Where does money come from?

vendetta4v

Get-real-buy-real wrote: »

When talking about the difference between money and currency, lots of things have been used as curency shells £10 notes, but they are only currency 1. and all currencies have a 100% certainty to go to nothing in history. 2. Gold and silver are money and can never go to nothing, so I would say that makes them have inherant value.

Mike Maloney says our true wealth is measured in our time and labor, but governments are able to get some of that time and labor by cranking out paper currency. He discusses the difference between currency and money. Currencies must be: a medium of exchange, a unit of account, portable, divisible, durable, and fungible. Money must be all those qualities plus be a store of value over time.

1. Under the current monetary system subject to interest currency have no other choice but to diminish in value until the entire system suffers terminal failure.

2. Gold and silver are of finite capacity and if the entire planet was to use gold and silver as it's currency (we need currency) do you think we will have enough metals to represent it? Just think what destruction it will cause to the earth (mining is very destructive). It's impossible to sustain growth and have it represent our wealth using a finite resource. You will still need to use paper currency (even if it's going to be backed up by metals) unless you are prepared to carry tiny pieces of silver in your wallets. Which is what some precious metal bugs are advocating. But would you keep the same banking system in place or how will it work then? Will you still be issuing currency that would be subject to interest? If you will gold or no gold it will suffer terminal failure (there is a mathematical proof it will) and we are going to find out soon enough too.

Here is another quote:

So why does a precious metal monetary standard fail to preserve the cost or value of money or property?

1. The real cost of harvesting the resource varies (and should determine its value); and
2. The varying ratio of circulation to assets itself undermines a principle which cannot be sustained by an alternate monetary asset, insufficient in quantity to redeem a circulation equivalent to a greater sum of other wealth. -Mike Montagne

And another one:
... finite circulation fixed in sum by monetary reserves and ostensibly fixed in value by a resource, cannot ensure and does not ensure the intended, consistent value of money. We may observe for instance that even the cost of the very resource which ostensibly fixes the value of the money in truth vacillates according to other matters such as involved labor (versus a purported vacillating cost of labor). -Mike Montagne on Sir William Petty's treaties

No offence to you m8. But honestly !I think! people who advocate gold standard or precious metals as solid money etc... do not understand the problem that is causing our monetary system (that is subject to interest) to collapse.

I used to listen to Mike Maloney too, but I don't anymore because the numbers don't add up.

Lets see if I can put a link already
http://www.perfecteconomy.com/pg-why-jefferson-franklin-paul-and-others-failed-to-deliver-solution.html

Asheron

Well right now they are just printing
Money out of thin air (Quantitative easing)

Just to keep the economy going just after Christmas and then Booooooom!

Cleaver

Asheron wrote: »

Well right now they are just printing
Money out of thin air (Quantitative easing)

Just to keep the economy going just after Christmas and then Booooooom!

Not seen you round these parts for a while Ash, how are you doing? Any special plans for Christmas? How's the GCSE revision going?

ffacoffipawb

vendetta4v wrote: »

Where does money come from?

The Labour Party seems to think it grows on trees.

esuhl

Was it Bertrand Russell that pointed out the absurdity of putting huge resources into the mining of gold just so that we can dig it out of the ground and then... only to put it back in the ground inside a bank vault?

Ah, yes, it was in his essay "The Modern Midas":

"Of all reputedly useful occupations, about the most absurd is gold-mining. Gold is dug out of the earth in South Africa, and is conveyed, with infinite precautions against theft and accident, to London or Paris or New York, where it is again placed underground in the vaults of banks. It might just as well have been left underground in South Africa."

sabretoothtigger

More commonly attributed to warren buffet nowadays, bert who ?

Gold does have a purpose, I get the basic point but it is a unique indestructible element.
Its use is enforced honesty, you either have or you dont.
You might think thats pointless but we have at least two thousand years of history from people squabbling over who deserves what in finance trades
Think of gold like an immovable chess piece, its importance comes from what surrounds it and the worth it implies on those things by its rarity in comparison

Some things are worth more then gold, but only very useful things so it becomes a good base line

The Labour Party seems to think it grows on trees.

It does, you chop the tree up, pulp it, print paper and call it money. The government gets richer and people get poorer.
Because only politics awards itself this ability without merit we can see that the process has zero utility to it which then makes gold mining positively fair in comparison in that anyone with reasonable enterprise can acquire and use it to trade.
Paper money is produced at no cost and given to select individuals without any effort.

Of the two processes the one with less worth is not gold hence price of gold is accelerating (priced in dollars or sterling - like houses its value could still drop in theory) )as it is a more honest open transaction


Or say two games, which is worth more: playing Monopoly with notes anyone can write or chess where the pieces are fixed.
The silly game is more fun for a while but the chess game is the one that'll last, people do want their lifetime efforts to last
This is my (very bad) attempt to explain why gold has worth and is likely going to double in price in forthcoming years,

It might just as well have been left underground in South Africa."

The assets of miners and oil drillers are valued despite never being used or ever seen, they are valued and traded for their potential that may never occur. Bert was right but a solid potential has a solid worth to it

Humans do stupid absurd things, gold is not the worst of them is the main point so its worth is consistent