What's this guy Smokin'?

Sometimes I am amazed how status quo blowhards can get published and really good writing like midtowng, New Deal, Robert Oak can get overlooked.

Today was one of the status quo days as David Hirst asked the question What's blowing the golden bubble?. Following is this assinine statement:

Gold became an unsatisfactory medium of exchange as the world entered the modern age. Cash, banknotes and cheques were far superior to gold, especially when backed by gold.

It is in the US where the great gold debate is centred.

America is a gold-loving nation. Gold could well be added to the "three Gs" that kept the Republicans in power in recent times: God, gays and guns.

America is a gold loving nation? Is he serious? It is barely on the radar of Joe Sixpack. I will save you the agony of reading the entire article but some of my choice hilites are:

gold has been the best wealth protection scheme

principally there isn't much of it in the ground and the easy stuff was dug up by the Romans.

One can't eat the gold.

The Romans? Really? So the California Gold Rush that probably spawned the largest population movement the world ever had witnessed was of little consequence. How about the Klondike? Comstock? Nevada Silver Rush? Any of that ring a bell?

While David is busy getting a clue. The Financial Times is reporting once again that mints around the world are in short supply of product .... again.

The US Mint has sold 193,500 ounces of its popular American Eagle gold coin in the first seven weeks of this year, the same amount it shipped during the whole of 2007 and about the same as in the first six months of last year.

If you doubt that this isn't just an American gold rush...

The Rand Refinery in Johannesburg, which mints the world’s most popular gold coin, South Africa’s Krugerrand, said demand was above its maximum capacity, even after doubling last month to 20,000 ounces from 10,000 ounces a week.
[..]
Johan Botha, head of precious metals sales at the Rand Refinery, said there was demand for more from international investors, pointing to strong sales to Switzerland, the UK and Germany. “If we were able to produce 30,000 ounces,the market would absorb it,” he said.

If you recall this was being reported most of last year for Gold Eagles. However this was not confined to just gold but silver as well.

The world is sniffing hyperinflation and deflation is only a scare tactic that allows the governments of the world the cover to continue to chop down every tree in the forrest.

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god

That's some economic fiction to be sure....the 4 G's...uh huh.

It seems like in terms of financial analysis on hard metals, all reason goes out the window with some of the guys...

It's just a chunk of scarce metal people.

What would be interesting is to see, after all nations were off the gold standard, how well the price of gold correlates to the possibility of inflation as well as hyper inflation.

It is a sniff test? Really? Get some sanity into the gold bug post world.

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Central Banks

Like to talk it down.
Calling it a barbarous relic yet .... they still keep it on their books and list it as a capital asset.

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You didn't even post the best quotes

from that FT article.

“There is demand for double or triple what the US mint is able to produce,” said Michael Kramer, president of MTB in New York, one of the four US gold dealers authorised to purchase bullion coins directly from the government’s mint.

“The demand is extraordinary. All the coins we got on Monday are gone today [Tuesday] and we will not be able to take any order until the following week,” Mr Kramer said. “It is the same with other mints.”

The New Zealand Mint said it was doing as much business in a day as in a month a year ago, mostly servicing global investors.

Also, Julian Phillips has some news to share.

Russia has just announced that in January it bought 34 tonnes for its gold and foreign exchange reserves and intends to keep on buying gold for its reserves, thus activating its stated policy of increasing gold reserves to 10% of total gold and foreign exchange reserves. [We have received reports that this takes their purchases above 90 tonnes in the last three months]

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Return to Gold?

It's more likely that a basket of currencies or commodities (as a standard) would suffice as a peg for fiat money before a return to gold, silver, etc.

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Return to Direct Producer-Consumer Barter

I've been trying something rather novel in my own life- a return to direct producer-consumer barter. As in, I'll trade you full batteries of green energy from my home turbine for a share in your subscription farm.

I think that's the real future.

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Moral hazards would not exist in a system designed to eliminate fraud.

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Maximum jobs, not maximum profits.

Basket of Currencies?

There is a real problem with quality of currencies when they can be printed without any limit. Tying them together, by extension, doesn't make them any more stable.

That being said, no I don't see a return to a gold standard because banks like to lend without limit because of their insatiable greed, and governments like to spend money they don't have (how else can you wage endless wars).

Which leaves commodities ... what better commodity than precious metals?

It has always been about class warfare.

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Food & Energy

I find food and energy to be better commodities for trade than precious metals. For one thing, even if you can't find anybody to trade with, do it right and you'll consume the item yourself eventually. Secondly, we've got God-given resources that anybody on the planet can access to make more Food and Energy, you can't own your own printing press and while you can own your own gold mine, most people aren't able to.

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Moral hazards would not exist in a system designed to eliminate fraud.

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Maximum jobs, not maximum profits.

That works for trade.. not money

Don't get me wrong ... barter is great.
But just as our ancestors figured out long ago it has its limitations for use as money. Remember, money has its own laws that it needs to comply with in order to be useful.

•Unit of Account- a unit in which goods and services can be related to one another.
•Medium of Exchange- money facilitates the exchange of goods and services and makes the economy efficient.
•Store of Value- joeshwingdings personal favorite. Money needs to retain its value. Money saved and spent later will still buy the same amount of goods and services at a later date. Said another way, it will not depreciate.

