Saturday, March 21, 2009

The secret life of money

I can't pretend to understand all that much of it, but this article has some interesting data, claims, and postulates regarding money, paper and gold, debts, etc.
"The decision to sell England’s gold thereby saved Goldman Sachs and insured the political future of Gordon Brown. Goldman Sachs’ is still in business and Gordon Brown is now the Prime Minister of England—proving that good things come to those who do the bidding of the powerful (whether either outcome was worth 415 tons of England’s gold is questionable)
Selling a nation’s gold to save the bankers’ parasitic system is now common practice as the banker’s system continues to collapse and gold continues to rise. Since Gordon Brown sold England’s gold, gold has risen from $275 dollars per ounce to its present price of over $900 despite the thousands of tons of central bank gold sold to prevent its inexorable movement higher."

... Aha, this guy echoes something I've said for a while:
"Though, today, we look to government to provide and protect our freedoms and welfare, we are fools for so doing. Throughout the ages, the greatest threat to freedom has always been government."

A comment:
How would you expect a group of people to act civilly towards each other with no one establishing and maintaining some sort of rules/guidelines for society?

I wouldn't. I just think we should be aware of how governments are likely to behave when push comes to shove.
For example, it might cause us to think twice before passing suppressive legislation like the Patriot Act. The threat of government is *far* greater than the threat of "terrorists", just look at the number of people each of those has murdered in the past.
Notice the article is only peripherally about government, though.


Kent McManigal said...

Absolutely right. Government depends on people being more afraid of the unknown murderer than of the murderer in high office. I have never had a "terrorist" injure me or anyone I know, but I can't say the same for government thugs.

By the way, I am now the Albuquerque Libertarian Examiner and would appreciate some more readers. Thanks!

Anonymous said...

But gold is an arbitrarily chosen substance of value. It is exactly the same as paper coupons, except that it is finite. As consumers, we don't eat paper coupons or gold, we simply use them as a medium to exchange for goods and services. You could just as easily have a diamond standard.

The fact is, gold is a wonderful metal which is highly prized in industry for its properties. To keep it locked up in gold bars, behind steel bars is a waste of a precious resource.

What people must realise is that the old credit models are broken and entirely new ones must be devised to replace them. It is my prediction that 'money' as a concept has run its course and that an alternative concept of 'meaning' will replace it.

I paraphrase here, rather badly, an old saying which goes something like;
"When the buffalo are all gone and the rivers are empty, will you then eat your money".

Eolake Stobblehouse said...

Yes indeed. I think the one place where this kind of people mess up is that they seem to think gold is "real" money, and paper is not. Gold has no great intrinsic value. It is simply scarce, durable, and more likely to keep its value.

Even so, if he is right about the banks selling gold thingy running out, this is a buying opportunity.

Kent McManigal said...

Gold does have intrinsic value. It has great utility, and is completely recycleable. It is highly maleable and ductile. It is dense. It doesn't (as far as I know) react with anything. It is used in electronics. It is used in spacecraft windows and spacesuit visors to block radiation. It is beautiful, and it keeps its beauty because it doesn't tarnish. If "beauty" is not a real, tangible (if subjective) "value", then nothing is.

Diamonds are beautiful, but have only one use beyond ornamentation; their hardness. Plus they are manufacturable, though not in gem quality. Yet. A worldwide cartel is required to keep the "value" of diamonds artificially high.

Gold has been consistently valuable for over 5000 years. That's a pretty good track record.

All money is just a placeholder for what you really want. It makes sense to use a placeholder that has never been worth zero; something no fiat currency can ever hope to achieve.

The market should allow people to choose what they wish to put their trust in and use as "money". I have made my choice.

Pascal [P-04referent] said...

I don't agree with ALL that he says.
For instance, silver and gold themselves only have value because they were given it. In ancient Rome, soldiers were paid with salt (hence the word salarium, which became "salary"), because salt was quite valuable in these days. And remained so for many centuries.
The whole idea of Economy is at its very origin about more or less arbitray conventions. You work, you get paid with currency, and you can use that currency to acquire the product of the work of others. Basically, a convenient alternative to barter. Or so it was intended at the beginning. Now? I'm not sure of anything any more. After reading that article, my head hurts.

Still, he makes many very relevant points, overall. Just saying I haven't found my new life guru.

Gold has a few great qualities for a monetary standard. It is limited in quantity, like you said, and it is virtually eternal, you can store it in a vault for millenia. And also, um... well, it can be used to make pretty jewelry, not many metals are yellow instead of white/gray, or as stubbornly rebellious to oxydation.
I guess that's about it. Some 25 years ago, I read that were it not for its use as a monetary reference and the automatically ensuing speculation, the price of gold as a normal metal would be one quarter of what it is.
And that was before the current crisis shooting its rate into outer space.

"You could just as easily have a diamond standard."
Ah, yes, the good old days, until recently, when you COULDN'T synthetize diamonds for a far lesser cost than their current market value.
Gaseous phase chromatography... a barbaric-sounding expression, but it makes a girl's best friends. :-)

I believe that buffalo and rivers quote is from Sitting Bull.

