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The gold standard
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besson3c
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Jan 8, 2016, 07:42 PM
 
When I hear politicians and other activists talking about this it makes my blood boil. This is incredibly backwards, but I'm posting this here in the lounge because I don't intend to get political with this, but technological.

The reason why it is backwards is the same reason why cash and coins will soon be obsolete. It costs money to mine, manufacture (in the case of coins/cash), refine, store, and secure. It can be stolen. If you want to secure it it needs to be held by another entity like a bank, which carries with it its own set of problems and shackles (here and in third world countries in particular).

The future is digital cash and other forms of digital currencies. Bitcoin is not regulatory friendly which means that some people love it (geeks, libertarians, etc.), others hate it (law enforcement), to others it is inaccessible. It will never carry with it the convenience of more liquid forms of currency such as traditional cash and credit. However, there are more regulatory friendly digital currencies on the horizon that will strike a better balance here.

When these are ready for prime time, the world will change in a profound way. The cost of transferring value from country to country and person to person will be much less. There are stats that say that there is a 10% overhead in transferring value to individuals in third world countries, and this is assuming that there is nothing unethical involved with those involved for this to exchange hands. This digital currency will be direct without as many middlemen involved.

As with all technologies there will be challenges and hurdles, but to hear some talk about returning to the gold standard to me is the equivalent of urging us to return to horses and buggies.
     
The Final Dakar
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Jan 8, 2016, 07:54 PM
 
pssst. Wrong forum.

Edit: psst. I can't ****ing read
( Last edited by The Final Dakar; Jan 8, 2016 at 08:07 PM. )
     
The Final Dakar
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Jan 8, 2016, 08:08 PM
 
Originally Posted by besson3c View Post
When these are ready for prime time, the world will change in a profound way. The cost of transferring value from country to country and person to person will be much less.
Don't worry, banks will find away. Why do we still get charged ATM fees?
     
besson3c  (op)
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Jan 8, 2016, 08:13 PM
 
Originally Posted by The Final Dakar View Post
Don't worry, banks will find away. Why do we still get charged ATM fees?
Because those transfers go through networks they control.

The principles of digital cash are either where you have a cryptocurrency like Bitcoin which is itself a currency that you mine, or you have a cryptocurrency that is a digital representation of funds that exist in the real world, backed by a bank account, security, or some sort of financial apparatus.

The difference is, with a digital currency you would top up your account at some point, and then once your money is inside this system, transfers from within this system can cost considerably less - even transfers that involve currency conversions so long as you have competing digital cash brokers that compete to give you the cheapest conversion rates.

Once digital cash is inside an ecosystem like this, unless the platform itself is a property of a bank (which doesn't seem terribly likely at this point as most banks are not this progressive and forward thinking), the transfers within the system will not involve a bank at all.
     
starman
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Jan 8, 2016, 08:55 PM
 
Hahahahaha. BITCOIN?


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OAW
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Jan 8, 2016, 08:58 PM
 
Originally Posted by The Final Dakar View Post
Don't worry, banks will find away. Why do we still get charged ATM fees?
I don't even mind paying a fee. What I do mind is how when ATM's first came on the scene the banks swore on a stack of bibles that as the networks expanded the fees would decrease. Economies of scale and all that jazz. Yet somehow the exact opposite happened. Imagine that.

OAW
     
besson3c  (op)
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Jan 8, 2016, 09:07 PM
 
Originally Posted by starman View Post
Hahahahaha. BITCOIN?


To be clear, I don't think Bitcoin is the future, in case I gave you that impression. Not all cryptocurrencies work with the same principles.
     
ghporter
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Jan 8, 2016, 09:20 PM
 
Digital transactions are only worth what people think they're worth. Without something that everybody agrees upon as having a hard value, monetary systems collapse.

The dollar's value is based on "the good faith and credit of the US Government." Bitcoin is based on Internet pr0n and money laundering, if you believe half of what you read about it. You GOTTA have something that the paper/metal disc/digital fiction represents. That's a major principle of economics.

