@ Weebly

WEEBLY: "Either way, Gold is pretty cool to look at, but there just isn't enough of it around to store for spending when one reaches old age."

BISCHOFF: You don't actually save physical gold. You invest your redeemable currency in gold bonds. When they mature, you get back gold. In the meantime, you earn as a minimum 2.5% to 3% per annum (the natural interest rate).

@Weebly

WEEBLY: "Why not trade with Real Gold instead?"

BISCHOFF: That's when you turn gold into currency, which does not work. Gold is a lousy currency. I just explained that... ...

Hi Weebles
You didn't stop the thread, it has run over long as has the time. You don't seem mad but I must dispute bankers being bonkers. They know exactly what they are doing to us. Besides bonkers is funny and bankers are $%^*(&^%$.

Pete's post was wonderful but they are overly polite way down there, which is of course why he didn't include Kiwis in the salad.

If there really were a $trillion coin you couldn't carry it in your hand. You couldn't even carry it in a Terex Titan. If you could, might as well digitalize it like the rest.

Oh my, I seem to have done it again! Why does thread stopping seem to be my specialty, or if in the UK: speciality? Hopefully it will self-heal soon.

I loved your post, by the way, Agent Pete 8. You can catch me if you can in Wormhole 7 . . . this is way too much fun to come home right now!

Deliver . . . the . . . message . . . do you understand?

Wormhole 7: Click to view link

Man this thread and your answers are quick tonight! I missed Agent Pete 8's response, and your 2nd response. HI, AGENT PETE 8!

Are you suggesting that we legislate bankers to be honest?

And are you also suggesting that people save for their old age using Gold or paper scrip based on Gold?

Either way, Gold is pretty cool to look at, but there just isn't enough of it around to store for spending when one reaches old age.

Did you read anything else I wrote?

I'm completely mad, you know.

Hi Ingo,

But bankers are bonkers! I don't trust a banker to hold his urine, let alone hold my Gold and give me a piece of paper instead.

And your Real Bills are just scrip. Why not trade with Real Gold instead?

@ Weebly

WEEBLY: "Ingo . . . there are too many people on this planet for gold to be used as a medium of exchange."

BISCHOFF: I couldn't agree with you more. Gold makes for a lousy medium of exchange. The shortage of gold does not allow gold to circulate as currency. That problem has been accute for at least 250 years. That's why George Clymer and Benjamin Franklin, among others, founded The Philadelphia Bank in 1750 to create the Pennsylvania Pound against Bills of Exchange.

Read Adam Smith's "Wealth of Nations". You'll find the Pennsylvania Pound mentioned in there for the consistancy of keeping its value, even without a redemption requirement. In those days, bankers had honor. They would never create currency against non-existing Real Bills. There was never any concern that the The Philadelphia Bank would not redeem its currency for specie.

By sharply containing its circulation, it was the British Parliament which in the end killed the Pennsylvania Pound, and thereby destroyed the prosperity it had bought the American colonies. This more than anything else led to the American Revolution.

However, gold is not necessary for use as currency. 90% of currency is used to house and maintain oneself. These transactions can easily be cleared with Real Bills or the paper currency created against them. Only generally 10% of the currency is set aside as savings. It is there were gold is needed.

It is the superiority of gold as a store of value which is ideal for savings. With a redeemable currency, people can save for old age.

With a "managed" currency, which we have had since 1935, people need "Social Security" (created in 1935) to survive in old age.

Just a suggestory note on the collegial decorum we find here at the DB, and the textual habits of those ramming their barrow(s) so passionately in the face of others;

Folks who SHOUT the words THEY wish to EMPHASISE, paragraph after PARAGRAPH, usually reach my deaf side, knowing they lack consideration for others.

Like the hard-baked comments typicallly seen at Infowars, or Puffington Host, where many choose to capitally punish other readers with such shoutiness.

I think it is a symptom of feeling they are not being heard, but also of not accepting the reality that others think and operate differently, and the process of realisation takes time - to grow.

Perhaps it is more grammatically correct, and polite/considerate/accepting that "emphasis" can be simply quoted; 'single' or "double".

