This is where all the gold is money people are going wrong imo. There is currently a lack of demand for private debt, but ultimately it will win out over gold because debt still maintains a free lunch illusion that gold can never attain.

Absolutely correct in that the 20th century fiduciary currency phenomenon is unlikely to be ended for centuries. And the reason given tying with the ability of G to control monetary policy using fiat.

But I think you miss one practical factor in the theory, and that is that we are in a highly globalised, yet still multi-national world. From this, the foreign states states are ultimately what makes gold money again in this day and age. the fact that none can control the debt-based fiat of others, and are asked to receive such currency as payment. It is here that gold as a sound money will play a role as ballast in the international monetary system.

1. nobody is actually forcing the use of fiat, and even legal tender. I understand that you think because there are laws against alternative currencies etc. but the truth is that somehow the demand for debt currency is pretty high.

2. I know that it is not "really fixed". But it pretty much is inflexible. An appreciating medium of exchange does certainly threaten investment - because it will become a store of value. I am really convinced by this freegold stuff at the moment because the separation of monetary roles are very important. And I honestly think that gold as money will always result in a gold standard because that's just what history tells us.

3. Gold will not be money - nobody would spent it. It is a store of value.

Yes - but a currency collaps (e.g of the dollar) is very much possible, when the conditions are as mentioned.

@ clowntable: What you say is correct, but the thing you forget is that it is not the market - currency relation I describe - it is the relation of medium of exchange and store of value. More precisely: Demand and supply will appreciate Gold (imagine people everywhere buying $$ as an investment, productivity and the good/money supply relation plays no role here)- this is what happened in the middle ages in Europe with gold and it pretty much slowed the **** out of the continent.

come on. USD are used BECAUSE it is legal tender. it this wasn't the case no one would "demand" such a currency.

its sounds like you think people are choosing a debt based currency over an alternative. good joke.

You. Are. Wrong. "This note is legal tender for all debts public and private." Try, for example, compelling someone to pay a debt to you in anything but dollars in the United States. Even if the debt was contracted in something other than dollars, for example ounces of gold. Government courts have ruled that you cannot demand specific performance in such cases. Legal tender laws and taxation create the fundamental demand for fiat currencies, and in the absence of those, the demand would quickly collapse. At least among those who are not idiots.

Because of legal tender and tax laws.

That's a good thing. What you really mean by "flexible" is "the ability of the monetary authority to get something for nothing by printing money."

WAT. That doesn't threaten investment, IT IS REQUIRED FOR INVESTMENT TO OCCUR.

The "separation of monetary roles" bit is ridiculous. The medium of exchange is the medium of exchange precisely because it is a good store of value. As soon as you break that connection and the medium of exchange ceases to be a good store of value (which it never is under a fiat regime, because the monetary authority can never keep from printing with abandon), then demand for it falls, and it would cease to be the medium of exchange in the absence of legal mandates. That's why it is called fiat. Because it is compelled upon the populace by legislative fiat.

Possibly. That's a separate issue. I always told J.R. that as long as governments are around and forcing people to accept their toilet paper that the next international monetary system may be something freegold-like; although if there is no redeemability for specie it will collapse in pretty short order. Because in that case there is essentially no difference between that and what we have now.

You have to understand how ridiculous this is, right? Of course people will spend it. The question is, at what prices? Why store value if you are not eventually going to spend it? Why store your value in a form that cannot be spent. It's completely inane.

http://en.wikipedia.org/wiki/Liberty_Dollar

Gresham's Law for Pete's sake.

WTF

I knew that story and it is of course an atrocious reaction by the government and it really shows how weak the $ actually is.

Ah and Boro, why do you buy Gold, Land, Real Estate, if you do not want to spent it - it is INSANE!!

Also Fiat is loaned out for collateral - that is how it works - you cannot just shout: COUNTERFITTING and PRINTING in every discussion when really that is not what the discussion is about.

Also Price and Money correlate - what you say in your last paragraph pretty much shows that you also think in freegold terms - there is a price for gold - gold does not constitute the price.

I was bored, and haven't looked at bank closing in awhile so...

We only had 1 failed bank yesterday, things must be getting better right?

First Nat'l Bank of Florida had assets of $296.8M and deposits of $280.1. Nice healthy bank right? So why did it cost the FDIC $46.9M to close the bank? Thats a loss of ~20%! BUT WAIT! Thats the "estimated" costs for the FDIC, aka pretty number they made up. The FDIC entered into a loss-sharing agreement with the acquiring bank. Does anybody want to take the under @ $46.9M for the final "cost" of this failure?

Below is a Bloomberg article discussing a Greek default:

http://www.bloomberg.com/news/2011-0...ro-credit.html

What effect would a Greek default have on the price of PMs?

It's two sided. A weak currency that everyone wants to spend means nobody wants to work for it. Conversely, a strong currency means more people are willing to work for it.

Said another way: Would you rather work for gold or for fiat?

Personally I would prefere Gold, however the current fiat will be somewhat different from existing because even if it is still issued by the state, the currency has to be profitable and advantageuos to hold - if that is not happening most money will flow into gold - you may say well then Gold becomes money but the state will not let that happen since, as Borodog pointed out, taxing and monetary management will become very hard under a pure gold system. Where as on the other site in a non-central banking environment the interchanging demand for money will create a fiat that has many benefits for everyday use, including wages, for a large % of society - + there is still the tax/management issue.

That is only what I think- if you are a ACist however I can see how Gold is money, but since I do not think free-markets are beneficiary in Anarchism I do not think of that as an expected outcome.

1813 and 1800 for the low

1) Paying taxes
2) Court rulings on contracts in non-legal tender currencies or currency alternatives not being enforcable

It's quiet. Too quiet.

Don't jinx it. If Greece defaults tomorrow I'm blaming your post

Great now I have to watch TMNT. Thanks.

http://www.youtube.com/watch?v=_7P1z28mCwI

True story: I was almost in that movie.

trip report. did you get to at least meet Vanilla Ice?

Not a very interesting TR, I'm afraid. When I was 15 or 16 I registered with the employment security office (lol government etc) in Wilmington, NC where I grew up, which at the time had become sort of an east coast Hollywood, where a significant number of major motion pictures and television series were shot. The studios would apparently routinely hire up people from the ESO as extras and even for bit parts. I went down to the studio and interviewed, but never heard back, either from the studio or the ESO. I found out like 6 weeks later that the studio had informed the ESO that they had hired me, but ldo I was never informed. Thus ended my movie career.

Gold below 1800 now. History will say that this was the beginning of the end for the buggers. Looks like you guys will still have to work for a living. Oh the delicious irony, you all bought gold because you thought the government was out to give everyone a free lunch. But what fantasizes did you have playing in your head when you looked to hoard gold? A free lunch! Dreams of it going to 5k-8k an ounce then you could all quit your jobs and live the easy life. Get back to work slaves.

Even ignoring declining purchasing power, retiring after making a return of ~500% is probably not reasonable for most people.

edit: and everyone knows the buggers were defeated by Andrew Wiggin

So the economy is booming, the dollar is increasing in value, and the future looks bright for the U.S. and we're not going to get downgraded within the next few years? Also, from what I can tell, a fair amount of people were planning on hoarding it for several years. If this is sarcasm, though, you got me.