gold is the best thing any smart person can do. There aren't too many places to get it, and they often restrict selling, like if it is a shop, having only 2 customers at a time allowed 'for security' (stops gold rushes really well though). Gold always keeps it's value and silver is hard to manipulate the price on. Obviously selling it is a good idea because your inventory would protect you against any crash of any kind. Stockmarket, property market, war, UN sanctions, the lot. Nope, that guy has got brains for sure. Having an inventory of gold and silver at work is even better than having a stash at home because of course you can afford more. He is no dummy that's obvious.

author: c4757p
author_rank: Super Contributor
timestamp: August 15, 2015, 10:58:07 am
content: I don't buy the idea that gold "always keeps its value". Like anything, it has value because people want it. I don't trust people to keep wanting it, particularly if the proverbial shit hits the fan and they have better things to worry about than shiny crap.

author: TheElectricChicken
author_rank: Frequent Contributor
timestamp: August 15, 2015, 11:01:39 am
content: Quote from: c4757p on August 15, 2015, 10:58:07 amwhen in history has it been worthless enough so that people throw out chunks of it like it was steel today ?Now paper notes like those zimbabwe dollars if they are tattered and worn, what would they do with them ?

author: c4757p
author_rank: Super Contributor
timestamp: August 15, 2015, 11:23:25 am
content: Dunno, I'm not well versed enough in history to say without talking out of my ass. I doubt it's been universally valued everywhere, though. As for paper notes becoming tattered and worn... uh, you exchange them for new ones, just like we've always done.

author: Macbeth
author_rank: Super Contributor
timestamp: August 15, 2015, 11:34:45 am
content: I guess a form of fiat that can't be controlled or manipulated is needed. Perhaps a crypto currency? It will find its value in the free market. Of course governments and bankers won't let that happen - not without a back door so it can be used for taxation and bankster manipulation.Unfortunately all it takes is the trivial invention of a quantum computer and the encryption will be useless. That also applies to the current banking model too. I guess something tangible is needed, like gold perhaps.But yeah, there are only so many gold plated tellurium copper 4mm plug low noise shorting blocks that are needed in the world. So gold is mostly for looking shiny I guess.

author: Macbeth
author_rank: Super Contributor
timestamp: August 15, 2015, 11:36:21 am
content: Quote from: TheElectricChicken on August 15, 2015, 11:01:39 amThey are cheaper than toilet paper - you work it out

author: JackP
author_rank: Regular Contributor
timestamp: August 15, 2015, 11:43:28 am
content: I read something in a book saying that all of the gold we have accumulated as a race, if melted down and cast into a cube, would fit below the Eiffel Tower. Most things are expensive 'cause they're rare.

author: Jeroen3
author_rank: Super Contributor
timestamp: August 15, 2015, 01:54:06 pm
content: Any sane person would see the current economy system as flawed. Yet, because enough people keep the system running. It does not crash.When was the last time a country had a positive number below the line?

author: apis
author_rank: Super Contributor
timestamp: August 15, 2015, 08:23:08 pm
content: I'm still not sure where money come from these days but this guy had something to do with it:https://en.wikipedia.org/wiki/Nixon_Shock

author: lewis
author_rank: Frequent Contributor
timestamp: August 15, 2015, 09:32:38 pm
content: Money as Debt is a great video and explains the whole thing scarily well:

author: ez24
author_rank: Super Contributor
timestamp: August 16, 2015, 12:35:09 am
content: QuoteIf someone sends you this one you could retirehttp://www.ebay.com/itm/ZIMBABWE-100-TRILLION-DOLLAR-P91-2008-PMG67-UNC-WORLD-LARGEST-DENOMINATION-1000-/141571779455?hash=item20f655eb7fBut not if someone send you one of thesehttp://www.ebay.com/itm/Zimbabwe-100-Trillion-Dollar-Note-AA-2008-Series-w-Certificate-of-Authenticity-/161792600770?hash=item25ab972ac2The moral is - easier to sell @ $23 than @ $10,000,000 I guess this fits in some how into this post. ie where would the $9,999,977 go ?

