Value of the dollar based upon voodoo and superstition, page 1
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ATS Members have flagged this thread 4 times
Topic started on 28-1-2010 @ 12:41 PM by In nothing we trust
It's not supported by gold.


In early 1933, in order to fight severe deflation Congress and President Roosevelt implemented a series of Acts of Congress and Executive Orders which suspended the gold standard except for foreign exchange, revoked gold as universal legal tender for debts, and banned private ownership of significant amounts of gold coin. These acts included Executive Order 6073, the Emergency Banking Act, Executive Order 6102, Executive Order 6111, the Agricultural Adjustment Act, 1933 Banking Act, House Joint Resolution 192, and later the Gold Reserve Act. These actions were upheld by the US Supreme Court in the "Gold Clause Cases" in 1935.


In the early 1970s, inflation caused by rising prices for imported commodities, especially oil, and spending on the Vietnam War, which was not counteracted by cuts in other government expenditures, combined with a trade deficit to create a situation in which the dollar was worth less than the gold used to back it.

In 1971, President Richard Nixon unilaterally ordered the cancellation of the direct convertibility of the United States dollar to gold. This act was known as the Nixon Shock.
In 1972, the United States reset the value to 38 dollars per troy ounce (122.17 ¢/g) of gold. Because other currencies were valued in terms of the U.S. dollar, this failed to resolve the disequilibrium between the U.S. dollar and other currencies. In 1975 the United States began to float the dollar with respect to both gold and other currencies. With this the United States was, for the first time, on a fully fiat currency.

en.wikipedia.org...



It's not supported by oil.



Shortly after the gold price started its ascent in the early 1970s, the price of other commodities such as oil also began to rise. While commodity prices became more volatile, the average exchange rate between oil and gold remained much the same in the 1990s as it had been in the 1960s, 1970s and 1980s.

Fearing the emergence of a specie gold-based economy separate from central banking, and with the corresponding threat of the collapse of the U.S. dollar, the U.S. government approved several changes to the trading on the COMEX. These changes resulted in a steep decline in the traded value of precious metals from the early 1980s onward.

In September 1987 under the Reagan administration the U.S. Secretary of the Treasury James Baker made a proposal through the IMF to use a commodity basket (which included gold) as a reference point to manage national currencies. However, the stock market Crash of October 1987 followed by the Iran-Contra scandal distracted the administration from such plans, and political momentum was lost.

en.wikipedia.org...



Is it supported by the people?



The history of the dollar in North America pre-dates US independence. Even before the Declaration of Independence, the Continental Congress had authorized the issuance of dollar denominated coins and currency, since the term 'dollar' was in common usage referring to Spanish colonial eight-real coin or Spanish dollar.

en.wikipedia.org...



The Spanish dollar (also known as the piece of eight, the real de a ocho or the eight-real coin) is a silver coin, worth eight reales, that was minted in the Spanish Empire after a Spanish currency reform in 1497. It was legal tender in the United States until an Act of the United States Congress discontinued the practice in 1857.

en.wikipedia.org...


[edit on 28-1-2010 by In nothing we trust]


reply posted on 28-1-2010 @ 01:05 PM by OnceReturned
The value of gold is based on the same thing: the idea that people believe it is valuable. Gold is useless. It's okay for the dollar to have the value that it does because people believe in it enough for them to trade goods and services in exchange for it. Ultimately all currencies' value is determined exclusively by the beliefs of the people who use it. If people believe it is valuable, then it is - by definition - valuable to them. It doesn't have to have some "objective" value, I don't know what that would even mean.

Currency is in stead of directly bartering for goods and services. That means that it is not the same as a good or service, which in turn means that the currency itself will not have any innate value. We imbue it with value, and as long as we agree - or at least as long as enough people agree - then the currency is useful, its value is legitimate, and it doesn't have to be backed by anything more tangible than a shared belief. The same is true of gold, it's only valuable because people believe it is.

Edit, to add: So, I suppose the title of your thread is correct, it is based on voodoo and superstition. But it's a very strong voodoo and superstition, and its no less legitimate than any other belief. And as long as enough people subscribe to the same voodoo and superstition the dollar can provide the basis for a highly functional system, which is all that it is intended to do. All laws, ethics, and religions are based on voodoo and superstition too(in the sense that there is nothing objective in reality on which we base these things - they are all beliefs), so combine that with the nature of currency and it turns out that pretty much all of society is based on voodoo and superstition. I don't think that realizing that diminishes it though.


[edit on 28-1-2010 by OnceReturned]


reply posted on 28-1-2010 @ 01:14 PM by projectvxn
reply to post by OnceReturned



Gold is most certainly NOT useless. The processor that allows you to post to ATS has gold in it. Without it your CPU wouldn't work. The visors on space helmets use very thin gold sheets to block out the unfiltered sunlight in space. Gold has thousands of uses, all of which impact the way we live. I recommend doing a little more research before you make such claims.



reply posted on 28-1-2010 @ 01:25 PM by OnceReturned
reply to post by projectvxn



The context of the thread is very clearly gold as currency, things like gold coins and gold bars. Those things aren't useful.