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Waragainstsleep
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Jan 8, 2016, 09:21 PM
 
What will happen to currency when 3D printers destroy intellectual property values by making it possible to print any object you like from a photo or a description? I figure the fashion industry will be the first to suffer.
I have plenty of more important things to do, if only I could bring myself to do them....
     
besson3c  (op)
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Jan 8, 2016, 10:03 PM
 
Originally Posted by ghporter View Post
Digital transactions are only worth what people think they're worth. Without something that everybody agrees upon as having a hard value, monetary systems collapse.

The dollar's value is based on "the good faith and credit of the US Government." Bitcoin is based on Internet pr0n and money laundering, if you believe half of what you read about it. You GOTTA have something that the paper/metal disc/digital fiction represents. That's a major principle of economics.

And, like I said, you can do this with digital currency. You can have your digital currency backed by money in a bank account, or any kind of traditional investment.
     
John B. Smith
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Jan 8, 2016, 10:45 PM
 
I agree with the OP that gold is a much better standard than fiat currency, which is essentially Monopoly money. Gold is also embraced by the tech business as a more stable choice, and gold can be very easily repurposed and reinvested in times of crisis. A gold app on your phone, + Apple Pay = a stable currency with almost universal convertibility.
     
starman
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Jan 8, 2016, 10:56 PM
 
Originally Posted by besson3c View Post
And, like I said, you can do this with digital currency. You can have your digital currency backed by money in a bank account, or any kind of traditional investment.
Except the day will probably come when the crypto gets cracked and all the money is worthless.

We have yet to get replicators, so gold is fine.

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besson3c  (op)
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Jan 8, 2016, 10:59 PM
 
Originally Posted by John B. Smith View Post
I agree with the OP that gold is a much better standard than fiat currency, which is essentially Monopoly money. Gold is also embraced by the tech business as a more stable choice, and gold can be very easily repurposed and reinvested in times of crisis. A gold app on your phone, + Apple Pay = a stable currency with almost universal convertibility.

I didn't say that gold is a better standard than fiat currency. I think gold is a terrible currency.
     
besson3c  (op)
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Jan 8, 2016, 11:05 PM
 
Originally Posted by starman View Post
Except the day will probably come when the crypto gets cracked and all the money is worthless.

We have yet to get replicators, so gold is fine.

Somebody could crack into a bank just the same, the same checks and balances exist in banks and digital currency: HSMs, multiple encryption techniques, multiple networking layers, strict access policies, etc. We live in a world where everything exists in the digital realm that could, in theory, could be cracked, but it very rarely is when the right technologies are applied the right way. The same is true of digital cash/currency.

Do I need to repeat the reasons why gold is a terrible currency?

1) It requires significant resources to mine
2) It requires significant resources to secure
3) It can be stolen

Digital currencies, on the other hand, are a much more cost effective way to represent value. Gold has no inherent value, we just decided that it should have value in a rather abstract and arbitrary way.

Digital currencies are also a major benefit to third world countries in that they don't require the same resources to transport, broker fees, etc.

Cash, coins, and even plastic cards that we carry with us will soon be obsolete, as will tying your payment instrument to your personal identity.
     
besson3c  (op)
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Jan 8, 2016, 11:15 PM
 
The one thing that BitCoin got right, and what I think appeals most about it, is the concept of anonymous, private transactions. The extent to which BitCoin provides private transactions is not government-friendly, but the privacy also comes in the form of the transaction data not including your name or any personal identifiable information, unlike credit cards.
     
John B. Smith
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Jan 8, 2016, 11:52 PM
 
Originally Posted by besson3c View Post
I didn't say that gold is a better standard than fiat currency. I think gold is a terrible currency.
Hmm. You only think that because you do not understand the economic concept that gold is a fiat currency.

Gold is inherently worthless (as a substance) but it can be easily transferred and converted. Especially in the digital era, when real time market apps can tell you an instant valuation of your gold specimen.

The best thing about it is that the government can't just print a bunch of gold whenever it runs out of money. Gold has to be created. Not printed. Therein lies the difference, young padawon.
     
besson3c  (op)
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Jan 9, 2016, 01:02 AM
 
Originally Posted by John B. Smith View Post
Hmm. You only think that because you do not understand the economic concept that gold is a fiat currency.