author: nctnico
author_rank: Super Contributor
timestamp: August 16, 2015, 12:57:54 am
content: Quote from: MikeW on August 14, 2015, 08:43:14 amOr it can dissapear into thin air as well. Shares are a good example on how money is created from thin air and can dissapear into thin air as well.IMHO the primary source for money is doing some work and getting paid for it. Anything else is derived from that like getting a loan or investment based on the amount of work you'll likely do in the future which generates money.

author: IanB
author_rank: Super Contributor
timestamp: August 16, 2015, 01:26:28 am
content: This idea of money disappearing into thin air if shares drop in value is not correct.If you buy some shares for $1000 and those shares later drop in value by 50% you have not lost $500. Shares are not money. You actually gave away the whole $1000 in the first place when you bought the shares.When you purchased those shares you gave $1000 of your money to someone else. That is where your $1000 went. That $1000 worth of money still exists, entire and undiminished; it just happens to have left your hands and found a home with someone else. More fool you for giving it away instead of holding onto it. If you gave that money away in return for something of lesser value, that is your problem when exchanging money for a piece of paper, not a problem of the actual money dropping in value.Money only drops in value due to inflation, when indeed some of its value disappears. But the face value of the money itself doesn't vanish, its purchasing power just reduces.

author: Unknown
author_rank: Unknown
timestamp: August 16, 2015, 01:42:25 am
content: It's very telling how much interest this one post has. I have to go back and read all the posts but I've been buying AUD against USD for some time now. I also have Rubles bought at 66+ against USD and some British pounds and Yen. Don't know if people are aware but what China did in devaluing their currency 5% this week that was a big deal.The root cause of our problem I believe is oversupply and debt. When corporations farmed out all the work overseas they created a temporary windfall by the cheap manufacturing. But as jobs are lost everywhere else it's only short term. So they filled that pocket with debt. Now there's so much competition between China, Japan, Korea and Asia because they've built up supplies for the market which the demand doesn't exist.

author: TheElectricChicken
author_rank: Frequent Contributor
timestamp: August 16, 2015, 05:48:05 am
content: Quote from: IanB on August 16, 2015, 01:26:28 am

author: TerraHertz
author_rank: Super Contributor
timestamp: August 16, 2015, 07:16:17 am
content: Quote from: IanB on August 16, 2015, 01:26:28 amIt's true inflation devalues the purchasing power of existing currency (both physical cash and in accounts.)But it's incorrect that 'money doesn't vanish'. Virtually all money in existence in current national economies came into existence via creation from nothing when banks issued loans. Such fiat money vanishes in at least two circumstances:- When a loan is repaid. Where is it now? It simply vanishes.- When an entity with debts goes bankrupt. Typically they will have had debts to others, who were counting that money owed as an asset. Suddenly it isn't going to come home, and has to be written off. ie, it just vanishes.If all bank loans were repaid, there would be virtually no money left in existence. (In our current system.)On the other hand, allodial specie-based currencies (ones you hold in your hand, with no external agency being able to do anything about it, because that currency is intrinsically valuable - like silver and gold) do not have these problems.With fiat paper currencies a government can just issue a statement one day, saying that currency is no longer legal tender. Or, they can suddenly print some multiple of the existing currency base. In both cases all your notes are toilet paper. (Yes, historically this does happen.) If you are lucky, with a currency switcheroo there will be an interval during which the government will kindly offer to replace your 'non-currency' paper for new currency at some exchange rate (usually ruinous.) With hyperinflation, you are just plain out of luck. Unless you had the foresight to buy a warehouse full of actual toilet paper, that you can then barter for food or whatever.In contrast if you hold, for instance, gold or silver coins or bar, or even any other precious commodity, there is f*ck-all the government can do to ruin you. They can try to confiscate it, as governments often do. But it's your choice whether to comply or resist.Having a currency system which isn't dependent on the government not being c*nts, is a fundamental issue of individual freedom and right to possession of the fruits of your labor. This is why the US Constitution (RIP) specifies the currency must be silver and gold only, the government must issue such coins, and those are the only kind of money the government is authorized to issue. Ha ha, what a strange concept, when was the last time you heard of such a thing?Also, of course, with an actual gold or gold-backed currency, neither the government or banks would be able to create and inflate the money supply out of thin air. Preventing them from doing that that is a core requirement for an economy to be stable and prosperous in the long term. It also severely limits the financial and thus political power of the banking class, which is why we don't have that now.Two pics below. The first was an instrument of individual freedom. The second is an instrument of enslavement of nations. (Especially when dealt with in large boxes full of them, which is typical.)

