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452 comments:
«Oldest ‹Older 401 – 452 of 452Enjoying the posts over at TF Metals Report, especially regarding the GSR, which never made sense to me.
Motley Fool:
This natural occurance verus price ratio thing is interesting.
Why would the natural occurance of an element determine it's price? Isn't this just a analogy of the labour theory of value as opposed to the subjective theory of value?
Point in case. Wikipedia informs me that copper is very very abundant on earth. They cite resources of at least 10^14 tonnes in just the upper 1km of the earth crust, making no mention of deeper reserves or above ground used supplies.
Well, we know there is about 170,000 tonnes of gold above ground, and perhaps another 80,000 tonnes in reserves(prolly a little more, just wanted a nice number), so lets call that 250,000 tonnes.
The natural ratio (using just that estimate which is still inacuracte) is then at least 400,000,000 to 1, for copper versus gold.
Well then. What is the price of copper? It must be 400,000,000 times less expensive than gold right?
Copper is about $8,000 dollars per tonne at present, gold is about $54,643,410 per ton. That is a ratio of 6830 to 1.
.....
Shit! We must sell all our copper immediately, it is waaaaay overvalued.
It should be only 13.6 cent a tonne.
I'm going to short copper immediately. I'm going to be rich, rich I tell ya.
....
Ok so all joking aside, what is the deal with this naturally occuring ratio must determine price thing?
Motley Fool: My question has the obvious answer that naturally occuring ratio's have nothing to do with price. I even provided some quick examples disproving the assumptio. Since the touted GSR is simply one example of this, it is obviously wrong to use it in determining what price silver may or 'should' have.
In determining value one should look at usage of the commodity. The argument offered here is that silver has the same use as gold. Barring the obvious fact that this is false, in that at present silver has about 50% industrial and 50% investment demand, while for gold it is about 10% to 90%, the argument must be made as to future usage of these metals to make a forward price projection.
I hold that silver will lose all investment usage and will have to rely on industrial demand to determine price.
Hence their future use has no commonality, and any GSR historic or naturally occuring has no bearing on future price.
Thanks for TFM links, priceless :-)
BH,
China hasn't nationalised their gold mining industry. They simply buy all local production AFAIK at market price less any taxes, fees and other charges that are applicable.
In Australia's case I think you have to look at the impact of the US alliance. That security umbrella comes at a cost. All of the dollar bloc countries sold down their reserves since the 1970s. If the RBA/Treasury started buying gold it might be construed as an unfriendly action.
I have to log off now.
Cheers
Thanks Costata, In my mind Gov buying of all the gold is defacto nationalisation, just a more efficient method. Maybe it'll be like that everywhere post RPG.
I heard a rumour that output from silver mines is also bought up by the gov, don't know if it's true or not, some sort of quasi-nationalisation.
Thanks for your help
BH
Mot,
To say..."the current dominant...thought" is "polar in nature"... presupposes that you have a very intimate knowledge of the particular thinking of certain individuals whom you presumably consider to be very important in regards to this topic...but I don't dare ask if you could name these people, much less know their inner most thoughts, for I suppose that you couldn't, just like nobody that I know of can exactly know with certainty what another person is thinking at anyone point in time...and if by chance you could, I would certainly be cautious about believing that their thinking is so stuck in time, impervious to revision thanks to either their own self-reflection(s) or lobbying...or whatever else....
I think it pays to admit that you cannot know what people are thinking, particularly in a very detailed way when it comes to complex matters, and that to view the world through even a basically true prism of "debtors" vs "savers" is to vastly oversimplify the current and (necessarily unknowable) future machinations of a society or "the" society.....The only certain thing is nothing is ever entirely certain, and that everything can always possibly change
Costata has helped me past some baggage: China's Government buying up lots of gold on the market is nothing like nationalising the gold resources (making gold not free, and discouraging citizens) . I hope it helps others as well. Maybe we are seeing how the gold markets work in the future in China? I'm not sure.
Nationalising gold prevents it from functioning under freegold, and would be a mistake that is quickly realised I'd guess.
Hi,
Costata, thanks for your thoughts on HI & mortgages.
FOFOA, those Newer/Newest link at the top of the page are a great idea - but they don't actually work for me.
Is anyone interested in an Australian Freegold conference? In keeping with the theme, it could be in BrisVegas...