While food and energy are necessities .... tying a currency to the whims of nature is not wise. Same as tying energy resource to food was about as dumb a thing I think our government has done in recent memory.

It has always been about class warfare.

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Only if you actually are rich enough

Only if you're actually rich enough to need a store of value. Myself, and most people in the United States if you apply governmental and trade debt on a per capita basis, are too poor to need money as a store of value; we can't even live on what we earn to begin with, so who has the extra money to save?

I'm all for the Kw/H as a standard international currency if we ever get globalism to actually work at all. It's a unit of account (E=MC^2 after all), so it's universally applicable. It's consumable, so even if you can't trade you can still use it. As a store of value it falls down currently though- but perhaps someday we'll have good enough, light enough, battery tech to use it that way as well.

Oh, and nature has no "whims", just laws that you can count on a heck of a lot more than you can count on the value of gold in trading or the made-up value of stocks and fiat currencies. I'd rather put my trust in physics than in economics.

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Moral hazards would not exist in a system designed to eliminate fraud.

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Maximum jobs, not maximum profits.

enough

Seebert, yesterday I warned, strongly on writing economic fiction. Trying to create options out of money, which we patiently explained why using batteries or power as a unit of monetary exchange is illogical...yet here is this nonsensical "idea" being brought up again as some sort of valid concept. Things like a real time open market, such as the stock market should magically be turned into a private venture capital system....which is defeating the entire concept of market economies and what the stock market actually is.

These comments are not in economic reality. Either is trying to compare a 10 year old census to current unemployment rates as we also patiently noted.

Either start getting an education and learn from others but writing these continual posts that are nonsensical is simply not ok.

I've warned and warned and warned you and I'm getting really tired of chasing this down. Do you understand?

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I do fail to understand

Where this is getting us.

If you aren't allowed to be a populist and create an economic system based on POPULISM, then what's the point?

What has a real time open market gotten us other than an open market for fraud, as you've pointed out time and time again?

What has foreign trade gotten us, other than a load of debt we'll never be able to repay, as other articles here have shown time and time again?

What has a fiat currency gotten us, other than an opening for a true communist military spy to promote a fake model?

If we're not willing to expand the idea of what is economics into something that works for the entire population instead of just a small percentage, what exactly is the point?

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Moral hazards would not exist in a system designed to eliminate fraud.

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Maximum jobs, not maximum profits.

Populism is not Fantasy

Populism is simply not posting ill conceived ideas, incorrect concepts and inaccurate data. You are posting nonsense as many of us have pointed out for months. That has nothing to do with Populism or getting economic and related policy that creates a strong middle class or U.S. economy.

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I realized that

Responding to a different account, that what I saw as populism is a completely different set of values than can possibly be supported by a free and open market.

I see no way to create a strong middle class or a strong US economy at this point without radical change to the way markets work.

I will take into account what others have written, and I will be reading, but this will be my last post, as it is now clear to me that the class warfare has progressed to a point where I can no longer give my assent to the violence being done in the name of "it's just business", or the fraud being perpetuated in the name of corporate finance.

Good luck with the fantasy of returning to a gold standard or anything else related to a government of, by, and for the people when the people can't even control production of their own money.
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Moral hazards would not exist in a system designed to eliminate fraud.

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Maximum jobs, not maximum profits.

but why violence, my friend?

seebert, surely there has to be another way than violence? Killing one, just brings on retaliation, that is how wars start. Surely, as one intellectual to another, we can come to a more civilized way of achieving reform? No? I like you, seebert, sure we don't see eye to eye, but it saddens me when we have to go for an eye for an eye.

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seebert ...hate to see you go.

Recoinsider ..... I enjoy reading your posts and appreciate all points views and NEW ideas. There is no problem with new thought processes and spirited debate .... its a way of finding out if something is viable or not. If only Congress would engage in more debate and less bickering.

You are correct.... the current system is broken and new ideas can come from anywhere. I promote thinking outside the box.

At the same time I understand Robert runs the show so I cannot speak to past events.

It has always been about class warfare.

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Actually Robert, I hate to say it, seebert ain't talking fiction

But what seebert is proposing is not exactly economic fiction, if what I think he's proposing is what I'm thinking. If I am correct, he's proposing something akin to the old Technocracy movement from yesteryear.

The technocratic philosophy assumed that energy was the critical factor determining economic and social development. The Technocrats measured social change in physical terms: the average number of kilocalories used per capita per day. Money would be replaced by energy certificates, the total supply of which would be determined by the total amount of energy used in the production of goods and services

The above is taken from the wikipedia link I provided.  The Technocratic ideal is interesting (especially in Science Fiction), but I think in the end unworkable.  You really end up replacing one set of economists with another.  Also human behavior is not really taken into account.

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is SF

he is not saying energy units (well consistently) but batteries, which have an exponential decay factor, i.e. more like an option.

So it's almost a misinterpretation of a pretty funky original idea.

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Technocracy then?

Isn't what you're proposing what the old technocracy movement in the 20s and 30s was all about? Replace currency units with units of energy? Incidentally, that is what Gene Rodenberry based Star Trek's Federation's economy on. Then again, basing an economy on a work of fiction sounds kinda wacky too.

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