Wonder how this would affect CRHing finds?

[jim4silver]

First article I have seen on this from a more mainstream commentator, definitely worth a read. If this ever happens all PMs would be considered far more valuable than now including silver. I think it would make silver coins in circulation really dry up, as if it could be any worse in my area now.

I have always thought if the dollar ever crashed a new currency would be created and it would need to be backed by gold or other PMs to have any credibility after what has happened to all the fiat currencies to date.

This is one reason a person should have gold in addition to their silver. The central banks and other big institutions view gold as money and silver as industrial metal (important industrial metal nonetheless).

This was on the Drudge site today.

http://www.humanevents.com/article.php?id=43439

Jim

 

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[Syrys]

If they did this, would they go back to making silver coins? In that case... we could see 100% silver boxes! If that happens though, it might actually make it easier to find "older" silver since it will have the same intrinsic value as modern silver coins and people might dump them.

 

[mts]

I think Forbes is off of his rocker. He seems to forget why we went off of the gold standard in the first place. We don't need a gold standard to stabilize the value of the dollar and curb spending. We just need to stop printing more money and reign in our current legislators (easier said than done). That would have the same effect without the downside of fixing our dollar's value to the price of gold.

Imagine what would happen if a president came in and got laws passed declaring that it would be illegal for the fed to print any more money for the next 50 years...

 

[silverfinder20]

there isnt enough gold out there in order for the dollar to be backed up by it. The government understands that people grow at an exponential rate while the production of gold tends to be mined at a constant rate. With this being said, there may be one or two representatives who approve of the gold standard but will the people vote for them?

 

[Generic_Lad]

I think Forbes is off of his rocker. He seems to forget why we went off of the gold standard in the first place. We don't need a gold standard to stabilize the value of the dollar and curb spending. We just need to stop printing more money and reign in our current legislators (easier said than done). That would have the same effect without the downside of fixing our dollar's value to the price of gold.

Imagine what would happen if a president came in and got laws passed declaring that it would be illegal for the fed to print any more money for the next 50 years...

But think about how silly it is to have money that is literally just paper. Paper with no artistic merit (especially the new $5s, $10s, $20s, $50s and now the $100), paper that can't feed or clothe you.

While gold can't feed or clothe you, it is universally admired, every culture with access to gold (and silver) has valued it for its beauty and its utility.

Gold also has a known rarity, many uses (jewelry, dental applications, art, electronics) has high value in small quantities (unlike metals like copper or things like oil) along with an infinite life requiring no special storage (gold can't spoil like food, nor decay like cotton).

Limiting the amount of money is only one side of the problem, the other side is making sure that the currency is backed up with something because without something to back it up, what is the point of it? Without backing, currency is just paper, simple worthless paper.

The US dollar needs to be backed up with -something-, oil, gold, silver, copper, wheat, corn, etc. just as long as it has some backing, it solves both problems, the problems of devaluation and making the currency make sense.

 

[mts]

I disagree that paper money needs to be backed by some physical commodity. It is backed by the "faith of the US government". What this means is that we intend to back it with "something". Just not a specific thing. It might be lumber one day and technology the next depending on what country we are trying to appease.

The problem with backing it with any one specific thing (like gold) is that the dollar is still only backed by faith. That faith is in our ability to deliver that product in exchange for dollars. If gold becomes scarce, we will be unable to deliver it and will still default. But if we don't tie our dollar to a specific commodity then we can deliver lumber, food, or some other valuable good in exchange for dollars.

Just remember one of the main reasons why we went off of the gold standard in the first place. Our dollars didn't really track the price of gold for whatever reason (countries didn't value our dollar as much as gold, gold became more valuable intrinsically, etc.). At that point, countries were able to buy our gold at below market value which caused major problems for us.

At some point, even dealing in gold is dependent upon faith in the entity you are dealing with. If you want other countries to have faith in you, run a "profitable country". Pay off your debts, acquire surpluses, operate in a fiscally responsible manner, and be a good citizen.

Going back to the gold standard isn't going to solve the underlying problems. It is a crutch that likely will just cause more problems. Solve the underlying problems themselves and there is no need to back our currency with anything other than faith in a great country.