Cheers,
DI
Delusional Investing,
They haven't worked for me either, ever since Blogger put them there. Only the ones at the bottom work. Sorry, but I just work here. ;D
Sincerely,
FOFOA
Hello Victor and FOFOA,
Interesting:
"That's one of the key things about Freegold where a lot of people finally go, "a-ha, now I see, they (meaning the USG elite) will need Freegold and therefore they will embrace it and even defend it if necessary!"
I did come to this conclusion at one point, but lately I have been a little less unsure. Maybe it's a question of faith in humanity? Or purely just a question of faith ;0).
Of course normalcy bias comes in all shapes and sizes, all subjective to the view. Much depends upon the "6 months of turmoil, followed by reset and continuity". Yet in such uncharted territories as these, history may not even rhyme.
Victor, whenever you leave a link I will surely read it, time permitting ...
Time ... if only we could control it, we'd all accumulate more of it. Now THERE'S a wealth reserve asset that even trumps gold.
I just posted this on TFMetals. Lets see whether it gets approved for posting. I didn't think that they had moderation, and was thinking why I can't see it :-).
Hoping that they post it.
1/2
---------
I am curious. I come from India, and here nobody cares about silver. Silver is used for utensils, idols of gods, and jewelry for the feet. Silver is considered too cheap. It has no value for showing it off. If you wear silver jewelry then you must be poor :-). In India even the most poor person will only buy gold. Gold is the only thing that can be given to the bride in marriages. These days it has become more expensive so people prefer giving money or electronic items. Nobody gives Silver Jewelry.
I don't understand why you think that poor people can't buy gold. In India you can buy very small pieces of gold jewelry, or even gold leafs, in subgram quantities. If you come to Bangalore, and go to gold shops, you can see a very poor person going to a jewelry shop who doesn't even have footwear, and he will go and buy gold, not silver. I guess a poor Western person isn't happy with a small piece of gold, and has to have a large piece of Silver to carry.
If you look at the amount of Gold imported compared to Silver imported in India in Monetary terms you will see that the two are not in the same league.
http://www.commodityonline.com/news/india-import-of-gold-silver-to-soar-in-2011-40694-3-40695.html
"Every year, India buys more than 4,000 tonnes of silver and over 960 tonnes of gold."
This means that import of Silver is at best only 5 times by weight compared to Gold. With GSR being around 50, in monetary terms it is only 1/10th. The govt doesn't even list them separately. They always list Gold and Silver. It is tough to find out how much silver compared to gold.
I am pretty sure similar things apply to China as well, and from searching the web the imports look in the same ballpark. China is also a big producer of gold. It is even more difficult to find import volumes of Silver in China.
The same thing applies to most of the other asian countries, because we have similar ideas about gold and silver.
So I would think that consumption ratio in weight terms in Asia is about 1:5 gold to Silver.
The production ratio is around 1:10 gold to Silver.
Around 10% of Gold gets used in industry. About 75% of Silver.
The remaining gold to silver ratio for production after removing industrial use is 1:8.
The silver production is higher than the demand for Silver generated by Asia.
The Oil producers are no different. If you have been to Dubai, you would know. It is the premier destination for Gold. Silver doesn't figure.
Its pretty obvious that Central Banks do not care about Silver, they don't hold any :-).
Another thing is that for rich people there is no point in buying silver, it can only increase storage costs, although not by much. But shipping costs can be more. Although maybe security requirement is not that stringent as the thief will have too much to carry to break even :-).
2/2
-------
If you take in everything I have written above. The only people who can make the price of silver go up is the Western poor people. Do you think they can do that? Do they even have the money to make a dent in Silver prices? Aren't they more interested in just getting enough food?
I can bet you the demand is not going to come from India, China or the rest of Asia, including the OIL Producers. Who is it that is going to have enough money to make the Silver go up?
I have looked at theories for the ascent of silver, but they all rely on the supposed Industrial use. But as I have shown above, the silver industrial use is not enough to modify the production enough to get it to the same ballpark as demand. The other theories are based on Manipulation. And well Manipulation goes both ways. Are you sure you are not being manipulated in a pump and dump scheme? Silver did rise a lot last year. But after that rise Silver has gone down more than Gold. Not to the same point as before, but that's probably because still a lot of people are holding the silver thinking that it will go up in the future :-).
Do you find any problems with my data?
First, the ‘deflation la-la-land’ comment was inspired by this exchange between Rui and victor:
Rui, September 21, 2012 4:04 PM:
A healthy hard money economy should lead to a mild deflation, which the hard camp understands.
