You Pay whatever your Taxes are Regardless of how much the Government Spends

Price inflation has no correlation to monetary inflation

Inflation harms people who do not increase their monetary gains from the increase of money in the system. Winners and losers, you should be happy with that!

Nothing to buy

They are sheets... the fact that they are not valued now is just a testament to productivity increases. Back then it took a lot more to make a sheet than it takes to make a suit now. And back then it took a lot more to make "a lot" of sheets than it takes now to make millions of suits. Your point is moot.

The gold standard didn't "enable" them to do anything. They were productive because they were productive.

That's impossible, because fiat currency isn't supposed to "sustain purchasing power". Either is gold.

That's a lie backed by zero proof

It gives more power to dollar owners than to investors of dollars. Shouldn't people who use their money to gain more money be more profitable than those who stick their money in their mattress?

Because people want it. There is also a demand for Michael Jackson memorabilia.

Yes, gold literally does not do anything other than make grills for rappers and jewelry for rich people. It is not "wealth". It is worth something because someone else is willing to pay for it. This is the same argument on the Mickey Mantle baseball card.

Nope, this is just your lack of investing knowledge. Gold has popped before and popped tremendously. There is no reason the gold bubble will not pop in the future. Gold is not special.

Because people don't want tulips as much

I have no reason to ever buy gold unless it's forced upon me by the Government.

False, the death of an empire always brings currency down.

Picasso's sell for millions of dollars. What use do they play other than someone wanting them?

 

America is full of magical thinking. There are now so many people in this country incapable of critical analysis that the weight of their ignorance has carried the country past the tipping point. The only thing that will end their magical thinking is complete collapse of the political and economic systems.

 

So what is "non-magical" thinking?

 

In addition to the other arguments , inflation etc

the national debt has to be paid for , it carries interest.

currently that interest is not being paid out of taxes because there is a deficit in the budget annually

therefore it is being added to the federal debt each year, one way or another.

this means the debt is rising exponentially, carrying even more interest.

As the markets realise that the US cannot control its fiscal situation it downgrades the value of the dollar.

foreigners own the debt. if they think that when they get paid it will be worth 50% of what they loaned , in real terms, they will no longer buy US debt

where does the government get more money it needs?

print more making inflation worse and the dollar worth even less, deeper spiral downward

or ?

put up your taxes

how complacent will you be then?

 

Generally Accepted Accounting Principles would be a good starting place. Recognizing that the public schools of this country have largely failed to produce students capable of critical analysis. Changing the culture itself so that incentives reward hard work, education and family cohesion would be another good step.

Why should someone invest money in America to hire undereducated and overpaid employees in a highly regulated high tax environment with large numbers of people clamoring for the confiscation of wealth so that the party can continue for a little while longer? There is no reason to do so.

Recognizing that the artificial boost in American living standards resulting from America's WWII victory and the international organizations and relationships established in the war's aftermath is now almost completely over would be useful. Recognizing that without unity and solidarity America in its current form is through would be useful as well.

 

We had $15 trillion of real output last year. Over a quarter of the world's output. There is nothing artificial about that.

 

Completely wrong. Any economics professor would laugh at that statement. Econ 101

Correct. The banks, government, and recipients of government entitlements benefit because they are able to spend that money before it dilutes the other dollars in circulation and causes prices to rise...the people who that money reaches last (the middle class and upper poor class) have to pay higher prices.

That's how the free market works. Everybody can't be a winner, it's an impossible socialist utopia. Or you can have certain people protected from the free market, like bankers, the auto industry...basically anybody that Obama and the Fed bailed out. The rest of us are losers, they are winners. You should be happy with that!

"Nothing to buy"? Do you mean a GDP of $0? That doesn't make any sense.

Back then it took a lot more to make sheets, so they were worth a lot more. A toga was the Roman equivalent of a suit to Americans. In relation to the pricing structure, they cost the exact same amount relative to other goods and services, including gold. The same amount of gold bought a toga in Roman times that will buy you a suit today.

Well gosh darndit if it's that simple then we can fix the recession right now just by being productive!

So you're saying that fiat currency is intended to eventually be reduced to it's real value of zero?

I have already shown you how gold has maintained purchasing power for thousands of years, and you're simply in denial. You're too close minded; there's no hope of getting through to you.

Your statement makes no sense. How can inflation "give more power to dollar owners" by destroying the purchasing power of personal savings ("dollar owners")? Saving is not "investing". Investing is spending. Your knowledge of this subject is elementary.

Why do YOU get to decide what people should do with their money? What business of YOURS is it to tell people that they're being bad by saving their money? You can't just go around forcing your morals on people like that. Where in the Constitution is this sort of theft authorized?

