Like I said, money (or at least an ideal currency) is to be a measuring cup of the value of the goods and services exchanged between people and organization. That's the benefit of them over barter - their simplicity to carry and their use as the measuring cup.
With a constant inflation varying between 2% and 5%, we got used to this slightly modified measuring cup year after year. More so when it doesn't translate *yet* into inflation in commodities.
But when we print a lot of money, this inflation cranks up and this mean, the measuring cup changes in size fast enough from year over year that
- it gets more difficult for people to use it to compare prices
- that then dollars starts to burn in your pocket and you want to spend it before that measuring cup goes smaller.
Friday, September 26, 2008
Friday, September 12, 2008
Why those wild swings in the price of Gold
On Planet Gold, prices are always very stable. There might be some variation depending on weather affecting harvest but the price swings are low.
On earth, we see gold having big swings. One major reason, mostly since we are not on a gold standard, is that the true value of things measured in Gold has a barrier. There is a barrier between Gold and other things like Real Estate - that barrier is the fiat currency, the printed dollar back by nothing. People see prices of real estate and other things in dollars, people will see the price of gold in dollars but people do not see the price of things measured in gold which would actually be a much better static measurement unit than the dollar.
Because they don't realize that barrier, things can get out of whack severely and gives wide adjustment that will have a huge velocity (big swing) overshooting the value on the other side.
Oops, suddenly, you could see real estate or oil or other commodities under priced in value compared to Gold (gold bubble), but that's just because the market is trying to catch up.
Now, if we must talk about the recent downward pressure on the price of gold, silver and other commodities lately, that's a local minimum which some say has been orchestrated by the Feds and treasury to limit the impact on the market of the take over of Fannie Mae and Freddie Mac.
That's a different subject and out of scope of the harmony on Planet Gold!
On earth, we see gold having big swings. One major reason, mostly since we are not on a gold standard, is that the true value of things measured in Gold has a barrier. There is a barrier between Gold and other things like Real Estate - that barrier is the fiat currency, the printed dollar back by nothing. People see prices of real estate and other things in dollars, people will see the price of gold in dollars but people do not see the price of things measured in gold which would actually be a much better static measurement unit than the dollar.
Because they don't realize that barrier, things can get out of whack severely and gives wide adjustment that will have a huge velocity (big swing) overshooting the value on the other side.
Oops, suddenly, you could see real estate or oil or other commodities under priced in value compared to Gold (gold bubble), but that's just because the market is trying to catch up.
Now, if we must talk about the recent downward pressure on the price of gold, silver and other commodities lately, that's a local minimum which some say has been orchestrated by the Feds and treasury to limit the impact on the market of the take over of Fannie Mae and Freddie Mac.
That's a different subject and out of scope of the harmony on Planet Gold!
Thursday, September 11, 2008
Planning for retirement is piece of cake on Planet Gold
When you plan for retirement on planet earth, the money you put aside loses its value from one year to the other so it is imperative to get a good interest rate or another form of investment that will be sufficient to compensate for both the inflation (translation: lost of value of the dollar) and the taxes you will pay on this earning.
On planet Gold, the money you put aside (which is in effect Gold and/or Silver) is put aside year after year, growing in amount and not losing any value. In addition to that, the money can find good returns when put into a loan. Hence, after a few years, that money has doubled in overall value. Since taxes are minimal on Planet Gold, you gain on that too.
Think about it, in an environment where inflation eat your dollars at a rate of say 3%, you need an interest rate of at least 3% just to get even - not counting the taxes you will have to pay on that 3% of interest you will earn. So in reality, you need 4 or 5% depending on the tax rate, just to match inflation.
Bob on Planet Gold saves the equivalent of $20,000/year in gold/silver money on Planet Gold and earns 6% on his money. In 10 years, Bob has: $263,615.90
Don't forget 10 years later that $263,615.90 has the same purchase power has $263,615.90 would have when he started saving.
