Gold v paper money: Which should we trust more?

[Namak_Halaal]

Gold v paper money: Which should we trust more?

A popular solution to the financial crisis has been to print more money, but is there another way of fixing our economy? Would the financial system be more stable if each pound, dollar or euro in our pocket was once again backed by gold? Brian from Manchester has lost faith in money. After selling his house, he decided to turn his cash into something he says he can trust - gold. "I started in 2005 and now I've got £200,000 worth - about half of what I own - in gold. "If I kept all my money in the bank, the value of my work would either devalue over the long-term or it would be wiped out." Brian's worry is that inflation will erode the value of his savings over time, or worse still, that fragile banks and governments will fail to protect them in another financial crisis. And he is not alone in these fears. Frances, who lives in London, sold her flat in 2008 and invested £40,000 of the profit in gold, which she bought via the internet and keeps in a vault in Switzerland. "I don't fear a financial Armageddon," she tells Radio 4's Analysis, "but I do fear governments, in their desperate search for wealth, constantly printing more money to deal with the debt that they have at the expense of people like me. "So I need to protect against that." Both Frances and Brian have hitched their fortunes directly to the value of gold. They have put themselves on a gold standard, if you like. Some economists and politicians argue that currencies need to do the same - that we need to reforge the link between money and something tangible. As central banks around the world print trillions of pounds, euros and dollars in new money through measures like quantitative easing, which makes more sense: believing in money that is conjured out of thin air or believing in a yellow metal you cannot eat, put in your petrol tank or even take to the shops? It is an argument that reveals deep divisions between economists. In the green corner are those who would print more money to get us out of trouble and in the gold corner are the folks sometimes dismissively referred to as "gold bugs", who believe we are heading for a monetary reality check. Detlev Schlichter is a former banker and the author of Paper Money Collapse and he says the current system is fatally flawed. "The problem is that what we use as money can be created and produced by the privileged money producers - which are the central bank and the banking system. "They can produce as much of this money as they like. And so the supply of this form of money is entirely elastic, it is entirely flexible." Detlev Schlichter believes this will, ultimately, lead to people losing faith in our current system of elastic money and turning to something that does not stretch - like gold. He advocates a radical free-market system where there are no central banks and where currencies - which are no longer tied to nation states - compete for credibility. He believes that, in such a system, money that can be exchanged at the bank for something valuable - like gold - would be more attractive than a £10 note that can only be swapped for two £5 notes or change. Quantitative Easing: Step by Step First, with the permission of the Treasury, the Bank of England creates lots of money. It does this by just crediting its own bank account. The Bank of England wants to use that cash to increase spending and boost the economy so it spends it, mainly on buying government bonds from financial firms such as banks, insurance companies and pension funds. The Bank buying bonds makes them more expensive, so they are a less attractive investment. That means companies that have sold bonds may use the proceeds to invest in other companies or lend to individuals. If banks, pension funds and insurance companies are more enthusiastic about lending to companies and individuals, the interest rates they charge should fall, so more money is spent and the economy is boosted. Theoretically, when the economy has recovered, the Bank of England sells the bonds it has bought and destroys the cash it receives. That means in the long term there has been no extra cash created. The United States still operated under a form of the gold standard until President Richard Nixon abandoned it in 1971 because foreign governments started swapping the dollars they held for gold and the US started to run out of bullion. And that, says mainstream thought, is the problem. If the power to create more money is restricted, then as the economy grows, producing more goods and services, prices are likely to go down. You might think that sounds good, but gold standard opponents argue there is a problem. After all, why would you buy something today if you know it is likely to be cheaper tomorrow? Consumers stop spending and the economy grinds to a halt - and this is why most economists are so scared of deflation. DeAnne Julius of the think tank Chatham House was a member of the Bank of England's Monetary Policy Committee - the body that decides how much money is in the system. She says that if the amount of money in the system was limited by pegging it to gold it would limit economic growth, which is the last thing we need right now. "I think to put your faith in gold as the basis of a country's monetary system would be extremely foolish," says Dr Julius. And not just because it would limit growth but because, in practical, terms it would be chaos. "We currently have less than one per cent of our GDP locked up as gold reserves in the Bank of England, so the kind of multiplier you would need to create pound notes which were very strictly tied to gold would be something of the order of four, five hundred times," she explains. "Every time the price of gold moved, you would find the value of that money in your pocket leaping up and down - an extremely volatile and unstable way to run an economy." This volatility of gold prices means it is also risky for investors like Brian and Frances, who have large amounts of their personal savings tied up in gold investments - £40,000 of gold might be worth less a year down the line. The benefits of the current system, say central bankers, is that in times of trouble they can take remedial action, they can lower interest rates which encourage people to spend rather than save - which gives a boost to economic activity. Detlev Schlichter says giving this sort of power to the monetary authorities is part of the problem, because it only postpones a financial crisis: "The present system is a policy tool. It allows the central bank and by extension the state to manage the economy. It creates near-term booms but we pay for them with a big hangover at the end of the boom." If we had stuck to the gold standard, it is probably true we would not be in the mess we are today. Yes, our economy would be much smaller - but perhaps its foundations would be more solid if the only money in circulation was money that tied to something tangible like gold. But in a world where monetary systems are controlled by central banks and governments, would a return to the gold standard work? "You can't force a government to stay on gold, so therefore gold has no credibility," says Lord Lawson, chancellor of the exchequer in the 1980s under Margaret Thatcher. "Because [leaving the gold standard] has happened in economic history on many occasions, gold no longer exerts that discipline." Countries have indeed abandoned gold when the going got tough - as they did in the 1930s and the 1970s. So if currencies did return to the gold standard, it might please the so-called "gold bugs" who have lost faith in paper money - but equally, it might introduce a new wave of sceptics, for whom the golden ring of trust has already been broken. http://www.bbc.co.uk/news/business-18644230