Gold is inherently worthless (as a substance) but it can be easily transferred and converted. Especially in the digital era, when real time market apps can tell you an instant valuation of your gold specimen.

The best thing about it is that the government can't just print a bunch of gold whenever it runs out of money. Gold has to be created. Not printed. Therein lies the difference, young padawon.

Your thinking here is outdated.

Gold is a terrible currency not because fiat currency is better, I never claimed that, but because it is fundamentally flawed when compared to the promises of digital forms of currency. Countless experts have predicted the end of physical forms of currency such as cash, coins, and gold. One of these (who may not be an expert, but is somebody we both know a little about) is Tim Cook.

Apple Pay will no doubt eventually embrace digital cash. Right now it is just a wallet (and one of several), a great one at that, and certainly a stepping stone to the direction we are going in payments, but not the ultimate target.
     
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Jan 9, 2016, 02:03 AM
 
Originally Posted by ghporter View Post
Digital transactions are only worth what people think they're worth. Without something that everybody agrees upon as having a hard value, monetary systems collapse.

The dollar's value is based on "the good faith and credit of the US Government." Bitcoin is based on Internet pr0n and money laundering, if you believe half of what you read about it. You GOTTA have something that the paper/metal disc/digital fiction represents. That's a major principle of economics.
But at the end of the day even "hard" assets like gold or diamonds are only with what people think they are worth. It's not as if they have any sort of intrinsic value that is in any way commensurate with what we pay for it.

OAW
( Last edited by OAW; Jan 9, 2016 at 11:33 AM. )
     
ghporter
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Jan 9, 2016, 11:14 AM
 
Originally Posted by besson3c View Post
And, like I said, you can do this with digital currency. You can have your digital currency backed by money in a bank account, or any kind of traditional investment.
What is that "money in a bank account" backed by??

There has to be something that is inherently valued as the foundation of any monetary system. Gold worked for a long time, but today it's more a matter of basing currency on the value of a bunch of things, as in "the market", whether that's something like a stock market, the value of a bank's collateral on thousands of loans, or whatever.

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besson3c  (op)
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Jan 9, 2016, 01:05 PM
 
Originally Posted by ghporter View Post
What is that "money in a bank account" backed by??

There has to be something that is inherently valued as the foundation of any monetary system. Gold worked for a long time, but today it's more a matter of basing currency on the value of a bunch of things, as in "the market", whether that's something like a stock market, the value of a bank's collateral on thousands of loans, or whatever.
A currency, but a fluid one. It could be any country's currency, or really anything else that is legally recognized as having value.

That's the thing. Deciding that some piece of metal has value or some piece of paper has value is arbitrary. Whatever that arbitrary thing is doesn't really matter so much though. What matters is that it is abstracted. It doesn't have to be something you touch or something that is produced. Stock is rather abstract, but we are comfortable with owning it. I think it is a matter of time before we are comfortable with some form of digital currency, because their technological, economical, and practical advantages are clear.
     
besson3c  (op)
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Jan 9, 2016, 01:09 PM
 
There is an interesting opportunity with combining loyalty programs with payments. In the digital world, there is nothing stopping each major retailer from having its own currency, and currency conversion is a trivial matter. If there is discomfort with relating everything to the country's fiat currency, maybe some will relate it to Apple bucks, Walmart dollars, or whatever. The private sector could absolutely maintain a dominant currency if permitted by their governments. They already do if you consider stock a currency. Maybe stock will be treated as currency. It doesn't really matter - it's all arbitrary anyway.

In the digital world where there is nothing physically produced, it takes the complexity out of converting currencies in taking into account the cost of physically creating that currency.
     
turtle777
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Jan 9, 2016, 07:32 PM
 
I was trying to hold back, and not get involved in this thread, but shit, here we go.