Mark on Planet Earth (say USA for example), saves also $20,000/year in US dollar and saves them in CD or equivalent, bringing also 6% per year (I'm being generous). Imagine inflation at 3% and taxes eating 0.5% of this 6% earning.
So, because of the taxes, Mark earns only 5.5% interest
At the end of the 10 year, Mark has $257,507.08 in savings. Not too far away... but we need now to account for inflation... Subtracting 3% per year out of the 5.5%, this gives 2.5% interest rate. We also need to account the lost of value of the $20,000 per year. This means $1 at year 10 is worth $0.7374 of the dollar at year 1, when he started saving. So, that's 26% of hidden Tax (So much for Bush tax cut)
So, this gives Mark $197,331.06 of saving in "year 1" dollars, effectively losing almost $3,000. See table
Unfortunately, more than often for many people on planet earth, the interest rate are below the rate of inflation. Adding taxes on top of that and they are losing money!
Mark, you need to find a space ship and move to Planet Gold. Another option is to talk to your politicians about Planet Gold and how earth could do the same :-)
Regards
Phil
On planet Gold, the money you put aside (which is in effect Gold and/or Silver) is put aside year after year, growing in amount and not losing any value. In addition to that, the money can find good returns when put into a loan. Hence, after a few years, that money has doubled in overall value. Since taxes are minimal on Planet Gold, you gain on that too.
Think about it, in an environment where inflation eat your dollars at a rate of say 3%, you need an interest rate of at least 3% just to get even - not counting the taxes you will have to pay on that 3% of interest you will earn. So in reality, you need 4 or 5% depending on the tax rate, just to match inflation.
Bob on Planet Gold saves the equivalent of $20,000/year in gold/silver money on Planet Gold and earns 6% on his money. In 10 years, Bob has: $263,615.90
Don't forget 10 years later that $263,615.90 has the same purchase power has $263,615.90 would have when he started saving.
Mark on Planet Earth (say USA for example), saves also $20,000/year in US dollar and saves them in CD or equivalent, bringing also 6% per year (I'm being generous). Imagine inflation at 3% and taxes eating 0.5% of this 6% earning.
So, because of the taxes, Mark earns only 5.5% interest
At the end of the 10 year, Mark has $257,507.08 in savings. Not too far away... but we need now to account for inflation... Subtracting 3% per year out of the 5.5%, this gives 2.5% interest rate. We also need to account the lost of value of the $20,000 per year. This means $1 at year 10 is worth $0.7374 of the dollar at year 1, when he started saving. So, that's 26% of hidden Tax (So much for Bush tax cut)
So, this gives Mark $197,331.06 of saving in "year 1" dollars, effectively losing almost $3,000. See table
Unfortunately, more than often for many people on planet earth, the interest rate are below the rate of inflation. Adding taxes on top of that and they are losing money!
Mark, you need to find a space ship and move to Planet Gold. Another option is to talk to your politicians about Planet Gold and how earth could do the same :-)
Regards
Phil
Wednesday, September 10, 2008
Government Counterfeiting vs Gold Standard
Counterfeiting...
When there is X amount of a currency chasing Y amount of commodities (real estate, food, metals, and any products made out of those), a price is established based on the amount of X there is in circulation. If suddenly, someone adds:Q (new quantity) = X + 1 which is obviously still chasing Y amount of things... the person who printed that +1 and started using it benefits from the fact that the market prices have not *yet* adjusted to the new amount of currency. It's like a long water reservoir where water is added at the beginning of the reservoir. Eventually, the level adjust to a new high and everyone pays a new higher price. But gosh, the counterfeiter got it for free at the expense of everybody else.
So, when the government creates money (or a central bank), who gets the benefit? The first spender! And the central bank happens to charge interest on money it just created.