What you're saying is entirely missing the point. By that reasoning, dollars are useful as toilet paper. What this thread is addressing is the value and use of these things as currency.

The value of gold is not determined by its utility in computers and visors, its value is determined relative to other currencies in the same way as dollars - and in the same arbitrary belief based way. And like gold, the value of dollars is not determined by its actual utility - in its case as toilet paper or whatever else you can imagine.


reply posted on 28-1-2010 @ 02:53 PM by Rockpuck
reply to post by OnceReturned



excellent post.

In shorter sense:

GOLD IS A FIAT CURRENCY.

Fiat = "Ordered Value" .. All forms currency have an ordered value, all currencies are Fiat..

Gold lovers need to find a new word to call the USD, preferably something that makes linguistic sense.


reply posted on 28-1-2010 @ 04:57 PM by projectvxn
reply to post by OnceReturned



I'm aware of the context. And while gold may be PRICED in dollars it is not equivalent to dollars in terms of how one derives it's worth and value to humanity.

It isn't a fiat currency as some have suggested. It has ALWAYS been worth something to humanity for it's usefulness and versatility. That value later carried on to trade, and eventually to being the baseline for currency.


[edit on 28-1-2010 by projectvxn]


reply posted on 29-1-2010 @ 12:33 AM by OnceReturned
reply to post by In nothing we trust



I believe that it is accurately valued. If what you're getting at is the idea that it is secretly worthless, and that that secret may someday soon become known - thereby making the dollar worthless in actuality - I think that that is highly unlikely and would occur only if the u.s. as we know it collapsed. I understand the imminent apocolypse/downfall of society arguments, but I don't agree with them, and I think that the only way for the dollar to become worthless or near worthless is for the country as we know it to collapse. Without such a catastrophe I think that the value of the dollar will fluctuate in more or less the way that it has so far - a way that is essentially trivial to average americans leading average lives.

It would take a lot for people stop believing in dollars. Imagine, what would it would take for businesses to stop accepting dollars in exchange for whatever they are selling? This is a true doomsday senario. People don't want that kind of total societal upheaval. As far as hyper-inflation, that scenario seems more realistic to me but still unlikely. The government has to slow down spending and printing of money, but I believe that it will, and I believe that we are still quite a ways away from serious risk of hyper-inflation. I don't think that we need to worry about "street level" merchants and workers and normal people devaluing the dollar themselves. People believe in it too much. If walmart starts selling bread for $20 a loaf, the corner store will sell it for 5 based on the belief that things will go back to normal. I suppose that we could worry about foreign governments calling in our debt, and us not being able to pay, but I don't think thats realistic either. It's not like they would go to war with us over it, and if we couldn't pay them no one benefits from them calling in the debt. And they know this.

Many on ats would consider these views optimistic - and maybe they are - but I see no compelling signs that a drastic societal change is on the immediate horizon.


reply posted on 29-1-2010 @ 12:51 AM by Rockpuck
reply to post by OBE1



But you and I both know that Gold today is in fact NOT based on sole supply and demand principles, nor the cost of mining.. it is essentially decided by men in a board room. Yes, the cost of unit does fluctuate per demand and value of dollars, but for all intents and purposes Gold is still run by Ordered Value, it's still a Fiat Currency. And who says Gold has value anyways? The only reason it's worth anything at all is that it's rare and hard to mine. I could say I will trade in sea shells, or shiny pebbles, or exotic bones.. anything, and put a value to it.

Moving to a Gold Standard you will STILL have 1 Dollar = 1oz .. five years later 1 Dollar = 10oz .. five years later 1 Dollar = 15 oz .. Nothing would ever stop the Government from taxing us through inflation .... NOTHING. It's how they survive.


reply posted on 29-1-2010 @ 01:56 AM by Edrick
Great Article!

I have always been a firm believer in the notion that, if you want to understand the Economy, you have to understand Money.

There HAVE BEEN currencies that had intrinsic value, Such as the Koku.

en.wikipedia.org...

The Koku was a measure of Rice in Japan Fiefdoms.

The inherent value of the Koku, was that it was food. it could keep you alive.

It was a necessity, and thus, had inherent value.

The problem with the Koku, was twofold.

It depreciated Rapidly (decomposition made the rice worthless) and it was subject to inflation and deflation based upon the weather... Literally.

So, worth, has only one meaning... Of VALUE to human life.


All currencies are based on this simple premise.


The problems of inflation and deflation are somewhat solved by precious metals, because there are no massive influxes of these metals in short amounts of time, thus, it keeps a relatively stable value.