You have no respect for liberty and property.

Strawman. I ask you "why do people want gold", your answer is "because they want it." Answer the question please.

Doesn't answer the question. Why would people invest so much money in gold if it's worthless?

No it's not. You can't "invest" in Mickey Mantle baseball cards, they're too rare. Your knowledge of economics can't be any better than high school level.

Your example is worthless. When gold bubbles pop, it does not become worthless, it merely returns to a more realistic price that much more accurately reflects the amount of gold in circulation. When bubbles on relatively worthless items (such as tulips) pop, they also are return to their more realistic value, in that case almost ZERO. So, please provide me an example of a gold bubble popping where its value was reduced to zero (gold's real value as you claim it to be).

They sure wanted them during Tulip Mania. Why do people want gold more than they want tulips?

Shows just how out of touch with reality you are. The government would never force anybody to buy gold because it disables them from using inflation as a hidden tax. In fact that's why Americans were banned from owning gold for decades. Nice try.

Oh so the Weimar Republic collapsed and THEN hyperinflation occured? Funny, history disagrees with you.

Picasso's paintings aren't worthless. Why would people pay for gold if it's worthless? Stop dodging the question.

 

You obviously haven't taken Econ 101

I never said everyone was a winner. I said the country was a "net gainer". As in there can be more winners than losers.

That's what would happen if no one wanted USD

You are sticking to this stupid argument? A sheet is a sheet.

Actually we could... we just need money for people to have to spend... hence the need for stimulus. Duh!!

No, that is the idiotic thing you are saying.

Your idea of sheets being worth the same as $2000 suits is not "already shown" me of anything. Try harder!! You can buy an old car for that price.

Your lack of knowledge boggles my mind. Investing is not spending.

I don't. We just decide that people who do stuff with their money should have more purchasing power in the future than those that don't.

There's no other plausible explanation. I don't want gold or need it. Gold doesn't build houses or provide food. I don't get why you want gold. Other than investing just like someone invests in a Mickey Mantle baseball card. Duh!

By worthless, I mean intrinsically worthless. It has no value other than what someone places on it. It doesn't provide food, water, or shelter. It will drop like a rock... no pun intended, the second the economy picks back up. What do you value so much in gold?

So you can't invest in rare goods? Hmmmm... maybe my school failed me. Lol!!! You are embarrassing.

Gold will never reach zero... doesn't mean it still doesn't provide anything. It is simply supply and demand like Mickey Mantle baseball cards. Your infatuation with it is scary!!!

Actually yes, they tried to take over the world and lost. They were left ravaged and with reparations to pay. Hyperinflation had nothing to do with it. Nice try history buff!!

Worth is subjective. When I say worthless I mean they do not provide any tangibility other than ones utility. People wouldn't buy Picasso's if they needed food... just like no one would want gold if they need food. It provides nothing other than the value of ones wants. Gold is no more special than a Picasso or a Mickey Mantle baseball card.

Nice try, but you have a lot to learn. But, luckily I'm here to educate... for free!!

 

The country is insolvent in the equity sense. Soon it will be insolvent in the bankruptcy sense. There are 77 million baby boomers on the cusp of retirement. There is no way to pay the benefits they have been promised.

No country, nation, principality, polity or other entity in all of human history has survived a prolonged period of financial instability. None. America is not an exception to the forces and processes of history.

My words will not persuade you otherwise. So let reality be your mentor. Reality will show zero mercy.

 

Well one could go the other way.....

 

Obviously you haven't if you believe that price inflation has no correlation with monetary inflation.

That still does not change the fact that inflation harms the poor and middle class the most.

I agree that GDP of $0 would happen if nobody wanted the USD anymore. Now, back to my original question: what would cause people to not want the dollar anymore?

Brilliant deduction. I'll take your incessant stubbornness and strawman tactics as admitting that you were wrong about gold maintaining a stable pricing structure.

Why wasn't there money for people to spend?

Where did the money come from to pay for the stimulus?

Then what exactly are you saying? If fiat currency isn't supposed to retain it's value, how do you expect it to continuously depreciate in value forever without eventually becoming worthless? That doesn't make any mathematical sense.

Sheets aren't worth the same as $2000 suits today. Togas were to Romans as suits are to Americans. If you cannot grasp this simple analogy, then you are either hopeless or in denial. Probably a combination of both.

in·vest
verb (used with object)
1.
to put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value.

Fail.

Why do YOU get to decide what the purchasing power of people's money should be? What business of YOURS is it to punish people who are saving their money? You can't just go around forcing your morals on people like that. Where in the Constitution is this sort of theft authorized?