If Gold worked for Kings, Pirates, Prophets alike - it will work for you.

[Sachin85]

Originally Posted by Namak_Halaal Gold v paper money: Which should we trust more? If Gold worked for Kings, Pirates, Prophets alike - it will work for you.

What about land? That would be the safest bet. Prices are really high now though.

[Green Leopard]

Ha! Fanciful, there is no hell in chance the US Fed and Government will let Gold dictate monetary policy.

The economic dominance of US is underpinned by global faith in US dollar paper currency. Which gives the US Fed basically "money grows on tree" scenario.

I hear the Bank of England will be printing another £200 billion pounds which the avearge joe won't be seeing as usual, unless you are that 1%.

More than Gold, it's land, good land that is a guaranteed the safest bet, plus it's earns the owners an income.

[Namak_Halaal]

Originally Posted by Green Leopard Ha! Fanciful, there is no hell in chance the US Fed and Government will let Gold dictate monetary policy. The economic dominance of US is underpinned by global faith in US dollar paper currency. Which gives the US Fed basically "money grows on tree" scenario. I hear the Bank of England will be printing another £200 billion pounds which the avearge joe won't be seeing as usual, unless you are that 1%. More than Gold, it's land, good land that is a guaranteed the safest bet, plus it's earns the owners an income.

The more the US, UK, and Europe create money out of thin air, the higher the price of Gold.

[Namak_Halaal]

Originally Posted by Sachin85 What about land? That would be the safest bet. Prices are really high now though.

Paid in cash I would say Land/Property is a top option too.

I think prices will fall.

[shakil]

[Green Leopard]

I am still laughing at Gordon Brown's faux pas 10 years ago, selling nearly 400 tons of gold at just under $300 per ounce (approx $11,000,000 per ton).

Today it stands at $1600 per pounce (approx $57,000,000 per ton)!!!

hehe, a classic economist...even dumber than he looks.

[KingKhanWC]

Paper money is the biggest financial fraud in human history. Any currency you can print off a machine is a joke. Its destined to collapse. Silver is a good investment at present.

[LethalSami]

Gold is the best currency

Land is the best investment

............especially in a volatile climate like we have now

[Black Zero]

neither

[PetroDollars]