Before we even go further, we have to revisit the PURPOSE and FUNCTION of MONEY:

1. Medium of exchange: Money can be used for buying and selling goods and services. If there were no money, goods would have to be exchanged through the process of barter (goods would be traded for other goods in transactions arranged on the basis of mutual need). For example: If I raise chickens and want to buy cows, I would have to find a person who is willing to sell his cows for my chickens. Such arrangements are often difficult. But Money eliminates the need of the double coincidence of wants.

2. Unit of account: Money is the common standard for measuring relative worth of goods and service.

3. Store of value: Money is the most liquid asset (Liquidity measures how easily assets can be spent to buy goods and services). Money’s value can be retained over time. It is a convenient way to store wealth.
A gold-backed system (which gold standard falls under) recognizes that currency (i.e. paper or fiat money) is really good at 1., and ok at 2., but bad a 3. Physical gold (bullion) is really good at 2. and 3., but bad at 1.

When it comes to the future (digital), there is no reason to operate in a purely fiat environment.
https://www.bitgold.com is an example of the future. BitCoin is NOT, because it's nothing else than digital fiat currency.
Fiat currencies are a perfect vehicle for governments and central banks to manipulate, rip-off people and transfer wealth from the masses to the power that be.

People don't realize today how badly the fiat currency will hurt us once this debt ridden system implodes.
$200 Trillion in debt worldwide is only possible in a fiat currency system. Once this comes home to roost, the ensuing collapse will make people understand that it's NOT a good idea to create currency without any backing at all.
And it's not good to trust a private banking cartel or the government with corrency.

-t
     
el chupacabra
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Jan 10, 2016, 12:32 PM
 
All Money is Fiat money
It’s become a meme in pop culture that cigarettes are often used as currency in prison (I have no idea whether this is still in fact true). We all instinctually understand how a cigarette-based currency system would work, right: people would mass cigarettes, use them as a medium of exchange and store of value, etc., but we don’t think about the implication.

In both cases, what makes Tide detergent, or cigarettes, or the US dollar, or Bitcoin, or whatever, a currency, is simply common agreement that these an item of currency is valuable. What makes it possible to buy drugs with Tide is not because Tide is useful as a detergent. It’s because drug dealers and users have agreed that it is currency.

This is, of course, equally true of gold. Gold’s uses in industry are marginal to its appeal. What makes gold valuable is that we’ve all agreed since time immemorial that it’s valuable.
Gold in a sense is fiat money too. The cloth, that paper money is made of has some value as a commodity, the medal that gold coins are made of has some value as a commodity. However the value of gold is just as much faith based as paper money. The only reason people take gold's value more seriously is because it's an old idea, from a culture (say the Romans or whatever... ) who essentially took over the world. Gold wasn't that valuable to the Aztec and Inca for example.
Gold can be deflated and inflated just like any other currency.

The fact that gold can't be mined/produced and worked with as easy as paper isn't necessarily a good thing. It means you need a large organized effort by a mafia overlord such as a government, a corporation etc to produce. Which means they have even more power over your currency which extends to more power over you. So backing paper money with with gold is just backing one fiat currency with another fiat currency.

Im starting to think it might be more probable than we think for society's faith in gold to completely disappear. We already see in recent history the price of gold fluctuating erratically just like any other fiat currency.

As for digital currencies, I wonder what will happen to all of us when a coronal mass ejection (a type of solar flare) inevitably hits us.
Solar Flares and Coronal Mass Ejections - Could an extremely powerful solar flare destroy all the electronics on Earth? | HowStuffWorks
     
besson3c  (op)
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Jan 10, 2016, 01:06 PM
 
Originally Posted by turtle777 View Post
I was trying to hold back, and not get involved in this thread, but shit, here we go.

Before we even go further, we have to revisit the PURPOSE and FUNCTION of MONEY:



A gold-backed system (which gold standard falls under) recognizes that currency (i.e. paper or fiat money) is really good at 1., and ok at 2., but bad a 3. Physical gold (bullion) is really good at 2. and 3., but bad at 1.

When it comes to the future (digital), there is no reason to operate in a purely fiat environment.
https://www.bitgold.com is an example of the future. BitCoin is NOT, because it's nothing else than digital fiat currency.
Fiat currencies are a perfect vehicle for governments and central banks to manipulate, rip-off people and transfer wealth from the masses to the power that be.