 

[jim4silver]

This is just my personal opinion on the matter. An asset backed dollar would be great for dollar stability. Here is why: they would not be able to print to oblivion like they do now. If say the dollar was backed by gold, they could not print more than the amount of gold backing it. This is why Roosevelt "confiscated" gold, in that they could not inflate back then without gold backing. So they called in the gold (they did get a huge amount turned in), then they increased the fixed price of gold from $20 and change per ounce to $35 bucks per ounce. This in effect increased the amount of available dollars by the same ratio.

I don't believe we will have a "gold standard" that would allow the redemption of paper for gold like in the old days, nor will we have circulating silver currency. But if they are ever going to have a currency that does not become worthless over time due to inflation, it will have to be backed by something other than "faith" or a "promise".

It is a fact that since the beginning of time, every non-backed, fiat currency has gone to its inherent value of zero. This is in part what brought down the ancient Roman culture, as they debased their silver coins over time to having almost no silver content.

PS The reason the gov won't stop spending so much is because they don't have to, just increase the debt ceiling and instant money to spend. It is too late for the gov to stop what they are doing because the populace would revolt if they took away their free, government goodies-medicare, medicaid, disability payments, 2 years of unemployment benefits, etc.

Jim

 

[mts]

...Here is why: they would not be able to print to oblivion like they do now...

...It is a fact that since the beginning of time, every non-backed, fiat currency has gone to its inherent value of zero. This is in part what brought down the ancient Roman culture, as they debased their silver coins over time to having almost no silver content....

PS The reason the gov won't stop spending so much is because they don't have to, just increase the debt ceiling and instant money to spend. It is too late for the gov to stop what they are doing because the populace would revolt if they took away their free, government goodies-medicare, medicaid, disability payments, 2 years of unemployment benefits, etc.

Jim

There is nothing stopping the government today from not printing more money other than the will to do it. You don't need anything special to declare that you will no longer print new dollars. Backing by a physical commodity is just a way to try and force the issue. But as has been seen in the past, it apparently never works. It is no coincidence that no country has ever backed their currency by physical commodities for the long term. It doesn't seem to work for whatever reason.

It is NOT a fact that every non-backed fiat currency has gone to zero. Every fiat currency that exists today is an example of a fiat currency that has not gone to zero. It is true however that many fiat currencies are heading in the wrong direction. But there is nothing inherently evil about fiat currencies. What does appear to be inherently evil is the way that governments abuse them. So I'm just playing devil's advocate. I hear the above claim made over and over again and it obviously isn't true. As long as ANY fiat currency still exists with a finite value then it will not be true that EVERY fiat currency throughout history has gone to zero.

I don't disagree that our government likely doesn't have the will to make things better. Can you imagine the uproar if the government suddenly declared that it was reducing medaid payments by 50%? We've gotten ourselves in a real pickle. And I don't think a gold standard will change that one bit.

There isn't an easy answer that's for sure. But the idea that gold backed currency is suddenly going to change things seems a bit farfetched to me. You will still have the same spending problems that need to be solved. You will still have the same debt. The only difference is that you now have to deal with the additional problems associated with having your currency backed by gold. Why handcuff yourself when it doesn't appear to solve any of the underlying problems? Instead of going to a gold backed currency, just stop printing money. It has the same effect without all of the potential side effects. Of course, ceasing to print money still doesn't solve the debt and spending problems.

 

[mts]

I should also point out that gold itself is like a form of "fiat currency" (not really by definition). It's value is "faith based". I can't eat it. I can't build a house with it. It's only value is the "faith" that I have that someone else will take it in trade for goods or services. If the SHTF, we all know that gold will drop in value compared to guns, ammo, food, water, gas, and medical supplies. So it's value is not constant. That's a major problem when trying to tie your currency to it. People who advocate a gold-based currency system make the assumption that the value of gold is constant. It may seem so now but that is no guarantee that it will be in the future. In fact, it was this change in apparent value that led to discrepancies between the value of the dollar and the value of gold when we were tied to the gold standard. That was a contributing factor for the US going off of the gold standard in the first place.

 

[mts]

I think Forbes is off of his rocker. He seems to forget why we went off of the gold standard in the first place. We don't need a gold standard to stabilize the value of the dollar and curb spending. We just need to stop printing more money and reign in our current legislators (easier said than done). That would have the same effect without the downside of fixing our dollar's value to the price of gold.