Top article by a top man

when the fed prints money, what impact does it have on you? written by: Richard duncan the federal reserve, the united states central bank, has “printed” more than $2 trillion since the global economic crisis began in 2008. This has more than tripled the size of its balance sheet. Before this spree of paper money creation began, the fed held $950 billion in assets; now it holds nearly $3 trillion. Why did they do this and what impact has it had on you, the general public? They did it to prevent the global credit bubble that had been forming for decades from completely imploding. It is probable that the global economy would have collapsed into a new great depression had the fed not printed so much money. Of course, we cannot know what would have happened for sure. Nevertheless, it is clear that the fed’s actions supported the economy in three crucial ways. First, it allowed the us government to finance $4 trillion of budget deficits (over three years) at extremely low interest rates. How did that work? The fed created $2 trillion from thin air and used it to buy government bonds and other debt instruments (mostly mortgage-backed securities) from the market. The people from whom they bought the bonds then had $2 trillion in cash. Some of that cash was invested in the new treasury bonds the government had to sell each month to finance its deficit. So, by directly buying government bonds and by injecting cash into the market that other people used to buy government bonds, the fed made it much easier for the government to spend $4 trillion more than it took in as tax revenues. That government spending kept the economy from collapsing. (to understand how, review economic forecasting, 101, posted february 15, 2012.) next, that “injection” of $2 trillion of new money meant that there was a lot of money sloshing around in the financial markets. Some of that new money was invested in bonds, which pushed up the price of those bonds. When bond prices rise, their yields (or the interest rate the bonds pay) fall. Therefore, the creation of paper money by the fed pushed interest rates lower. Consequently, the cost of mortgages, car loans and other consumer credit all fell. Lower mortgage rates kept home prices from dropping even further than they have; and lower interest rates on consumer credit supported consumer spending (and therefore the gdp). Finally, money printing pushed up the stock market. The fed does not like to say that it is “printing” or creating new money. Instead, fed officials use the term quantitative easing to describe their money creating activities. There have been two rounds of quantitative easing, qe 1 and qe 2. During both rounds, stock prices rose sharply. Higher stock prices make people richer (so long as they remain high, at least); and when people are richer they spend more money. That spending supports the economy and it creates jobs and it generates tax revenues, which reduce the government’s budget deficit. So, what’s not to like? Paper money creation allows the government to spend more, it keeps interest rates low and it makes stock prices high. It sounds too good to be true. And, it is. There are negative consequences (both actual and potential consequences) that i have not yet mentioned. The worst actual consequence so far has been a sharp increase in food and gasoline prices. It has been known for centuries that printing money creates inflation. There are different kinds of inflation, however. These can be grouped into three categories: Cpi ex-food & energy, asset price inflation and commodity price inflation. Let’s consider each. The most closely watched kind of inflation is consumer price inflation (excluding food and energy) or core cpi as it is often called. This measures the price increases for the things consumers buy such as clothing, electrical goods and cars; but it excludes the price of food and energy because these are considered to be too volatile. During the 1970s, core cpi spiked as high as 13.6%. Since then it has fallen steadily and it now stands at only 2.2% compared with one year ago. The reason it has fallen is globalization, which has resulted in a collapse in the cost of hiring workers in the manufacturing industry. Before, it was necessary to pay a blue collar worker in michigan $200 per day to work in a car factory. Now cars can be built in india using $3 a day labor. This collapse in wage rates has had the benefit of holding down inflation in the us; however, it has produced undesirable consequences of its own (to be discussed some other time). So long as globalization persists, there will continue to be downward pressure on wages and therefore little core inflation. Protectionism would cause us wages to rise, but it would cause a sharp spike in inflation. The second category of inflation is asset price inflation, or, in other words, inflation in the price of stocks and bonds. As discussed above, quantitative easing did cause a significant increase in stock prices and bond prices. In fact, one of the fed’s main goals in printing money was to create asset price inflation. In this they have been very successful. The problem comes with the third category of inflation, commodity price inflation. Gasoline prices are not $4 per gallon due to supply and demand factors, but rather because too much money creation has pushed up oil prices. Even worse, from a global perspective, is the surge in food prices that has resulted from the fed’s actions. During qe 2, global food prices soared 60%. This has done much more damage than simply driving up the price of milk and bread at the local grocery store. It has created a humanitarian disaster for the 2 billion people (29% of mankind) who live on less than $2 per day. Higher food prices played a leading role in igniting the arab spring, the political uprisings that overthrew three north african governments and threaten to overthrow several more governments across the middle east. The ultimate outcome of those revolutions is still undecided. It has been said that revolutions devour their offspring. They have also been known to frequently devour their neighbors. Saudi arabia is in that neighborhood. We can hope for a democratic outcome that works to everyone’s advantage. That outcome is by no means assured, however. A third round of quantitative easing would cause another spike in food prices and that could cause more hunger-inspired revolutions to erupt all around the developing world, with more destabilizing geopolitical consequences. Those are the actual consequences of printing money. Hyperinflation is the worst potential consequence. So far, inflation remains low. However, paper money creation has a long and ignoble history. It has almost always ended in tragedy. The great american economist, irving fisher (1867 - 1947) put it this way, “irredeemable paper money has almost invariably proved a curse to the country employing it.” time will tell if it eventually proves to be a curse for the united states (and europe and england and japan and …).

[freelance_cricketer]

Originally Posted by Sachin85 What about land? That would be the safest bet. Prices are really high now though.

+1
The most secure and profitable investment right now. But those are bigger investments, if you have limited resources and can't afford to buy property immediately then buying gold is a good option.

[shakil]

Gold is not much of a currency as far as I am concerned.

A currency should be
1. Easy for having transactions (exchange of goods)
2. Be reliable in having value

Paper money has the first property whereas Gold has the second property. It is difficult to use Gold for transactions because Gold is not easily divisible, difficult to carry around, difficult to handle and insecure.

We need a currency which has both the above mentioned properties. The second property of stable value and trust is subject to acceptance as a standard and perception. Therefore, it is difficult for any alternatives to become reliable and stable overnight. We need gradual switch over to the other (most suitable) alternative for it to gain the trust of general public (Remember even gold and paper money have no intrinsic value). I would recommend we look towards P2P electronic currency system like Bitcoins which could solve the problems in our "interest based economy" once and for all.

