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posted 8/20/2007 10:44:08 AM |
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I had an epiphany yesterday. I'll warn you now, this may piss you off. You may not wish to hear these thougths.

I was thinking of how money works. What is it that makes money worth anything. In the early years of US currency the money was backed by Gold. In fact, there was no money to begin with. Gold was the only form of monetary exchange. Gold was exchanged for "notes" that declared the value of gold deposited. Since gold was the only thing "worth" trading everywhere it became the currency. The true source of how gold became "worth" something goes farther back than the US.

Sometime between 1776 and 1933 the US dollar came into being. It was backed by gold. Because thats what the dollar really was, a bank note. A note stating the amount of gold you owned. Then in 1933 the US dollar was removed from the Gold standard. Meaning that it was no longer backed by gold.

This is the reason for much debate these days. How its just paper money, not worth the paper it is printed on. False!

(this is where you get pissed, right?)

Lets look back at gold. Why is gold worth anything? Because its gold? No. Its worth something because someone else wants it. Not because it have natural value. Something is only worth anything if someone else wants it. If no one wants it, its useless. Gold is only worth something because someone else wants it.

So, if gold is worthless without want, then so is the dollar. But, if the dollar is wanted even without gold behind it, its worth something.

Think about it. The dollar is of value because of want not gold.

The truth of the issue is, we could trade with seashells its all just a form of accounting the value of trade.

Yeah, I know, stfu.

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Aug 20 @ 10:55AM  
Problem is, A lot of countries are unloading they're dollars right now. One of the reasons we're sitting below Iran with (5) carrier groups right now is because Iran is threatening to trade in euros. China owns several trillion of our debt and has been looking to sell it as well. Suddenly, We discover glycol in our toothpaste, Tainted pet food, Lead in toys. . .

Just food for thought. Seven years ago, The dollar was worth $1.35 to the euro, Now it's reversed.............................................

Aug 20 @ 11:27AM  
Your continued donations keep Wikipedia running!
Gold standard
From Wikipedia, the free encyclopedia
Jump to: navigation, search
The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold.

Under the gold standard, currency issuers guarantee to redeem notes, upon demand, in that amount of gold. Governments that employ such a fixed unit of account, and which will redeem their notes to other governments in gold, share a fixed-currency relationship.

Supporters of the gold standard claim it is more resistant to credit and debt expansion. Unlike a fiat currency, the money backed by gold cannot be created arbitrarily by government action just by printing banknotes. This restraint prevents artificial inflation by the devaluation of currency. This is supposed to remove "currency uncertainty," keep the credit of the issuing monetary authority sound, and encourage lending. Nevertheless, countries under a not truly 100% gold standard, like countries simultaneously using manipulated paper currencies, underwent debt crises and depressions throughout the history of its use with the Central Bank manipulation and inflation of the currency as the U.S. experienced in its Panic of 1819 after its Second National Bank was chartered in 1816.

The gold standard is no longer used in any nation, having been replaced completely by fiat currency. However, it is still in use by some private institutions.

Contents [hide]
1 Why gold?
2 Early coinage
3 History of the modern gold standard
3.1 The crisis of silver currency and bank notes (1750–1870)
3.2 Establishment of the international gold standard
3.2.1 Alternate currencies
3.2.2 Effects on taxation
3.2.3 Effects on rural communities
3.2.4 Effects on interest rates
3.3 Gold standard from peak to crisis (1901–1932)
3.3.1 An increase in living standards
3.3.2 Abandoning the standard to fund the war
3.3.3 Return to the gold standard
3.4 The depression and Second World War (1933–1945)
3.4.1 The London conference
3.4.2 The gold ban
3.4.3 Stabilizing global finance
3.4.4 British hesitate to return to gold standard
3.5 Post-war international gold standard (1946–1971)
4 Theory
4.1 Differing definitions of gold standard
4.2 Effects of gold-backed currency
4.2.1 Perceived stability offered by gold standard
4.2.2 Mundell-Fleming model
5 Advocates of a renewed gold standard
6 Gold as a reserve today
7 See also
8 References
8.1 Articles
9 External links

[edit] Why gold?
Due to its rarity, durability, and the general ease of identification through its unique color, weight, ductility and acoustic properties, gold is a commodity that merchants and traders came to select as a common unit of account - thus it has long been used as a form of money and store of wealth.

A large variety of commodities have been used for money, including such unlikely candidates as cowrie shells and tobacco leaves. The desirable properties for a material to choose as a basis for money are (in no particular order):

Stability of quantity
Freedom from intrinsic price fluctuations
Gold meets all of these criteria, and is arguably the only material in the world that does. The quantity of gold available to the human race has not varied significantly in centuries, and the addition from mining activities is small and predictable. The majority of the stock is used in its "function" as a store of value. The only other market demands are for electronics, dentistry and jewelry. The use in jewelry and other artifacts is arguably as much for its significance as a store of value as for its decorative properties. The other two usages are tiny in proportion to the quantity stored as bullion, and the demand for dental purposes is declining as preferences change to more natural-looking alternatives. Any other commodity would introduce distortions in the value of money in response to changes in the balance between its own supply and demand.

