March 7, 2016 at 2:01 am #47747
While this topic has been touched on in other threads, perhaps it might be of interest to collect input on it as its own topic. I ran across a very interesting 1966 quote from Alan Greenspan (once a close devotee of Ayn Rand, and later the Fed’s master money manipulator). One might wonder how he could wander so far from his 1966 roots on the subject. But then various people are corrupted in various ways….
Anyway, this is what Greenspan had to say a half century ago. The bold print emphasis is mine.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.
If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods.
The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.
While I THINK he was right a half century ago, very lately I’ve been having questions pop up in my brain. With gold not being money (according to The Bernank), and no major currency being backed by gold anymore, then what happens in the event of a total breakdown of economies? If gold is not convertible into a grossly hyper-inflated fake currency (the $US, for example), then will it really be accepted between individuals as a standard of trade? We’ve always thought of gold as having a dollar-denominated value, but wasn’t that perhaps only because it used to BE convertible into a set amount of dollars? Now that we can’t trade it in, and particularly if FedGov (or any other government for that matter) does NOT make gold “illegal” to own, won’t that send a message that gold truly has no value? IF that becomes the case, and people are afraid of trading away valuable commodities for a shiny coin because they believe it maybe really is worthless (after all, it can’t be converted into “real” money, i.e. the paper kind that is the ONLY known variety of money to anyone under about age 50 or so), wouldn’t that wipe out perceived wealth of all those that have converted dollars to gold and silver? (And of course, return everyone to a pure barter system?)
Perhaps, just perhaps, that’s the whole point of the massive advertising of gold and silver coins – let people think they’re retaining a measure of control and future insurance, while actually setting everyone up for the ultimate Cloward Piven Strategy scenario. If (when) the $US collapses, it will not be in the government’s best interest to have a viable underground economy going. So if they can convince enough people to not consider gold or silver to be worth anything, the underground, or non-government controlled, economy becomes unviable. Then FedGov gets to come in to the “rescue” by being the only significant source of “assistance” in an economic disaster.
I dunno. Just thinking “out loud” (or in black-and-white as the case may be). But for now, I’m certainly not ready to dump my belief that gold and silver will become worthless some day. I’m hopeful that enough will be very happy to have it, that it will still be a viable trading medium, along with the other precious metal (Pb) and such things as toilet paper, oil, shared electrical generation, labor, etc.March 7, 2016 at 3:05 am #47748
GS, while I’d agree that relatively few people are storing some of their wherewithal in gold and silver, I also observe that the $US “price” of those (and other) commodities fluctuate (usually, inversely) with changes in the stock market and the general economic news, which I take to mean that at least some people do consider them to have value. Ergo, a “market” for such exists. I would think, that as has been pointed out in other forums, some circulated, small-denomination US silver coinage, will be recognizable enough to be an acceptable trade medium in a grid-down event, or between individuals in the coming forced digital-only-currency economy.
Gold coins, especially the 1 ounce variety, will serve better as a long-term store of value to outlast the distortions, ripoffs, and craziness that digital-only currency is designed for. This may mean that those who have such savings may find no reasonable (or needful) way to spend them in their own lifetimes, other than perhaps, to facilitate an escape, or to purchase land from those willing to part with it. (Gold has been described as “portable land.”)
But the whole idea of “the dollar (peso, yen, pound, rouble, etc.) price of gold is in some ways, at least as silly as computing the “rise” of the iceberg from the “elevational standard” provided by the deck of the sinking Titanic. It is gold that is the 5,000 year-old benchmark, not any of the imminently pervertible currencies ever invented, since the humans who figured out how to mint, print, or create them at the keyboard, also figured out how to fake, and inflate them to their advantage, and our loss.
As you pointed out in another article, an ounce of gold has, since early days, been worth approximately the same (and in material terms, at least, never zero.) An ounce of gold would have bought a fine woolen toga, or a skillfully-wrought sword, in Caesar’s day. The same would have bought one of Hart, Schaffner & Marx’s finest suits, or one of Colt’s best pistols at the turn of the 20th, or of the 21st centuries, give or take a little small change. Plus ça change, plus c’est la même chose. (My guess is that, on average, finding, mining, and protecting an ounce of gold, has been on average, as difficult now, and across the centuries, as then.)
Gold has its risks, but loss of value to the knowledgeable is probably not one of them. Yet there may come laws, and governmental lawlessness, that will make the exchange, indeed the mere possession of gold, temporarily risky. When the King has rape on his mind, he wants all a$$es bare.
Addendum: Not to encourage greed, but other things being equal, how disappointed would you be, to run across someone who wished to be rid of his gold coins, badly enough to sell or trade them at a steep discount? It would pay to have means to veriify the genuine article.