Then they wouldn't manifest like hysterical rabid AIPAC-style manipulatrices, rather appearing as someone who could be invited to dinner, without upsetting the other guests.

Mint anyone, or is it time for pudding?

P.S. I like the idea of a fruit salad of currencies available anywhere: Apples, Oranges, Bananas...

@ Weebly

WEBLEY: "You would want to give them paper scrip, so you could resolve the debt at the end by not giving away your gold."

BISCHOFF: The paper currency I propose to be restored uses Real Bills and gold held by banks against which they create a REDEEMABLE paper currency. As such it carries the value standard of gold, hence the name gold standard currency.

Real Bills are 90-day non-credit, negotiable, commercial instruments. When they mature, the currency exspires.(It has to do with Real Bills being clearing instruments, not credit loans.) Therefore, RBD currency will never be inflationary.

Hi Ingo, taxesbyanyothername, and tonight's Mod Squad [solid modding, real solid modding, by the way] . . . and now some recent additions: bionic mosquito and pauloportugal.

I think I am going to have to get Politenessman to whip out his steel hankie and let it rip!

The Trillion Dollar Coin, with roughly the same current face value as gold, is still a debt instrument. Anyone holding one would ask themselves . . .

'What is this I hold in my hand? Something the US Gov gave me must be able to purchase something in USD . . . ' And then one day, when you least expect it, they will come a knocking and buy whatever assets the $1T coin will buy them at that time.

The real issue is not so much the debt and paying it off, but the huge quantity of money and electronic money, e.g.: $1.2 Quadrillion ($1200T) on investors' balance sheets as derivatives. The recent money printing of another $15T, which is sitting on the bankers' balance sheets, is also disconcerting . . . all that free money they got due to a shell game they pulled from 2001 - 2007.

I never got any.

Money is like holding stock. If you have a share split, then the shareholders get the split, not some bankers! That's bonkers! Sorry, I could not resist calling bankers bonkers.

If any of that vast quantity of money ever goes on the market at a high rate of speed to buy up US assets, or anything where the USD is accepted as payment, then all hell will break loose on upward price movement - too much money chasing too few goods.

A tiny US GDP of $15T puts it in perspective.

It's pretty obvious that people that create money are playing games with money, and they use the balance sheet to do it. The balance sheet is where that huge amount of money sits, tax free.

Now we come to Ingo and his 'gold as money' . . . Ingo, how come you want to print paper based on the gold you have? I know exactly why . . . the same reason my 5oz will not be used for exchange unless that is the last asset I have . . . it would take a lifetime to get it back if I used it to buy something. I own 5oz, which is 6.66 times the 0.75oz that we would each have, if it were distributed equally to 7 billion people. Most people hold no gold, and would not lose their grip on it, if they got some. You would want to give them paper scrip, so you could resolve the debt at the end by not giving away your gold.

Ingo . . . there are too many people on this planet for gold to be used as a medium of exchange. It is merely a store of wealth for a few people; that is all. 0.75oz is just not enough to do all the things one wants to do in life . . . it's like running your life on just under 3 days pay!

To make a long story short, the balance sheet is where the action is. Honest money is easily produced using small amounts of paper money from a large amount of people . . . let's say 86.2 million Irish and Irish Diaspora invest $1 each . . . and viola, the fiddler would be fiddling on the roof with $86.2 TAX FREE million . . . so that the money printing and the peace process can begin.

Oh, did I mention that the money is destined for a new game? A Limited Edition Print ARG (Alternate Reality Game,) and distributed to all people for free, as a marketing and promotion tool. All completely legal, tax free (in Canada,) and endorsed by Rothschild himself, MI6, CSIS, HRH and David Cameron, although David Cameron doesn't matter so much, since he is just an elected person . . . but he does have connections.

The issue is who will be trusted to print the ARG money? That person . . . or 4 persons would have to be above reproach. And when the printer accepts the game money as payment for the print jobs, the whole thing goes Overunity . . . then the quadrillions of existing US money becomes irrelevant, along with all governments.