[velu]

Historically stocks returned more than Gold

DJ vs Gold

Stocks pay dividends but gold wont

[Namak_Halaal]

Originally Posted by velu Stocks pay dividends but gold wont

Gold pays me a dividend every month just fine.

[Namak_Halaal]

Originally Posted by velu Historically stocks returned more than Gold

All depends on the time cycle. With Gold you can only start from Mid 70s - Then when Gold was available to trade on the markets.

If we start from 2000 then Gold has trumped pretty much everything.

But also depends on frequency. If you had bought Gold every month/year since 1975 then you'd be quids in.

[pakistanalltheway]

Definitely gold . My dad knows Gold doesn't lose too much value so doesn't mind buying lots of it .

[PetroDollars]

Originally Posted by shakil Gold is not much of a currency as far as I am concerned. A currency should be 1. Easy for having transactions (exchange of goods) 2. Be reliable in having value Paper money has the first property whereas Gold has the second property. It is difficult to use Gold for transactions because Gold is not easily divisible, difficult to carry around, difficult to handle and insecure. We need a currency which has both the above mentioned properties. The second property of stable value and trust is subject to acceptance as a standard and perception. Therefore, it is difficult for any alternatives to become reliable and stable overnight. We need gradual switch over to the other (most suitable) alternative for it to gain the trust of general public (Remember even gold and paper money have no intrinsic value). I would recommend we look towards P2P electronic currency system like Bitcoins which could solve the problems in our "interest based economy" once and for all.

Thats why instead of valueless fiat paper money you deposit your gold in the central bank and take a receipt. Which can then be used for trading just like now but the difference is that now you have a receipt which is backed by gold.

This was of course the idea of the Jews in the 17th century which they exploited and turned into ponzi schemes by issuing fake receipts and later Mayer Rothschild took it to another level and took over the monetary system and became too powerfull and made fiat money legal.

[Justcrazy]

Invest in silver........... the price will go up drastically in future.

[youboy]

A simple research done by Islamic scholars.

Chicken 1400 years ago= 1 silver dirham.(2.975 to 3.15 grams of pure silver)
Goat or sheep 1400 years ago= 1 gold dinar (4.25 grams to 4.45 grams of gold)

If we convert the today's price of gold & silver equivalent

If a person had a 1 gold dinar which was 1400 years ago. He still will be able to buy the goat or sheep, and same goes with chicken and 1 silver dirham. No inflation, no body got poor.

[Namak_Halaal]

Originally Posted by Justcrazy Invest in silver........... the price will go up drastically in future.

Indeed!

[Namak_Halaal]

Originally Posted by youboy A simple research done by Islamic scholars. Chicken 1400 years ago= 1 silver dirham.(2.975 to 3.15 grams of pure silver) Goat or sheep 1400 years ago= 1 gold dinar (4.25 grams to 4.45 grams of gold) If we convert the today's price of gold & silver equivalent If a person had a 1 gold dinar which was 1400 years ago. He still will be able to buy the goat or sheep, and same goes with chicken and 1 silver dirham. No inflation, no body got poor.

Spot on.

Gold is the ultimate preserver of wealth and is endorse by God.

[speed]

The higher the price of gold get's the closer the collapse of the us dollar.

[Sachin85]

Originally Posted by Namak_Halaal Spot on. Gold is the ultimate preserver of wealth and is endorse by God.

How did God and religion come into this thread?

The main factor for preferring land is that it is actually useful. Gold shines and that is about it.

You can't eat gold or use it as it is for anything. It needs to be traded.

Land on the other hand is useful as it is. You can use it to grow crops or for cattle. Build a house for shelter, set up a business etc etc.

[Namak_Halaal]

Originally Posted by Sachin85 How did God and religion come into this thread?

Why not? No man made paper currency has lasted more than a 100 years unless backed by God's Money - Gold & Silver.

Why else would God mention Gold in the scriptures?

Gold has served as a monetary tool since the dawn of man kind.

Originally Posted by Sachin85 The main factor for preferring land is that it is actually useful. Gold shines and that is about it. You can't eat gold or use it as it is for anything. It needs to be traded. Land on the other hand is useful as it is. You can use it to grow crops or for cattle. Build a house for shelter, set up a business etc etc.

You cannot eat land, brick, and mortar, either.

You can use Gold to preserve your wealth.

Yes Gold needs to be traded, that it is why it's the ultimate 'currency'.

[Sachin85]

Originally Posted by Namak_Halaal Why not? No man made paper currency has lasted more than a 100 years unless backed by God's Money - Gold & Silver. Why else would God mention Gold in the scriptures? Gold has served as a monetary tool since the dawn of man kind. You cannot eat land, brick, and mortar, either. You can use Gold to preserve your wealth. Yes Gold needs to be traded, that it is why it's the ultimate 'currency'.

