Gold

#101
#101
BigPapaVol said:
would halt inflation? interesting theory, given that fixed amount would be chasing more goods for more people. Maybe you're onto something I don't understand.
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I don't get what you're really asking? If you're asking how we would deal with a growing population without growing the currency?...

That is not a worry of mine. As productivity grows, and the population grows the money supply that exists improves its purchasing power. Kinda like the quarter from 1943. You don't have to make more quarters because the quarter buys twice as much as it used to.
 
#102
#102
n_huffhines said:
I don't get what you're really asking? If you're asking how we would deal with a growing population without growing the currency?...

That is not a worry of mine. As productivity grows, and the population grows the money supply that exists improves its purchasing power. Kinda like the quarter from 1943. You don't have to make more quarters because the quarter buys twice as much as it used to.
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what?

Wealth essentially can't be created. Every wealth creation is a zero sum affair, with a loser on the otherside. The 1943 quarter can't deal with that.
 
#103
#103
I disagree. Wealth is created through the invention/production and exchange of goods, services, and ideas. The money supply has little do with it.
 
#104
#104
You have 4 TVs. I don't have any. I have 3 Telephones. You don't have any. We trade a TV for a Telephone. Money never came into the picture and we are both wealthier.
 
#105
#105
n_huffhines said:
I disagree. Wealth is created through the invention/production and exchange of goods, services, and ideas. The money supply has little do with it.
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whatever the currency is has everything to do with it. The gross supply dictates the gross value available. Across a spectrum of goods, some have to take on lesser relative value and the implications of that are brutal. In the example of floating M, the entire Pie can get larger to reflect disruptive style technologies.
 
#106
#106
BigPapaVol said:
whatever the currency is has everything to do with it. The gross supply dictates the gross value available. Across a spectrum of goods, some have to take on lesser relative value and the implications of that are brutal. In the example of floating M, the entire Pie can get larger to reflect disruptive style technologies.
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I don't understand. Today we inflate the economy. Prices adjust accordingly. That is why gasoline doesn't cost $.25/gallon anymore. What would be so horrible about prices moving in the opposite direction? Value isn't determined by some arbitrary price, it's determined by a good's relative value compared against other goods. When you buy a Toyota, you are demonstrating that you value the Toyota more than the money you spent. But what does the money represent? It represents the Nissan you would have bought had you not chosen the Toyota.

I feel like maybe we are talking past each other. I don't understand why you brought in disruptive technology. Can you elaborate?
 
#107
#107
Disruptive technology changes how we value things in the world, but doesn't dampen demand for fuel, so why should the guy with the fuel lose out?

Once you've defined the total value of all goods and services, anything new is fighting to steal from someone or something else to scrape out its value in the world. Artificially dictating relative values and shrinking the pie makes no sense.
 
#108
#108
What happens if one day enough people realize that gold has very low commercial value, and that the only reason it is valued at such a steep price is that, previously, enough people agreed that it was worth that?
 
#109
#109
lawgator1 said:
What happens if one day enough people realize that gold has very low commercial value, and that the only reason it is valued at such a steep price is that, previously, enough people agreed that it was worth that?
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the same thing that happens to any commodity out of demand. Is that hard for you?
 
#110
#110
BigPapaVol said:
the same thing that happens to any commodity out of demand. Is that hard for you?
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No. Just musing about the massive fortunes that will be lost in the blink of an eye should folks one day acknowledge the lack of clothing on the Emperor.
 
#111
#111
BigPapaVol said:
Disruptive technology changes how we value things in the world, but doesn't dampen demand for fuel, so why should the guy with the fuel lose out?

Once you've defined the total value of all goods and services, anything new is fighting to steal from someone or something else to scrape out its value in the world. Artificially dictating relative values and shrinking the pie makes no sense.
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K, I did understand you. I just disagree. I don't think a fixed money supply is artificial. I think printing money is artificial. The fuel guy might make less in # of dollars, but his dollars buy more, so he is wealthier. I don't agree that the pie shrinks.
 