Imagine what would happen if a president came in and got laws passed declaring that it would be illegal for the fed to print any more money for the next 50 years...

But think about how silly it is to have money that is literally just paper. Paper with no artistic merit (especially the new $5s, $10s, $20s, $50s and now the $100), paper that can't feed or clothe you.

While gold can't feed or clothe you, it is universally admired, every culture with access to gold (and silver) has valued it for its beauty and its utility.

Gold also has a known rarity, many uses (jewelry, dental applications, art, electronics) has high value in small quantities (unlike metals like copper or things like oil) along with an infinite life requiring no special storage (gold can't spoil like food, nor decay like cotton).

Limiting the amount of money is only one side of the problem, the other side is making sure that the currency is backed up with something because without something to back it up, what is the point of it? Without backing, currency is just paper, simple worthless paper.

The US dollar needs to be backed up with -something-, oil, gold, silver, copper, wheat, corn, etc. just as long as it has some backing, it solves both problems, the problems of devaluation and making the currency make sense.

I realize that "paper is just paper". But "gold is just gold". It may be pretty but you can't eat it. It only has had REAL value during times of relative prosperity. If times get really bad gold will have no value whatsoever. It will be just as useless as paper.

The dollar is backed with "something". It is backed by the country's ability to deliver "something" in exchange for dollars. Today that something could be land, water, lumber, food, dirt, technology, weaponry, and on and on. It's no coincidence that the countries whose fiat currencies have failed had virtually nothing to offer in terms of natural resources or technology. The US is rich beyond its gold reserves. We have LOTS of worthwhile commodities to offer. THAT is what the dollar is backed with. If it ever came down to it, the US could trade vast amounts of resources in exchange for dollars. That is in stark contrast to countries like the Phillipines and many others whose fiat currencies have been in trouble over the years.

I know that a lot of people are enamored by gold. But frankly, it is a metal that derives its worth solely from beauty and faith. Not all fiat currencies are created equally. The US dollar is backed by the faith in the country which includes an eye toward its overall "net worth". That faith continues to dwindle for various reasons which reduces the value of the dollar. But the value of the dollar would have to decrease pretty far in order for us to not be able to back it with the vast amounts of natural and unnatural resources we possess.

 

[mts]

Another thought along the lines of my last post... Why would our government want to tie its currency to a limited resource like gold? Today, our currency is backed by countless resources at our disposal. As a country, we are "rich" beyond our current gold supplies. It would make no sense to handcuff ourselves by leveling the playing field with other countries who may have as much gold as we do but nowhere near the same natural and technical resources.

 

[ArkieBassMan]

You guys are WAY more knowledgeable than I on this subject, but allow me to throw a few "dumb Arkie" thoughts, feelings, opinions, and ramblings out there out there: In my opinion, a responsibly ran fiat currency system would be ideal - watch your spending, but have the ability to print a little extra money (even if you don't have the resources yet to back it) in the case and ONLY in the case of an extreme emergency. Unfortunately that's a "perfect world" scenario. Human beings lack the ability to be that responsible and history has proven that numerous times. Imagine the most financially responsible person in the world. Now hand that person a credit card with no limit and a printing press to create the "money" to pay the bill. I would imagine that person would go out and buy every little thing his/her heart desires. And why not? Its "free" money after all! Even if he/she was overly responsible, there would occasionally arise some little thing that was wanted or needed. "A little more" won't hurt he/she would likely reason. Well, pretty soon there will be another little thing...and another...and another. Pretty soon all those "a little mores" have ballooned into "a whole bunch" and the whole thing is out of control. I personally know several very smart, responsible people that have gotten themselves into some pretty serious debt problems with credit cards. Our government has done the same thing on a much grander scale.

Therefore, I believe that a currency system has to be backed by more than faith. If for no other reason, to reign in the spending ability of the government, as over time and as a whole, human beings just cannot be responsible enough to make it work otherwise. With that said, I believe our current system is too far gone to fix and is now in a death spiral and doomed to fail. I think the government probably now has no other option than to keep printing money until said money is totally worthless. They can't fix the system, but they can extend the time it takes to die, and maybe that is all that can be done at this point. I believe that is the fate of all fiat currencies - eventually they all fail. Its inevitable.