(description of Rui’s understanding of how the economy should work)
victor, September 21, 2012 8:10 PM:
Which has been refuted empirically using 200+ years of pre-1922 gold standard data (Barsky-Summers). Under the gold standard, the general price level fluctuated wildly. Even in the long term average, there was no mild deflation.
Rui, September 23, 2012 8:08 PM:
I have described how economy growth, improved productivity and supply & demand dynamics work together to create deflation. It's simple and yet makes sense.
You claimed that 200+ years of history refuted it. Well, if I have all the data I would like to do a break down of those years.
Were they all growth years? Were there any disruptions such as wars, natural disaters or new exploration that brought in extra gold to disrupt the monetary system? Was FRL rampant in any period that eroded the sytem?
I would draw a conclusion after that, and I doubt it'd be different.
***
Next, a substitution game:
Debtors by their very nature are fiscally irresponsible, otherwise they would not be stuck in debt.
Debtor: One that owes something to another.
Therefore:
Anyone that owes something to another, by their very nature are fiscally irresponsible, otherwise they would not be stuck in debt.
See why such a statement might cause costata to doubt your sanity? Clearly not everyone who ‘owes something to another’ is ‘stuck in debt’.
***
Goods and services deflate when priced in gold over the years so your gold saving will take advantage of it to buy more in future.
FOFOA:
One of the things I have found that people have a hard time grasping is that ALL savers will want to be in gold after the transition, even though it won't deliver ANY real gains like we've had over the past decade. This is a difficult concept to wrap one's head around. People seem to think that they are in gold only for the big 30-bagger revaluation and then they'll want to find something else in which to put their little dollar soldiers to work earning a yield. Either that or they imagine that Freegold will be an environment of perpetual real gains for gold holders. It will not.
Freegold will be simple purchasing power preservation, and you'll love it! No gain, but also no risk and no loss. That's what savers need and want. And most of us are savers whether we admit it or not.
***
If banking is so evil, then why did it exist even in the absence of any government monopoly?
Rui
I don't think I can assist you in breaking your belief in the omnipotence of central bankers, if the evidence of reality cannot do so.
I wish you luck.
TF
"No gain, but also no risk and no loss". I would add that
the removal of an absolutely predictable yearly LOSS, (that
being the "money management costs" associated with the
present securities investment arrangements) will in fact
constitute a real GAIN, particularly when adjusted for risk,
to the average saver. I am not disagreeing with what you
say, Michael, just adding that things will be slightly better,
to the tune of 1 or 2% per annum, when this skimming has
come to its deserved end. Cheers.
Costata,
Not to traffic in a variant of U.S. exceptionalism, but I think the behavior of farmers facing foreclosure in the 1930s is instructive regarding the outcome of U.S. authorities pulling some of the stuff you describe. Suffice it to say that if they try that Icelandic @&?!! here a lot of these jokers looking to collect will be looking down the wrong end of a gun.
@ anand srivastava
In my past I have been to most countries in Asia and also to Dubai. I can confirm your thesis about Gold and Silver.
BrotherJohn in his presentation called Fiscal Cliff stated that the reason banks do NOT hold Silver is because it is too cheap. His argument for banks not buying Silver is that they have so much money that a fraction of their reserves would buy up all the Silver in the World market and be self-defeating. The proverbial elephant trying to squeeze into the broom cupboard.
His followers obviously accept this as being a rational explanation. To me it's like saying that because an oil sheik can purchase all the production of Rolls Royce cars he can never buy one.
The only reason I now follow the Silver blogs is to marvel at my past gullibility.
"Because the trading of paper securities (stocks, bonds
currencies etc) have become the only avenue for world
economic activity, we are all compelled to play this game
of chess. LIKE IT OR NOT, YOUR VERY NET WORTH IS
EVERY DAY IN PLAY. And as such, we all watch for the
next move on the board. Each, in his own quiet way,
ready to act quickly and purchase the "next paper asset"
that appears to hold value in trade. That is, before our
neighbor beats us to it." FOA MSG ID 3351
The only reason I now follow the Silver blogs is to marvel at my past gullibility.
Keep going duggo, you're doing great! ;)
@ Rui
Quote:
"Imagine I am a banker and print a load of FIAT to buy stuff off the market. By the time you go shopping there's less stuff while more FIAT is chasing them so what happens to the price? It goes up. Your FIAT paycheck ends up buying less due to my printing. There I steal from you no matter what you save in "
FIAT HAS NO INTRINSIC VALUE. If they print the money and nobody is SAVING in it, then the price of everything goes up but so does the value of your savings (GOLD) by the same amount. So the banker gained NOTHING.