Click to view link

snip - - - The Fiddler is a metaphor for survival, through tradition and joyfulness, in a life of uncertainty and imbalance. - - - snip Click to view link

@ POP

POP: "POP: Both rulers and scales were market creations that widely accepted for various obvious reasons. Is it feasible, and in fact likely, that gold is the ideal form of money as selected by the market? Yes. But it is up to the market to make that determination."

BISCHOFF: Markets do not decide measuring devises. Markets exist by using measuring devices.

POP: "But to suggest that it must be standardized is incorrect."

BISCHOFF: Here I agree with von Mises, who has a very different view of gold as money from the view I hold. Yet, von Mises clearly states that without the gold standard capital valuation for financial statements to aid in longterm investment is impossible. The value of the present "managed" FRN currency as a unit of account is in constant flux, depending on the interest rate policy of the FED. Longterm capital investment is almost impossible to plan, because of its impact on amortization and depreciation schedules. It is suprising that you support such system. I am truly amazed.

POP: Bischoff saying: I don't know how I can make it any more clear to you, it is NOT I who insists on a single standard of value. IT is LOGIC. Your reply is: Whose? Yours?

BISCHOFF: See, this is what I mean. I stated that I don't insist on the standard, that it is logic which demands it. Now, you ask me whether I have a subjective logic system all my own. You really know how to subtly accuse someone of suffering from schizophrenia, don't you... ???

POP: "That's because you can't. You are filled with contradictions and are a half-witted blowhard statist loving Georgist who postulates arguments against monetary historians such as Rothbard - and when pushed admits, as you have here before, that you really hadn't read a lot of his work! But yet you profess to know "reality" and be the wise German with all the answers. Why the DB allows you and your 1960s mugshot to monopolize their forums is beyond me."

BISCHOFF: There, there... I knew it !!! You couldn't contain your veilness from slipping out. Judging from your comments, readers should have little problem to decide the kind of person you are.

I think too much of the service Tony Wile provides with the DB, evenso he and I disagree vehemently on many a subject, to answer you in kind. As I said, readers can figure out for themselves who is a half-witted blowhard, and sycophant clinging to the "Austrians". Enough said.

DB: Try to keep it civil.

BM: Agree.

Ingo

Math is the only exact science. I am sorry that you are stuck.

DB: Please don't call names. Mr. Bischoff doesn't

BM: Now DB, that just isn't true.

Click to view link

Posted by Bischoff on 02/20/12 06:17 PM

Of course, not to excuse the practice. Logic will suffice, or shutting windows to keep out the wind.

Reply from The Daily Bell

OK. No one should. Try to keep it civil.

@Bischoff

Bischoff: Is it not logical to have a standard for measuring something. We have a ruler for measuring linear distance, we have a calibrated scale for measuring weight, why can we not have a commodity whose value is serves as the measuring devise to measure the value of other goods and commodities?

POP: Both rulers and scales were market creations that widely accepted for various obvious reasons. Is it feasible, and in fact likely, that gold is the ideal form of money as selected by the market? Yes. But it is up to the market to make that determination.

Bischoff: If you do numerical accountng, you have to decide the measuring standard for your accounting system. You can convert feet to meters, or kilos to pounds, or gold standard to silver standard, but whatever you convert to, you have to be consistent in that measurement for your financials to be of use.

POP: Yes, it would seem that it only makes sense for the market to sort out consistent means of accounting. But to argue that the system of measurement must be "consistent" is foolish. Obviously in a free market where personal responsibility is embraced by the individual, whatever is considered "satisfactory" in terms of full, true and plain disclosure (assuming the reader of the financials actually cares and performs due diligence), is entirely up to the receiving party - not without consequences to the originator of the financials, naturally. But to suggest that it must be standardized is incorrect. It does not. It could develop, but the market should decide what is best today, tomorrow and so on. Kind of reminds me of the government forcing the "seatbelt" solution of the major car manufactures before THEY were ready to introduce the seatbelt option in their cars - in the name of satisfying their consumers desire for better safety. As soon as the Fedgov got involved thousands of children were unnecessarily disabled and killed as a result.

Standards should never be imposed, the market should derive whatever it feels best to satisfy the needs of the individual, community, or what have you.

Bischoff: I don't know how I can make it any more clear to you, it is NOT I who insists on a single standard of value. IT is LOGIC.