The overall value of a currency is directly related to its availability.

Too much of the currency, and it is worthless... to little of the currency, and it is beyond the reach of most all people.

If noone has access to the currency, then there can be no economy, except bartering.

And bartering is the essential nature of an economy.

Money, is a universal exchange medium of bartering.


There are several problems with Precious metals based currencies, and fiat currencies... and they should be understood in order to understand Economics.

(Keynesian Economic theory was based upon the Gold standard, which is why it is failing today)

Precious metals based currency cannot keep up with economic expansion, and population growth.

As the economy expands, and the reserves of precious metals remains the same, the precious metals are quickly priced out of circulation, and the economy collapses.

If the market detracts, and the reserves remain the same, the currency quickly becomes worthless, and the economy collapses.

Likewise, Fiat currencies fix this problem, but introduce some of their own.

If the supply of currency outpaces the economic growth, the currency devalues, and the economy collapses.

This is the situation in the USA and West at this time.


Instead of raising taxes to pay for services that would get politicians reelected, they get the FED to print more, and that influx of currency devalues all the other currency.


Money is a very special problem in an economy as complex as the one in our world... and debating on economic solutions and recovery initiatives without understanding WHAT MONEY IS, is a useless proposition.


Furthermore, Electronic money is also subject to the same pitfalls of a FIAT currency, as it IS a Fiat currency, and since you don't even need to buy ink and paper, it is much easier to "Create"


The inherent Value of gold, is completely subjective.

Sure, it is useful for many applications, but its relative rarity makes it useless to use in most all fields, except in EXTREMELY small quantities.

The VALUE of gold, comes from the perceived value of the metal, and that is based on its "Beauty".

It is pretty to look at, and it is rare... THUS, it is valuable.

-Edrick

[edit on 29-1-2010 by Edrick]


reply posted on 29-1-2010 @ 02:49 AM by ickylevel
reply to post by OnceReturned



The real difference between gold and the dollar :
You can't create gold out of thin air. Gold is rare, so you can trust it's value unlike dollar :

One day you own 100 dollars , then the FED prints money , and suddenly the value of your 100 dollars is just 10% of the old vaue. You can't do that with gold, unless you create tungstene filled ones.


reply posted on 29-1-2010 @ 03:24 AM by Rockpuck
reply to post by OBE1




Fiat


Fiat = COMMAND.

Gold Standard and non-pegged currencies are very different, yes. Fiat is simply the wrong choice of words, it's ignorant.

You carried silver coins in your pocket, but so did children in the 1910's. Did their silver buy just as much goods as the silver you had?

Relative to the currency, Gold/Silver does not change by much.. when the Dollar is inflated so is the price of Gold.. while not directly Pegged, it is an indirect relationship simply because it's a commodity. But to say that there is NO inflation what so ever under a Gold Standard is .... retarded. That's the only word for it. Nor does it ensure a level economy, in fact it can be quite the opposite. With Pegged currencies (to Gold) the US economy suffered more depressions, recessions, with increased frequency and increased severity. That is FACT. Another fact would be that under the Gold Standard the US Economy would cease to exist overnight. Why peg the Dollar to something you don't have?

Metals are consistent with inflation ... that's why investors invest in it, to hedge for inflation .. other than that, I see no benefit to, by FIAT, make Gold the standard for money.

ickylevel


Here is what you people don't understand.

THERE IS NO MINIMUM DOLLAR PER TROY OZ REQUIRED FOR CIRCULATION.

One day the Congress Critters can decide it's 1 dollar to troy oz, another year another group of Congress Critters can decide it's 20 dollar to a troy oz.

ITS A GOD DAMNED FIAT.

It still buys the same, relatively, but so does the current Fiat currency. There are huge benefits to pegging the Dollar to Gold. There are some major drawbacks as well. First and formost is it limits to an extent governments negative spending.. but then again, had we not released the currency from Gold and pegged it (more or less) to Oil and Demand, then the US Government would have collapsed roughly around the same time as the USSR did. Government data regarding national debt can show us as much, when compared to the USSR. The only difference, other countries requiring our "fake" currency meant that it remained strong.


reply posted on 29-1-2010 @ 03:29 AM by Rockpuck
reply to post by projectvxn




It has ALWAYS been worth something to humanity for it's usefulness and versatility


Not true. In Ireland for example, Gold was used as a status symbol for Royalty, but was never, ever, used as currency. Cows were. The number of Cows you owned measured your wealth, and quite literally, were worth more than Gold.

Gold wasn't used on the Island until Coinage was used after the Viking and Norman invasions.. Coinage, a method of centralized control over commerce, allowed governments to effectively tax the production and wealth of her own people.. far easier than running around the country trying to collect tributes of cows.

The same can be said for the vast majority of the World.. Gold's usage of primary commerce originates with Government Control, and spread outward from certain civilizations throughout history, over dominated people.
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