People don't realize today how badly the fiat currency will hurt us once this debt ridden system implodes.
$200 Trillion in debt worldwide is only possible in a fiat currency system. Once this comes home to roost, the ensuing collapse will make people understand that it's NOT a good idea to create currency without any backing at all.
And it's not good to trust a private banking cartel or the government with corrency.

-t

Turtle,

I see your point about the volatility and fragility of fiat currencies, particularly ours, but I think the solution in the digital realm is multiple brokers of multiple currencies providing complete flexibility over what currency to use for paying for stuff, and to add to fiat currencies currencies run from within the private sector, as I described above.

There will always be currencies in competition, fluctuation, volatility to varying degrees, but the difference is that with what I'm describing our national economies and personal wealth is not tied to the performance of one currency.
     
starman
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Jan 15, 2016, 05:24 PM
 

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turtle777
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Jan 15, 2016, 09:59 PM
 
Wow.

I never bought into Bitcoin. The problem I always perceived was that there is nothing unique to it.
There are already a lot of competing electronic currencies, what keeps people from adding new ones and "diluting" the value ? Nothing.
In the end, even Bitcoin is a faith-based currency, just like paper money.

-t
     
besson3c  (op)
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Jan 15, 2016, 10:44 PM
 
Originally Posted by turtle777 View Post
Wow.

I never bought into Bitcoin. The problem I always perceived was that there is nothing unique to it.
There are already a lot of competing electronic currencies, what keeps people from adding new ones and "diluting" the value ? Nothing.
In the end, even Bitcoin is a faith-based currency, just like paper money.

-t

There are not really many competing electronic currencies. If you are considering systems like PayPal an electronic currency, they are basically just a cloud based bank and payment gateway. I believe the idea behind electronic/digital currency is that the value is represented and transferred outside of the usual banking and credit card networks.

BitCoin was unique in that it was a new crypto-currency that was not backed by anything outside of the ecosystem. It's main problems were:

1) it couldn't scale. It ended up costing more in electricity to mine than a BitCoin dollar was actually worth

2) It was not regulatory friendly, which was either good or bad depending on your point of view. It ended up attracting a lot of dodgy sorts of characters making dodgy sorts of transactions

3) They were unable to build an ecosystem surrounding it (e.g. point of sale terminal apps, participating retailers, etc.)
     
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Jan 16, 2016, 04:47 AM
 
From the article:
The divide has led over the last six months to death threats against Bitcoin developers and hacking attacks that have taken down Internet providers.
Something I've noticed lately is how spineless people have become. "Someone sent me a death threat on Twitter!" Poor thing! Someone on the internets, who doesn't even have enough courage to say it to your face, has said they're going to kill you. I've had threats written on notes and placed on my personal property, but it still applies. Anyone who is that chickensh*t isn't going to come after you, it's just posturing and impotent rage, but it's enough to make these guys quit? It takes stones to effect real change, and changing the world's currency certainly qualifies. Pull your pants up, gentlemen.
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turtle777
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Jan 16, 2016, 03:49 PM
 
Originally Posted by el chupacabra View Post
Gold in a sense is fiat money too. The cloth, that paper money is made of has some value as a commodity, the medal that gold coins are made of has some value as a commodity. However the value of gold is just as much faith based as paper money.
Oh my, so many half-truths, misconceptions and ignorance about Gold.
Why do you guys think Gold has become what it is, essentially THE true currency for many millenniums. It's obviously NOT because Gold is intrinsically worthless.
Gold has many uses, and therefore, has much intrinsic value.

Obviously, Gold is used for jewelry. It's properties hare perfect. It can be easily worked, applied to almost anything, it can be rolled/hammered very thin, and it doesn't corrode. All of this makes Gold superior to most other materials for jewelry.

Dentistry: Gold is known to have been used in dentistry as early as 700 B.C.