It is NOT a fact that every non-backed fiat currency has gone to zero. Every fiat currency that exists today is an example of a fiat currency that has not gone to zero. It is true however that many fiat currencies are heading in the wrong direction. But there is nothing inherently evil about fiat currencies. What does appear to be inherently evil is the way that governments abuse them. So I'm just playing devil's advocate. I hear the above claim made over and over again and it obviously isn't true. As long as ANY fiat currency still exists with a finite value then it will not be true that EVERY fiat currency throughout history has gone to zero.

Sorry mts, but I have to completely disagree here. While its true that currently there are surviving fiat currency systems out there, I believe they are all in the process of dying - some albeit sooner than others. I can use your reasoning to say, "I will live forever" and use the fact that there are humans out there that are indeed living to "prove" my point. History proves to us that all individual human beings will eventually die. Some live longer than others, but in the end everyone dies. The same is true with fiat currencies. History has proven time and again that all eventually fail. The fact that there are fiat currency systems in place that haven't failed yet means absolutely nothing other than maybe they were ran a bit better than some others that have already failed. Just like a person that takes very good care of his/herself...he/she will probably live longer than a person who doesn't. But in the end, they all meet the same fate. They die. I'm sorry, but your reasoning holds no water IMO.

 

[mts]

Arkie, comparing fiat currency systems to people dying is not an apples to oranges comparison. Saying that all fiat systems will ultimately fail implies that you know for a fact that it is not possible to have a successful fiat currency system. We know that this is not true. It is possible. But history has shown that so far, it has not been probable. There is a big difference.

I will continue to hold that today's currencies are backed by more than just faith. And that's why I don't believe that the dollar will ever be worth absolutely nothing. It will continue to go down in value that is for sure. But at some point the US government could draw on the vast resources this country has to keep the dollar from going to zero. To date that has not been necessary. But some day it may be.

What I also believe is that it would be a major mistake to adopt a gold standard. It makes no sense to handcuff yourself when you have so many resources available to you. Fiat currency systems make sense for countries with vast resources that they can draw upon to prop up their currency.

 

[jim4silver]

...Here is why: they would not be able to print to oblivion like they do now...

...It is a fact that since the beginning of time, every non-backed, fiat currency has gone to its inherent value of zero. This is in part what brought down the ancient Roman culture, as they debased their silver coins over time to having almost no silver content....

PS The reason the gov won't stop spending so much is because they don't have to, just increase the debt ceiling and instant money to spend. It is too late for the gov to stop what they are doing because the populace would revolt if they took away their free, government goodies-medicare, medicaid, disability payments, 2 years of unemployment benefits, etc.

Jim

It is NOT a fact that every non-backed fiat currency has gone to zero. Every fiat currency that exists today is an example of a fiat currency that has not gone to zero.

I was referring to past history and cultures. Many don't know this but the US has even had failed currencies ie, the Continental (every hear that phrase "not even worth a continental").

I am not trying to persuade you since you are entitled to your own opinion, but show me one nation whose fiat currency has survived in past history. And many of the current fiat currencies were originally backed by gold or could be redeemed for gold/silver until early to mid 20th century, so it is not like they began as fiat and continue today.

The buying power of the dollar is about 7 cents from what it was in 1913. Do you think that is how things should go? For some strange reason gold has been seen as money for several thousand years, that is why it would be a good candidate for currency backing. But I suppose anything that backs the currency and thus limits rampant printing would work.

If anyone knows of how they can save the dollar I would like to hear that plan. When they raise the debt limit this spring, it will further push the debt higher and will even further make the dollar a currency going down like Arkie said.

You don't have to believe me know, but you will see it later I would opine. Just keep your silver and gold.

Jim

 

[mts]

I was referring to past history and cultures. ... but show me one nation whose fiat currency has survived in past history....


Past history and cultures implies "failed history and cultures". That seems to be a fairly selective data set don't you think? What about all of the cultures that are still with us whose fiat currencies haven't failed (yet)? Why exclude them? The bottom line is that the statement "all fiat currencies have eventually failed" is an Internet fallacy meant to create fear. It has no real basis in fact. It can't because there are still viable fiat currencies today that can't be proven to be destined to fail.

