Comments on: Currency Thoughts http://tauntermedia.com/2009/10/28/currency-thoughts/ Mon, 11 Jan 2010 21:32:18 +0000 http://wordpress.com/ hourly 1 By: Taunter http://tauntermedia.com/2009/10/28/currency-thoughts/#comment-1625 Taunter Wed, 28 Oct 2009 21:53:04 +0000 http://tauntermedia.com/?p=1848#comment-1625 Doesn't that make Jonathan's point? If the only value is the assumption that at some future point in time it will be coveted by someone else, that is no more or less stable with gold or paper. Doesn’t that make Jonathan’s point? If the only value is the assumption that at some future point in time it will be coveted by someone else, that is no more or less stable with gold or paper.

]]> By: Mark Hartzer http://tauntermedia.com/2009/10/28/currency-thoughts/#comment-1624 Mark Hartzer Wed, 28 Oct 2009 19:51:40 +0000 http://tauntermedia.com/?p=1848#comment-1624 Jonathan, I don't think any of the central banks are managing their currency well. I think all of them are printing like mad in an effort to stave off deflation. People are weird. You can't eat gold. You can't go to Safeway and buy a bag of chips with it. Yet people covet it anyway. Therefore, even though it might be essentially worthless as nothing more than shiny metal, if other people want it, it has value. Right? Jonathan, I don’t think any of the central banks are managing their currency well. I think all of them are printing like mad in an effort to stave off deflation. People are weird. You can’t eat gold. You can’t go to Safeway and buy a bag of chips with it. Yet people covet it anyway. Therefore, even though it might be essentially worthless as nothing more than shiny metal, if other people want it, it has value. Right?

]]> By: Mark Hartzer http://tauntermedia.com/2009/10/28/currency-thoughts/#comment-1623 Mark Hartzer Wed, 28 Oct 2009 19:47:07 +0000 http://tauntermedia.com/?p=1848#comment-1623 Very true. It is perfectly possible that a society's currency would have survived but for their own collapse. But consider the origin of the word 'dollar'. If my recollection serves me, it derives from the central European silver coin, the thaler. Anyway, you can debase a metal based currency just as certainly as over printing a paper one. Simply increase the percentage of base metal to that of precious metal. The upshot of my point was that debasing one's currency is a dangerous game, and as far as I know, every government around today is doing the same thing. Very true. It is perfectly possible that a society’s currency would have survived but for their own collapse. But consider the origin of the word ‘dollar’. If my recollection serves me, it derives from the central European silver coin, the thaler.

Anyway, you can debase a metal based currency just as certainly as over printing a paper one. Simply increase the percentage of base metal to that of precious metal. The upshot of my point was that debasing one’s currency is a dangerous game, and as far as I know, every government around today is doing the same thing.

]]> By: Jonathan http://tauntermedia.com/2009/10/28/currency-thoughts/#comment-1622 Jonathan Wed, 28 Oct 2009 19:08:45 +0000 http://tauntermedia.com/?p=1848#comment-1622 The Black Swan of fiat currency / gold is that central banks will manage money well and people will figure out that gold is essentially worthless (it is worthless). When that happens, all investments in gold will be lost; while those who stay in currency will do well. The real question then is which currency? Which central banks are managing their funds well, while not diluting currency value? The Black Swan of fiat currency / gold is that central banks will manage money well and people will figure out that gold is essentially worthless (it is worthless).

When that happens, all investments in gold will be lost; while those who stay in currency will do well. The real question then is which currency? Which central banks are managing their funds well, while not diluting currency value?

]]> By: Taunter http://tauntermedia.com/2009/10/28/currency-thoughts/#comment-1619 Taunter Wed, 28 Oct 2009 16:29:51 +0000 http://tauntermedia.com/?p=1848#comment-1619 How do we know that all eventually fail? Some have not failed yet, and we don't know of a mechanism that unavoidably causes them to fail. We could as easily say that all nations or all societies eventually fail. How do we know that all eventually fail? Some have not failed yet, and we don’t know of a mechanism that unavoidably causes them to fail. We could as easily say that all nations or all societies eventually fail.

]]> By: Mark Hartzer http://tauntermedia.com/2009/10/28/currency-thoughts/#comment-1617 Mark Hartzer Wed, 28 Oct 2009 13:37:24 +0000 http://tauntermedia.com/?p=1848#comment-1617 I'm glad you brought up this subject. While I like Krugman about a great many things, this isn't one of them. In fact, I'm with Einhorn 100% here. It is a sad fact that all fiat currency systems eventually fail. I'm not convinced that a 100% gold standard based currency is the way to go, but I don't think there is any dispute that the dollar is being debased. The whole concept of 'quantitative easing' is exactly that. It is Fed Speak for printing dollars in the hopes of creating inflation. Unfortunately for most Americans, it is a Ponzi scheme, and the only question is when will it fail, not if. I’m glad you brought up this subject. While I like Krugman about a great many things, this isn’t one of them. In fact, I’m with Einhorn 100% here. It is a sad fact that all fiat currency systems eventually fail.

I’m not convinced that a 100% gold standard based currency is the way to go, but I don’t think there is any dispute that the dollar is being debased. The whole concept of ‘quantitative easing’ is exactly that. It is Fed Speak for printing dollars in the hopes of creating inflation. Unfortunately for most Americans, it is a Ponzi scheme, and the only question is when will it fail, not if.

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