Replies

***And they (the Spanish) minted coins by the boatload, and they devalued their coins as they needed more and more of them.***

I read that when a treasure ship from the New World landed in Spain, the price of everything would go up because of the excess gold brought in. The inflation would start at that particular port where the lsip landed, and spread put as the excess gold was spent.

Makes one wonder what our monetary supply would look like if Lead was rare and Gold was plentiful.

The danger for America is also devaluation, of U.S. dollars. “Backing” them with gold or anything else will not prevent the government from devaluing dollars relative to what they are “backed” with; they could just adjust the ratio.

Devaluation is caused, of course, by the government creating new money faster than it is needed, i.e., faster than GDP, and therefore, the dollar volume of transactions per year, grows. No matter what is considered “money”, creating too much needs to be avoided.

The Federal government spending far more than it collects in taxes and to make up the difference is issuing new Treasury bonds, i.e., borrowing, so fast that there really are not enough buyers who want to or can buy the bonds. The Federal Reserve, ever helpful, is getting to the point of basically creating money to buy the debt.

All of government is counting on increases in GDP to somehow happen by magic and cause government revenue to “catch up” to spending.

There’s only one thing that will cause that; people knowing that the government was permanently shrinking it’s scope.

Most of the Spanish gold found in the Americas landed in what is now Belgium. Most of the Spanish gold found later in the Philippines ~ the third big Spanish gold strike ~ ended up in Spain but it was shipped across the Pacific to Mexico, transported East, and sent on to Spain.

The fourth big gold strike in former Spanish territory was California, then Indiana, then Colorado, then Alaska, and then Alaska again.

Today we are far more sophisticated and obtain much more of our gold reworking old tailings and with secondary recovery.

E.G. http://www.goldingravel.com/why_us.htm

There are yet other sources. You'll notice the guys with the gravel beds don't make much noise about it. That's because when you make a strike for a gold source of any size the best course of action is to keep your mouth shut!

Gold is still worth what it will buy. For Saudi princes and Big China entrepreneurs it buys security (maybe) so they have bid up the price!

About now ancient Indian temples filled with gold should be surfacing ~ and, lo and behold, they are! One found recently had in just one of its many chambers about 10% as much gold as the US government.