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View Full Version : Economic: "There isn't enough Gold for the Gold Standard"




NoOneButPaul
03-23-2012, 10:46 AM
I get this comment a lot...

How do you guys debunk it?

WilliamC
03-23-2012, 10:49 AM
Depends on who gets to set the exchange rate.

If the government does then there may not be.

If the free-market does then there will always be enough gold.

Besides, commodities based money need not be restricted to gold alone.

jkr
03-23-2012, 10:51 AM
nano scale application

there is PLENTY of gold

Sola_Fide
03-23-2012, 10:51 AM
For the definitive answer:

There Is No Shortage Of Gold
by Hans Sennholz

http://www.thefreemanonline.org/featured/no-shortage-of-gold/



"Declining prices do not call for contravening central bank maneuvers that hopefully stabilize prices.Actually, whether the given stock of money is large or small, it renders the desired exchange service. The popular notion that an increase in the stock of money is socially and economically beneficial and desirable is one of the great fallacies of our time. It has lived on throughout the centuries, embraced by kings and presidents, politicians and businessmen. It has shattered numerous currencies, inflicted incalculable harm, and caused social and political upheavals. It springs forth, again and again, no matter how often economists may refute it."

Original_Intent
03-23-2012, 10:58 AM
Another advantage to competing currencies:

Even if there were somehow "not enough gold" (not the case) but even if it were, there are almost infinite commodities that could be used to back currency that could meet any demand. But the fact that gold is scarce is actually a good thing to base a currency on. (There is a reason that leaves are not used as currency - because then money WOULD grow on trees, and everyone would spend all of their time harvesting money rather than doing anything productive!)

roho76
03-23-2012, 11:07 AM
Isn't gold just a ruler in the case of a gold standard. I think what the OP was talking about is everyone thinks they're going to be walking around with gold chillings in their pockets.

fisharmor
03-23-2012, 11:19 AM
As Rothbard put it, any amount of money is the "right" amount.
The problem that people are trying to illustrate when they say there isn't enough gold is that under such a standard a debt-based economy such as we have now would be impossible.
If the money supply is stagnant or even slightly deflationary, there is a serious disincentive to go into debt.
People would have to save money to undertake large projects, or would have to find alternate means of funding, such as true investment (which AFAIK is what stocks are supposed to be all about, anyway) as opposed to simply debt financing.
There's kind of 6000 years of history to look through to find out how people financed large projects, and believe it or not, debt and inflation aren't the primary means... they just are today.
And debt and deficit financing are robbing money from those who hold it.
When there is "enough money", it's not "enough", it's "as much as bankers want", which is always more than what it takes to be "stable", which dilutes the spending power of existing money.
The entire point of going on a commodity standard is to make sure there's "not enough money" as we understand it today.

seraphson
03-23-2012, 11:43 AM
http://mises.org/Community/wikis/economics/gold-as-money-faq.aspx

kuckfeynes
03-23-2012, 11:48 AM
That's the whole point, that's why gold is valuable and paper is not. It's rare.
"Gold standard" doesn't mean you'd be buying ice cream with physical gold, it's just used to back the currency so it couldn't inflate.
If we had remained on a gold standard all these years, that ice cream would probably still be a nickel.
But since "gold standard" confuses so many people I prefer Ron's model of calling rather for "competing currencies."
With a gold standard, that the government is truly being honest about, there's no reason to be worried about competition. X dollar = Y gold, that's it.

But they can't allow that because the dollar has been inflated so much, that as soon as it is legal to compete with the dollar, it would crash like a house of cards. Washington's lack of competition, due to their violently enforced monopoly over currency, is what allows it to inflate. For people that get hung up on the very limited amount of gold though and can't see the practicality of it, this can open their eyes to see that just because gold is the "standard" doesn't mean it's the only choice. It leaves the door open for all kinds of possibilities...

http://upload.wikimedia.org/wikipedia/commons/c/cf/New_Orleans_Coast_Lafourche_Railroad_Dollar.jpg
http://www.free-photos.biz/images/business/money/preview/the_city_bank_of_sydney_20_pound_note.jpg
http://www.freedomsphoenix.com/Uploads/004/Graph/Disney_dollarC.B.Dollar.jpg

William R
03-23-2012, 11:50 AM
Enough Gold To Restore the Classical Gold Standard

http://www.thegoldstandardnow.org/key-blogs/1173-enough-gold-to-restore-the-classical-gold-standard

rpwi
03-23-2012, 07:34 PM
Let me play both sides of the issue here..