When President Bush claims he is cutting taxes while at the same time spending like crazy - requiring the Federal Reserve to create new currency, he is actually taxing in a way that the media does not currently report. And that happens in all country in the world today. When people are happy that their house has just increase in value by say 20%, overall, did they actually increase in value? When inflation kicks in the rest of the commodities (when that water in the reservoir spreads to all the corner of the reservoir, raising all prices), the gain is mitigated. Of course, homeowners are gaining with the fact they owed a mortgage that has now decreased in value, that's the benefit. The folks most affected are the renters.
That's the reason why the democrats - who are claiming to be the protectors of the poor and middle class - are the first one who should declare we should go back to the Gold standard!
But this "inflation" which is a disguised tax that is like dust sent under the carpet makes it so much easier to get reelected.
A lot of homeowners and real estate investors are happy with this system since they see their mortgage going down in value - literally (since they are in fixed dollar, not adjusted for inflation while rents are). But they dont' realize that they too would benefit.
More on real estate on Planet Gold on a future post...
- Phil
When there is X amount of a currency chasing Y amount of commodities (real estate, food, metals, and any products made out of those), a price is established based on the amount of X there is in circulation. If suddenly, someone adds:Q (new quantity) = X + 1 which is obviously still chasing Y amount of things... the person who printed that +1 and started using it benefits from the fact that the market prices have not *yet* adjusted to the new amount of currency. It's like a long water reservoir where water is added at the beginning of the reservoir. Eventually, the level adjust to a new high and everyone pays a new higher price. But gosh, the counterfeiter got it for free at the expense of everybody else.
So, when the government creates money (or a central bank), who gets the benefit? The first spender! And the central bank happens to charge interest on money it just created.
When President Bush claims he is cutting taxes while at the same time spending like crazy - requiring the Federal Reserve to create new currency, he is actually taxing in a way that the media does not currently report. And that happens in all country in the world today. When people are happy that their house has just increase in value by say 20%, overall, did they actually increase in value? When inflation kicks in the rest of the commodities (when that water in the reservoir spreads to all the corner of the reservoir, raising all prices), the gain is mitigated. Of course, homeowners are gaining with the fact they owed a mortgage that has now decreased in value, that's the benefit. The folks most affected are the renters.
That's the reason why the democrats - who are claiming to be the protectors of the poor and middle class - are the first one who should declare we should go back to the Gold standard!
But this "inflation" which is a disguised tax that is like dust sent under the carpet makes it so much easier to get reelected.
A lot of homeowners and real estate investors are happy with this system since they see their mortgage going down in value - literally (since they are in fixed dollar, not adjusted for inflation while rents are). But they dont' realize that they too would benefit.
More on real estate on Planet Gold on a future post...
- Phil
Tuesday, September 9, 2008
Trade between countries on Planet Gold brings less friction
One great thing that brought peace and prosperity on Planet Gold was the use of gold on the entire planet. Trades are easy, no tension, no issues of outsourcing etc since everything balances out. A bit like the United States right now where everyone uses the same currency but the economy of say San Francisco is drastically different then the economy of Birmingham, Alabama. Housing is cheap in Alabama compared to San Francisco, allowing for industry requiring lots of space to operate.
So, on Planet Gold, the difference between the 258 countries are based on their business laws, their customs, their habits and culture but they have one thing in common, everyone uses gold and silver as money, from any individuals on the planet to any other individuals, from one government to another, from one nation to another.
There are no trade deficit that can accumulate for very long time, always of short duration. Right now, here we have the United States of America that has one of those amazing credit card with, it seems no limits on spending... only paying the minimum on the balance every month. When will the credit card company call?
On planet Gold, if a country doesn't have good business laws protecting intellectual property or handling litigation of any kind, this country is one of the poor country. They know quickly they need to change this quickly. The country with the best infrastructure, the best brains, the best schools and good system of business law attracts a lot of company, even though it is expensive to live there. It might be even more when the climate is even nicer than everywhere else. It might not be perfect, it might not have the best business law but if it has everything else, it will attract businesses. That sounds like San Francisco... nice climate, great universities, lots of brains, attractive landscape and good infrastructure. Results- even if the business law are not the best in the country, they still attract businesses. This, on a planet base is what happen on Planet Gold.When one country has a lots of its citizen with lots of gold, other citizen in other countries will knock on their door for financing. Money (gold) can flow easily, no trade barrier - like from state to state in the USA. The only thing that might stop those investors would be the system of laws in this other country. The best wins.
