Posted on 11/04/2015 12:22:09 PM PST by Isara
Of course the cost of Gold will inflate to fill the M0 currency burden, but a combination of precious metals like silver and platinum might also be used to provide a hard currency. Thoughts?
I said my numbers were probably off but the main point made.
You confirmed my 1/5 number.
IIRC, the 33x number was derived from interaction with the world economy, as when we go on the standard a whole lotta other countries would panic and try to do the same.
Keep working the numbers, you’re on track to come up with pretty much the same results I did.
As for “why just gold?” Good question.
The advantage of gold is
- it’s easily refined
- it’s easily verified
- it’s rare
- it’s value/volume ratio is conveniently compact
- it’s viscerally attractive
- it’s durable
- mining/production occurs at a slow steady rate roughly equivalent to growth rate of human productivity.
Throw in other commodities, and you have to deal with lots of less desirable factors that decrease confidence and increase chaos.
I’ve long wondered about an economic model that dynamically tracks the relative value relationships between many goods & services, defining a stable unit of value. Something that recognizes that a gallon of gas typically is worth about 20 minutes of floor sweeping, a good suit or handgun is worth about 1 oz of gold, 10 oz of gold is roughly our national “poverty line”, etc thru hundreds of items and their mutual relative values, accommodating whatever “localized” variations & changes occur (like gas doubles in 6 months), all dictating what “a dollar” is. That would much better address currency as a fraction of total national/world value without everyone getting hung up on “gold” or playing stupid/dangerous games like “quantitative easing”.
See second half of #22.
Likewise, I’ve heard of Catskills-area NY police started getting weird reports of strange people buying up all the baby formula everywhere. Suspicious of perhaps some new drug being made from off-the-shelf products, they investigated. Turned out someone discovered that baby formula was significantly cheaper in Upstate NY than in NYC, so some enterprising folks were just buying ALL OF IT off the shelves and selling it in the City.
That’s the problem with product-based currencies. Variations can lead to strange results.
Only at current prices.
a whole lotta other countries would panic and try to do the same
That is a jump and not part of the math.
If the of Gold was 33 times higher, then we would need 1/165 of the gold supply, not 1/5. You cannot raise the price of gold without reducing the amount of gold needed to equal the dollars.
Keep working the numbers, you're on track to come up with pretty much the same results I did.
No, it is clear it won't come close.
Too bad so many "conservatives" seem incapable of learning this lesson . . . Ron Paul for one.
If you assume all other countries grab their “fair share” of the world gold supply, the 1/33 number kicks in.
Don’t berate me, I’m not in a frame of mind to re-derive all the numbers right now.
Any amount of gold will work to back the dollar. All that matters is that the ratio of gold to dollars is maintained.
Ok. $1,000,000,000,000:1oz. Carry on with QE42.
if it drives us the price, we don’t need the same volume of gold.
It really is not complicated.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.