Cry, "Treason!"March 7, 2016 at 11:13 am #47752
I will try to post , but there are a few states that passed laws to allow gold and silver as legal tender . World wide ? that is exactly what the Chinese and Russian coalition is attempting to do , create their own gold backed monetary system . Bad news for us if that happens , they are buying up large amounts of gold for a reason . No government has the power to get rid of gold and silver as exchange , yes they can attempt to dictate it ownership , but that works about as well as prohibition of alcohol did in the 30s . Humans have coveted gold and silver sense the day they stepped out of the cave , and will continue to do so , until the day we nuke ourselves back into the cave . It will always have value and be desired . I believe that in the event of a collapse , it will be quite the opposite , despite attempts by our government , or any other , to stop or prevent it , gold and silver will replace the worthless world currencies as a preferred medium of exchange . Interesting thing about the lend lease program of WW2 , we accepted the currency of our allied nations , such as Britain and others , as payment for the materials we were providing them ………..however , the money of the Soviet Union was worthless outside their own country , therefore , we demanded GOLD as payment for the same materials . In a post collapse , I believe gold and silver will continue to be accepted as payment , simply because that is how it has always been , we as humans want it . That sounds strange , but its true . every religion’s scriptures , speak of it as having value , its too ingrained in humanity . They may attempt things , but its destined to failure .March 9, 2016 at 5:12 pm #47785
If gold is not convertible into a grossly hyper-inflated fake currency (the $US, for example), then will it really be accepted between individuals as a standard of trade?
It will be accepted enough for local economies to lurch along, people to survive, etc. Depending on geographic area, of course. Some areas of the country have a long, proud and hallowed history of telling the government to f*&^ off and then going their own way. Some won’t have any problem chucking the dollar and happily going their own way…
If the .gov “decrees” that only their sh*t dollars will be used, well, just HOW will they enforce that across the nation? In the backwoods? In some guy’s living room? Parallel economies will rise – just like the parallel narco-economy we have right now (and other assorted black and grey markets).
It will be like fighting a Hydra… stamp one out, 3 more rise in it’s place… and if gold isn’t “money” then that means its private property. Like to see the .gov put the clamp down on private citizens trading their own private property… Gold has been “money” for 6,000 years and has done just fine. Just because Helicopter Ben says otherwise don’t make it so…
We’ve always thought of gold as having a dollar-denominated value, but wasn’t that perhaps only because it used to BE convertible into a set amount of dollars?
In that you mean gold = bits of paper? No. Our actual money – the dollar – was physical metal. The paper version came along as a stand-in out of necessity, since there were not enough precious metals to go around… which is where the money troubles of the early Republic come in…
Later, the gold dollar was a paper representation of gold. It was – literally – as good as gold because you could go to any bank and change it for equal amounts of physical gold. Gold is heavy. Much easier carrying around bits of paper as a stand-in.
If gold “money” is a physical representation of a certain amount of labor, then gold is literally interchangeable with labor. Since the gold dollar used to be interchangeable with gold, then gold = paper dollars = labor.
What we have now is not the case. It’s not the “value” of gold going up and down that accounts for it’s change in price. It’s the worthlessness of our fiat dollars when compared to gold that is changing. As the “worth” of our crap fiat dollars craters even more, the price of gold rises… but not it’s value. An ounce of gold mined and refined 3,000 years ago has the same value as an ounce of gold mined and refined yesterday… it is as constant as Polaris.
As far as folks pushing PM’s as a way to preserve wealth being some nefarious scheme to concentrate PM’s to make it easier for confiscation, I don’t think that’s the case.
I think your fears are unfounded re: the .gov having some kind of control over black and grey markets. They can’t even handle the black and grey markets that exist right now. The ones they do eventually bust are just little bits of a much larger whole, which immediately regrow with different players in the game.
How do you expect them to have a measure of control over the thousands of little mini black and grey markets that will spring up like dandelions as a result of Some Event? By decreeing you cannot convert PM’s to fiat currency? Yeah, that will totally work – coz human nature, corruption… plus, everyone gotta eat, ya know?
Rest assured, there will always be some local or regional apparatchik who can be bought off with something Shiny – either to actively look the other way, or for “protection” or to actively aid and abet swapping cash for PM’s… especially if they’re some appointed bank goon. Bank goons know the in’s and out’s of the system better than anyone else, know the “gold isn’t money” line is a scam – a particularly weak Jedi Mind Trick that convinced exactly nobody, but we play along anyway.
