<<um can you say argentina? asian financial crisis? BRITISH STERLING CRASH? >>

thanks for the links.

The link you provided talks about problems due to a shift in trade balances, not from running the printing presses (thus a gold based currency would not help).

Didn't the british sterling crash happen in the 1930's? Way before the peroid I'm talking about.

And the Asian Finincial Crisis was not an hyper inflation issue (to the best of my knowledge). It was an issue trillions of dollars of speculation money being pumped into the "asian tigers" since they were showing 30%+ growth for two decades and then when they started making bad economic decisions and their growth leveled out the trillions of dollars of invenstment fled to other markets. Again, not an issue that a gold based currency could help you with over a fiat based currency.

It occurs to me that we should probably start a new thread on gold as currency. But, I'll let you do that if you want, since you started this thread.

I certainly understand the conflict between wanting to respond while the ideas are fresh and wanting to wait until you've fleshed them out a bit more in your own mind. I'm doing the same thing here, though without the rum.

Something else we should clarify: Even back when we had a gold-based currency, back before the Federal Reserve system, banks still "created" money by making loans, accepting that loaned money into a new account, then loaning money from the new account. All gold did was limit the original batch of money, not the total available. I can't quite tell if you want to end that practice as well. Can you clarify?

"No, but that might be something worth investing my time in. I'll give it some thought and see if I can come up with a "Vlad's Wealth of Nations Theory". "

Yeah, I'm working on "Mark's Explanation of Everything" myself.

Regarding gold itself vs. gold-backed currency: You might be able to convince me that a gold-backed currency is a good idea. I doubt you'll be able to convince me that shipping gold coins around instead of tracking it in a computer is a good idea in today's world. The transaction costs of transferring money that way would enourmous. Any long distance commerce by regular people would die. Right now, I can order a book from a London publishing house and only pay to for them to ship the book to me. Using solid gold, not only would I have to pay for shipping both ways, but I'd have to pay an additional amount to have my gold guarded on the way to London. Can you imagine what would happen to mail, FedEx, and other drop-off boxes once criminals realized they were filled with untracable gold? The mail would have to be moved in armored cars. The Post Office would become the most heavily armed building in town, or it would have to be combined with the police station. Mailmen would have to be armed. In would, in fact, get quite silly very quickly.

I think I'm going to have to stick with the gold-backed currency idea. Actual gold isn't very practical, in my opinion, whatever the upside.

Regarding debt: I'm not sure how much of that is our current system and how much would occur in any system. I agree that easy access to credit combined with cultural and media-based pushes to acquire cause people to take on absurd levels of consumer debt. However, there are legitimate uses for credit and debt. Farming, for example, tends to be a credit-based enterprise. The farmer borrows at the beginning of the season to purchase seed and equipment, expecting to pay it back at the end of the season and keep the profit. This is legitimate, because there's no way for a beginning farmer to have already saved the necessary capital. Perhaps it is better, in some abstract sense, to force the would-be farmer to work for somebody else, saving for a few decades until he has enough to throw the dice for one season, but it seems better overall to let people borrow money and share the risk, because there is risk. If the crop fails, or some natural disaster strikes, the farmer now has some debt that needs to be paid off over a longer period. This sucks, but is also, I believe, the nature of the beast no matter what currency you use. And, with credit, and with a deep-pocketed loaner who knows that the farmer is still a good bet, the farmer doesn't have to lose everything. He can borrow for another season instead of starting over, spending another two decades accumulating capital. Now, too-easy access to credit may prompt the farmer to buy a shiny new piece of equipment that's not actually a good business decision, which is a problem with the current credit climate. Perhaps a gold standard and a tighter dollar would help that, perhaps it wouldn't.

"[quote]then I'm better off taking my gold out of the country and buying a car in, say, Japan. Now, as gold becomes more common in Japan, it's value will decrease until it's about par with the US. But, that's just Japan. Now I'm better off buying my car in Germany, or Italy, or Britain.[/quote]

Still happens today, look at the American auto makers, if another country can provide a service for less business flocks there. That is the crux of "globalization" (I'm still not convinced that is a good thing as a whole yet either) that anyone can provide any service or product at any price. The idea is all very libertarian and in concept honest but in practice (due to unequal regulation of the host nations) it may be just as unworkable as socialism or communism which are also both beautiful on paper but in reality SUCK. "

Yes, I can buy a car in any country I want to now. I can go with whomever has the best deal. But, my doing so does not move gold out of the US. At worst, it moves dollars out of the US. These dollars can, in theory (though not in practice) only purchase goods made in the US, so they'll come back eventually. But, if I buy that car in Japan for gold, there's no built-in counterbalance that would naturally lead the gold back to the US. My point wasn't about where cars are bought. It's about the fact that gold can get sucked out of the country for good a lot more easily than dollars can. Depends on the balance of trade and other considerations, of course.