The only thing that was added as a worldwide regulation is on the environment and labor standard. If a country was not threating either of them properly, it could have an advantage over other countries at the expense of a world wide air pollution or water pollution. With environmental and lable regulation/standard in place, you reduce those issues.
So fun to talk about Planet gold ;-)
So, on Planet Gold, the difference between the 258 countries are based on their business laws, their customs, their habits and culture but they have one thing in common, everyone uses gold and silver as money, from any individuals on the planet to any other individuals, from one government to another, from one nation to another.
There are no trade deficit that can accumulate for very long time, always of short duration. Right now, here we have the United States of America that has one of those amazing credit card with, it seems no limits on spending... only paying the minimum on the balance every month. When will the credit card company call?
On planet Gold, if a country doesn't have good business laws protecting intellectual property or handling litigation of any kind, this country is one of the poor country. They know quickly they need to change this quickly. The country with the best infrastructure, the best brains, the best schools and good system of business law attracts a lot of company, even though it is expensive to live there. It might be even more when the climate is even nicer than everywhere else. It might not be perfect, it might not have the best business law but if it has everything else, it will attract businesses. That sounds like San Francisco... nice climate, great universities, lots of brains, attractive landscape and good infrastructure. Results- even if the business law are not the best in the country, they still attract businesses. This, on a planet base is what happen on Planet Gold.When one country has a lots of its citizen with lots of gold, other citizen in other countries will knock on their door for financing. Money (gold) can flow easily, no trade barrier - like from state to state in the USA. The only thing that might stop those investors would be the system of laws in this other country. The best wins.
The only thing that was added as a worldwide regulation is on the environment and labor standard. If a country was not threating either of them properly, it could have an advantage over other countries at the expense of a world wide air pollution or water pollution. With environmental and lable regulation/standard in place, you reduce those issues.
So fun to talk about Planet gold ;-)
Monday, September 8, 2008
What if population increase - not enough gold as money?
My wife was asking me the other day - If the amount of gold as money stays the same but the population on the planet increases, say by 20% over x years, wouldn't there be a lack of gold for all those new people?
That was a good question. To that, my first reply was:
- Well I hope there will also be an increase of 20% of food and other related commodities otherwise, some people will be starving :-)
But then, I added, assuming we have 20% more people as well as the matching increase in food with those people but still the same amount of gold...this means food is cheaper than it used to be - as measured in ounces of gold. if it took you, say 1 of ounces of silver for your grocery, then it will now take 20% less silver (or gold). (or maybe in grams of gold, or whatever units of gold or silver you want to use).
Does that mean deflation? Yes it does, but slowly, as the amount of food increases year over year. So, as a family, you don't need as much gold as you used to before to buy the same amount of goods - assuming any of those goods did increase as well.
As we said with the thermometer or the ruler, as long as the unit is fixed, it doesn't matter.Would this price deflation affect the farmer? No it won't because he/she too will need less gold to buy other commodities.
If on the other hand, another commodity (like say sugar) decreases because of a major natural disaster, it will go up in value compared to gold.
What is difficult on our planet is that we do not notice that our measurement unit of value (the dollar, pound, euro, yen...) changes every year
Take care
Phil
That was a good question. To that, my first reply was:
- Well I hope there will also be an increase of 20% of food and other related commodities otherwise, some people will be starving :-)
But then, I added, assuming we have 20% more people as well as the matching increase in food with those people but still the same amount of gold...this means food is cheaper than it used to be - as measured in ounces of gold. if it took you, say 1 of ounces of silver for your grocery, then it will now take 20% less silver (or gold). (or maybe in grams of gold, or whatever units of gold or silver you want to use).