The counter is that Ron doesn't advocate a gold standard per say...but rather a more broader based precious metal standard that would average out the quirks a gold standard would have. I suspect that a key component of Ron's monetary plan...would be to start accepting taxes in various non-dollar denominations (like gold and silver). These assets would then swap out the current fiat assets and securities the government holds in a transitional process. Ultimately Ron does not appear to want to force a gold standard on us (as near as I can tell) but would prefer a system in which currencies could compete (not happening now as the exclusive ability of the dollar to pay government debts props it up).

On the other hand...I personally detest the gold standard and think there are better ways to reform our monetary system. If the government is buying over-priced gold with our resources, then that is as bad as the government buying over-priced mud pies and represents enormous economic waste.

Let's crunch the numbers with gold. There is probably about 10 billion ounces (roughly a third the size of the Washington Monument). Not much! The price of gold is about a 1000 dollars an ounce (little more but this is easier to calculate). So the total supply of gold in the world is worth roughly 10 trillion dollars. The amount of money (dollars) we have in the economy depends on how you measure it...and it's most potent level we have the monetary base which is about 2.6 trillion.

Let's say we go to a 100% backed gold standard (advocated by Rothbard). Isn't it a problem to buy 10 trillion dollars worth of gold with 2.6 trillion in fiat money that in turn you intend to back with gold? Keep in mind...as soon as the market gets a whiff that there would be a gold standard...the price would skyrocket astronomically. In fact the more gold you bought...the more the price would go up...to a breaking point in which no more gold could be purchased because the exchange rate between the dollar and gold would be too extreme.

Partial backings are evil too... Whatever is unbacked is open to manipulation, inflation, bank runs and general economic distortions.

Pegs are also greatly evil. FOREX traders make a lot of dough preying on countries dumb enough to peg their currency to other currencies. They can use their volume to churn the system and bleed profits from these smaller countries...or even break them if they see their reserves are getting low enough.

Ultimately...gold is a fiat currency. Does it have utility value? Sure...so does paper money. It can start fires. The question is what percentage of a means of exchange is real utility value and what value is fiat/speculative value? Look at gold...we use it for speaker wire and fillings and little stuff like that. It basically has no utility value which means it is a speculative instrument and little different than paper money. The US government should not under any circumstances buy gold IMO.

Better ways to reform our money supply would be to can the Fed and turn over maintenance of the monetary base to the treasury department while the quantity remains static. Not perfect...but better than the status quo or going to a precious metal standard.

PierzStyx
03-23-2012, 07:39 PM
I'm more of a silver person myself. I think its more useful in everyday monetary usage than gold. But the posts before are right. There is still plenty of gold for the gold standard.

thoughtomator
03-23-2012, 07:45 PM
It doesn't have to be gold, but it does have to be something that can't be printed and is generally desirable. You could back a currency with oil, for example.

rpwi
03-23-2012, 07:46 PM
Enough Gold To Restore the Classical Gold Standard

http://www.thegoldstandardnow.org/key-blogs/1173-enough-gold-to-restore-the-classical-gold-standardHe advocates a fractional based backing using our current gold supply. It would not work. If dollars are redeemable in gold...and there are more dollars than gold...then we'll return to a situation like we did the last time we backed dollars with gold. In 1970 our already depleted gold standard was being assailed by redemptions (perfectly legit) by Switzerland and France. There wasn't much left and Nixon really didn't have too much of a choice, but to close the gold standard. A similar scenario popped up when FDR closed the gold standard to the public, but left it open to foreign governments in the 30's. If the dollar was backed 100% by gold this would never have been a problem. But that brings up another problem... 100% gold backing is astronomically expensive and is just not feasible. Yes...adding silver would help...but you still have the same problems.

Carson
03-23-2012, 08:15 PM
Pretty lame excuse to let the OTHER guy counterfeit the money supply, in my opinion.

What is with peoples imaginations? Can they see only two ways? One Gold. The other; getting taken to the cleaners in-oh-so many ways by the golden calf fiat!


What if some guy wrote notes on a silo full of corn and you held some notes against it. Maybe your then taking an honest risk with an honest man for a change.