He/she mentioned camels but not airplanes. Does that make camels better than airplanes?? Why else would god mention camels in his book? He/she mentioned gold but not the US dollar! What an argument.

You can grow crops on land. Gold shines.

At some point people can stop valuing gold. It has no functional value. The value is in the minds of people. Thats it. That can change.

[youboy]

Originally Posted by Sachin85 At some point people can stop valuing gold. It has no functional value. The value is in the minds of people. Thats it. That can change.

It as not changed as long as the history remembers so lets see what is the future of your this argument.

[Namak_Halaal]

Originally Posted by Sachin85 He/she mentioned camels but not airplanes. Does that make camels better than airplanes?? Why else would god mention camels in his book? He/she mentioned gold but not the US dollar! What an argument.

Oh dear. You clearly didn't understand. Gold is the only form of currency which holds value. It preserves wealth.

God mentiones Gold in the scriptures and for good reason.

God does not mention property or USD.

What are you talking about with Airplanes?

Originally Posted by Sachin85 At some point people can stop valuing gold. It has no functional value. The value is in the minds of people. Thats it. That can change.

Same applies to Land.

Gold is rare thus is valuable by natural decree.

You cannot create Gold in the same way governments can create Mickey Mouse paper currency.

As for no functional value, educate yourself. Which part of currencies were backed by Gold and Silver did you not understand?

[Namak_Halaal]

Originally Posted by youboy It as not changed as long as the history remembers so lets see what is the future of your this argument.

He who has Gold has power.

History testifies to this fact.

[youboy]

Originally Posted by Namak_Halaal He who has Gold has power. History testifies to this fact.

Agree.

[shakil]

Originally Posted by PetroDollars Thats why instead of valueless fiat paper money you deposit your gold in the central bank and take a receipt. Which can then be used for trading just like now but the difference is that now you have a receipt which is backed by gold.

The problem with using gold deposits or gold investments as a currency is that it is all too easy for a central authority like the US govt. to close it down. I admit that Gold is a good investment. But I was talking strictly in the context of it's use as a medium of exchange. Remember "E-Gold", a service for gold transactions, was closed down by US due to illegal transactions.

The problem is that whenever a central authority is involved, it can easily manipulate its inventory (amount of gold in our case) to defraud us. That is why it is important for the next generation currency to be distributed and controlled by the users themselves - not some govt. agency or central authority.

Remember, it is your money and you don't want it to loose value by just sitting there. You don't want the govt. to print loads of money when you had to work your ass off to earn it.

[Saqs]

Or some commodity based currency with intrinsic worth?

My one qualm about economists I meet is that they think everything that went before them is now obsolete and never worked. They only present a limited number of approaches to economics with no room for movement almost as if they ve been brainwashed in uni.

Fact is gold and silver were working for thousands of years before paper came. Why not go back? Is it possible? Most importantly - should we?

Calling all PP economists (I am not an economist so would like some professional opinion on the matter)

[PerfectionPersonified]

lets go back - world runs on a fake economy

[ammo]

price risen too much to go back

[Saqs]

Who has all the majority of the gold in the world thesedays?

[youboy]

Originally Posted by Saqib S Who has all the majority of the gold in the world thesedays?

Federal Reserve.

[youboy]

Originally Posted by Saqib S Or some commodity based currency with intrinsic worth? My one qualm about economists I meet is that they think everything that went before them is now obsolete and never worked. They only present a limited number of approaches to economics with no room for movement almost as if they ve been brainwashed in uni. Fact is gold and silver were working for thousands of years before paper came. Why not go back? Is it possible? Most importantly - should we? Calling all PP economists (I am not an economist so would like some professional opinion on the matter)

Has per Hadith yes the world will go back to gold & silver currency.

As per World Bank & IMF a country cannot go back to gold currency. The currency has to be backed by dollar and all major commodities trading has to be in dollars.

The Prophet Muhammad (S.A.W.) said " A day is coming when there will be nothing left of value except gold and silver " (imam malik)
At that time people could not understand this hadith as they were already using Gold & Silver and barter system. Now this hadith is relevant in this current world situation as per per knowledge given by Allah Prophet Muhammad (S.A.W.) knew that the world will be using fraud monetary system. He (S.A.W.) informed that surely it has to go back to gold and silver.


The Prophet (S.A.W.) Confirms Greatest Danger of Riba
"There will come a time," he (S.AW.) said, "when you will not be able to find a single person in all of mankind who will not be consuming riba. And if anyone claims that he is not consuming riba then surely the vapor of riba will reach him. (Abu Daud, Mishkat) According to another text "the dust of riba will reach him."

[Random Aussie]

No chance, world money is regulated by demand and supply and inter country trade.

A country can print as much money as it likes with no reference to gold reserves but that devalues the currency on the world market.

My 2 cents, it will never go back to gold and silver or any other standard. Its electronic money now.