^ And that banana republic style inflation does nobody any good so the bankers would not do it once they are aware that it accomplishes nothing.
That is why banana republics do in fact, stop printing money and don't start again.
@ Charliebravo
Quote: "In regards to purchasing coins from a Canadian bullion bank. Scotia bank has maples for 1863 US$ vs Gainesville Coins for 1741 US$.
http://tinyurl.com/av83lum"
I did write that ScotiaMoccata (the website)is way more expensive then the actual bank location.
I was going to buy online once because I work out of town but I got the quote and compared it to the bank and it was allot more.l
Make that Gold...btw if you tell people that POG is now higher than POP , you'll see their aha! in their eyes ;-)
http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/07/could-two-platinum-coins-solve-the-debt-ceiling-crisis/?wpisrc=nl_cuzheads
Knallgold,
LOL, good entertainment!!!
It is stories like this that makes one think that (American?) economists are crazy...
Why not revalue (to market price from ~$42) the existing gold reserves as FOFOA once suggested (and then deposit higher valued gold certs at the FED), or just let the FED print the damn thing (Magical Money Tree style)...
Does it really matter if 2 oz's of platinum are deposited at the FED?
All those other ideas [like the platinum coin option] are very uncertain, and they could lead to complicated litigation,” says Balkin. “A government shutdown is much more straightforward.
That is even crazier...
Yeah all right listen: Government shutdown is the easiest option out there, mkaaay...
Victor: Thank you for the compliment.
Costata,
So, according to the Bloomberg piece, The Fed would try to sell those bonds, in two and a half years time. There's just one tiny problem which is the price that will be required to coax potential buyers to bid on all that debt. Hint: it's a price that crushes, like a bug, the fragile U.S. economy.
Discharging the debt through monetization of another asset, one already on the books, one with a yellow tint, might be the way forward, eh, Chairman Bernanke, er, Yellen, er, whoever?
Thanks Barry. I'm trying.
Anand,
According to Times of India: 70 crore silver, 40 crore gold nationwide this Dhanteras. Looks like the high gold price overhang from last year is still playing and silver is serving as an alternative. Have they got their facts wrong?
http://articles.timesofindia.indiatimes.com/2012-11-12/lucknow/35067963_1_total-car-sales-jewellery-sales-festive-sales
Adding to Anand's observations about India, one observation about the situation in America is that Americans are conditioned to believe that gold is expensive, regardless of the price. Years ago I would buy 14k jewelry as a gift expecting (and paying) a high price "because it's gold" -- without much thought to how much gold was actually in the item. Of course, once you do the math, it's an outrage. But how many do the math? And even if you do, what are your other options buying jewelry in the U.S.? For me, it was only years later after my first visit to India that I realized you can get more bling for your buck by sticking with 22-24k gold and buying by weight . . . in India. When I bought my first few gold coins in the U.S., I was actually shocked how much gold there was. I felt rich. It left me wondering how much the "gold is too expensive" message comes from retail jewelers eager to collect a high margin and leave the unsuspecting customer to believe they are paying a lot "because it's gold."
OMG it's torture to read those comments at turdville!
What can you expect from someone who names themselves, Turd? Answer: crap.
Agreed Edwardo.
I've been reading more and am really turned off now at the way they gang up. It's pathetic. Even the shit...err the Turd does it.
I had no idea of this drama before I posted about Truthingold last week....lol...after reading more of Dave in Denver, I really don't care much about what he has to say anymore.
Group think? Nah... freethinkers over there...at least that's what they said.
"The only reason I now follow the Silver blogs is to marvel at my past gullibility."
Well Duggo, I also marvel at my own gullibility but I take solace in understanding that it led me here and for this I am very thankful.
I am comfortable with how it turned out.
I think either of these is begging for a caption contest:
1
2
That wonkblog (aptly named) trash is pure economic nihilism from the Keynesian Koolaide Krewe:
"Thanks to an odd loophole in current law, the U.S. Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases."
Unadulterated "value by decree". How can anyone with a troy ounce of rational cognition digest that statement without feeling queasy?
And sadly, the commenters there mades Turds smell like a rose.