#114
#114
n_huffhines said:
K, I did understand you. I just disagree. I don't think a fixed money supply is artificial. I think printing money is artificial. The fuel guy might make less in # of dollars, but his dollars buy more, so he is wealthier. I don't agree that the pie shrinks.
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how do dollars buy more when the range of products continues to increase? Fixing the pie simply makes the relative valuation matrix larger, to the point of unmanageable. Add in the increasing population and you've got a spiral of death waiting to happen. Product development and risk capital would curtail dramatically.
 
#115
#115
NEOCON said:
Gold is not goin away. It will always be a hedge.
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I'm not a fan of "always" and "never" but I'm pretty confident that humans will always need some agreed upon metric of value. It may not always be gold but it's hard to imagine the world will wake up one day and simply decide gold is worthless and move on to the next thing. IOW, the emporer has no clothes/massive loss of value scenario is about as likely as me getting hit by a meteorite
 
#116
#116
n_huffhines said:
That is not a worry of mine. As productivity grows, and the population grows the money supply that exists improves its purchasing power. Kinda like the quarter from 1943. You don't have to make more quarters because the quarter buys twice as much as it used to.
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Where do you get the money for loans? Say 500,000 new houses are built. You're saying the existing houses must become less valuable to balance out the equation.
 
#117
#117
volinbham said:
I'm not a fan of "always" and "never" but I'm pretty confident that humans will always need some agreed upon metric of value. It may not always be gold but it's hard to imagine the world will wake up one day and simply decide gold is worthless and move on to the next thing. IOW, the emporer has no clothes/massive loss of value scenario is about as likely as me getting hit by a meteorite
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I would imagine that, the more gold a person owns right now, the more likely they are right now to support the artificial construct that it will "always" be a hedge against inflation.
 
#118
#118
lawgator1 said:
I would imagine that, the more gold a person owns right now, the more likely they are right now to support the artificial construct that it will "always" be a hedge against inflation.
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I own zero and believe that gold as an inflation hedge and metric of value isn't going anywhere in my lifetime.
 
#120
#120
Velo Vol said:
Where do you get the money for loans? Say 500,000 new houses are built. You're saying the existing houses must become less valuable to balance out the equation.
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Not value, but prices would fall. We have a very inflated housing market, so the prices are artificial. Easy credit will become less available, but won't be as necessary.

Moving away from the boom and bust of the housing market that we're used to would cause some growing pains, but would those growing pains be any worse than what we've suffered under the boom and bust? At least in the long run we'd be better off moving to natural prices, and have a more stable economy. There would be less 6,000 sq ft homes, but there would be less foreclosure. Creating a government system that enables/encourages people to live outside their means is not wise, IMO.
 
#122
#122
n_huffhines said:
Creating a government system that enables/encourages people to live outside their means is not wise, IMO.
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It's true that excessive debt/money creation has generated a lot of problems, as we're experiencing now.

But your solution wouldn't work unless we had a 0% population growth society that was content with a 0% economic growth rate.
 
#124
#124
Velo Vol said:
Sure, the President of the United States single-handedly controls the value of the U.S. Dollar.

Welcome to Simplisticville.
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When investors think government monetary policy is going to greatly lessen the value of various markets, including currency value, many of them pull out and invest their capital in something they think will maintain it's value, gold is one of those.

The only thing Obama's stimulus plan has stimulated is inflation.

If that is too simlistic for you, then explain why the value of gold has steadily been climbing.

I'm all ears.
 
#125
#125
TennxxVol said:
If that is too simlistic for you, then explain why the value of gold has steadily been climbing.
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1) People buy into irrational premise that gold has magical powers to resist inflation. This irrational premise is made temporarily rational only because enough people have bought into it so far that it continues of its own momentum.

2) People who make money off of transactions involving gold have perpetuated the myth of these magical properties.


Next up: How unicorns cure cancer.
 
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