POP: Whose? Yours?

Bischoff: To argue that value is subjective, (which by the way it is not. It is utility which is subjective. That's were Menger comes in. I say no more

POP: That's because you can't. You are filled with contradictions and are a half-witted blowhard statist loving Georgist who postulates arguments against monetary historians such as Rothbard - and when pushed admits, as you have here before, that you really hadn't read a lot of his work! But yet you profess to know "reality" and be the wise German with all the answers. Why the DB allows you and your 1960s mugshot to monopolize their forums is beyond me.

Reply from The Daily Bell

Please don't call names. Mr. Bischoff doesn't.

@ Taxes

TAXES: "Locke was a smart guy but he didn't figure out everything, and the age of an axiom or practice, does not give it veracity or utility."

BISCHOFF: Quite true. However, what about logic? Is it not logical to have a standard for measuring something. We have a ruler for measuring linear distance, we have a calibrated scale for measuring weight, why can we not have a commodity whose value is serves as the measuring devise to measure the value of other goods and commodities?

Linear distance is expressed in feet or meters, but they are not the same measuring devise. Weight is expressed in kilos and pounds, but the measuring devise varies. You can express value in terms of aliquot parts of gold, or in aliquot parts of silver, but they are not the same.

If you do numerical accountng, you have to decide the measuring standard for your accounting system. You can convert feet to meters, or kilos to pounds, or gold standard to silver standard, but whatever you convert to, you have to be consistent in that measurement for your financials to be of use.

To argue that value is subjective, (which by the way it is not. It is utility which is subjective. That's were Menger comes in. I say no more) and that therefore there cannot be a fixed standard is wrong.

To argue that you can value anything in terms of gold and silver without using either as the standard is analogous to a dog chasing its tale.

@ DB

DB: "But just as we predicted, your insistence on a single market standard for money and accounting contradicts the lip service you pay to "markets." You are entirely predictable, Ingo. The more agitated you become, the longer your rebuttals get. That doesn't improve their accuracy though."

BISCHOFF: I don't know how I can make it any more clear to you, it is NOT I who insists on a single standard of value. IT is LOGIC. I am entirely predictable, because I try to use logic in presenting my point. You seem to want to fight logic in favor of your preconceptions.

My replies to you become more lengthy as I try desperately to appeal to reason. Again, and again I take the time to lay out a reasonable argument for my point hoping that I get back a reasonable counter argument. It never happens. You always seem to question my motives instead of addressing yourself to my argument.

I have reluctantly come to the conclusion that the only thing which will change your mind on the subject is reality. However, as long as the present "managed" currency is protected by a "legal tender" law, you won't have to worry that reality will come knocking.

In the meantime, I am happy to hold onto your view, and I wish you luck with yours when you have to face reality some day soon.

Reply from The Daily Bell

You are not logical; you are opinionated.

Markets do not settle things once and for always. They decide what a price should be at the moment. As soon as conditions, or what is known changes, the market's decisions may change.

Every regulation, no matter what it is, is a government saying: 'no, this is not a market.'

The relative value of silver and gold will continue to vary, and if governments will butt out, it will be no problem. It appears to me that platinum, and eventually perhaps other metals, will be coined. And if governments keep their hands off, that will still be no problem.

Locke was a smart guy but he didn't figure out everything, and the age of an axiom or practice, does not give it veracity or utility.

Setting the ratio of value between the two metals at precisely the ratio that exists in the posession of mankind is another way of saying that the total quantity of gold possesed by us is precisely equal in value to the total quantity of silver possesed by us. Since both are used as currency and jewlry, and silver has many other important uses, this seems absolute bunk to me. Industrial use of silver has brought the ratio down to about ten to one. In a SHFT situation, which we may very well soon have over major portions of the globe, silver's use as a water purifier will make it even more valuable compared to gold than it is now.

This suggests to me that without manipulation of the markets, and gold priced as it is now, that silver should be over $200/Oz. Now. The huge discrepancy between the actual situation and that last also suggests to me that the price of both of them has less to do with standards, or honest market decisions, than disinformation and timed buys and sells by those manipulating the price of both metals. This is probably at least as large a theft as the libor manipulation.