And yet ... this type of nonsense passes for more than just tongue in cheek silliness. At least the commenters seem to think it lies within the realm of serious rebuttal.
And that is the sad part, perhaps saddest for Yale and the Peterson Institute to even be mentioned, as some people wouldn't realize that the whole article is basically a parody of sound economics.
Or is it ??
;0)
and ranting further ... as this drivel demands. When in the blue FARK did the US Treasury, it's Malthusian secretary, or it's shadow master, the ESF give a RATS ARSE about whatever anyone or any "law" allows it to do. It answers to no one but the dogs of war.
And yet this author writes as though we live in a world concocted by a 3rd grade civics insctructor where laws have consequences to the system which writes them ??
Thank God this puff piece was an awkward attempt at humor or I'd forced to state how I REALLY feel.
Loved this:
One day, the rest of the world will drop the dollar. Then the BRICS will sell gold to the ECB in order to acquire Euros. Why? Because they will need these Euros to buy oil. Why Euros? Because OPEC wants gold, and the only liquid gold market will be in Euros, physical only. The ECB will make that market. The exchange rate is going to blow Jim Sinclair out of his socks. (And this is also what will drive the GSR beyond 500).
Victor
I think the Treasury would have more success with platinum blondes than platinum.
All -
What is your take on ANONYMITY and its relative importance when it comes to purchasing physical Au? Is it worth it to pay $50 more locally/oz compared to online prices to be "cash-only"?
Joe
Greetings to all. I finally am able to post so I thought I would ask about whether the readers here think it is a good idea to trade all of my silver for gold or perhaps keep some silver. I am considering doing this and would like your opinions.
Thanks
P. S. Concering the Gold/Silver ratio GSR; I have seen it referred to several times as on the order of 50/1. If one is going to use the ratio Gold/Silver it really should be 1/50, yes?
@Michael H
You can skip everything else I wrote and just focus on this part: "Anytime anyone brings a new product to the market, the product is going to compete against other existing products for money supply. ... Such competition is naturally deflationary."
That's enough to explain why deflation is merely a form of free market mechanism so there's no need trying to fight sth happening naturally.
@M
If I as a banker can simply print to buy the stuff from the market w/o having to work for it then how can we say there's nothing to gain for me from printing?
As for banana republics, I notice Argentina is in a currency crisis again. What is this, the 3rd time since 1980's that their currency melts down? I suspect we'd find out more cases of meltdown if we trace it back to 1970's, 1960's and so on. Stop printing? Why would bankers stop it while there's much to gain for them as I've shown in above?
On thinking about my PS on the GSR if one talks about ratio of prices then 50/1 but in terms of oz then 1/50
Phil,
Stick around a bit and do some more reading if you have the time. Only you can decide what's best for you.
Hey, I ditched 98% of my silver for gold a long time ago and I have zero regrets. No GSR involved in my decision. I got out of it at a higher number than I got into it for and ended up with a few more ounces of gold than I would've if I hadn't bought the silver in the first place...
Good enough for me.
Edwardo,
I hear you. Any attempt by the government to compensate one party at the expense of another for the effects of HI could lead to conflict.
We were merely sketching out some RE scenarios based on past events.
In regard to the Bloomberg piece, I agree it's fanciful unless they remove the bank deposit guarrantees. I can't think of any other incentive that would prompt people to take that paper off the Fed's hands.
New ZeroHedge article:
Guest Post: A Few Thoughts On Gold, Part 1 – Gold As An Investment
Phil: If you enjoy looking at the price of silver every day and doing some calculations to determine your net worth keep as much silver as you want to follow on a daily basis. If you would rather think in ounces every now and then perhaps gold could fill your needs. It is a different mind set and a comfortable position.
I put zero degree Kelvin energy in the gold to silver ratio.
FOFOA / Costata / Wil,
I've thought long and hard about this business of retiring debt during/after HI. What a curious situation we all could soon find ourselves in, where simple homeowner shrimps with a mortgage, that are just lumping along doing what they have been conditioned to do, are unwittingly set up to make a debt play that one might expect to see attempted by more extreme risk takers. Curious indeed.