Does that mean deflation? Yes it does, but slowly, as the amount of food increases year over year. So, as a family, you don't need as much gold as you used to before to buy the same amount of goods - assuming any of those goods did increase as well.
As we said with the thermometer or the ruler, as long as the unit is fixed, it doesn't matter.Would this price deflation affect the farmer? No it won't because he/she too will need less gold to buy other commodities.
If on the other hand, another commodity (like say sugar) decreases because of a major natural disaster, it will go up in value compared to gold.
What is difficult on our planet is that we do not notice that our measurement unit of value (the dollar, pound, euro, yen...) changes every year
Take care
Phil
Sunday, September 7, 2008
What Planet Gold learned 400 years ago: Can't trust the goverment
In school today, Mark learned that about 400 years ago, the banks on his planet - Planet Gold - decided to give paper money to represents the gold that people were storing in the bank. People started using this paper money rather than actual silver and gold coins for simplicity. Much lighter of course. But then, this changed. And Mark ask the question:
- Mrs Walt, why we are no longer using paper today?
- Well you see Mark, started Mrs Walt, the banks started to take advantage of this and they printed more paper money then they really had.
Mark replied "What?"
- It is a bit complicated but to put it simply, they considered that people will never want to get back their actual gold and settle with the paper. But then, there was so many paper in circulation that something that never happened started.
- What was that? replied Mark
- The price of about anything starting climbing, starting with real estate and stocks. At first, people were happy thinking their houses was really better than any others but then people started to realize it wasn't real. Eventually, the price of everything climbed up. On June 2nd of that year, everybody went to their banks asking to convert their paper certificate into their actual gold and silver deposits. The banks got bankrupted, lawsuits and so on. Lots of people lost their money. That's why since then, paper money is no longer accepted. But that is the reason, that we have their yearly celebration of "getting your gold out day" (GYGO) where people on every June 2nd, get their deposits in gold and silver coins (the one they haven't put up for lending). This way, we always make sure the bank since then, are not inflating with any other means - electronic or any other deception that could come up with new future technologies or tricks.
Another student, Margaret, replied:
- My parents take June 2nd very seriously. They tell me that paper is what cheaters use.
Yes, that saying "paper is what cheaters use" was invented a few days after that infamous June 2nd, 400 years ago. Replied Mrs Walt. What was the most surprising for everyone is that the government was persecuting everyone who counterfeited those papers but did nothing about the banks themselves that were too, issuing more of that paper then the suppose "wealth" or resources it was suppose to represent.
Bill, another student asked
- What about credit cards and all that electronic money?
Mrs Walt replies:
- On June 2nd, all electronic bills must be paid out. Everything must be reset to zero. It is a way of verifying that we have no more money in the real world as we really have gold and silver coins and bullions. There could be manipulation during the year but it will not go unchecked beyond a year and the manipulators are prosecuted by the law. Anybody has heard of Bob Cantanro?
The class nod their head in negation.
- Bob Cantanro was head of Cantanro Bank and him and several other bankers tried to manipulated the market by trying to use a complex combination of electronic money and debt loan contracts to their advantage. They hope to their scheme would not be caught on the following June 2nd by using some delayed payment to go on June 3rd. Complex scheme but nevertheless, it didn't work and he and his friend went into prison for a decade for that.
This happened 30 years ago. It was a closed call and since then, they even added more restrictions. No forms of paper or electronic forms of money are accepted on that day. A complete inventory on a worldwide basis happens.
The bell rang.
- Ok class, time to go.
-------------------------
Wouldn't you love to live on such a planet ? :-)
- Mrs Walt, why we are no longer using paper today?
- Well you see Mark, started Mrs Walt, the banks started to take advantage of this and they printed more paper money then they really had.
Mark replied "What?"