...The buying power of the dollar is about 7 cents from what it was in 1913. Do you think that is how things should go?...


I do believe that the buying power of the dollar should keep going down. But not at the rate that it has been throughout history. I talk about not ever printing any more money. But that philosophy is not realistic in the real world. For example, if back in 1970 congress had decided to print 100 billion dollars and no more, ever, it wouldn't have worked. Why? Because there are now more than 100 billion people in the US. It would have been impossible for everyone to get even one dollar. So the number of dollars printed each year needs to steadily increase to keep up with population rates. The problem is that it isn't consistent from year to year. If the fed had started out by saying that they would print 3% more dollars each year and no more, then it would not have impacted the value of the dollar significantly. As it is, the perception is that the fed prints as much as they want to which hurts the dollar's value.

...But I suppose anything that backs the currency and thus limits rampant printing would work....

How about "law"? Isn't the issue that the fed prints whatever they want to? What if we had a law stating that the fed could not increase the money supply by more than X percent each year? I think it would help considerably to restore faith in the dollar (assuming the debt is also reduced).

There are people on this forum "tracking the demise of the dollar". Don't get me wrong. I don't think things are rosy by any means. I'm just playing devil's advocate and trying to make people think about some of the claims they keep hearing about gold, fiat currencies, and where the dollar is heading. I think that 5 years from now the dollar will have dropped another 25% in value. But it will be far from dead.

Despite what you hear on the Internet, fiat currencies by definition are not all destined to fail. I can create my own fiat currency in my own neighborhood that can be successful for the rest of eternity. It is the way that governments have typically handled fiat currencies that is the real problem. Enact laws that put limits on printing and be fiscally responsible with your nation's debts and there should theoretically be no problems. Unfortunately though, theory and practice are usually entirely different things.

 

[jim4silver]

I was referring to past history and cultures. ... but show me one nation whose fiat currency has survived in past history....


Past history and cultures implies "failed history and cultures". That seems to be a fairly selective data set don't you think? What about all of the cultures that are still with us whose fiat currencies haven't failed (yet)? Why exclude them? The bottom line is that the statement "all fiat currencies have eventually failed" is an Internet fallacy meant to create fear. It has no real basis in fact. It can't because there are still viable fiat currencies today that can't be proven to be destined to fail.

...The buying power of the dollar is about 7 cents from what it was in 1913. Do you think that is how things should go?...


I do believe that the buying power of the dollar should keep going down. But not at the rate that it has been throughout history. I talk about not ever printing any more money. But that philosophy is not realistic in the real world. For example, if back in 1970 congress had decided to print 100 billion dollars and no more, ever, it wouldn't have worked. Why? Because there are now more than 100 billion people in the US. It would have been impossible for everyone to get even one dollar. So the number of dollars printed each year needs to steadily increase to keep up with population rates. The problem is that it isn't consistent from year to year. If the fed had started out by saying that they would print 3% more dollars each year and no more, then it would not have impacted the value of the dollar significantly. As it is, the perception is that the fed prints as much as they want to which hurts the dollar's value.

...But I suppose anything that backs the currency and thus limits rampant printing would work....

How about "law"? Isn't the issue that the fed prints whatever they want to? What if we had a law stating that the fed could not increase the money supply by more than X percent each year? I think it would help considerably to restore faith in the dollar (assuming the debt is also reduced).

There are people on this forum "tracking the demise of the dollar". Don't get me wrong. I don't think things are rosy by any means. I'm just playing devil's advocate and trying to make people think about some of the claims they keep hearing about gold, fiat currencies, and where the dollar is heading. I think that 5 years from now the dollar will have dropped another 25% in value. But it will be far from dead.

Despite what you hear on the Internet, fiat currencies by definition are not all destined to fail. I can create my own fiat currency in my own neighborhood that can be successful for the rest of eternity. It is the way that governments have typically handled fiat currencies that is the real problem. Enact laws that put limits on printing and be fiscally responsible with your nation's debts and there should theoretically be no problems. Unfortunately though, theory and practice are usually entirely different things.

I hope you are right MTS. But I am betting against it.

Jim