Glass making: used as a reflective coating or for decoration (pigments)

Electronics: Gold is the highly efficient conductor, and it doesn't corrode. A small amount of gold is used in almost every sophisticated electronic device. This includes: cell phones, calculators, personal digital assistants, global positioning system units and other small electronic devices.

Lubricant (aerospace): Gold is also used as a lubricant between mechanical parts. In the vacuum of space, organic lubricants would volatilize and they would be broken down by the intense radiation beyond Earth's atmosphere

Medicine: Gold is used in the healthcare industry in a variety of forms and applications. Uses are for Arthritis and Cancer treatment, in diagnosis and medical equipment, or for implants.

So, please, don't give me this "gold is useless" crap. It reeks of ignorance.


Originally Posted by el chupacabra View Post
The only reason people take gold's value more seriously is because it's an old idea, from a culture (say the Romans or whatever... ) who essentially took over the world. Gold wasn't that valuable to the Aztec and Inca for example.
Sigh, see above.
And just because Gold wasn't useful to some people, doesn't mean it's universally useless.
There are plenty of uses where there are very few alternatives.

Originally Posted by el chupacabra View Post
Gold can be deflated and inflated just like any other currency.
And how is that ? By what mechanism ?
I suspect that whatever "example" you give will not show how Gold is deflated or inflated directly, but rather, some form of manipulation, "propaganda" or restriction of access. You can't just make up gold out of shit.

Originally Posted by el chupacabra View Post
Im starting to think it might be more probable than we think for society's faith in gold to completely disappear. We already see in recent history the price of gold fluctuating erratically just like any other fiat currency.
LOL, that's probably why both Central banks and governments worldwide have been net BUYERS of gold for the past few years.

And fluctuation of Gold measured in a fait currency is a useless observation.
It is as much the fiat currency value that's fluctuating as it is the true value of Gold.

Finally, let's take a step bak.

Does this look like something that's losing value ?



-t
     
besson3c  (op)
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Jan 16, 2016, 04:27 PM
 
Turtle, what post are you responding to? He didn't say gold is useless, it said the valuation is faith based.

Lots of things are useful and rare, but the material thing we decide to use as a basis of currency is pretty arbitrary. Why not silicon wafers? Why not aluminum, or barrels of oil?

I believe we will soon reach a day where currency is not tied to material things we can touch, but finally embrace the abstract. This company represents what I'm talking about: a regulatory-friendly digital currency based on the country's fiat currency (for now), but with all of the potential in the world to support an unlimited number of currencies, and for being tied to a fiat currency to be merely transitional. They are a brand new startup, so it's way too early to write the book on companies like this, but I think this is general direction things are going.
     
turtle777
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Jan 16, 2016, 06:32 PM
 
Originally Posted by besson3c View Post
Turtle, what post are you responding to? He didn't say gold is useless, it said the valuation is faith based.

.
What is that supposed to mean ?

It costs on average more than $1,000 to get one oz of Gold out of the ground.
How is gold then overvalued at currently less than $1,200 ?

This is just silly.

-t
     
besson3c  (op)
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Jan 16, 2016, 08:51 PM
 
It costs to mine other minerals, to make silicon wafers, and to extract oil from the ground too.

I'm not really sure what your point is here, or what you think mine is.
     
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Jan 16, 2016, 09:08 PM
 
From a pure supply and demand perspective diamonds are essentially worthless. They are ridiculously abundant in Africa but the DeBeers cartel controls most of the mines and keeps the supply coming out of the ground tightly controlled. IOW they introduce artificial scarcity into the market. Add to that the fact that chicks dig them and we end up with a situation where the going rate for diamonds is far beyond what it should be. It's all a game. At the end of the day any asset is worth what the next fool is willing to pay you for it. Period.

OAW
     
turtle777
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Jan 16, 2016, 09:13 PM
 
Originally Posted by besson3c View Post
It costs to mine other minerals, to make silicon wafers, and to extract oil from the ground too.

I'm not really sure what your point is here, or what you think mine is.
Gold's value is NOT faith based or arbitrary.

There is a significant floor to the value of gold, based on the cost of mining it.
And because gold has a lot of uses and desirable properties, it's not just a shiny shell or rock.