How many other things hold honest value that could be traded with?


I suspect the system we had could have worked it the money was held within a 4% range of fluctuation. I think I heard tell of such a rule.

http://photos.imageevent.com/stokeybob/followthemoney/Baseline2.jpg

Not just a little was counterfeited up but all of it, the entire money supply over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over. Is it any wonder they are such geniuses and have something to say about everything we do. Truly! All the rest of us Bozos (http://en.wikipedia.org/wiki/Bozo_the_Clown) are expected to fit on one short bus.

If you only double the money supply, the honest hard earned money people have been trying to bank on becomes worth half as much. It allows the counterfeiters the ability to, not only get to your Aunt Martha's savings, but suck the wealth out of it like vampires in the night. Sure you Uncle Phil's stocks double, but they double in cash that is worth half as much. Then on top of it he is stiffed with a capital gains tax imposed by the ones behind the counterfeiting in the first place. That isn't the only area they cut themselves in on your stuff by claiming capital gains. Are these the false profits we were warned about?

Carson
03-23-2012, 08:32 PM
Nice post kuckfeynes.

Here is what I'm thinking I heard was our first attempt at fiat. The Continental.
(http://en.wikipedia.org/wiki/Early_American_currency)
http://photos.imageevent.com/stokeybob/morestuff/Continental.jpg

I've also heard this is what got the saying, "Not worth a Continental" started.



How could I have been so stupid to let them steal away all of my wealth and liberty for over forty years?

They have a new world order and I'm in a situation where no matter how much hard earned money the We the People of the world can gather together, to build our world the way we want, others can fire up the fake money presses and print what ever it takes to dictate their way.

In 1776 they would have never put up with it for as long as we have.

The painful experience of the runaway inflation and collapse of the Continental dollar prompted the delegates to the Constitutional Convention to include the gold and silver clause into the United States Constitution so that the individual states could not issue bills of credit, or "make any Thing but gold and silver Coin a Tender in Payment of Debts." (http://en.wikipedia.org/wiki/Early_American_currency)

mello
03-23-2012, 08:52 PM
There's a Peter Schiff video about him explaining this very issue. If I remember correctly the value of the gold increases to compensate its scarcity.

Lafayette
03-23-2012, 08:57 PM
In 1932 before the US went off the gold standard and started the beginning stages of printing our way to prosperity, the price of gold ranged between $20.50 to $35. Now with all the economy problems and government manipulation with the price of gold at the time its hard to say what fair market value was at the time but lets just average it out at $28 an Oz. The average price of gas per gallon in 1932 was 10 cents. So at a rate of $1.10 cents per gram of gold it would take about 1 tenth a gram of gold to purchase a gallon of gas.



If you use today's prices of $1660 oz and about $4 a gallon, we see that the price per tenth a gram of gold is $5.35. It terms of gold , gas is cheaper today than in 1932.

You can compare the price of many things the same way and you'll find that they have all gotten cheaper or remained the same price in terms of gold.



Is there enough gold to cover the 100s of trillions of debt and worthless fiat paper in the US, let alone the entire planet, at its current price in terms of USD?

NO

In order for gold to back it all, the price would have to climb by many, many zeros.

Keith and stuff
03-23-2012, 09:02 PM
Besides, commodities based money need not be restricted to gold alone.
Excellent post!


Another advantage to competing currencies:
Excellent idea. I notice that Ron Paul calls for competing currencies. The liberty activists I know have created competing currencies, not a gold standard. We need competing currencies.

Mahkato
03-23-2012, 09:20 PM
It's important to remember that real money is nothing more than the most convenient bartering agent available. Gold works pretty well because it is compact, homogenous, easily divided, and useful for a number of purposes. Silver has many of these same properties, but it can tarnish and it gets consumed by industrial processes. If too many people decide to use gold as their money, the "price" of gold (measured in the amount of things you can buy with it) will increase, and people will start to use other things for their money instead.

You don't really want to be dividing physical gold into pieces much smaller than a 10th of an ounce, and at current purchasing power that little amount of gold is worth around 40 gallons of gasoline in the U.S. One option is to switch to gold receipts and use that as your money instead, so long as you can verify that receipts are not counterfeit. This way you can have a gold receipt for one hundredth of an ounce and buy 4 gallons of gas with it. The U.S. dollar started out as a receipt for silver, but this was done away with by the Fed (and other central banks previously). That essentially means that the receipt producer is counterfeiting their own receipts.