[Kwremb]

LOL no way it'll go back

[Black Zero]

when was it backed by gold?

[Saqs]

Up to the 70s the greenback was linked to a gold standard.

Before that (I think prior to the 20s), paper based currency was just a reciept for gold that was held in banks.

[RWAC]

I would like to be explained about this to go back to gold/gold-backed currency because of it's "intrinsic value". What' does gold derive its intrinsic value from? Just because we mentally consider it to be "valuable"? Why not base the currency on say coal then? Just take anything then and assign a perception of value to it. Or why not just believe fiat currency backed by the government to be "valuable" and carry on with it?


Sent from my iPad using Tapatalk

[Namak_Halaal]

Originally Posted by RWAC I would like to be explained about this to go back to gold/gold-backed currency because of it's "intrinsic value". What' does gold derive its intrinsic value from? Just because we mentally consider it to be "valuable"? Why not base the currency on say coal then? Just take anything then and assign a perception of value to it. Or why not just believe fiat currency backed by the government to be "valuable" and carry on with it? Sent from my iPad using Tapatalk

The intrinsic value of gold is not it's value but it's weight.

Any currency must be backed by a finite resource, Gold is the best. You cannot destroy it or create it. No matter what you do with Gold, the total weight of Gold on Earth remains the same.

[RWAC]

Originally Posted by Namak_Halaal The intrinsic value of gold is not it's value but it's weight.

So it is also acceptable to suggest "coal" as another alternative? It's got weight!

Any currency must be backed by a finite resource, Gold is the best. You cannot destroy it or create it. No matter what you do with Gold, the total weight of Gold on Earth remains the same.

Pretty much the same thing as putting a limit on how much currency can be printed. Would you be okay with laws that restrict printing of fiat currency then?

Also, can goal mining technology be able to keep pace with real GDP growth?



Sent from my iPad using Tapatalk

[sa88]

Originally Posted by Namak_Halaal Why not? No man made paper currency has lasted more than a 100 years unless backed by God's Money - Gold & Silver. Why else would God mention Gold in the scriptures? Gold has served as a monetary tool since the dawn of man kind. You cannot eat land, brick, and mortar, either. You can use Gold to preserve your wealth. Yes Gold needs to be traded, that it is why it's the ultimate 'currency'.

You can live on land and grow crops on it which you can eat. Bricks and mortar build you a house in which you can live.

On that level - what use does gold have? Absolutely none. It looks pretty and shines. Otherwise, it is a very soft metal that is only useful in a few industrial processes.

[shakil]

Originally Posted by Saqib S Or some commodity based currency with intrinsic worth? My one qualm about economists I meet is that they think everything that went before them is now obsolete and never worked. They only present a limited number of approaches to economics with no room for movement almost as if they ve been brainwashed in uni. Fact is gold and silver were working for thousands of years before paper came. Why not go back? Is it possible? Most importantly - should we? Calling all PP economists (I am not an economist so would like some professional opinion on the matter)

How would you carry around gold if you had to buy something expensive like a car or a house. It is too unwieldy to carry around. Imagine carrying around tons of gold coins in your pocket.

And no gold certificates don't work either. Fiat currency was just like Gold certificates only for the banks to play a double game and ending the economy to what it is right now. So no it hasn't worked and it will not work that way

[MattyB]

Originally Posted by Namak_Halaal Why not? No man made paper currency has lasted more than a 100 years unless backed by God's Money - Gold & Silver. Why else would God mention Gold in the scriptures? Gold has served as a monetary tool since the dawn of man kind.

No it hasn't, livestock was used as a monetary tool before Gold was.

Originally Posted by Namak_Halaal You cannot eat land, brick, and mortar, either. You can use Gold to preserve your wealth. Yes Gold needs to be traded, that it is why it's the ultimate 'currency'.

You can eat what comes off the land, whereas you can do nothing with gold, it serves no purpose whatsoever. If paper money becomes value-less then you'll just have lots of heavy metal that can't be used for anything, atleast with crops or livestock you could barter..

Those that left the Gold Standard the earliest during the Great Depression recovered far quicker than those who continued with the Gold standard. If everybody was still using the gold standard we never would have had the global boom of the 2000's and sthe standards of living around the world would be far lower right now.

[youboy]

Originally Posted by shakil How would you carry around gold if you had to buy something expensive like a car or a house. It is too unwieldy to carry around. Imagine carrying around tons of gold coins in your pocket.

Current scenario

1 Kilogram = US$52,055.27

Cost of an average sedan around US $ 30,000.00 or less

Imagine you had to carry 570grams of gold to buy a car even today. Not tons of gold coins in your pocket.

And so goes on with House you can carry the required amount in briefcase.

The real economy growth will remain stable, as the growth in wealth and production of goods will be close to each other hence inflation will become zero.