"There is a huge difference between issuing money created from nothing and simply verifying or validating the weight and purity of a comodity. A government agency answerable to the public (as opposed to a private banking conglomerate such as the FED) could easily provide such validation as a service to the public on a relatively small part of the federal budget."

Yes, that's true. Validating is more a "weights and measures" sort of thing, not a banking thing.

One thing I'd like to clarify: When you say "Fed," do you mean the Federal Reserve System as a whole, the twelve Federal Reserve banks, the Open Market Committee, or what? Or do you lump all banks that are FRS members as being one thing?

"You also have to figure out the value of a dollar, after all that is what currency trading is all about. Nothing really changes there. One US$ = about 1/1500th an ounce of gold is probably close to accurate at this point and would of course change rappidly in the short term until things found their equaliberium. The value of items relative to their weight in gold would eventually sort themselves out just as they have for fiat currency. "

I think this is a distinction between a gold-backed currency and gold. If prices are in dollars, then I have to figure out how many dollars an ounce of gold is worth at that moment, even if the currency is backed by gold. If, however, the stereo is priced at 1 ounce of 22 caret gold, then no calculation is necessary. Are you talking about using weight of a particular purity of gold as your units of money?

Regarding the payment of interest: Let's assume for the moment that we have a gold coin-based system, and there was no loaning at interest. (I believe this is your ideal position.) What would you think is a fair amount to pay banks to store your gold? I presume you wouldn't want to store it in your house, or at least not your life savings. Having every house a fortress isn't very efficient. If banks can loan your money at interest, then they're not going to stay in business under their current model. Companies like Brinks (or whoever) would build defended storehouses that you could use for a fee, but how much? Would it be a flat rate or a percentage? What would be their liablity if the bank was cracked and your money taken? Do you still believe there should be an FDIC to protect your cash, or should that go away with the rest of the national banking apparatus?

I'll have to look at egold. I know that Muslims take the old prohibition against usery much more seriously than Christians. (At some point, Europeans weaseled the definition of "usery" from "interest" to "excessive interest.")

I had some other thoughts about interesting and banks, but they've escaped me.

[quote]The fact is that 1.2 billion people struggle to survive with less than 1 dollar per day. [/quote]

Historically they had less. So why is this such a problem if it is fixing itself over time?

[quote]About every reputable scientist agrees that we have made unprecented changes to our environment that has put irreversible climate change in motion.[/quote]

By reputable you mean that the environmentalist have ruined the reputation of anyone who didnt forward their agenda? Are we experiancing climate change? Maybe. Can we mere mortals do anything about it? Adapt and survive is about the best we can hope for, and only pure human arrogance suggests anything else.

[quote]but there is simply still a huge lack of political will to employ those technologies... (which, by the way, have been known to humanity for millenia)[/quote]

Meaning give in to the ludites and become amish? Get over that idea, it'll never fly. Honestly it wouldnt help anyway. You say "too late to turn this ship around" is just an admission of what I said earlier (We mere mortals cannot affect climate, the best we can do is adapt to it.) that still allows you to continue to push your political agenda.

[quote]Is that the trickle down effect? Well, we are still waiting to see it start happening... The fact is that almost everywhere the middle class is squeezed out of the game. I think it is also one of those myths we are led to believe... [/quote]

The poorest American enjoys health care, instantaneous communication, access to information, food quantities and cleaner/safer water supply than would have been available even to the the Emperors of Rome at it's height. Or certainly more than any colonist at Jamestown or PLymouth Rock. How about even the average civil war plantation owner? With the exception of clean water, which wasnt really a problem that late in the game, that very wealthy plantation owner would envy much of what even the poorist American takes for granted today. What would they have been willing to pay for Air Conditioning? VERY commonly available today in most public places.

[quote]Yet another one of those myths we are led to believe. The fact is that the current money system, with money created as a debt with interest, has set an automatic restribution mechanism into motion that takes the money from the poor and gives it to the rich. According to studies undertaken about 20 years ago or so, it's the bottom 90% that pays more interest than they receive, and only the top 10% who receives more than they pay. Today, with the gap between rich and poor growing, that figure is probably even more extreme. [/quote]

That is a result in a deficency in education and management. That the system is rigged shouldnt come as a surprise to anyone. There are plenty of people out there letting the world know. The problem isnt that the information isnt out there but rather that Americans are too busy worrying about who's getting voted off the island to educate themselves on our financial systems and how they work. The would rather sit fat and lazy and vote for rich men who tell them they are going to "tax the rich man" and provide them with some sort of government check to eliminate poverty. The only thing that will eliminate poverty is individual responsiblity and it is government programs that ruin the chances of that ever happening. The poor are poor because for generations they've made bad choices and havent bothered to learn how the world works and try to improve their lot in life. The wealthy learned how the system works and work it to their own benefit. Anyone can start and in a few generations join them though most wont. Most are lazy and willfully ignorant.