-t
     
OAW
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Jan 16, 2016, 09:16 PM
 
^^^

This makes no sense. Gold is inherently valuable because it costs money to mine it? Regardless of whether or not people could care less about it once it's out of the ground?

OAW

PS: Don't get me wrong. I'm not saying gold is worthless by any stretch of the imagination. I'm just saying that gold is not food, water, or air. It doesn't have inherent value like that because at the end of the day it's a WANT not a NEED.
     
turtle777
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Jan 16, 2016, 09:54 PM
 
Sigh, you guys are really binary.

So your argument is that everything except food and water is inherently invaluable ?

-t
     
TheWOAT
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Jan 16, 2016, 10:44 PM
 
The gold standard... Are there any proponents here? How would a central bank implement a QE program with a gold backed currency?
I believe gold is valuable, just ask Chinese residents right now.
.......
     
besson3c  (op)
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Jan 16, 2016, 11:04 PM
 
Originally Posted by TheWOAT View Post
The gold standard... Are there any proponents here? How would a central bank implement a QE program with a gold backed currency?
I believe gold is valuable, just ask Chinese residents right now.

I guess I've made my opinion clear, but I think currencies based on material things such as gold, cash, or the like is antiquated.

Hopefully we can keep this thread open long enough that when cash, coins, and gold become almost completely irrelevant I can say that I told you guys so
     
turtle777
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Jan 16, 2016, 11:11 PM
 
Originally Posted by besson3c View Post
I guess I've made my opinion clear, but I think currencies based on material things such as gold, cash, or the like is antiquated.
Would you please explain why you think thy currencies backed by nothing and w/o intrinsic value are superior to currencies backed by something ?

I haven't heard a reason yet, only your opinion.

-t
     
TheWOAT
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Jan 16, 2016, 11:16 PM
 
How can a central bank 'stimulate' an economy under a gold backed currency? To expand credit wouldnt you also need to expand your supply of gold?
.......
     
turtle777
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Jan 16, 2016, 11:23 PM
 
Originally Posted by TheWOAT View Post
How can a central bank 'stimulate' an economy under a gold backed currency? To expand credit wouldnt you also need to expand your supply of gold?
Uhm, yeah. That's one of the ideas of a hard currency. Central banks are destroyers of wealth. Look at what the Fed has done to the middle class - QE has taken money from the 99% and given it to the 1%.

Exactly HOW is that desirable ?

It should be abundantly clear that the Fed has had no success with their policies, other than bringing us to the brink of another epic crash.

-t
     
besson3c  (op)
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Jan 16, 2016, 11:27 PM
 
Originally Posted by turtle777 View Post
Would you please explain why you think thy currencies backed by nothing and w/o intrinsic value are superior to currencies backed by something ?

I haven't heard a reason yet, only your opinion.

-t

I think I made my point, but I'll reiterate...

Wealth in modern society is not built around material things with intrinsic value, it is about value being represented in an abstract manner.

Bill Gates' wealth is not backed by rooms full of money somewhere in the world, it is backed by records of stock and equity (which are both abstract concepts in and of themselves), and many other forms of abstract legal records identifying his wealth. Of course, he also possesses stuff that is tangible that he can liquidate relatively effortlessly (cars, houses, etc.), but in today's day and age many of our assets are built around many abstract documents, records, and things with no intrinsic value. For example, a stock certificate is a piece of paper that most certainly does not equal the value of what it represents.

So, I think you are thinking about this all wrong.

It's not about wealth not being backed by something, it's about that something needing to be a tangible good. It doesn't need to be a tangible good. It can be a piece of paper saying that you have $5M. But why do we even need that literal piece of paper in the digital age? Digital cash is about finally recognizing that fact, and putting to rest the idea that our wealth needs to be represented by something tangible and non-abstract we can touch.
     
besson3c  (op)
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Jan 16, 2016, 11:28 PM
 
Originally Posted by turtle777 View Post
Uhm, yeah. That's one of the ideas of a hard currency. Central banks are destroyers of wealth. Look at what the Fed has done to the middle class - QE has taken money from the 99% and given it to the 1%.

