Subject:
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Re: A hypothetical economics question...
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Newsgroups:
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lugnet.off-topic.debate
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Date:
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Fri, 1 Mar 2002 22:51:51 GMT
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Viewed:
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398 times
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In lugnet.off-topic.debate, Richard Marchetti writes:
> In lugnet.off-topic.debate, Pedro Silva writes:
> > Then immagine the rest of the world decides they don't need Gold, or that
> > Gold has a lesser value to them than to the American Government - then what?
> > Besides, I think every issued banknote must have a correspondent amount of
> > "metal" in the Federal Reserve. At least I hope so!
>
> I hate to be overly harsh -- but you have no idea what you are talking about.
No harm done! I wrote "I think" and "I hope" for a reason! :-)
> The corresponding amount of paper money to precious metals is by definition
> in U.S. federal law supposed to be .999 fine 1 oz. silver for a dollar (it is
> essentially the definition of a U.S. dollar, despite the existence of Federal
> Reserve Notes), and 1 oz. gold for twenty dollars. But there is no real
> corresponding relationship because the U.S. went off the gold standard in
> 1934 and off the silver standard in 1963 (years are approx., if not precise
> -- I am going from memory here). The Federal Reserve Notes used in the U.S.
> have very little to do with what one might traditionally associate with U.S.
> dollars. Federal Reserve Notes are not U.S. Dollars, and if they were it
> would say so right on the face of the instrument. Instead, Federal Reserve
> Notes are a kind of money borrowed by congress from a private banking entity,
> this is supposedly done under the Constitutional clause to borrow money while
> ignoring the Constitutional dictate that only gold and silver be minted by
> the U.S. govt. The U.S.' national debt represents in part the monies borrowed
> from the Federal Reserve in the manner described.
Ah, ok. My mistake then.
In my place money is understood to have correspondance with central bank
reserves (USD + Gold). Now it may have changed, with the new "Strong
Central" in Frankfurt... At least the old PTE notes used to say "Worth
xxxx$00 gold", indicating the relation.
But we do (did?) have National Debt bonds. State issues (issued?) them when
needing extra $$. They weren't currency, though.
> [Note: If any of this is incorrect, I certainly would like to be corrected
> by someone more knowledgable than myself. Not a joke. Everything here is
> my best understanding of the situation based on many years of study of U.S.
> federal law, case law, political essays, and historical documents. Not the
> easiest way to figure things out.]
Actually, you interested me in the subject either. I'd like to know more too!
> Gold and silver, different from things like diamonds, are elements that are
> in a strictly finite supply. You can find gold and silver but you cannot
> create them. This makes gold and silver excellent choices for monetary units
> because you cannot devalue them as you can paper money by simply printing
> more. Get it?
Yup. I know that. So is Platinum, Palladium, and other rare elements (come
to think of it, it would be funny to have part of our money reserve in the
form of Kripton gas... ;-)
However, that does not mean I need the gold. I don't eat it, and my trust in
it as an intermediary currency unit can be shifted to another one of the
"rare and uncreatable" elements. Gold and Silver are traditional, but are
hardly unique choices - so this means the rule expressed in the constitution
may be "updated" to include a wider variety of relation choices for the buck.
> Believing in the value of paper money is exactly like believing in god -- it
> is a matter of faith. In the U.S., under the Articles of Confederation
> (before the U.S. Constitution was adopted), people were wallpapering their
> walls with the monetary notes, paper money, issued under the Articles as a
> kind of political comment on their value.
Alright, it IS a question of faith (we have Germany in the 1920's to
remember us). But it is also a practical issue: why have a wallet heavy with
gold when you can have paper instead, representing that same value? Another
issue, often overlooked (probably obsolete anyway...), is to pevent Gold
theft: in the old days, when coins were minted individually, people would
file the coin to get some Gold powder (honest!), causing devaluation of the
currency.
> > Do you want to pay more to live better earlier? As simple as that: extra
> > money buys extra time to enjoy possession.
>
> You are placing a lot of faith in what is a monetary shell game. You really
> have no idea what paper money is actually worth, nor does anyone else.
> Intrinsically, paper money has no value beyond its value as paper and ink.
So has Metal (unless it can be used for industrial purposes; but then again,
papermoney can be used as wallpaper - I loved the example! :-)
> The value imputed to paper money is whatever we all agree it is, and closely
> related to the control the Federal Reserve has over the supply of these notes.
Well, that is true. Also for Metal, though.
> I very much doubt that things are substantially different in Brazil, but feel
> free to educate me if it is otherwise. There is probably some paper means of
> exchange and y'all think it has some value because that is what some national
> bank, or whatever, tells you is true. That doesn't make it true though.
I'm from Portugal. "Brazilians are Portuguese on the loose!", or so said a
poet. ;-)
As for Portuguese situation, it is now the same as the rest of the EU. As
for Brazilian situation, hmmm... they changed the currency unit some time
ago (quite successfully), because noone had confidence in the prvious
currency. I have no reasons to doubt the ability of Brazil to convert paper
money in Gold or whatever (USD, silver, diamonds...), if they don't have it
on the vaults all they have to do is search for it in their vastly
unexplored Hinterland.
> And what exactly do you mean by "extra money" -- you will pay for it more than
> twice over, and don't forget that by the time you are done paying for it some
> of the value of the home is lost through aging, not to mention money expended
> in terms of upkeep (plumbing, electrical, roofing, painting, etc.). But I
> think these details stretch the argument to a point of absurdity, much as
> you did by mentioning other details. The broad strokes of the issue are
> enough to understand the dilemma in my view.
I perceive your point - both of us can argue with increasingly small things,
up to a point where they are residually interesting.
Personally, I would not mind paying a bit more to be enjoying the house
while it wasn't yet fully paid. But that is an option I might have to
calculate in more precise terms in order to get the full picture - meaning
"theory doesn't make reality".
> Debt is slavery. Great profit is to be made if you qualify to become a bank.
> If it were otherwise, the banks would not be so VERY KEEN to loan everyone
> money and give them credit cards. The only thing that annoys them is
> bankruptcy laws (forgiveness of debt), and they regularly lobby for stricter
> regulation for private bankruptcy. Corporate bankruptcy is a different matter
> though, vexed as it is with their own need to maintain protection from
> liabilities incurred as "fictitious persons."
True, up to a point: debt is dependance, not necessarily slavery! I must pay
the bank, but I have a certain margin on how to do so (negotiable BEFORE the
loan). OVERDEBT is slavery, that I agree.
Pedro
(Where on Earth did you get the idea I'm Brazilian??? :-D)
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Message has 1 Reply:
 | | Re: A hypothetical economics question...
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| I think you have been making some oblique references to the Euro. As far as I am able to discover, there was some talk about two years ago in regards to linking the Euro with gold in some ratio -- but I am unable to find anything recent that asserts (...) (22 years ago, 4-Mar-02, to lugnet.off-topic.debate)
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Message is in Reply To:
| | Re: A hypothetical economics question...
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| (...) I hate to be overly harsh -- but you have no idea what you are talking about. The corresponding amount of paper money to precious metals is by definition in U.S. federal law supposed to be .999 fine 1 oz. silver for a dollar (it is essentially (...) (22 years ago, 1-Mar-02, to lugnet.off-topic.debate)
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