There are trillions of dollars floating around the U.S....is this money just numbers in a computer somewhere, or does it exist? And is there actual reserve to back all of this currency? And if not, why the hell are we trading paper with president faces on it for goods?
once the U.S. went off the gold standard, all tender is taken with the faith of the united states government so in reality its just paper
It's called fiat money. The only real value is that everybody else values it.
The same is true of gold. It is only as valuable as someone says it is. The truth is that this statement is true of everything in the world. The only thing with inherent value is life, health, land and happiness. Of those four, the only one that you can buy and sell is land. I suggest that you need to see who owns the most land free of debt. This man is the wealthiest man.
wrong, the dollar has its value essentially backed by the strength of the American economy. rises and falls occur because of speculation and interference and so forth, as well as our relation to other countries, but the basic foundation for the currency here as elsewhere is the total amount of goods and services within the country, rather than the amount of gold reserves, and indeed, long before we went off the gold standard, the currency was in fact backed by multiples of our gold reserves, not by a one to one correlation, which would have prevented our economy from growing. Some economists even regard the inability to raise the supply of currency on the gold standard to be a major cause of the Depression.
You're thinking of this place all wrong. As if I had the money back in a safe. The money's not here. Your money's in Joe's house...right next to yours. And in the Kennedy house, and Mrs. Macklin's house, and a hundred others. Why, you're lending them the money to build, and then, they're going to pay it back to you as best they can.
ricky-bobby wrote:
once the U.S. went off the gold standard, all tender is taken with the faith of the united states government so in reality its just paper
I don't understand the reasoning of those today who want U.S. dollars backed by a mineral.
Doesn't it make more sense to back it by the value of goods and services our economy produces?
George Bailey wrote:
You're thinking of this place all wrong. As if I had the money back in a safe. The money's not here. Your money's in Joe's house...right next to yours. And in the Kennedy house, and Mrs. Macklin's house, and a hundred others. Why, you're lending them the money to build, and then, they're going to pay it back to you as best they can.
It's a Wonderful Life is a pretty good summary of economy.
But really it's all just numbers on a ledger.
The need for physical currency is fading.
It's a swipe of the card, credit or debit.
It's not just about fiat money, despite what people here are saying. Even if we were on the Gold Standard (or some other commodity based system) we could (and probably would) still have a fractional reserve banking system. Banks would lend out more money than they actually have (insane as this might sound, it's actually a good thing in moderation) so there would be more money out there than technically could be redeemed.
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I don't understand the reasoning of those today who want U.S. dollars backed by a mineral.
Doesn't it make more sense to back it by the value of goods and services our economy produces?[/quote]
Goods and services fluctuate in price. Gold does not grow on trees like some goods. Literally need billions of years to be "born". Impossible to game the system. Also gold buys roughly what it bought in the time of Jesus Christ. When mania and bear phases wear out it revers to "intrinsic" price. It's meant to be an anchor(store of value), not a speculative tool. That and silver. Run on same fundementals.
It only exists because people have faith in it.
It's kinda funny to compare faith in God vs. faith in the currency....
The majority of US currency isn't even in the US. It is overseas in the hands of all sorts of black market traders and drug lords. Like almost 60%.
drinker wrote:
I don't understand the reasoning of those today who want U.S. dollars backed by a mineral.
Doesn't it make more sense to back it by the value of goods and services our economy produces?[/quote]
Goods and services fluctuate in price. Gold does not grow on trees like some goods. Literally need billions of years to be "born". Impossible to game the system. Also gold buys roughly what it bought in the time of Jesus Christ. When mania and bear phases wear out it revers to "intrinsic" price. It's meant to be an anchor(store of value), not a speculative tool. That and silver. Run on same fundementals.[/quote]
You dont think the price of gold is speculative or can't be manipulated in the market? How do you propose the United State acquire gold to back the money of the World's largest economy as it grows? I'd rather the U.S. government buy carbon emissions credits (another bad idea) than gold.
Gold has "real" value in electronics, medical devices, art, etc.
Snatch wrote:
Gold has "real" value in electronics, medical devices, art, etc.
So does paper!
Snatch wrote:
Gold has "real" value in electronics, medical devices, art, etc.
HAHAHA I read this to fast and I thought you wrote "medieval devices" and I racked my brain to think of what you meant.
The thing with gold is that besides electronics etc it's only practical purpose is jewelery, and in the WESTERN society less and less people are wearing gold. Mostly Asia and Africa. As those societies are adapting to Western culture they will shift away from gold, too.
drinker wrote:
Goods and services fluctuate in price. Gold does not grow on trees like some goods. Literally need billions of years to be "born". Impossible to game the system. Also gold buys roughly what it bought in the time of Jesus Christ. When mania and bear phases wear out it revers to "intrinsic" price. It's meant to be an anchor(store of value), not a speculative tool. That and silver. Run on same fundementals.
The supply of gold is increasing, though, as we mine it out of the earth and very little is thrown away.
Its all on computers. We still use paper currency for pretty much the same reason we use any kind of paper. Its essentially a communication tool.