Exactly HOW is that desirable ?

It should be abundantly clear that the Fed has had no success with their policies, other than bringing us to the brink of another epic crash.

-t

It's not, which is why I personally believe that our wealth need not be tied to a single national currency in the long run.
     
besson3c  (op)
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Jan 16, 2016, 11:34 PM
 
Really, our wealth can be tied to digital turtles. It doesn't really matter what that thing is, as long as it is legally recognized, accessible, and can be owned. The broker for this currency can reside in the public or private sector, so long as it can be regulated enough to restrict fraud and abuse. A government-run central bank need not be required.
     
TheWOAT
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Jan 16, 2016, 11:35 PM
 
Originally Posted by turtle777 View Post
Uhm, yeah. That's one of the ideas of a hard currency. Central banks are destroyers of wealth. Look at what the Fed has done to the middle class - QE has taken money from the 99% and given it to the 1%.

Exactly HOW is that desirable ?

It should be abundantly clear that the Fed has had no success with their policies, other than bringing us to the brink of another epic crash.

-t
Easy there, I never said it was desirable, or that it worked. I agree 100% with you on central banks. But Central Banks are in control, and QE is something they like to have in their toolbox. Ultimately currencies are based on confidence and faith.
.......
     
TheWOAT
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Jan 16, 2016, 11:39 PM
 
Originally Posted by besson3c View Post
It's not, which is why I personally believe that our wealth need not be tied to a single national currency in the long run.
As in One worldwide currency?
.......
     
besson3c  (op)
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Jan 16, 2016, 11:41 PM
 
Originally Posted by TheWOAT View Post
As in One worldwide currency?
No.
     
TheWOAT
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Jan 17, 2016, 01:20 AM
 


Can a gold standard do that? LOL.
.......
     
Cap'n Tightpants
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Jan 17, 2016, 02:37 AM
 
Originally Posted by turtle777 View Post
Would you please explain why you think thy currencies backed by nothing and w/o intrinsic value are superior to currencies backed by something ?

I haven't heard a reason yet, only your opinion.

-t
Bitcoin has inherent value too, when I was mining them on utility power it took ~$350 worth of electricity to mine 1 BC using dedicated ASIC-based miners.
"I have a dream, that my four little children will one day live in a
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ghporter
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Jan 17, 2016, 12:10 PM
 
Currency has to be "based on" something with inherent value. That may be a precious metal, like the old "gold standard" (which has not legally or technically existed for a very long time), or something else, such as the binding promise of a government that the currency will be redeemable for something else of value, such as tax liabilities. Experiments in "un-based" currency, such as Bitcoin, have failed to expand beyond a few applications and are essentially failures in the broadest sense of "currency."

Why is the dollar valuable? There are a lot of reasons. I like the simplicity with which Chris Mayer stated it in The Daily Reconing (April 8, 2014): "The U.S. dollar has value because the government levies $3 trillion in tax liabilities annually and accepts only U.S. dollars in payment — which only it issues. And there is the credible threat of penalties if you don’t settle up with dollars. In so doing, the government turns all of us into dollar chasers. It’s how a state, any state, can turn worthless pieces of paper into valued currency."

Essentially, the "basis" of the value of the US Dollar isn't gold reserves, it isn't a bunch of people in a dark and smoky room plotting to economically enslave us, or anything like that. The dollar has a value because it can be traded for things of inherent (extrinsic, intrinsic or abstract) value, AND there is an economic mechanism that ensures that the value of such trades is relatively stable - the US Government trades dollars for other currency (in both directions) to support that value.

Currency value doesn't just happen. Fiat currency has to have a mechanism to support it or it is waste paper. The reason Bitcoin isn't widely successful is not that it's a bad idea, but that there is no "dependable" authority/institution that promises that your Bitcoins will be redeemed for something else of value, no matter what. Bitcoins are essentially just digital IOUs without any mechanism to enforce the value of the repayment.

Glenn -----OTR/L, MOT, Tx
     
 
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