They’ll see The Shiny and they know that it will eventually become genuine ‘money’ again, sooner or later… they want to set themselves and their family up and will probably have no compunction against being co-opted, bribed, etc… of all the “morally flexible” types out there, bank goons are some of the ones you want on your side…
The wicked flee when none pursueth..." - Proverbs 28:1March 9, 2016 at 9:10 pm #47786
Well said, and spot on, Malgus! If the Soviet Union proved nothing else, it clearly showed how corruptible the minions of a socialist scheme necessarily become, out of self-interest. “They pretend to pay us, and we pretend to work,” was first said on some Soviet factory floor, or collective farm. Nobody in a position to get a little spiff, for looking the other way, is going to turn down a source of sustenance, when the alternative is just starving like everyone else.
Cry, "Treason!"March 9, 2016 at 10:06 pm #47787
Interesting in the early days of our nation , the dollar was supposed to be X grains of silver , but like you mentioned , the new nation was not up on its feet yet , so in addition to the US Dollar , Spanish silver was also legal tender .March 9, 2016 at 10:21 pm #47788
Malgus (and others) if I was to lay odds, I’d bet on your analysis. As I said, it’s only some interesting questions that have popped into this aging brain of mine. I do realize after all, that there are relatively few people that remember what “silver certificates” were, and even if some came out of someone’s collection in the attic, they still could not be converted to silver anymore – despite what they used to say. Heck, unless they just luckily happen to have an unknown silver dollar or 50¢ piece in their rolled coins, no bank has access to any silver money anymore. And anyone under about age 50 doesn’t think in terms of gold or silver as money, other than the commercials they see on TV. Now that PMs are not convertible from solid to paper in the U.S. and haven’t been for many, many decades, it isn’t a construct that most (meaning younger) people even have created in their brains.
So, how would it be valued for trade if the economy (and society) broke down – particularly if mass communication wasn’t available anymore? If anyone saw the old TV show “Jericho,” I visualize a scenario like that, where towns are cut off from the outside world in a flash, and suddenly have to play by an entirely different set of rules. If even the “silver” coinage of today is relatively worthless due to inflation, how would people go about determining what amount of silver (or gold) to ask for a given commodity or service, or how much to pay for same if on the buying end? We who’ve lived in a metals-backed system would have an easier time of it, but we’re also a fast-dwindling minority. It may well work, or work itself out, but with no recent history of convertibility, it’s truly a foreign concept to most people today. If mass communication goes down, particularly, it may be quite a while before any semi-standard exchange values are established. No, I don’t truly believe that TV gold hawkers are part of a giant conspiracy, but IF (still a big “if”) gold and silver don’t catch on with a large segment of society in the future, all those personal stockpiles of gold and silver could become relatively useless.
I know the history very well too, of course. But I also know American history pretty well too – and concepts that make sense to me as one of the over-50, and particularly over-60 crowd, don’t make a bit of sense to a younger America. Otherwise, how is a Socialist (capital “S”) making sense to so many? What us “old folks” have just assumed as “the way it is,” doesn’t always happen to be “the way it is” for much younger folks that make up the bulk of the population, and certainly our future. It’s just possible that a pure barter system will develop, with individual negotiations going on over goods and services, without metals having a large part of it in many areas. Perhaps low probability, but I’m still wondering none the less. In the meantime, a primary fundamental in investing is diversification. And I’m sure not ready to count PMs down for the count.March 10, 2016 at 1:14 am #47792
As you know , when the majority of people are down and out , with no money , barter starts to be a way of life , the great depression showed that . Beyond the day to day , hand to mouth , as things go along , people will want something more tangible . The younger crowd has no idea what bad times are , they are used to electronics to do everything for them ……………..but when everything breaks down , the old guy in the corner that knows a few things about life , will not sound so out of touch with ” reality ” very quickly . They have a rude awakening on the way . The new reality will be a world they have never been to , as will the solutions of how to get along in it .March 10, 2016 at 2:20 am #47793
Mr. Tolik you’re sound in thinking that the over 50 crowd are better set at thinking past the chaos which will be doing some terrible things while economic and legal rules collapse.too bad people’s health isn’t where it could be.March 10, 2016 at 7:06 am #47794
GS, I expect that as long as the grid stays up, and electronic $$ transfers remain operable (ATM banking still working), most people will stay with the present system, even under negative interest rates, and accelerated decline in value. Any other way of conducting everyday business would be too cumbersome. To the extent that they can, they’ll try to compensate for NIRP, and devaluation, but they’ll put up with it, because they’ll have no other feasible way to go. Sudden abandonment of the $US as reserve currency would cause devaluation panic, as the Venezuelan currency collapse did there. But those who still have Bolivares, still spend them where they can, albeit at an extreme disadvantage. So too, the FRN, electronic or paper.
Grid down, or even just electronic banking down, for more than a few days, would be a very different order of business. After the riots are suppressed, or burn themselves out, the survivors would need to trade with each other for continued living, and they would eventually gravitate to some recognizable luxury good as the best intermediary trading stuff. Goods that are perishable, or consumable, or too bulky or low in unit value may be useful in themselves, but difficult to deal with as a trade medium. For trade other than direct barter, people need something that doesn’t take up too much space, or require a lot of handling, or is hard to conceal or guard. That’ll be recognizable gold or silver coinage, probably initially trading at the last recognized $$ equivalent, and rising, or falling over time, as best suits the local need.