I remember my dad told me that when Pakistan came into being my grand father bought a cow on Eid for 5 rupees. Which now cost more 100 thousands Rupees in 2012. Imagine if it was 2 gold coins in 1947 and now in 2012 will remain same at 2 gold coins.

Originally Posted by shakil And no gold certificates don't work either. Fiat currency was just like Gold certificates only for the banks to play a double game and ending the economy to what it is right now. So no it hasn't worked and it will not work that way

What is required is that there is no room for private banks to operate in the country where a few people can exploit the authority. Only state run banks are to be allowed. Example of America where Federal reserve (a privately owned bank by few people) do all the printing of dollars as per their own wish and when all the world trade of precious commodities is in dollars, the countries have to buy dollars to do their trading. Also all IMF and World Bank loaning is done in dollars. And a country's capacity to repay the loan depends on the value of their currency value against dollar. And how it is easy to make sure one cannot repay the loan by just devalue the currency of the country. Its a complete plan to enslave everyone through economy control. You can now imagine who controls the world economy today.

[lahori]

Originally Posted by shakil How would you carry around gold if you had to buy something expensive like a car or a house. It is too unwieldy to carry around. Imagine carrying around tons of gold coins in your pocket. And no gold certificates don't work either. Fiat currency was just like Gold certificates only for the banks to play a double game and ending the economy to what it is right now. So no it hasn't worked and it will not work that way

The easiest way to possess or have exposure to Gold without the safety fears or inconvenience associated with carrying the physical form of it, is to buy a Gold index or ETF. One example is GLD which I have in my personal portfolio also. It fairly accurately tracks the price of gold.

Buy GLD in the stock market and it is like owning gold, without of course the hassle of owning gold. The only thing it doesnt give you is the shine!

[speed]

“Abu Bakr ibn Abi Maryam reported that he heard the Messenger of
Allah say: "A time is certainly coming over mankind in which there
will be nothing (left) which will be of use (or benefit) save a Dinār
and a Dirham.”

(Musnad, Ahmad)

dinar= gold coin , dirham=silver coin

[Namak_Halaal]

I'm still holding on to my Gold & Silver; and I am still buying like no tomorrow.

Carry trades in FX markets suggest prices are about to rocket!

[B@$!T]

it would probably gold then land then money

[shakil]

Bitcoin Prevents Monetary Tyranny (Forbes)

and it is an economic system which is interest free to it's very core.

[Animal]

Gold. Any day and every day.

[speed]

where can I buy silver anyone suggest me a site?

[LethalSami]

Originally Posted by Namak_Halaal The intrinsic value of gold is not it's value but it's weight. Any currency must be backed by a finite resource, Gold is the best. You cannot destroy it or create it. No matter what you do with Gold, the total weight of Gold on Earth remains the same.

thats Not true anymore

'Microbial Alchemy' Produces Gold From Toxic Chemical

bacteria produces 24 carat pure gold



http://www.forbes.com/sites/kitconew...oxic-chemical/

[Namak_Halaal]

Originally Posted by LethalSami thats Not true anymore 'Microbial Alchemy' Produces Gold From Toxic Chemical bacteria produces 24 carat pure gold http://www.forbes.com/sites/kitconew...oxic-chemical/

Yes read about this.

It's still not creating Gold but still.

Problem is gold chloride is found at the bottom of the oceans and is incredibly hard to extract and expensive. Not to mention, the amount needed to produce tonnes of Gold.

[waqar goraya]

Gold will always be the same gold..Because it has been considered a currency by heavenly people and divine guidance..

I heard they are also working on third option

The Electronic money......What are the possibilities of this?

[PetroDollars]

Originally Posted by waqar goraya Gold will always be the same gold..Because it has been considered a currency by heavenly people and divine guidance.. I heard they are also working on third option The Electronic money......What are the possibilities of this?

There is already electronic money (credit cards, debit cards, loans etc.)

Infact 97% of the money supply in GB is electronic, ONLY 3% EXISTS IN PAPER AND COINS.

[waqar goraya]

Originally Posted by PetroDollars There is already electronic money (credit cards, debit cards, loans etc.) Infact 97% of the money supply in GB is electronic, ONLY 3% EXISTS IN PAPER AND COINS.

So,very close to overtaking paper money?..We might see paper money to decorate museums soon?

[speed]

Germany to the Fed: We Demand to See Our Gold!

