UK watch....

[Little John]

In the event of total economic collapse posession and the means to retain possession (weapons) will be ten tenths of the law.

Total economic collapse and total state collapse, whilst very much related, are independent of each other. You can be sure that in the event of economic collapse, whilst there would be some significant argy-bargy for a while, pretty soon the state would impose order. Even brutal order, but order nonetheless.

On the other hand, if we ever get to total state collapse, then yes, I would agree.

[SleeperService]

Surely that inexorably leads to an accretion of gold with the most profitable venturers which reduces the money supply and so starves economic activity of it's life blood and in turn gives birth to a new fiat currency?

Good observation. The same also applies to anything that is or appears to be 'scarce'. At the moment that includes some currencies. In fact it's a pretty good statement of where the economies are at the moment.

[mobbsey]

Gold is used cos it doesnt go rusty.

It does in concentrated nitric acid

...nitric acid mixed with a little hydrochloric acid was called aqua regia ("water of kings") because it was used to test the quality of gold.

[RenewableCandy]

Ah so that's the acid in "the acid test"

[DominicJ]

Surely that inexorably leads to an accretion of gold with the most profitable venturers which reduces the money supply and so starves economic activity of it's life blood and in turn gives birth to a new fiat currency?

No, because no one just has a giant vault filled with gold.
No one sits in their vault, cackling their evil jewish cackle and counting it all.
People either invest it, in more profitable ventures or just plain old spend it.

Fiat Currency is born when government taxation strangles growth, as simply the only way to keep everything going, for a few more days.

Gold *is* deflationary, as the economy grows, the gold doesnt, therefore, the price of stuff relative to gold falls, but thats no bad thing in isolation.

[DominicJ]

We'd need an independent body which would determine, say, how many barrels of oil is equivalent to an ounce of gold.

Ah yes, experts....
Quite how anyone can decide how many oven bottoms a french stick is worth tests the limits of reality, how many grams of beef mince is a leg of lamb worth blows it apart, and how many neon tetras is a years subscription to the adult channel worth?
Well, surely my point is made?
Becaused price controls mean there is a logical exchange rate between pet fish and pornography


http://www.incrediblecharts.com/economy ... _ratio.php

In just the last 25 years, people have paid as much as 36 ounces of gold for a barrel of oil and as little as 2 ounces

Lets just say, we fix the price at 18 ounces.

That means, at the moment (before 85 and post 97), oil producers would have to be prevented from producing, or some government body would have to buy and store or destroy oil (see EU wine lakes and butter mountains), and in between, there would have to be some sort of rationing and price controls to prevent oil being sold above the price set by the independant body

And thats just oil and gold.

What do you do about your fixed potato/wheat exchange rate if theres a severe potato crop failure?
What do you do about your vodka/potato exchange rate?

ect

[UndercoverElephant]

We'd need an independent body which would determine, say, how many barrels of oil is equivalent to an ounce of gold.

Ah yes, experts....
Quite how anyone can decide how many oven bottoms a french stick is worth tests the limits of reality, how many grams of beef mince is a leg of lamb worth blows it apart, and how many neon tetras is a years subscription to the adult channel worth?
Well, surely my point is made?
Becaused price controls mean there is a logical exchange rate between pet fish and pornography


http://www.incrediblecharts.com/economy ... _ratio.php

In just the last 25 years, people have paid as much as 36 ounces of gold for a barrel of oil and as little as 2 ounces

Lets just say, we fix the price at 18 ounces.

That means, at the moment (before 85 and post 97), oil producers would have to be prevented from producing, or some government body would have to buy and store or destroy oil (see EU wine lakes and butter mountains), and in between, there would have to be some sort of rationing and price controls to prevent oil being sold above the price set by the independant body

And thats just oil and gold.

What do you do about your fixed potato/wheat exchange rate if theres a severe potato crop failure?
What do you do about your vodka/potato exchange rate?

ect

OK...the purpose of what I was suggesting was not to tie the prices of all commodities together like that. It was to provide some sort of physical backing for the monetary system. I'm just thinking aloud anyway...

I am aware that there have been problems in monetary history when bimetallic standards were used, because of the fluctuating supply of the respective metals. What I'm certain of is that the fiat money system really is broken, and it can't be fixed. It will collapse. And it seems to me that there are only two sorts of option available then. Either we attempt to reboot the fiat money system while the bankers and politicians make worthless promises not to screw everything up again, or we return to some sort of commodity-backed money. People keep telling me this is impossible, but I cannot see any other possible outcome.

[vtsnowedin]

Another possible scenario...