Until people know what real money is, they can't understand why FRNs are essentially a scam.

nobody
03-26-2012, 04:08 PM
Well of course it all has to do with how manipulated the Worlds' stockpile of gold has become at inception of the system. It is already a World standard measure held amoung all Nations. So you will get what you say you fight against. A World currency that poor people cannot afford to participate in. The Gold is already spoken for.

bolil
03-27-2012, 01:38 PM
When gold, due to whatever reason, loses its utility in facilitating indirect transactions, another currency will arise to alleviate the pressure. Silver, Lithium, Even corn. The argument that there is not enough gold for a gold standard would be true, except that when "gold standard" is mentioned it is used as a metaphor for sound money. Why do you think Dr. Paul talks about competing currencies? Perhaps gold wont even be the dominant player.

WilliamC
03-27-2012, 03:36 PM
How much gold is there, really?

Blacklisted gold not accounted for during the first Brenton Woods Accord may be more than 5 times known supply of gold?

From interview by David Wilcock (DW) of Benjamin Fulford (BF) hxxp://divinecosmos.com/start-here/davids-blog/995-lawsuit-end-tyranny


THE CABAL FORGED THE RIGHTS TO ISSUE CURRENCY AGAINST THE ASIAN GOLD IN 1968

BF: What happened was that in 1968, they set up a fake heir. A fake signatory.

DW: “They” is the Asian societies?

BF: No no. This would be Henry Kissinger, the Rockefellers and all these people. The Bushes. The people behind the murder of Kennedy. The members of this Sabbatean cabal.

DW: They set up a fake heir [who would allegedly gain the rights] to what?

BF: They forged the rights to use that money as a basis for issuing currency. For creating dollars.

They didn’t have the historical rights to 85 percent of the world’s gold that was owned by the Asians – but they faked the rights.

They forged documents to claim they had the rights.


STOLEN ASIAN GOLD WAS LAUNDERED TO FINANCE “BLACK OPS”

DW: So they wanted to repatriate this gold they had taken out of the market before Bretton Woods was convened.

BF: Some of it was laundered by BCCI, Chase Manhattan Bank, Black Eagle Trust and a few other of these groups.

It was this gold that was illegally laundered from these Asian stashes that financed the black ops and the various secret doings.


THE LAUNDERED GOLD WAS ORIGINALLY STOLEN IN THE 1930s

DW: So this gets back to what you were saying in the 1930s, where the Japanese troops were confiscating gold from the Kuomintang.

BF: Right. That was taken either to the Philippines or to Japan. At first to Japan, and then when it got too iffy, they transported it over to the Philippines.


THE GOLD WAS HIDDEN IN ABOUT 125 KNOWN SITES

DW: Now that wasn’t kept in any type of Federal Reserve Bank for those countries. That was kept in some kind of private storage that was totally offline.

BF: It was hidden. There are about 125 known sites where it was hidden.

DW: Wow.

[DW: David Guyatt, a 28-year veteran investment banker within the Cabal-controlled City of London, gave incredible supporting evidence, including documents, for everything Fulford is saying here:

http://www.deepblacklies.co.uk/about.htm

In many ways, Guyatt goes into vastly more detail about the story behind this hidden gold than Fulford has done here.

In his online book “The Secret Gold Treaty,” Guyatt’s data suggests there were 172 sites where the plundered gold was stolen:
http://www.deepblacklies.co.uk/secret_gold_treaty.htm]

Fulford's own insiders have since told me there are even more than 172 sites involved.]


AT LEAST TEN OLYMPIC-SIZED POOLS’ WORTH OF “OFF-MARKET” ASIAN GOLD

DW: How much tonnage are we talking about here? How much gold was it?

BF: What I’ve been told is [this].

The story we’ve all been told about how all the gold ever mined in history could fit into one or two Olympic swimming pools… is a total lie.

There’s at least nine times or ten times more off-market gold than there is officially tradable gold.

DW: My God!

BF: Some of it, like I say, was laundered by the CIA types to finance various things.

awake
03-27-2012, 03:45 PM
There is always enough gold. What we are short on is a free market.