Confusing Gold Standard and Dollar Fiat Currency with inflation?
I been trying to figure out what a trillion dollars amounts to. Well, actually what the USA owes (debt) in terms of gold.
I looked around the internet to find the total gold that has been dug out of the ground. 145,000 tonnes is the answer I came up with. So at $900 oz, the value is about $4.2 Trillion. $4.2 Trillion is all the gold in the world? Did I do that right???
The Iraq war is totaling 2-3 Trillion. 1-2 Trillion for the Tarp mess.
I've also read the bailout could cost 5 Trillion and the war 7 Trillion.
Okay, so who knows how much these things will cost. I guess if the dollar value sinks it could cost vigintillions?
So the question is…
Is all the gold in the world amount to 4.2 Trillion Dollars at 900oz? If this is right how can we ever go to a system backed on gold? We have inflated the dollar so much that we owe more than all the gold in the world.
I just dug a bit deeper and found that the 145,000 tonnes of gold was from 2001. This figure was reported from the World Gold Council. I did find a newer estimate of 193,000.
http://onlygold.com/TutorialPages/All_The_Gold_In_The_World.asp
http://www.rediff.com/money/2007/jun/08gold.htm
http://www.gold-eagle.com/editorials_04/hommel080104.html
http://minerals.usgs.gov/west/factfaq.htm
"gold is worth something because people agree it is, there is little to no use for gold in any industrial sense…"
Isn't it true that gold has always had value. It costs time and energy to dig it out of the ground. What use is paper dollars in the industrial sense? I know I can wipe my butt with it, but Charmin is softer.
"the dollar, all currencies nowadays really, is worth something b/c there is a market price where dollars are traded openly and people agree to it's worth."
Isn't gold worth something because there is a market place for it and people agree to it's worth? It seems to be getting stronger against the falling dollar.
To me, everything does have a value. Canned goods are worth more than what they cost in dollars today. Barter seems like a better system, I guess it is just a big circle.
Everyone needs to try to come up with a solution instead of a label. I think fairtax could work. Good luck on that ever passing. I am guessing there is people think the system works fine. The massive manipulation is the way it suppose to be. Everything seem broken to me. Throwing more money on the problem, printing up another batch, until the general foke (slaves) get just a little caught up. Just a little, we would not want them to be out of debt. Then what would we do?
March 1st, 2009 at 10:48 am
Well.. first of all I'm unsure of your total gold number. If you look at the PDF, you will see that it's roughly 2.5 million in production in 2006. I don't think that's a cumulative number. Also, if you look at wikipedia, it says that our gold supply will most likely last 45 years.
http://minerals.usgs.gov/minerals/pubs/commodity/gold/myb1-2006-gold.pdf
I don't know what kind of gold counts or not.
But whatever amount you are assuming, if the U.S. did go back to the gold standard, we would see massive deflation as society corrected to it. More likely, we would go to a gold fractional system.
Churchill tried to go back to the gold standard after WWI. What resulted was a huge economic loss and Churchill said it was the worst thing he could have done.
One of the reasons a fiat currency is preferred is that it allows the economy to grow with money supply.
__
Labor Theory of Value.. touche
You could apply value to anything. I mean, I could apply value to canned goods and moonshine. Actually, I'd prefer that if we went into a knock down drag out economic fall.
Just because people agree to a value in something doesn' make it so. I think that crosses the line of is economics social or hard science? Though people assume rationality in humans and their perceptions, something tells me otherwise on that.
March 1st, 2009 at 10:48 am
I agree with ^^nothin^^, as far as your figures, they should be looked ovver again- idk where that 145k tonnes comes from…
also, the thing about gold and fiat currency is that you can draw an interesting parallel. gold is worth something because people agree it is, there is little to no use for gold in any industrial sense, and making pretty jewelry is about the brunt of use there is. the dollar, all currencies nowadays really, is worth something b/c there is a market price where dollars are traded openly and people agree to it's worth.
there are actually a lot of similarities between the two in that sense with a major difference being that fiat currency is easier to regulate while gold is not. thereby you don't get huge lags in the growth of an economy (generally speaking) that was so common when gold backed the currencies. Proponents of the "only gold gives value to money" are as one-sided and intellectually dishonest as Marx's labor theory of value- it's not more efficient than supply&demand and "only gold.." is disingenuous.