- It is a bit complicated but to put it simply, they considered that people will never want to get back their actual gold and settle with the paper. But then, there was so many paper in circulation that something that never happened started.
- What was that? replied Mark
- The price of about anything starting climbing, starting with real estate and stocks. At first, people were happy thinking their houses was really better than any others but then people started to realize it wasn't real. Eventually, the price of everything climbed up. On June 2nd of that year, everybody went to their banks asking to convert their paper certificate into their actual gold and silver deposits. The banks got bankrupted, lawsuits and so on. Lots of people lost their money. That's why since then, paper money is no longer accepted. But that is the reason, that we have their yearly celebration of "getting your gold out day" (GYGO) where people on every June 2nd, get their deposits in gold and silver coins (the one they haven't put up for lending). This way, we always make sure the bank since then, are not inflating with any other means - electronic or any other deception that could come up with new future technologies or tricks.
Another student, Margaret, replied:
- My parents take June 2nd very seriously. They tell me that paper is what cheaters use.
Yes, that saying "paper is what cheaters use" was invented a few days after that infamous June 2nd, 400 years ago. Replied Mrs Walt. What was the most surprising for everyone is that the government was persecuting everyone who counterfeited those papers but did nothing about the banks themselves that were too, issuing more of that paper then the suppose "wealth" or resources it was suppose to represent.
Bill, another student asked
- What about credit cards and all that electronic money?
Mrs Walt replies:
- On June 2nd, all electronic bills must be paid out. Everything must be reset to zero. It is a way of verifying that we have no more money in the real world as we really have gold and silver coins and bullions. There could be manipulation during the year but it will not go unchecked beyond a year and the manipulators are prosecuted by the law. Anybody has heard of Bob Cantanro?
The class nod their head in negation.
- Bob Cantanro was head of Cantanro Bank and him and several other bankers tried to manipulated the market by trying to use a complex combination of electronic money and debt loan contracts to their advantage. They hope to their scheme would not be caught on the following June 2nd by using some delayed payment to go on June 3rd. Complex scheme but nevertheless, it didn't work and he and his friend went into prison for a decade for that.
This happened 30 years ago. It was a closed call and since then, they even added more restrictions. No forms of paper or electronic forms of money are accepted on that day. A complete inventory on a worldwide basis happens.
The bell rang.
- Ok class, time to go.
-------------------------
Wouldn't you love to live on such a planet ? :-)
Saturday, September 6, 2008
Fahrenheits changing every year
- Mom, how much is our house worth?
- Well, we live in a good neighborhood and we made sure to keep the house in good shape like
anybody else in our neighborhood dear. So, we paid 100 ounces of gold for it 30 years ago and it is about the same value today.
Imagine living on this planet.
Unfortunately, on our planet, we live in a world where we use currencies to measure values and this currencies constantly change.
Imagine if thermometers changed every year so that next year 80 degrees Fahrenheit would actually be 82 degrees. The thermometer vendors would be happy about this system because they keep selling thermometers years after years.
And then, we people talk about measures of temperature through time, they have to mention the year. Imagine reading a scientific article about temperature reading of the water in some pacific island affected by a volcano:
<>
(or Celsius, ...)
Imagine going to the garage station to fill up your car and you verify if he uses the current gallons, not last years gallons since these have changed.
Sound silly? Well actually we are not far off from that when we talk about the US dollars, the yen, the euro, the pound, the Canadian dollar or any other fiat currency. They are suppose to be a measure of value but they keep changing every year!!!!
Who do you think will be the first to complain about changing this system to a fixed measurement system, one that doesn't change every year, like the gold standard?
Answer: anyone getting richer with this system. This means those hedge funds who are only working on betting on variations of currencies. This is something that started when Nixon officially disconnected the US dollar from the Gold standard, these firms started popping up that are basically day trading on the exchange rates.
If Canadian Celsius goes up against UK's Celsius etc... they would be betting on this.
