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Author Topic:   Phat's Bookshelf
Taq
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Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


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Message 10 of 174 (904149)
12-22-2022 12:04 PM
Reply to: Message 6 by Phat
12-22-2022 5:14 AM


Re: Videos, Books, and Propaganda
Phat writes:
Too many people look to the government as the final authority of valuing money, for example. The counter argument, one which I wholeheartedly agree with and embrace, is that the people (private sector) and the marketplace should determine the value of a product.
Who thinks the US government sets the value of the dollar????
It is rather obvious that the marketplace already sets the values of products, and it does so in whatever currency is legal tender in their country. International markets also determine the relative value of currencies.

This message is a reply to:
 Message 6 by Phat, posted 12-22-2022 5:14 AM Phat has replied

Replies to this message:
 Message 11 by Phat, posted 12-22-2022 1:41 PM Taq has replied
 Message 15 by Phat, posted 12-22-2022 4:53 PM Taq has replied
 Message 71 by Phat, posted 12-27-2022 7:29 AM Taq has not replied

  
Taq
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Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


(5)
Message 12 of 174 (904153)
12-22-2022 1:45 PM
Reply to: Message 11 by Phat
12-22-2022 1:41 PM


Re: Videos, Books, and Propaganda
Phat writes:
I am convinced (so far, anyway) that the Central Banks want to promote digital currency and data/ethereal value based on the whim of the people rather than hard assets, which are in fact the bottom line.
Almost all of my transactions are already digital, so I fail to see the problem. Why would it matter if we pay with a debit card instead of with physical paper money?
I have also never paid for something with hard assets. Strangely enough, the local grocery store does not accept pork bellies as payment for milk. They also don't accept gold bars. As it turns out, one of the nice features of hard assets is that you can trade them for dollars in a digital transaction.

This message is a reply to:
 Message 11 by Phat, posted 12-22-2022 1:41 PM Phat has replied

Replies to this message:
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Taq
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Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


(1)
Message 14 of 174 (904160)
12-22-2022 4:25 PM


Benefits of Fiat Currency
One of the YouTube channels I do enjoy is Economics Explained. The difference here is that the videos are made by a real economist who also happens to be an Aussie. I don't know if those two things cancel each other out (just a bit of ribbing between countries), but it is a pretty good way of learning basic economics, at least in my experience.
Based on those videos and some other reading, fiat currencies seem to be much better than asset based currencies (e.g. gold backed). First, a modern economy can only grow as fast as the available cash grows. This means our country's GDP could only grow as fast as the amount of gold that is dug up from the ground. That makes no sense. A zero sum, mercantile type of economy just doesn't work anymore. Second, a country has no control over world wide assets. It does have control of its own currency. This allows countries to influence markets in a way that benefits its citizens (hopefully). This is where quantitative easing comes in as a way of reducing the impact of recessions while trading it in for higher inflation. It also allows a country to aim for beneficial inflation rates, about 1-3% per year.
It is sort of like the weather. Right now, we have no control over the weather. We just have to take what comes. If we could have some influence over weather, wouldn't that be beneficial? That's what modern central banking is. It's a way of having influence over the comings and goings of the economy, something that would be difficult to do with asset based currencies.

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Taq
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Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


(3)
Message 18 of 174 (904164)
12-22-2022 5:21 PM
Reply to: Message 16 by Phat
12-22-2022 5:00 PM


Re: Videos, Books, and Propaganda
Phat writes:
Russia and China play the game of good cop/bad cop. Putin, despicable though he is, is no fool. He is evil, heartless, and cruel but he chose to hang Russia's hat and economic future on the next rising global empire rather than the older falling one.
quote:
Nearly every asset class has seen miserable returns in 2022, except for the United States dollar.
The dollar has strengthened dramatically over the course of the year as the Federal Reserve hiked interest rates in an effort to quash sky-high inflation. The U.S. Dollar Index, which measures the greenback against a basket of other currencies, is up more than 17% so far this year.
“We have seen a tremendous rise in the dollar,” said Matt Forester, chief investment officer of Lockwood Advisors at BNY Mellon Pershing. “It’s a juggernaut in the middle of every securities transaction and payment around the globe.”
https://www.forbes.com/advisor/investing/strong-dollar/
The dollar is still doing just fine.

This message is a reply to:
 Message 16 by Phat, posted 12-22-2022 5:00 PM Phat has replied

Replies to this message:
 Message 20 by Theodoric, posted 12-22-2022 5:48 PM Taq has not replied
 Message 75 by Phat, posted 12-27-2022 7:53 AM Taq has replied

  
Taq
Member
Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


(1)
Message 19 of 174 (904165)
12-22-2022 5:23 PM
Reply to: Message 15 by Phat
12-22-2022 4:53 PM


Re: Videos, Books, and Propaganda
Phat writes:
Remember what Nixon did in 1971?
Yes, and it has nothing to do with the markets that determine the value of the dollar compared to other currencies.

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Taq
Member
Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


Message 24 of 174 (904203)
12-23-2022 10:49 AM
Reply to: Message 21 by Phat
12-22-2022 6:32 PM


Re: Videos, Books, and Propaganda
Phat writes:
Consider that Gold and Silver are slightly down, but in no way will they ever crash (as Bitcoin did). Stop and think. They are priced (valued) in US Dollars. There are five times as many dollars in circulation as there used to be. The dollar is inflating. Its not like the gold is going down.
Why couldn't gold prices go down? Why couldn't there be a flood of gold onto the market? You are aware that people mine gold, right?
If gold prices aren't keeping up with inflation then gold prices are down. Period. If you bought gold 2 years ago and sold it today you would have lost money.

