Woolleybugger
Mayor
I once read that every single ounce of gold that man has ever found is still in circulation somewhere today with the exception of lost gold. Think about that statement. Every gold nugget found by the Babylonians, the Nubians, the Egyptians, the Romans, the Incans, the Aztecs, the Aryans, the Mongol hordes...every single piece of gold they ever found is still around today. It has been stolen, melted, shaped, worshiped and used over and over again for thousands of years. And do you know how much gold we have found since time began?
http://www.numbersleuth.org/worlds-gold/
Enough to fill 3.5 olympic swimming pools. That's it. That site tells you how much all that gold was worth at the spot price when they wrote the article. Suffice it to say that was 8.5 trillion or so. Now how many dollars are in circulation today?
The Fed does track money supply in the form of M0, M1, M2, and M3.
M0 is cash in circulation and in bank vaults, plus reserves which commercial banks hold
M1 is M0 plus checkable deposits and travelers checks (this is what conforms to the definition of money)
M2 is M1 plus savings deposits, time deposits under $100,000, and money market accounts for individuals
M3 is M2 plus large-time deposits, institutional money-market funds, short-term repurchase agreements, and other larger liquid assets
How much is that? Well, its a number that is much greater than 8.5 trillion. That gold is not owned by one nation or bank, it is spread across the world so our end of it is just a fraction of the total amount of gold in existence. Half of the gold in existence is used for jewelry and is in India and China sitting in jewelry boxes or safety deposit boxes.
Anyone starting to see the problem with gold reserves as a foundation for a global currency? We find gold every year but we cannot find gold fast enough to keep up with the global economy. This is the essence of the problem that led to the great depression and our leaving the gold standard. Now some would say the problem is simple to solve. Just let us oversubscribe gold via a currency that is based on gold but not redeemable for gold. The way this works is that your dollar would be tied to some level of gold reserves, say 10 to 1 or 100 to 1, which then limits the amount of money in circulation to the set multiplier. But what if you need more money to drive the economy? Get more gold or increase the multiple to 200 to 1. At some point, the numbers start to get absurd and the gold backing no longer has any control over the supply of money.
Or the reverse happens, someone takes our gold via a war and then what do we have? You think this is not going to happen? What exactly do you think happened for thousands of years? I think Crassus had all the gold in Spain at one point in Roman history. He stole it from Pompey when he sacked Spain or at least that is what I remember happened. The gold of Tolusa is what they called it from my recollection.
Gold is not a good way to back money. That is why we went away from it. Money is an illusion anyway, it merely facilitates an exchange system at a common price, it stores value for as long as it is redeemable for a price and it creates a way to foster growth via lending and expansion of wealth. The problem of managing money is solved by sound financial systems, a strong central bank, a strong economy, regulations and the full faith and credit of the sponsoring nation. When that nation can no longer convince others that it can support the currency, it becomes worthless. As worthless as my East German Dmarks are now. Does anyone truly think the USA is headed for a similar fate as the nation once known as East Germany?
http://www.numbersleuth.org/worlds-gold/
Enough to fill 3.5 olympic swimming pools. That's it. That site tells you how much all that gold was worth at the spot price when they wrote the article. Suffice it to say that was 8.5 trillion or so. Now how many dollars are in circulation today?
The Fed does track money supply in the form of M0, M1, M2, and M3.
M0 is cash in circulation and in bank vaults, plus reserves which commercial banks hold
M1 is M0 plus checkable deposits and travelers checks (this is what conforms to the definition of money)
M2 is M1 plus savings deposits, time deposits under $100,000, and money market accounts for individuals
M3 is M2 plus large-time deposits, institutional money-market funds, short-term repurchase agreements, and other larger liquid assets
How much is that? Well, its a number that is much greater than 8.5 trillion. That gold is not owned by one nation or bank, it is spread across the world so our end of it is just a fraction of the total amount of gold in existence. Half of the gold in existence is used for jewelry and is in India and China sitting in jewelry boxes or safety deposit boxes.
Anyone starting to see the problem with gold reserves as a foundation for a global currency? We find gold every year but we cannot find gold fast enough to keep up with the global economy. This is the essence of the problem that led to the great depression and our leaving the gold standard. Now some would say the problem is simple to solve. Just let us oversubscribe gold via a currency that is based on gold but not redeemable for gold. The way this works is that your dollar would be tied to some level of gold reserves, say 10 to 1 or 100 to 1, which then limits the amount of money in circulation to the set multiplier. But what if you need more money to drive the economy? Get more gold or increase the multiple to 200 to 1. At some point, the numbers start to get absurd and the gold backing no longer has any control over the supply of money.
Or the reverse happens, someone takes our gold via a war and then what do we have? You think this is not going to happen? What exactly do you think happened for thousands of years? I think Crassus had all the gold in Spain at one point in Roman history. He stole it from Pompey when he sacked Spain or at least that is what I remember happened. The gold of Tolusa is what they called it from my recollection.
Gold is not a good way to back money. That is why we went away from it. Money is an illusion anyway, it merely facilitates an exchange system at a common price, it stores value for as long as it is redeemable for a price and it creates a way to foster growth via lending and expansion of wealth. The problem of managing money is solved by sound financial systems, a strong central bank, a strong economy, regulations and the full faith and credit of the sponsoring nation. When that nation can no longer convince others that it can support the currency, it becomes worthless. As worthless as my East German Dmarks are now. Does anyone truly think the USA is headed for a similar fate as the nation once known as East Germany?