author: eas
author_rank: Frequent Contributor
timestamp: August 16, 2015, 07:28:01 am
content: The idea that gold and silver (or bitcoins) are "real" money and currency like the modern US dollar, etc isn't? Utterly absurd. Sure, gold and silver do have practical uses, but so what? They became a medium of exchange thousands of years ago, and that has fueled a great deal of their valuation. Now, the price is propped up by people who believe that the doomsayers hawking gold are less crazy than the Fed.Here is the thing, money, it started as clay tablets with chicken scratches on it representing stored grain. You know what happens when you store grain? Mice and bugs eat it. Moreover, if you don't keep the roof up, the rain gets in and it rots or molds. To some extent, that extra cost is worthwhile, because the alternative, not having enough grain in lean years, famine, is worse. But at the end of the day, inflation has always been a fundamental property of money.

author: TerraHertz
author_rank: Super Contributor
timestamp: August 16, 2015, 09:23:32 am
content: Quote from: eas on August 16, 2015, 07:28:01 amIn general, your post demonstrates you've absorbed quite a bit of misinformation from various sources, regrettably.It wasn't and isn't 'historical practice' that gives precious metals their valuation. It's the other way round - their historical use as money was due to their having attributes that makes them ideal as a medium of exchange and a store of value:- They are in limited supply. No one can easily just make more of them. At any given time, mining capacity can only increase the total amount of the metals in refined form by a tiny fraction of a percent per year.- They are inert. Don't get eaten by mice, catch fire, rust, etc.- They can be made in standard sized pieces, to provide a uniform money system. (Unlike, say, diamonds. Which are a glut anyway, only price-maintained by a cartel.)The 'practical uses' are mostly irrelevant - the primary economic use is as a token of value. Though, not quite true of silver since it has many industrial uses that actually do consume a lot of the annual production.QuoteThis one phrase demonstrates you know virtually nothing about this topic. The present valuations of gold and silver are not 'propped up' by anyone, but rather are artificially and severely suppressed. The mechanism of price suppression is well known and proven - entities like the London Bullion Exchange issue paper tradeable certificates representing gold and silver. Trades of these certificates set the official bullion price, ie pricing has nothing at all to do with distributed transactions worldwide involving buying and selling bullion. If you'd ever bought or sold any, you'd know that the sale is conducted at that moment's 'spot price', plus or minus your dealer's fixed buy/sell margin. The spot price is set hour to hour by the London & NY paper bullion markets. It's proven these certificates have effectively no backing by actual metal, meaning they print and sell them in effectively unlimited quantities. It's estimated by bullion market experts that there are at least 100 to 140 times as many paper certificates for gold ounces, as there are physical ounces in the LBM vaults. The situation with silver is similar if not worse, since the historical value ratio between silver and gold is roughly a constant, but over the last decade or two has silver very much undervalued per that ratio. You can find endless information on the gold and silver spot price rigging mechanism. It survives because few who trade the certificates ever 'stand for delivery' of physical metal. To own the paper costs much less than to take delivery of the actual metal. However at some point this rigging mechanism is going to fail - just no one knows when.I think in those links I posted before, I forgot to includehttp://everist.org/archives/links/__Silver_links.txtOh and incidentally, the FED are anything but crazy. Bastards, but not crazy. Do please read Creature from Jekyll Island. It's free online. Or work through some of the links I posted.QuoteNow this is really confused. You're conflating official book keeping about taxes, tithes, warehouse records and such, with money. Nothing like the same thing. Also an analogy about losses of grain, and laying in supplies for future use, is not in any way applicable to understanding the nature of money. The purpose of money (and its tokens) is to avoid having to barter physical goods & services directly for each other. It's a convenience, and a very important one.QuoteThis too is flatly false. Inflation is a feature of all money systemsin which someone has the ability to create unlimited amounts of the token of exchange.It really doesn't occur in monetary systems where that is not the case. In fact the opposite - economies can expand by virtue of constructive work people do, increasing manufacturing and population, etc. But with a constrained money supply (eg because there's no more gold or silver available) the existing money has to spread more thinly - which is known as deflation. In which a given unit of money gains buying power over time.The need to avoid that 'horrible limitation' (from the govt and banker's point of view) was presented as the argument for abandoning the gold standard. Actually the reason was just so the banks and government could print and issue as much money as they wanted, to pursue goals which benefited no one but them. And is why a US dollar today has about the same buying power today as a cent or two of US money around 1900. (Same for other currencies that move in rough alignment.)Incidentally, you'll never really get an instinctive feel for how nice it is to own some gold and silver, till you hold some in your hand and realize... oh,thisis what real money is. Pic below is some I had at the time I retired. All gone since, and no I didn't make much profit. But profit wasn't the primary intention. If I had a couple of hundred thou today I'd immediately convert at least half to bullion. And NOT keep it in a bank safe deposit box (all such will be confiscated in any economic upset.)The bits of printed plastic/paper in my wallet are not real money. They are only accepted as a trading medium by convention, and because the government says they are. Convention and governments are fickle, while an ounce of silver or gold is never going to be anything but what it is. Rare, desired, and therefore useful as a token of exchange. Unlike those Zimbabwe 100 trillion notes. Same goes for any other fiat paper.Edited: numerous typos.