I meant currency :-)
Don't expect those folks to talk nicely about the virtue of the Gold Standard. They will use the Great Depression as an example of the misery the gold standard can bring. Total lie, it was a side effect of the Fractional Reserve Banking combine with the gold surplus the US was getting from payments from UK, France and Germany for materials for WWI
To have a fixed measurement, the measurement must not change and for this, it means the same amount in circulation. To that, we hear:
What about if the population increases by 30%, where would they get the additional gold to fit?
Well, I hope the amount of commodities will also increase by 30% otherwise some people will be starving. So, if the amount of commodities increase but the amount of gold stays the same, then the commodities value in gold will decrease and hence, it will take less gold to buy a given amount of commodities.
- Less gold? That means prices decline!
Well that's normal, there is more commodities but there is as much demand as before so the seller won't be sad...
-Wouldn't that lead to deflation?
Not if it is gradual and beside, we see price deflation on electronics every year and nobody complains!
We will cover more in future post/Articles. Stay tuned!
Take care
Phil
- Well, we live in a good neighborhood and we made sure to keep the house in good shape like
anybody else in our neighborhood dear. So, we paid 100 ounces of gold for it 30 years ago and it is about the same value today.
Imagine living on this planet.
Unfortunately, on our planet, we live in a world where we use currencies to measure values and this currencies constantly change.
Imagine if thermometers changed every year so that next year 80 degrees Fahrenheit would actually be 82 degrees. The thermometer vendors would be happy about this system because they keep selling thermometers years after years.
And then, we people talk about measures of temperature through time, they have to mention the year. Imagine reading a scientific article about temperature reading of the water in some pacific island affected by a volcano:
<
(or Celsius, ...)
Imagine going to the garage station to fill up your car and you verify if he uses the current gallons, not last years gallons since these have changed.
Sound silly? Well actually we are not far off from that when we talk about the US dollars, the yen, the euro, the pound, the Canadian dollar or any other fiat currency. They are suppose to be a measure of value but they keep changing every year!!!!
Who do you think will be the first to complain about changing this system to a fixed measurement system, one that doesn't change every year, like the gold standard?
Answer: anyone getting richer with this system. This means those hedge funds who are only working on betting on variations of currencies. This is something that started when Nixon officially disconnected the US dollar from the Gold standard, these firms started popping up that are basically day trading on the exchange rates.
If Canadian Celsius goes up against UK's Celsius etc... they would be betting on this.
I meant currency :-)
Don't expect those folks to talk nicely about the virtue of the Gold Standard. They will use the Great Depression as an example of the misery the gold standard can bring. Total lie, it was a side effect of the Fractional Reserve Banking combine with the gold surplus the US was getting from payments from UK, France and Germany for materials for WWI
To have a fixed measurement, the measurement must not change and for this, it means the same amount in circulation. To that, we hear:
What about if the population increases by 30%, where would they get the additional gold to fit?
Well, I hope the amount of commodities will also increase by 30% otherwise some people will be starving. So, if the amount of commodities increase but the amount of gold stays the same, then the commodities value in gold will decrease and hence, it will take less gold to buy a given amount of commodities.
- Less gold? That means prices decline!
Well that's normal, there is more commodities but there is as much demand as before so the seller won't be sad...
-Wouldn't that lead to deflation?
Not if it is gradual and beside, we see price deflation on electronics every year and nobody complains!
We will cover more in future post/Articles. Stay tuned!
Take care
Phil
Planet Gold - What this blog is about
What if this was our planet. Imagine that if the Bretton Woods treaty signed in Bretton Woods, NH in 1944 was based on Gold and not the US dollar.Imagine if Fractional Banking was not allowed.Imagine if banks were only allowed to lend the money that depositors had put into CD accounts or money market at a given rate for a given time...
We will discuss all those what if here.
What such a planet would look like - economically speaking - and what it means.
Hope to see you regularly...
We will discuss all those what if here.
What such a planet would look like - economically speaking - and what it means.
Hope to see you regularly...
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