What the hell is this guy smiling about?

Discussion in 'SF Lounge' started by Stamps Rule, May 5, 2012.

  1. Stamps Rule

    Stamps Rule Member

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  2. Tundra Mustang

    Tundra Mustang Moderator
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  3. Stamps Rule

    Stamps Rule Member

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    Inflation is always going to be there no matter what we do; I don't think it would be nearly as severe if we actually had a gold policy standard.

    Now, I know we are not going back to a gold standard, nor am I advocating for such a thing; but this "we're just going to print money and devalue everyone's savings because we feel like it" is a little out of hand and about to get much worse.
     
  4. iso_55

    iso_55 Member

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    Somebody enlighten me how is having a gold standard advantageous?
     
  5. Mathgod

    Mathgod Member

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    Inflation is a hidden tax.

    An item costs $5 now. Next year it costs $5.25. I just got hit with a 5% tax ON TOP of the astronomical taxes I already pay.

    Inflation hits the lower-middle class harder than anyone. The cost of living bar keeps going up and up and UP. :mad:
     
  6. Rids

    Rids Member

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  7. iso_55

    iso_55 Member

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    I haven't had a raise since 2010 it looks like my employer won't be giving us one until the fall of 2013...
     
  8. Mathgod

    Mathgod Member

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    Yep, the working class treated like garbage. Always harder and harder to make a living. And they wonder why the economy is failing...
     
  9. iso_55

    iso_55 Member

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    Appreciate it if someone would explain the gold standard to me..
     
  10. Newton

    Newton Member

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    It used to be that money bank notes represented a certain amount of actual gold in the nations treasury. You couldn't just print more money because it had to be backed by gold( fort knox )

    Without the gold standard you can print more money based on what others are willing to buy or trade it for. This is ok for strong and growing economy there is only so much gold in existence, but the western economy has the capacity to be much bigger than the amount of gold per capita it is capable of retaining.

    Now it limits inflation but it doesn't protect against hardship...the great depression happened on the gold standard...but under the gold standard savers are winners, holding onto your money is always "safe" ... a collapsing Economy non gold standard countries end up with worthless paper money. ( pre ww2 Germany) savers in Germany during the depression lost ...wheel barrels of cash worth nothing.



    Where as nations not on the gold standard are subject to inflationary pressures. Most people don't notice because we still refer to dollars like they are constant and say "gold is up" ... But the amount of gold in the world is pretty consistent it's really like saying dollars are down at least the way I manage money I think of it that way.

    Can and the US went off the gold standard in the 70s - remember those RCMP quarters with the mounted cop on them...I think it was that year.

    I don't see either standard as morally or fiscally superior, it just rewards different strategies...people who save up cash or earn a fixed income for sure find it tougher in inflationary periods...people holding debt certainly benefit from inflation and holding assets outside of cash does well. The problem is that most people don't understand that the rules of the game changed in the 70's
     
  11. iso_55

    iso_55 Member

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    Thanks, Newt. Now, the question I have is this. If every country's money, but for the sake of convenience just say Canada, the US, NZ & Australia as well as the Euro countries had their currency all tied to gold. If gold lost say, 35% of its value in a single year, would that touch off a financial crisis because countries dollar amounts were tied to the value of gold their currency was linked to? Would a country's reserve $$ amount also fall 35%? Commodity prices like gold go up & down, so pegging the dollar to gold would be risky, wouldn't it?
     
  12. Rids

    Rids Member

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    The quarter horses were 1973. Got a pile of them!
     
  13. Newton

    Newton Member

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    Gold doesn't really go up and down - the amount of new gold in the world is approx the equivalent of gold that is lost so the amount of gold in the world is pretty much a fixed point with a fixed value.

    In my opinion - its only an illusion to say that gold is going up or down because you commenting on the value of gold relative to dollars.

    So in your example if gold "went down" 35% that's a lot like saying the commodity being traded for it (dollars) has gone up 35%. ...that is why there was a gold standard in the first place, because the value of gold is pretty universal. It's not really like oil or other commodities. They being the money managers and media always report value as if the dollar is the fixed point and the cost of all other goods in relation to it. I think that works for most things and it is accurate about gold, but it causes people to mispercieve how the money system works.

    The danger being off the gold standard is when people stop having faith in the value of the dollar...when that happens it reverts to being worth what is is (paper) ...like the pre WWII German mark.
     
  14. iso_55

    iso_55 Member

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    When 50,000 Deutschmarks bought a single loaf of bread.
     

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