@ DB

DB: "As predicted, Ingo. You insist on a single standard that "everyone will follow." It as if you are not at all familiar with F.A. Hayek and the idea of spontaneous organization. Yes, there CAN be more than one solution - and, yes, the market itself can provide ways to integrate those solutions."

BISCHOFF: I DO NOT insist on a single standard, because I want it that way, but because logic and mathematics dictate it.

My insistence that a single commodity be used as the STANDARD OF VALUE is not something unique with little old me. I am citing the same quote I cited earlier in my retort to Dave, Jr.'s comments:

"Money is the measure of commerce... and therefore ought to be kept (as all other measures) as steady and invariable as may be. But this cannot be, if your money be made of two metals, whose proportion ... constantly varies in respect of one another.'
--John Locke (1632 - 1704), English Philosopher

This comment about a single STANDARD OF VALUE by a noted philosopher precedes my comments by 300 years. It certainly isn't something which found original concern with me.

If you think about it, the insistence on a single STANDARD OF VALUE is based on simple logic. This is something poor, old William Jennigs Bryan could never get through his head.

The Congress set a fixed ratio of gold to silver with the 1792 Coinage Act of 1 : 15. It was later revised to 1 : 15.5. This ratio worked when at the time silver was found along side gold as deposits and both were mined together in the same effort.

However, once large silver finds were made, such as the Comstock Lode in Nevada, the value equivalent of 1 : 15.5 no longer held. Rich, pure silver veins were much less laboreous to mine, than to mine the silver found along side gold.

In the late 1800s, silver prospecting was all the rage. The State of Nevada was the greatest lobbyist for maintaining the 1 : 15.5 value equivalent between gold and silver.

The relatively little amount of labor needed to mine and refine 15.5 ounces of silver from a pure silver vein in comparison to the amount of labor needed to mine and refine 1 ounce of gold, which in many cases amounted to four and five times the amount of work, simply no longer logically supported the value equivalent of 1 : 15.5.

William Jennings Bryan and his supporters simply could not get that through their head. Their contention was that by law silver miners should be able to demand from the banks 1 ounce of gold for every 15.5 ounces of silver they delivered up.

Do you really think that government interference in setting a fixed ratio and to enforce it was warranted... ??? If you do, then you are the statist, NOT I...

If you love silver, make silver the STANDARD OF VALUE. It will not work as well as will gold as the STANDARD OF VALUE, but go ahead... .advocate it. I could care less.

DB: "Yes, there CAN be more than one solution - and, yes, the market itself can provide ways to integrate those solutions."

BISCHOFF: That statement gets no opposition from me. Yes, let the markets decide what works. However, markets have to deal with reality. They cannot ignore universal truth. To call an apple an orange is illogical, but markets can usually settle such illogic in seconds. They need no help from me, or from you for that matter.

Reply from The Daily Bell

You must know after all this time that we advocate a floating ratio between money metals. In other words, the insistence of the US Congress on stating the ratio between gold and silver was a big mistake. The market should set the price, not the government.

But just as we predicted, your insistence on a single market standard for money and accounting contradicts the lip service you pay to "markets." You are entirely predictable, Ingo. The more agitated you become, the longer your rebuttals get. That doesn't improve their accuracy though.

Always enjoy stopping by The Bell. Wish I had the time to do it more often. While opinions vary widely, most are intelligently stated. Some posts here today however degrade to nearly name calling, which wastes my valuable (to me) time.

On the subject matter, once platinum reaches $1T per ounce, and if the coin weighs one ounce, the coins will disappear "as bad money drives out good" (Greshams Law). Ah, but my high tech solution would be electronic coins where the Fed could simply remark the coin at will, such as $1T, and change it to $10T or any other value at the flip of a switch! No need to recall the money or transport it in a wheel barrow such as 1924 German notes. Plus it would save energy!

The only possible better solution might be to eliminate fractional reserve banking as well as the Fed, and allow the market to define "money". I like the idea of gold coin, but marked as the weight, rather than dollar denominations. Government control of the money has worked out rather poorly in all countries. I agree we need something that works and SDRs will not be it either.