This sort of scenario becomes much more likely if it also looks like the world is sliding towards WW3. If a major war breaks out, the only people likely to get their gold back would be countries on our side in that war (if we are involved in it.) Physical possession would be nine-tenths of the law.

Wars are seldom fought if the likely outcome is apparent. It is only when both sides think they have a chance at winning that they go at it. Assuming your side will be the winner makes you much more likely to take a big loss as the other side won't start a war unless they have seen a possible win.

[biffvernon]

to provide some sort of physical backing for the monetary system.

Folks are just making it more complicated to hide the simplicity.

As we know, money is debt. You don't need gold or anything physical to have money. You just need to owe someone and and a note that says IOU...

The note is just to remind you who owes what to whom. It's not important in itself.

For the advanced version of money draw the Queen's head or somesuch on the note and make the debt transferable.

What we do not need to do is dig more dirty great holes in the ground to fill up vaults with metal that nobody will ever use for anything beyond dust-collecting.

[Little John]

to provide some sort of physical backing for the monetary system.

Folks are just making it more complicated to hide the simplicity.

As we know, money is debt. You don't need gold or anything physical to have money. You just need to owe someone and and a note that says IOU...

The note is just to remind you who owes what to whom. It's not important in itself.

For the advanced version of money draw the Queen's head or somesuch on the note and make the debt transferable.

What we do not need to do is dig more dirty great holes in the ground to fill up vaults with metal that nobody will ever use for anything beyond dust-collecting.

Money is not debt.

Credit is debt

Real money is a commodity that has no use value to you other than as a temporary store of your exchange value until you exchange it for something that is of use to you.

Credit is a promise to pay you money or some other commodity at a later date,.

It is the conceptual confusion between money and credit that is one of the primary reasons we are in the shit we are in.

[JavaScriptDonkey]

Indeed. Money as we know it is just a means of accounting for debt and surplus.

The difference is between a system backed by gold but that uses paper money or backed by universal consent and backed by paper money.

In the former I can exchange my paper for gold and in the latter I can exchange my paper for gold.

In the former the amount of paper issued depends on an arbitrary valuation of gold that I will never be allowed to count and in the latter it depends on a arbitrary notion of credit-worthiness.

I can see gold being used in exchange as a thing of worth such as any commodity but beyond that it'll never be used as backing for a currency again.

[DominicJ]

I'm afraid I have to disagree here.

"Money" HAS to have a value in and of itself.

For FIAT, thats covered by government acceptance as a method of paying taxes.

For Gold, that has jewelry and such.

Japan used the masu and koku, a day and a years supply of rice for a man.

Thats why LETS and such are doomed to failure.

[SleeperService]

Gold is valuable ONLY because all that's ever been mined will fill a couple of swimming pools. If an asteroid made of the stuff soft landed in Lincolnshire it's value would be slightly more than lead.

Ditto currency, the attractive thing about money is that £10 has more value today than it will next year, this is because interest/usury will mean there'll be more money around next year so each £10 will be worth that much less unless everybody has upped their game and produced a bit more from the same amount of resources the bit in bold is what means the fiat system will always fail.

The money in your hand is debt in the sense that it's paid after you've earnt it. In some cases weeks later. In the interim prices have tended to rise and so you get a little less than you would expect. Think of a bank note as a promise 'you've done this value of work and rather than give you goods of equivalent value this delays purchase so you'll get less'.

[Catweazle]

Surely money is debt, it's just a promise that at some point in the future someone will supply something useful in exchange for that note, which in turn will guarantee them that one day someone will supply them with something useful.

When we print loads more money, we promise that future generations will do some useful work so that we can have something now. Inflation is the natural way of balancing the value of the currency with what it is actually possible to exchange for it, or at least it should be.

The problem comes when so much money has been printed and spent abroad that we can never hope to give the bearers enough "useful stuff", because our capacity to produce has reduced through years of "promises" and no actual working.

[UndercoverElephant]

to provide some sort of physical backing for the monetary system.

Folks are just making it more complicated to hide the simplicity.

As we know, money is debt. You don't need gold or anything physical to have money. You just need to owe someone and and a note that says IOU...

The note is just to remind you who owes what to whom. It's not important in itself.

For the advanced version of money draw the Queen's head or somesuch on the note and make the debt transferable.

What we do not need to do is dig more dirty great holes in the ground to fill up vaults with metal that nobody will ever use for anything beyond dust-collecting.

This is now reaching the point of disingenuous, Biff. I have already explained to you on numerous occasions that most of the gold being produced in the world is a BYPRODUCT of mining for base metals. So why are you still attacking this irrelevant strawman?