"It is my prediction that 'money' as a concept has run its course and that an alternative concept of 'meaning' will replace it."
Well, it is MY prediction that, however extreme the circumstances that brought about the current crisis, it is still not enough for the System to change, and one day, maybe soon, there will be change forced by the will of an angry and hungry people. Very probably, through violence, like the Russian Revolution, and with noticeable bloodshed.
The mad people parasiting the whole world, exploiting the vast majority for always more pointless profit, will NOT change their ways until forced with the knife on their throats. Given the ever growing quagmire in the world today, and which I fear might dramatically worsen yet, people are very likely to snap and decide they've had way more than enough.
This is always how revolutions are ignited. And, always, against people who would never have expected a revolution to even be conceivable. "I don't understand, what are they upset about? Me, I find that life is just fine. Let them eat cake!"

How exactly do you define "libertarian"? Is is somewhat similar politically to "liberal"?
What I mean is, are you sure you had to turn left at Albuquerque?

"Gold [...] is dense."
Not as dense as those running our economy, by a long shot!
Actually gold does react chemically, it's just a very unlikely and unfrequent thing. If forced into oxydation, which is very difficult and yields very small quantities, gold oxyde becomes unstable, and returns to its metal state in a rather explosive reaction. (A bit reminiscent of the Coke-Mentos fountains, both are about brutal chemical release of gas.) Mixtures of hot acids can dissolve it, and its salts are used as treatment for many rheumatic diseases. And in nature, ancient gold exposed to the elements loses its polish, because the accumulated chemical reactions, while essentially leaving it complete in the end, have the same effect as glossy paper made wet and then dried again. Its surface becomes grainy, sometimes making the precise nature of old coins impossible to identify.
It's still damn durable overall.
Oh, and simply by the fact that it's very soft when pure, natural erosion can cause major abrasion over time. Even with just the water flow if left at the bottom of a river.

If "beauty" is not a real, tangible (if subjective) "value", then nothing is."
This... is open to much debate!
Many Africans would say that food and drink is far more tangible than beauty.
But let's not get philosophical. Not in Albuquerque. Right Doc?

Eolake Stobblehouse said...

"Some 25 years ago, I read that were it not for its use as a monetary reference and the automatically ensuing speculation, the price of gold as a normal metal would be one quarter of what it is.
And that was before the current crisis shooting its rate into outer space."

Actually at that point, the gold price was around its peak. It shot up during the seventies, peaked around 1980, and fell steadily for 20 years, then started going up again.

Still, it's metal value is way less in any circumstances.

Kent McManigal said...

Pascal, you rascal ;), here is how I define "libertarian": link, with more here: link. I didn't "turn left", I did a vertical take-off.

Pascal [P-04referent] said...

Its, not "it's".
My, your, his, her, its.
Mine, yours, his, hers, its.

I sound like a nitpicker, almost literally, but I'm amazed at how common, nearly universal, this specific mistake is. And I started learning English at age ten! British English, mind you.
No later than yesterday, I saw that very mistake in the subtitles of the videogame Tomb Raider: Anniversary, in the training level Croft Manor. And Ms Croft is british too! I say...
Mon Dieu, mais qu'advient-il de la langue anglaise? C'est terrible!

"I didn't "turn left", I did a vertical take-off."
I can picture it right now. Must be very elegant. A double counter-clockwise salto backflip vertical take-off, second star to the right, and then straight until morning, when we can land that magnificent dive in the mermaids' lagoon.
Not that I'm calling you an utopist. Just an irrepressible poetic urge. (Link-link, nudge-nudge :-)

You know what I consider the greatest handicap for the libertarian movement today? Barack Obama. If this guy keeps doing his best with smarts and integrity, the Americans might actually retain/regain some faith in the classic political system!
Ah well, nobody's perfect. Some like it hot.

Were it not for a rather libertarian/anarchic mentality, the Lebanese people never would've survived through 30 years of war. But they're just naturally used to relying on themselves.
You can easily spot a Lebanese abroad : he/she is the one who doesn't give a damn about daily Western discipline, like crossing the street at the dedicated place and allowed time, and who's proud about it too!
Hunh. I should add that one to the checklist on my blog.

Pascal [P-04referent] said...

P.S.: Another great libertarian whom I'm a fan of, Derek Zoolander, also never turns left.
Well, except this one time, to save the free world by stopping a bullet with the power of his stare.

Eolake Stobblehouse said...

"Its, not "it's".
My, your, his, her, its.
Mine, yours, his, hers, its.

I sound like a nitpicker, almost literally, but I'm amazed at how common, nearly universal, this specific mistake is. "

Indeed. I usually catch myself in it. But it seems not always.

Have you noticed how "site" and "sight" seem to be interchangeable these days? "You're web sight is a beautiful site."

Anonymous said...

The theory behind the United States' government (originally) is just this notion, that the greatest threat to a citizenry's freedom would be government itself. Madison's innovation was to pit two collateral governments perpetually against one another in the form of the United States Constitution -- one Federal, one residing in each of the many States. The idea being, that each checks and balances the other.

I'm not claiming that it works. (Or doesn't.) I'm just making the point that this concept, that government IS the evil rather than the solution to the evils of peole living together, is and old one. Old enough to have been incorporated INTO at least one government.