I never considered the idea of taking on a bunch of debt to try and leverage my way into a big freegold payoff. Too risky for my blood. I do, however, have a big fat McMansion with a big fat mortgage, and would welcome the chance to retire that bloated debt nominally with depreciated currency. I had thought about retiring it as the hyperinflation raged, but your comments, FOFOA, made me rethink that idea. I see how the window might very well open briefly when gold peeks out from its hiding spot after the giant rubber band breaks. Timing is everything ;)
As for the government moving to reset mortgages to cover the bankers' fannies, I'm certain that there would be plenty in government that would willingly support such a move. My initial thought (In line with Edwardo, above) was that tinkering with mortgages this way would create such an uproar from the electorate (who had just lost so much) that it would be politically unwise to try it.
But then I thought again, and realized that not so many mortgage holders will be in the position to sell a bit of gold and pay off their debts, because not so many mortgage holders have any gold. So, I have changed my opinion and now feel that it could very well happen that government could pull the rug out from under those of us who make this debt play. A giant crowd of pissed off citizens shaking their Obama phones with disdain at the smallish cluster of evil gold hoarding cult members could represent a solid voting block for an opportunistic political weasel.
In the end, though, I'm inclined to go for it anyway. As I sum up all the opinions and focus squarely on the forest (since I am not edumicated enough to see many trees), I deduce that the worst case scenario is that I wind up back where I am, with a big fat mortgage. At least I gave it a shot, eh?
And if all goes to Hell, I can still take heart in the fact that government cheese is quite low in carbs.
Thanks for all of your thoughtful comments.
Cheers
byiamBYoung,
If I was in your situation I would probably take the punt. One last thought that occured to me as I was reading your comment. In net terms this play could also be looked at as a hedging excercise.
You are net short US dollars equal to the balance owing on your mortgage. You have agreed to tender USD that you don't have now in the future. It's no different to shorting a borrowed share or other security.
If you are net long physical gold in sufficient size to pay out the debt after the revaluation then selling the gold and paying out the mortgage isn't necessarily required provided you can support the interest on the mortgage. You would be debt free in net terms if the mortgage is your only debt.
So you could either pay it out early if you think that is the best option or simply wait and see how the PTB decide to address this situation. If they try to strike some sort of balance between borrowers and creditors by reinstating some percentage of the original loan balance at, say, 50% then you could wait for the loan modification and pay it out when the dust settles.
If you agree with the theories discussed here then you would expect gold to revalue then stabilize at the revalued price. Many here do not expect a parabolic, blow-off top that occurs at the end of a speculative mania.
In closing, I think you have a few potentially good options in how you play this. Good luck.
@tyrannyofthepresent
According to Times of India: 70 crore silver, 40 crore gold nationwide this Dhanteras. Looks like the high gold price overhang from last year is still playing and silver is serving as an alternative. Have they got their facts wrong?
The numbers do look weird. I can't see who would buy so much silver, unless the silver bug is sweeping in the Indian Investing community :-).
Also 65crore was spent last year and 40crore this year. So there is a 25crore difference. Assuming the total expenditure was similar this would mean that last year 45crore was spent in silver.
I think the problem is that we are not thinking of the Gems and Diamonds market. This market has been growing pretty steadily in India. And these items have a significant markup in the Indian market not like the very good prices that we get for the gold and silver jewelry.
I think that the numbers would be explainable, by thinking that a lot more money was spent by the younger crowd, which loves diamonds and gems. The younger crowd also likes show silver jewelry which are not at all for investment purposes. The diamond and gems are also not for investment.
byiamBYoung and Costata,
Echoing my thought processes exactly. Nothing to add, you've nailed it.
;0)
@ Rui
Quote:"If I as a banker can simply print to buy the stuff from the market w/o having to work for it then how can we say there's nothing to gain for me from printing? "
And how long do you think that would work if nobody was saving in that currency ? A few days ?
Would the US government be able to run a deficit for 30 years, along with a trade deficit if nobody was saving in US dollars ?
Quote:"And how long do you think that would work if nobody was saving in that currency? A few days ?"
In freegold, someone somehow would have to hold that FIAT b/c govt forces people to transact in it. For example if you buy gold coins from a shop, you end up saving in gold while the shop owner end up holding your FIAT. From the printers' POV, they do not care who is holding what as long as people as a whole transact in it. It'd probably work as long as a typical banana republic, say, 15 years or so until it has to be reset. Rinse and repeat.
Quote:"Would the US government be able to run a deficit for 30 years, along with a trade deficit if nobody was saving in US dollars ?"
Once gold becomes global trade currency again, US will be left on its own. It could end up becoming like Argentina where the nation still sinks in perrenial debt and CB/GOVT still print the currency to crash despite the citizens already shunning their FIAT.
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