As previously report in Wealth Wire, the German federal auditors' office has publicly criticized Bundesbank, its central bank, saying they should be more pro-active when it comes to taking control and responsibility for the county's gold reserves stored in the United States, Britain, and France. Now they're encountering the same thing domestic politicians and citizens in the USA have faced for decades. The Fed is stonewalling the Germans and refusing to let them even see the gold they own. Previous and repeated requests were only partially addressed. Bundesbank staff members were allowed to see the facility in 2007, but they reportedly only made it to the anteroom of the German reserves. Bundesbank auditors made a second visit in May 2011. This time one of the nine compartments used to store Germany's gold was opened. Only a few bars were pulled out and weighed, but that was it. Even the details of this minuscule inspection were blacked out in a German auditor's report “out of consideration for the Federal Reserve Bank of New York.” So far, the 1,536 metric tons of gold, worth about $93 billion at spot prices, has only been backed up by personal assurances. The Fed's secrecy has warranted increasing suspicion and concern. It is understandable to limit access as much as possible for security reasons. However, these are high-ranking officials with $93 billion in deposits. The Fed is merely holding the reserves for the Germans and is refusing to allow them to inspect what they own. The Fed's actions only help validate claims that Germany's gold is long gone or been lent out and that promissory notes -- official “IOUs” -- are sitting in the vault. The Fed has vehemently denied the claims but has worked tirelessly to avoid any form of inspection. The leaked report from the German auditors has caused grave concern in Berlin about the gold reserves entrusted to the Fed. Bundesbank board member Carl-Ludwig Thiele cautiously stated, "I would like more transparency on the issue." However, tame assurances and diplomatic understatements will not suffice. Thiele was summoned to Berlin to provide an explanation to a parliamentary budget committee. Heinz-Peter Haustein, of the pro-business Free Democratic Party, stated during the hearing, "all the gold has to be shipped back." The Bundesbank has pledged to bring back and inspect 150 tons of gold from abroad over the next several years. There are also plans to count and weigh the gold bars stored in one of its nine chambers at the Fed in New York. As to what inspecting a mere 11% of Germany's reserves will actually settle, when a direct inspection will occur and how much of the 150 tons shipped back to Berlin will come from the Fed, no details are available.

Source: http://www.wealthwire.com/news/metals/4089

not just Germany Switzerland, Ecuador and the Netherlands all want there gold back.

[the Great Khan]

can someone explain why world gold is held in the fed reserve in the US?

also Lahori can you give some more details about how to and the best way to invest in gold? thanks

[PetroDollars]

Gold is held in Fort Knox by the Fed because it backs the Dollar, while all other currencies get backed by the Dollar.

Best way to invest in Gold is to either hold it physically and hide it in your house OR buy some ETFs.

[Indiafan]

Originally Posted by KingKhanWC Paper money is the biggest financial fraud in human history. Any currency you can print off a machine is a joke. Its destined to collapse. Silver is a good investment at present.

But is there enough gold silver to be used as currency all around the world? Also, the biggest reason Paper was used was because you cannot carry large bags of coins around with you, paper has made it so much more convinient to carry large sums. Of course, with the advent of credit/debit cards, thats become a bit redundant.

Well, of course a piece of printed paper is not worth anything. But once it has the signature of an authority who gaurantees to exchange that paper in return of metal worth same price, then it becomes equally valuable. Just like your land deed is on a piece of paper identifying you as the owner

BTW Gold is precious because its rare and used in reserves. If Gold is used as everyday currency, its value is definitely going to fall.

[waqar goraya]

^
A personal analysis only and personal deductions....

[KingKhanWC]

Originally Posted by Indiafan But is there enough gold silver to be used as currency all around the world? Also, the biggest reason Paper was used was because you cannot carry large bags of coins around with you, paper has made it so much more convinient to carry large sums. Of course, with the advent of credit/debit cards, thats become a bit redundant. Well, of course a piece of printed paper is not worth anything. But once it has the signature of an authority who gaurantees to exchange that paper in return of metal worth same price, then it becomes equally valuable. Just like your land deed is on a piece of paper identifying you as the owner BTW Gold is precious because its rare and used in reserves. If Gold is used as everyday currency, its value is definitely going to fall.

No it wasn't. Paper money was introduced by the banking cartels so they could put nations into debt and then control their domestic and foreign policies. Remember the banks are independent organisations. The federal reserve isn't owned by America, it effectively owns America.

Those who are keeping their paper money savings in their 'loyal' bank accounts or under their floorboards will be in tears in the near future. The days of paper money are coming to an end.

[Namak_Halaal]

Originally Posted by Indiafan But is there enough gold silver to be used as currency all around the world? Also, the biggest reason Paper was used was because you cannot carry large bags of coins around with you, paper has made it so much more convinient to carry large sums. Of course, with the advent of credit/debit cards, thats become a bit redundant. Well, of course a piece of printed paper is not worth anything. But once it has the signature of an authority who gaurantees to exchange that paper in return of metal worth same price, then it becomes equally valuable. Just like your land deed is on a piece of paper identifying you as the owner BTW Gold is precious because its rare and used in reserves. If Gold is used as everyday currency, its value is definitely going to fall.

I have never read a more ignorant post on the subject of Gold and Currency in my life.