author: TheElectricChicken
author_rank: Frequent Contributor
timestamp: August 16, 2015, 10:01:27 am
content: For TerraHertzFurther to that, I would point out that Max Keiser ran a hilarious campaign to ruin JP Morgan's position in silver futures, basically JP Morgan was trying so hard to suppress the price of silver they'd sold contracts for like the next 6 years of planetary production. Max told everyone to go and buy a physical piece of silver, such as a coin. Max's campaign has doubled their exposure. The only way JP Morgan and the others can get out of the situation involves the price of silver rocketing UP, rewarding all those who take part. Max is hilarious.I once heard some australian radio, the radio guy was asking some caller why they'd want real gold rather than shares in a gold company and wasn't it just the same. It was hilarious how hard the ruling class is trying to mislead. Stocks are worthless instantly, but gold buried deep near a particular rock in the forest, so long as you remember where you buried it, is always going to be there, no stockmarket gymnastics can change it.

author: Gribo
author_rank: Frequent Contributor
timestamp: August 16, 2015, 12:00:27 pm
content: Economies based on hard currencies (Gold standard etc) are not immune to inflation/deflation, it is just harder for the central banks to manipulate (Bastards!) or mitigate these fluctuations.

author: TheElectricChicken
author_rank: Frequent Contributor
timestamp: August 16, 2015, 12:07:54 pm
content: Quote from: Gribo on August 16, 2015, 12:00:27 pmIt's true. Some places HAD gold and silver or even copper coins, those are all 'phased out' so that the bastards9 can use the banksters to devalue a country. If you still had copper pennies, you could sell them for the copper, but coins in most countries today are made of worthless alloys.

author: Macbeth
author_rank: Super Contributor
timestamp: August 16, 2015, 06:44:40 pm
content: Quote from: TheElectricChicken on August 16, 2015, 10:01:27 amUntil I turn up with my metal detector and find your stash. beep beep!Actually I remember reading on some forum (Minelab forum IIRC) a guy in Australia bought a whole pile of land for really cheap in the more remote part of NSW. He built his house there and spends a couple of weeks a year searching for gold. He stops when he has about enough to live comfortably on for the rest of the year and relaxes with his wife and kids and spends time on more important stuff. He has no need to be a wage slave and no great urgency to spend all his time searching for gold - as his reasoning is it's his gold anyway and perfectly safe in the ground where it is, he can go looking for some more of it next year.

author: madires
author_rank: Super Contributor
timestamp: August 16, 2015, 06:55:28 pm
content: For a serious answer: The Mystery of Banking, Murray N. Rothbardhttps://mises.org/library/mystery-banking

author: SeanB
author_rank: Super Contributor
timestamp: August 16, 2015, 06:56:23 pm
content: Quote from: Macbeth on August 16, 2015, 06:44:40 pmThat only works till the government wants the gold. They reserve all mineral rights to underground resources.

author: ccs46
author_rank: Regular Contributor
timestamp: August 16, 2015, 07:03:02 pm
content: I don't know about you guys but in the 24th Century we have no need for such frivolous thingshttps://youtu.be/_H5uPyU2oKE