05TurboS2k

^^^ Does anyone know his home address???

SC RHINO

so who wants to rob BC's place with me? i know he likes to hide all his valuables with his candies.

AZDavid

In that case, gold would be used as a bartering medium. It could be exchanged for goods and services like dollars.

Penforhire

I used to buy and sell at numismatic (coin) shops. Might be other outlets. Those coins, along with American Eagles, are special because of their guaranteed purity. They are traded like bullion, only easier.

Gold was valuable since ancient times. I guess if you can't eat it you at least want it to look shiny forever. Gold doesn't tarnish (much). It remains attractive as an end-of-days valuable item. We're not even using so much of it in electronics these days because the price is so high. What else 'ya gonna trade, an AP1 flywheel?

You want artificially inflated value? Check out diamonds and how DeBeers forced that value up with the most clever marketing and supply control in history.

S2000Patrick

The idea is that gold is a finite substance in somewhat limited supply. So those that want to put all their money under the mattress, their money will eventually be worthless when the US government can just print up as much as they need, (inflation). Gold is just a little harder to come by. When everybody decides to buy gold, to hedge against inflation, the price will go up. Can't just make more gold and gold is not terribly easy to obtain from the ground, there is a lot of time, money and effort involved.

LostMotion

Gold has been used before in a very sophisticated economic setting which was the 17th-19th centuries and even into the 20th century. Gold is never or rarely exchanged between people because it's just too dangerous to transport gold and you can't break it into fine enough pieces. Basically each country would still have a currency, but it would be redeemable in gold and other countries would periodically settle imbalances by transferring large quantities of gold. People would continue to use paper money. Possession and use of gold would likely be made illegal anyway. For small transactions it would be possible to use some other metal such as silver or copper.

The good thing about gold is that it's somewhat self regulating in terms of supply. However many instances throughout history can be found where sudden increases in the supply of silver and gold have created inflation or decreases have cuased deflation. Even on a global scale, one large new mine can increase production quite a bit.

Bert05GPW

Has anyone here tried mining for gold as a hobby? Did you find anything besides rattlesnakes and scorpions?

LostMotion

Common misconception that the U.S. government has been aggressively printing money, what they are really doing is leveraging up the existing monetary base. The actual growth in currency from 1995 to 2007 was about 6% a year compared to gold at 1.5-.7%. However you receive interest on money -- which probably averaged 3% during that phase. At the end of those twelve years , taking into account compounding a person would have been out about 1% a year holding cash instead of gold. However you also have take into consideration storage costs for gold. You could argue the payment of interest point, but the reality is that's it's like PIK'd stock dividends and doesn't change wealth distribution at all. You could also make an argument that the supply of currency up 6% is driven by the globalization of the dollar which would be a justified reason for an increase potentially.

What you are probably looking at is money supply defined as M2 or M3 which included deposits and money market accounts, etc. This isn't money. In a gold based economy those same instruments could exist but they would be leveraged to gold instead of US Dollars. Remember that a money account holds for example a piece of commercial paper which says that company A will pay X dollars in 30 days. In a gold economy that same instrument would exist but it would say "pay X OZ gold in 30 days". Either way the piece of commercial paper is not money, it is debt yet it has money like characteristics so they have an extended money definition. However, what it really measures is leverage.

AZDavid

Government is already trying to give the FDIC $500 billion. They are keeping those printing presses running!

http://online.wsj.com/article/SB123630125365247061.html

S2000Patrick

Good post LostMotion.