The exact nature of the evolution of money varies significantly across time and place, though it is believed by historians that gold's high value for its beauty, density, resistance to corrosion, uniformity, and easy divisibility made it useful both as a store of value and as a unit of account for stored value of other kinds — in Babylon, a bushel of wheat was the unit of account, with a weight in gold used as the token to transport value. Early monetary systems based on grain used gold to represent the stored value. Banking began when gold deposited in a bank could be transferred from one account to another by a giro system, or lent at interest.

Its high density means that attempts to extend it by alloying with other metals are easily detected (as is noted in the famous story of Archimedes and the King of Syracuse. Few metals are more dense. Of the more easily obtainable ones, only osmium (22.6), iridium (22.4), platinum (21.45), rhenium (21.0) and tungsten (19.35) are denser than gold (19.32). All except tungsten are priced nearly as much as gold or far higher. An alloy of gold and tungsten would be difficult and impractical to create. [1]

When used as part of a commodity money system, the function of paper currency is to reduce the danger of transporting gold, reduce the possibility of debasement of coins, and avoid the reduction in circulating medium to hoarding and losses. The early development of paper money was spurred originally by the unreliability of transportation and the dangers of long voyages, as well as by the desire of governments to control or regulate the flow of commerce within their dominion. Money backed by a specie sometimes is called representative money, and the notes issued often are called certificates, to differentiate them from other forms of paper money.

Through most of human history, however, silver was the primary circulating medium and major monetary metal. Gold was used as an ultimate store of value, and as means of payment when portability was at a premium, particularly for payment of armies. Gold would supplant silver as the basic unit of international trade at various times, including the Islamic Golden Age, the peak of the Italian trading states during the Renaissance, and most prominently during the 19th century. Gold would remain the metal of monetary reserve accounting until the collapse of the Bretton Woods agreement in 1971, and it remains an importan

Aug 20 @ 11:44AM  
You are absolutely correct. It's only worth something if someone wants it. An actual dollar bill, so I have been told, is worth about 31 cents including special inks and paper. The same for all other denominations. however, a quarter, at cost would be worth about 14 cents.. and a penny is worth a penny. So the only money that's worth what it says it is, is a penny.

Aug 20 @ 1:52PM  
lickrick, yes your right. But that has more to do with the Oil standard than the gold standard. That is a completely different topic, the oil standard. The push to convert to the Euro is why they keep harping about the Amero. Oddly enough, I would speculate that they are looking to create a world currency which is close to the gold standard. Not like it, just close in theory.

Nacho, actually if you melt down a penny the base metals are worth 7 to 8 cents. Weird huh? So, why do we still need the penny? Because all taxes are based on the penny. Unless you want them to round taxes up to the nearest nickle?

Aug 20 @ 5:13PM  
I'm not pissed

I've blogged about money in the past, and ...well no one cares. I'm not going to go on and on here, but if you haven't already heard of this...I urge you to check out "Ithaca Hours"

form of currency being used in and around Itaca NY. It's perfectly legal since "money" is anything that two parties agree upon. whether it be rocks, animals, sea shells....Legal Tender is needed for little else besides paying taxes.

Interest free business loans...and the currency stays local. A nice way to say FU to the banks and corporations that would take from the community.

People don't believe me when I tell them that the dollar in my hand is worth nothing...that it's backed by nothing, and that the federal reserve isn't federal at all.

Ithaca Hours

check it out!

Aug 20 @ 5:58PM  
The federal reserve is a tool that Europe uses to control our economy and military.

Correct me if I'm wrong, But don't 5 out of the 7 people that actually own the federal reserve actually hail from Europe?

Aug 20 @ 6:01PM  
Oh, By the way, GREAT topic nativeamr35. I happen to think these issues are vital to our future in this country and enjoy discussing it "even" on a (SEX) site.


Aug 20 @ 6:01PM  
Thanks for the info BusterHymen, thats sounds like something worth checking out.

Lickrick, I though most of the original settlers were from Europe?

Just teasing.

Aug 20 @ 6:03PM  
Your welcome Lickrick. Once I made the choice to post ideas like these I decided to post them to every outlet I could find.

i.e. These posts are placed in many blogs. Not just here. But your right, is not just a sex site. Its a community and communities share knowledge.

Aug 20 @ 6:24PM  
If you want to look into the history of the Federal Reserve, there are some great documentaries on-line. One is titled the "Money Masters" I think.

and if you're intersted in how it came to be this last time...(I believe Jackson was the last to have the country debt-free) you might want to look into a book called "The Creature from Jekyll Island"

I found a site with a fantastic summary by the author...I'll post if I can find it again.

Aug 20 @ 6:33PM  
thanks Buster, the links are welcome.

I have done alot of study in the area myself and have for years before.

Aug 20 @ 10:43PM  
Just my tow bars of silver.. it' not the want, but the processes of extraction, etc... If you're into this sort of thing, then I recommend Adam Smith's Wealth of Nations, and/or Karl Marx's Capital (volumes 1-4).

Aug 21 @ 5:58AM  
Actually, the cost of extraction plays little part in how much value the minerals have. Mined ore is valued based on "Rents" not cost.

Mined ore rents

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