Real Money

[Tennesseahawk]

What is the prevailing wisdom, here on EO, what real money is?

Hint: What if the value of oil didn't go up; but the value of the dollar went down?

 

[scottm4211]

What do you mean?

 

[Dakota]

Gold according to the commercials

In reality, if the economy of a country fails, what we call money is worthless.
The real worth is in goods and services. And to everyone who bought gold because money will be worthless, I am sure gold will be worthless....If your hungry would you rather have bread and vegetables or gold?

 

[Tennesseahawk]

Gold according to the commercials

In reality, if the economy of a country fails, what we call money is worthless.
The real worth is in goods and services. And to everyone who bought gold because money will be worthless, I am sure gold will be worthless....If your hungry would you rather have bread and vegetables or gold?

You've got the answer, but it's not as simple as gold. It's commodities, for the most part. Oil, wheat, gold, are all forms of real money. Oil and wheat, however, are not permanent. Gold and other precious metals are. As long as oil, wheat, and other things are produced and traded, gold will be a form of money... regardless of what the world's currencies do. That's why gold and silver are in demand... they withstand the trends of civilizations and empires. IOW, the world's governments can screw up their economies to hell, and gold will still be king.

What I'm getting at is this... What is the US dollar, if it is not backed by gold or silver? It's a promise. That's all. A promise that the piece of paper is worth one dollar. It's not worth X amount of gold or silver... only a dollar. It's not even a promise by the United States government. It's a Federal Reserve promise. Private banks of the Federal Reserve determine what our currency is worth, according to how much money is printed.

Even in 1971, when our money went from being "United States Note" to "Federal Reserve Note", the meaning changed as well. I don't usually like wikipedia, but they explain it well:

"The difference between a United States Note and a Federal Reserve Note is that a United States Note represented a "bill of credit" and was inserted by the Treasury directly into circulation free of interest. Federal Reserve Notes are backed by debt purchased by the Federal Reserve, and thus generate seigniorage, or interest, for the Federal Reserve System, which serves as a lending intermediary between the Treasury and the public."

Essentially, we aren't even trading in currency. We're trading in debt.

Real money is what we used to deal with. Gold and silver certificates are considered real money. You could trade those in for real gold and silver. Even our money stated it was worth X amount in gold. Here's what that looked like:

 

[witness23]

My answer......

A .12 gauge shotgun.

 

[greg334]

I don't get the gold thing, the closest that it can be used for is shot pellets for that 12 gauge shotgun but outside of that, I still have the eggs, and the shotgun too.

 

[chefdennis]

Yea gold will be worthless...that is why george soros holds 11 ton of it...real phyical holdings, not paper gold....he doesn't have clue when it comes to money or gold...

Gold will always have value even when the US dollar is worthless...why do you think other world currencies are rising in value against the dollar...the dollar is are longer the world currency as it once was...Gold will always have value....

 

[mcavoy33]

Yea gold will be worthless...that is why george soros holds 11 ton of it...real phyical holdings, not paper gold....he doesn't have clue when it comes to money or gold...

That's only because that is the most efficient way to hold $50 million dollars in commodities. Its also not going to perish / rot like other commodities.

 

[chefdennis]

ahh 11 tons of gold...2000 lbs in a ton...32,000 oz per ton...352,000 total oz...gold at approx $1600 on oz....that a heck of alot more then 50 million dollars.....

 

[greg334]

I bet Soros is holding it as a hedge not as a vehicle, a bit of a difference.

The only two people who will actually make out with gold are the ones who sell it and those who sell air time to those selling it. Outside of that, gold is just the same as oil or wheat or frozen orange juice.

Money is not wealth, gold isn't either because it takes two who are willing to trade it for something that is of value.

 

[chefdennis]

and as i said, when the dollar is worthless there will be other world currencies to step up and buy any gold available...it will always have value....and it will always buy more eggs then any of us can produce....

And yes, most people that buy and hold gold, are buying it as a hedge..not a tools...but there could very soon be a time when it will be used as a form of currency....

 

[Dakota]

What i am saying is if I am hungry and food is scarce gold wont help much. Oh and I have some of those silver certificates and I don't think I could get silver for them

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[greg334]

Dennis, that's funny assumption.

How does one get currency without access to any markets and how does one use that currency when only a few have access to those markets.

I would think if the foundation of our economy collapses, so will the cell phone system, the internet and a whole bunch of other things. Are you going to get into your van and drive to Chicago?

So I cash in all my gold I discovered in my backyard and "sell it" to someone for £s but the guy who has the gas will only accept ¥ or the other guy with Diesel accepts ₯, then what?

By the way, the value is what others put on it. At $1600 an ounce, it may buy a lot of eggs right now but with a currency collapse it may only buy one egg because the egg guy doesn't need gold.

 

[MissKat]

It is our belief that we will return to bartering. Some will trade bullets for bread, others will take gold.

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[chefdennis]

The funny assumption is that you will be in "your backyard"...while those with significant holding in gold will be right there with you...when in truth, those holding significant gold will be long gone along with their holding to a country that will be more then happy to echange their currency for gold..when this economy starts going south at a accelerated pace...