I’d expect that under relatively crowded city conditions, a rare coin dealer could do business simply verifying coins presented for evaluation, charging a small percentage of the valuation to be verified. Merchants in the outlying areas would need to develop such capacity in-house. It would require a balance and weights, a micrometer, a magnifier, a book of coinage specifications, a secure building, and (most likely) an armed guard.
Cry, "Treason!"March 10, 2016 at 10:47 pm #47796
Merchants in the outlying areas would need to develop such capacity in-house. It would require a balance and weights, a micrometer, a magnifier, a book of coinage specifications, a secure building, and (most likely) an armed guard. – L T
They already exist.
Every single pawn shop in this country has a set of weights, a micrometer, scale, an assayer’s kit, magnifying glasses… which could very easily be overlooked in the initial chaos. Would be something to think about if things get wonky – place looted to the walls, but who thinks of lifting that stuff with an eye to the future when folks will have to start using their stashed PM’s for barter?
Exactly nobody, I’m guessing.
Heck, unless they just luckily happen to have an unknown silver dollar or 50¢ piece in their rolled coins, no bank has access to any silver money anymore.
What’s cool is that you can go into a bank today, right this instant, and ask them if they have had any silver coins come across their desk – older folks are starting to dip into those big jars of change as things get crappier and banks DO keep an eye out for them…
Offer to trade them, coin for coin, with today’s phony baloney currency and they have to do it.. pretty sure they have to do it, if you specifically request that they do.
The wicked flee when none pursueth..." - Proverbs 28:1March 10, 2016 at 11:58 pm #47797
Your right , a lot of people’s health isnt where it should be , but on the other hand , fat people will start to loose weight real fast when they cant graze all day long because food is not as easy to come by . Doing most things to get along will be much more labor , and time intensive ………..key word LABOR . Labor makes a person loose weight , gain muscle and build stamina ……………not a bad thing for our current population . You will also see a return to more traditional gender roles ( mens work , women’s work ) Why ? because thats what nature intended . The urban Meterosexual will either have to cross over to manhood or die . The feminists will get beat up if they dont keep their mouth shut and work where needed ……..barbaric , but people are not nice when things are not going well , and nothing works . Just think of it Corvus , after its all over , you will be able to go down to the store , and buy a shirt made for a slim population , instead of a sack with sleeves , and a pair of pants not made for Bobo the baby elephant .March 11, 2016 at 1:12 am #47799
Agree with returning to the traditional gender roles, it was like that and probably gonna be like that again, yeah “meterosexual” gonna have hard time for sure. It is world where old ways simply kick in again. Adapt or die.
Older generations have lot of advantage there over the kids today, it is not all about strength and muscle, especially if you own assault rifle.
Gold coins, gold and silver and similar is always interesting topic, and just like caliber topic (or similar) is going to be always kinda controversial.
From my experience, I always like to have something that I can use for real, things like food, weapon, tools etc.
Yes, in my time of SHTF there were people who seek for the gold simply because they could get it from (hungry) people for low amount of food (or medicines, ammo etc.) and then use it trough their connections outside of region where war was.
What if whole world gonna be thrown in one big SHTF?
My situation was specific maybe, but again I simply like to have things that are useful.
Maybe after the some time of SHTF people gonna develop some system where you could use silver or gold, maybe not.
It is useful to have it as a savings in normal times, and it might be useful to have it stored and wait when collapse is gone, and some system kick in (if), but in the middle of prolonged collapse might be more useful to have farming skills and bank of seeds or reloading machine.
March 11, 2016 at 12:40 pm #47807
- This reply was modified 4 years, 6 months ago by Selco.
I have always been leery of the gold/silver thing in large part because there is not remotely enough of it in most communities for it to govern a working post-SHTF economy. Another aspect of this is that all economics will be local post-SHTF and the value of gold/silver will fluctuate wildly to a degree that it wouldn’t be a sound arbiter of value. Yes it is a very good thing to have but of higher priority is addressing basic food/water/heat/security matters. You can have all the gold in the world but there isn’t enough food to go around nobody will be selling any.March 11, 2016 at 9:28 pm #47810
Bout the only precious metal I deal with is lead.
The bonus to the job is I get first crack at the lead we dig out of our indoor range.
Going to have to dig in again, looking at bringing home somewhere between 6-8 five gallon buckets of lead.
Gold and silver, unless I find a piece of junk silver in the change drawer, I really don’t worry about getting any. Can’t eat gold but lead can feed us.
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