So you think people invest in gold for literally no reason? They're just willing to spend $2000/ounce for absolutely no reason? That's the best you can come up with?

Already disproven. See tulip mania. If gold were intrinsically worthless like tulips, it would have already been reduced to its real intrinsic value of zero on the market. It has maintained its purchasing power for THOUSANDS OF YEARS. This would not have happened if it was intrinsically worthless. All items are eventually reduced to their REAL value in the market, regardless of any kind of speculation that temporarily drives its price unrealistically high.

The reason this hasn't happened yet is because the value of gold is represented by the labor that it took to mine and refine it. Just like the value of tulips are represented by the labor it took to plant and grow them (almost nothing). That gold is always going to represent the labor it took to mine it. Period. That's the entire point that you're missing.

I agree that the current price of gold is unrealistically high becuase the amount of gold in circulation has not halved in relation to the amount of goods and services available over the past few years. But its current value is based on speculation, nothing more. It's not an accurate representation of the amount of gold in circulation.

Already explained. See above.

An individual can, but millions of people can't invest in rare goods, because they wouldn't be rare at that point.

Way to contradict yourself. You just got done telling me that gold is intrinsically worthless. How can something be intrinsically worthless if it will never reach zero value (or almost zero)?

So you admit that you were wrong in saying that gold is intrinsically worthless?

It doesn't have to provide anything. It's a medium of exchange. Where did you get the idea that it has to provide something? Fiat dollars don't provide anything either. Lol.

Babbling incoherently again I see.

Why, because I'm not a totalitarian like you? Because I actually believe in liberty and property?

http://en.wikipedia.org/wiki/Inflation_in_the_Weimar_Republic

The Weimar Republic didn't collapse until after their currency hyperinflated.

You're referring to gold as a commodity. If it's used as a medium of exchange, of course they would get rid of it in exchange for food if they were starving. That's the whole point. Gold isn't worthless if it can buy you the food you need.

I don't want an education from you becuase it's riddled with logical fallacies, inconsistencies, high school level knowledge, bias, distorted opinions, and factual errors.

 

Price inflation has to do with quantity * velocity. Monetary inflation can happen with out price inflation is all I'm saying.

False... it harms people who do not increase their wealth. I'm upper middle class and inflation has no harm on me what so ever as my wage increases above inflation every year.

Nothing to buy with it

False, gold does not maintain any pricing structure what so ever. Your toga to armani suit comparison is laughable.

Because other people are keeping it

Same place money always comes from. From the banks.

It depreciates in relation to a previous period of time. It does not depreciate to "zero" as you call it. $1 from 1913 might end up being $10,000 in 2200. But that doesn't mean the dollar depreciates to 0. I have no clue how you even come to that conclusion.

It's a very stupid analogy

In economic terms investing is not considered spending.

I don't get to decide. The private sector still determines the purchasing power of money. People want returns, so they go out and try to get them. That is how returns happen. The Govt just provides an increase in the money supply to make sure the country is a net gainer and continues to grow. Why should you get to decide if the country should grow or not?

No, they have reasons. They think they'll be able to get more USD in the future. They don't buy it because it provides them anything more than the thought of getting more money in the future. I'm saying the gold doesn't do anything for them.

False, why not compare gold to Picasso's or Picasso's to tulips?

Hahahahahaha, you are still stuck on the labor to dig a useless metal out of the ground. Now that is hilarious!

There is no "accurate" representation. There is supply and demand. There is no value gold "should" be at

Who cares

I never said it would never reach zero. It probably never will... just like diamonds will never reach zero. Why don't we use diamonds for currency?

Nope, it is intrinsically worthless

Your education level is laughable. You are arguing against the largest country in the history of mankind and making ridiculous nonfactual comments to back your claim. People are much smarter than you that make decisions for this country... and even I know that gold is friggin worthless and always will be.

 

That's true, if it doesn't occur at a rate faster than the rate goods and services are being produced. That would cause price deflation.

That doesn't matter. In an healthy economy that is continuously technologically progressing, prices should be moving downward as wages move upward. Rising prices affect everybody, particularly the poor and middle class.

That's only one of two reasons people will get rid of their dollars.

1. What you're talking about is a situation where production of goods and services decreases at an exponentially faster rate than which the money supply is decreasing, to the point where economic output is effectively zero and remaining money cannot purchase anything because very little goods and services exist.
2. The second reason is a situation where the money supply is increasing at an exponentially faster rate than the production of goods and services, to the point where the value of the bank notes is effectively zero and remaining goods and services cannot be purchased with any reasonable quantity of fiat notes.