Soros is now getting out of the hedge fund business and returning all money to investors...you think he is doing that because he is a nice guy...1st he wants to avoid new US disclosure laws and 2nd, he see's the hand writing on the wall...he has no morals as to how he makes his money, but no one can say he is a fool when it comes to how he handles the money he has,,,,

 

[greg334]

The funny assumption is that you will be in "your backyard"...while those with significant holding in gold will be right there with you...when in truth, those holding significant gold will be long gone along with their holding to a country that will be more then happy to echange their currency for gold..when this economy starts going south at a accelerated pace...

Well let's see ... people who hold 'significant' amounts of gold are those who don't need to barter or need to worry, they have their own little escape plans and will be long gone if they can get out of the country.

Those are a very small amount of people in our population - maybe less than 1% and don't impact me or you or any one at our level.

It is an assumption that you are making that the dollar will also not drag other currencies down or that gold will have a value above the $35 an ounce and be some super cure for the problems of a society that has faced what others have. I love to hear people repeating the bs line that gold through the ages has held its value when countries collapse but no proof of that ever happened and I think that is the base argument by the people selling it to stir up the emotion and fear.

Soros is now getting out of the hedge fund business and returning all money to investors...you think he is doing that because he is a nice guy...1st he wants to avoid new US disclosure laws and 2nd, he see's the hand writing on the wall...he has no morals as to how he makes his money, but no one can say he is a fool when it comes to how he handles the money he has,,,,

Actually Dennis, I don't care what he or Buffet or anyone else does because they can't and don't affect the markets outside of the emotion they stir up. This is atypical thing for many who seem to want to draw attention to Soros and his ilk. What matters is what our congress does and how they either get off their a**es and do something or allow things to happen. We are at fault for that, no one else can take the blame.

 

[Tennesseahawk]

It is our belief that we will return to bartering. Some will trade bullets for bread, others will take gold.

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That's what gold is, basically... bartering. You're trading one commodity for another. Bullets, if that happens, will be another commodity. A good example to look at would be Road Warrior with Mel Gibson. Anything could be used as a commodity... gas, cars, dog food, shotgun shells, even snakes.

Greg... then why has gold been used as currency for over 5000 years? Because it stands the test of time. It is permanent. It can be melted, and made into coinage. That coinage, when the issuing nation collapses, can be melted down again into different coinage or bars.

It does not mold, evaporate, or wash away. There is only so much gold. It cannot be produced, only mined. Yes, a farmer might have too much gold, and will only sell you some wheat if you give him a lot of it... that's called supply and demand. The same thing can be said of any other commodity. You can't eat oil either. But to some people it's worth something. To an Amish person, it's not. Gold is universal money.

When I was in the Gulf War, a bunch of us bought Saddam dollars, printed in Kuwait, thinking they'd be collectors items. If I had bought gold instead, I'd be happier today. LOL

 

[chefdennis]

ahhh greg you do realize that people, regular joes and janes hold enough gold to get them thru their retirement yrs just fine...and that alot of those sme people go "ex-pat" on a regular basis and are living every comfortably outside the US where they are not depending on the USS economy for their aily lives....

As for what will affect you, you can bet, what affects you will affect me, but id venture to say in a completely differnt way....Will the dollar collapse affect other currencies? Sure it will, but while they are affected, not all will collapse...the PIGS are going out in grand fashion, but other countries are till doing fine....there will always be a place and a value to gold...those holding it will do just fine...and to say that it will hold no value here after a economy collapse here, is to say there will be no recovery and that gold will hold no value as a tool to a recovery....both are wrong....

As to soros , gates, buffet, while their dealings are not to be confused with that of the ordinary investor, they do serve as a window as to how one can invest, but on a smaller basis....

by the way greg, are you telling me that you don't own property outside of the US?? And before you ask, if you take the time to back to post about going ex-pat a yr or so ago with Rlent...you will find the answer...and that was before this current econmic mess we currently are in..

And yes gold and silver and other commodities will be used a "barter"...and no, it won't be at a "market value" price....it will be at what you can get with it...and nothing more...and those that take it will be the ones that will make out when a "recovery" starts....

 

[Monty]

Everything you wanted to know about the gold standard, and more!

Gold Standard: The Concise Encyclopedia of Economics | Library of Economics and Liberty

You know, there is reported 173 million ounces of gold stored in Ft Know, valued at $43.00 an ounce.

Anyone know the price of gold today? Let me help you, $1612.00 an ounce .... maybe it's time we audited our gold reserve and revalue it?

Returning to a bimetal standard, (gold and silver), would cause a worldwide tsunami, but maybe we need one!

 

[Tennesseahawk]

Everything you wanted to know about the gold standard, and more!

Gold Standard: The Concise Encyclopedia of Economics | Library of Economics and Liberty

You know, there is reported 173 million ounces of gold stored in Ft Know, valued at $43.00 an ounce.

Anyone know the price of gold today? Let me help you, $1612.00 an ounce .... maybe it's time we audited our gold reserve and revalue it?

Returning to a bimetal standard, (gold and silver), would cause a worldwide tsunami, but maybe we need one!

I believe the US has sold off all of our gold. Ft Knox may just be a ruse now.