Guess which one is far more likely to happen.

Baseless statement that was already disproven.

Who and why?

Where did the banks get the money?

Just this thing called hyperinflation.

Your say-so is not good enough.

http://economics.about.com/gi/o.htm...&tt=8&bt=1&bts=0&zu=http://www.econterms.com/

Investment is defined as any use of resources intended to increase future production output or income.

"Any use of resources" includes spending. You're wrong.

That's not entirely true. The Federal Reserve has total control over the money supply, and thus the value of the currency. The only way the private sector influences the purchasing power is by production of goods and services. The difference is that production of goods and services requires real labor, and creation/destruction of money requires effectively zero labor.

This statement is based on a baseless axiom that the country cannot grow without the Fed controlling the money supply.

This doesn't answer the question. Why does the gold have value in the first place?

You keep bring up the fact that "gold does nothing" for them. What exactly do Federal Reserve Notes "do" for people? Provide water? Shelter? Food?

You're going to have to be more specific. Which part of my statement was false?

You could if you wanted to. I fail to see where you're going with this.

Because for some reason, you are incapable of grasping the concept that that is what gives gold its intrinsic value. People wouldn't be buying gold if it was worthless.

Under a gold standard, the pricing structure would directly reflect the amount of gold in circulation, it would be totally driven by the law of supply and demand, and would be an accurate representation. Fiat money creation ignores the law of supply and demand and simply creates money out of nothing based on flawed bureaucratic formula.

You do, becuase you were claiming that people could "invest" in Mickey Mantle baseball cards like they do gold. It's a faulty claim.

So how can gold be intrinsically worthless if its value will never reach zero?

Diamonds can't be melted down and reformed into different size quantities. Since the amount of diamonds in circulation are less abundant than gold (by mass), even small diamonds are far too valuable to be used in small purchases.

So how can gold be intrinsically worthless if its value will never reach zero?

There is a huge logical flaw in this statement. You're supposing that the reason we are the "largest country in the history of mankind" is becuase of fiat currency and not because of the free market, which is totally false. It was obviously a combination of both. All I'm saying is that we wouldn't have all of the problems we have today if we had sound currency and the free market from the start, we'd be even better than we are now.

They're obviously smart enough to decieve you.

So how can gold be intrinsically worthless if its value will never reach zero? How is gold worthless if I can get almost $2000/ounce for it?

You're continuously embarassing yourself.

 

... because historically, having more gold than the next guy has never been cool, useful, or attractive?

 

Those are reasons why people want gold. Just like the same reasons why people want hot girls. It doesn't change the fact that gold provides absolutely zero use other than possible door stops and jewelry. 9 out of 10 people who buy gold, buy it as an investment hoping that someone will pay more for it later so they can buy more real goods. Most people do not buy gold because it has any use to them what so ever.

 

Most people do not invest in anything because it has any use to them what so ever. It's the demand and future demand from other people that often makes the investment worthwhile.

There is and will continue to be demand for jewelry. Gold also provides use to and is consumed by manufacturing, medical, construction, electronic, aerospace, computer and even dental industries.

 

Exactly, gold is not any more special than any other investment out there.

 

*shrug* Or any less valid.

 

So what's your point?

 

There were two. The first was to question your assertion that owning gold wasn't as cool as other investments and subsequent prediction that prices would therefore drop like a rock when "people realize that owning a piece of useless metal is not as cool."

The second was to disagree with your asserted "fact that gold provides absolutely zero use."

Gold is a useful material, a reasonable investment, and a lot cooler than pork bellies.

 

Other investments are typically factored base on productive uses. Like we invest in Apple because Apple sells products. We invest in bananas because people eat bananas. I'm just saying the price of gold right now is far higher than it's productive usefulness and the second people realize there are more productive uses of their money, gold will plummet just like everything else.

 

*shrug* People buy bananas or iPods or DeLorean's because they want them.

A fad for eating bananas, wearing Apple's, or driving lemons might indeed burn out. But gold, one of the less than a hundred metals in existence, has caught people's attention since before most people on this planet knew what an iPod, a car, or even a banana was. I expect gold will be wanted, demanded, and traded long after we've forgotten all three.

 

Gold is driven by the same fundamentals as bananas. If people stopped eating bananas then the people who invested in bananas would lose money. If people stopped "wanting" gold people who invested in gold would lose money.

I'm not saying people will stop wanting gold, I'm saying people will not be willing to pay the current price for gold if there are more productive uses of their money. The point is that gold still has no intrinsic value that makes it any different than any other commodity/investment out there. Gold is not magic.