This message is a reply to:
 Message 21 by Phat, posted 12-22-2022 6:32 PM Phat has replied

Replies to this message:
 Message 28 by Phat, posted 12-23-2022 11:58 AM Taq has replied

  
Taq
Member
Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


Message 29 of 174 (904221)
12-23-2022 12:08 PM
Reply to: Message 28 by Phat
12-23-2022 11:58 AM


Re: Now that you mention it
Phat writes:
First of all, what is this insane idea that it is "normal" for assets to keep up with inflation?
Inflation is when the prices "inflate" while the assets stay put. Its a bit like the chicken and the egg analogy.
If assets don't keep up with inflation then no one should buy them. They will always lose money.
Now...even if the value of that house (relative to the US Dollar, as are all assets) dropped, the intrinsic value of the house would remain. A house is a hard asset.
The intrinsic value won't matter much if a person needs to sell their house, either because of needing to move or financial hardship. This is especially true if people owe money on a mortgage. If you are upside down on your mortgage, that could be a real problem if you need to sell.
The dollar is becoming worth less. The gold is standing still.
So if gold is worth the same dollar amount over time as the dollar becomes worth less then the gold is worth less.
It will be interesting to see once the world decides to dump the dollar and value everything relative to the value of some new currency. And I wonder what the bedrock will be that supports that currency?
When you decide to rejoin us in the real world, let me know. I'm not sure what good it will do to decide what is happening in the world you are fantasizing about.
Republicans by and large want the gold to be the bedrock.(I think, anyway)
Democrats want the people to be the bedrock. But here is the kickr. Humans are not a solid bedrock. Only rocks are solid bedrock. (Or the Rock of Ages! )
I have never heard Republicans pushing for the dollar to be put on a gold standard. In reality, both parties are strongly influenced by big finance which probably wants the modern fiat currencies to continue.

This message is a reply to:
 Message 28 by Phat, posted 12-23-2022 11:58 AM Phat has replied

Replies to this message:
 Message 35 by Phat, posted 12-23-2022 12:26 PM Taq has replied

  
Taq
Member
Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


Message 33 of 174 (904226)
12-23-2022 12:22 PM


Gold isn't magic
Phat,
You seem to have this weird belief that if gold stays at the same dollar amount it will protect you from inflation. This is obviously wrong. The price of gold has to increase at the same rate as inflation in order to protect your wealth.
Let's put it a different way. Why not just keep physical cash (i.e. bank notes)? It will always be the same dollar amount, just as you think gold should do to protect you from inflation. Why is gold magic when it does the same thing as physical cash?
Let's do the math.
You cash out $10,000 in $100 dollar bills and hide it under your mattress. After a year of 10% inflation the purchasing power of your cash hoard is 90% of what it was.
You cash out $10,000 in gold and hide it under your mattress. After a year of 10% inflation you cash in that gold and get the same $10,000 back. Your gold hoard results in you having 90% of the purchasing power you once had.

  
Taq
Member
Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


Message 36 of 174 (904230)
12-23-2022 12:27 PM
Reply to: Message 31 by Phat
12-23-2022 12:17 PM


Re: Videos, Books, and Propaganda
Phat writes:
$100,000.00 in government bonds or $100,000.00 in precious metals or gemstones? Be honest and explain your reasons.
It depends on the amount of risk I am willing take. Precious metals or gemstones are much riskier. I could lose a lot more than I would with bonds, or I could earn a lot more. Bonds offer a very safe investment, but with a ceiling on returns. It's all about risk assessment.
1933-Roosevelt (D) confiscates public gold (for public good? )
1944-Bretton Woods. (Bi Partisan)
1971- Nixon(R) seperates gold from the US Dollar.
1974- Ford(R) makes it legal to own gold again. (gives back what was confiscated)

2008-Obama(D) bails out banks and financial institutions too big to fail.
2020-Trump(R) oversees the quickest recovery from a stock market crash ever in history. (the downside is that the money supply increased exponentially. We still are observing the effects of that.
No currency in existence today is backed by gold. There's a good reason for that.
I have an assignment for you. Write down the times the Fed has done QT. Compare it with the times the Fed initiates QE. Compare the two and note the patterns.
If we were on the gold standard neither could happen and we would be stuck.

This message is a reply to:
 Message 31 by Phat, posted 12-23-2022 12:17 PM Phat has replied

Replies to this message:
 Message 40 by Phat, posted 12-23-2022 12:34 PM Taq has replied

  
Taq
Member
Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


Message 38 of 174 (904232)
12-23-2022 12:30 PM
Reply to: Message 35 by Phat
12-23-2022 12:26 PM


Re: Now that you mention it
Phat writes:
An ounce of gold is worth an ounce of gold.
A pound of water is worth a pound of water. No one is saying that the chunk of gold will lose or gain mass over time.
Gold has value because we can trade it for currency. If we couldn't trade gold for currency then it would be worthless. It is the currency that has the ultimate value, not the gold. We don't buy food with gold. We buy food with currency. We don't buy houses with gold. We buy houses with currency. See a trend here?

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 Message 35 by Phat, posted 12-23-2022 12:26 PM Phat has seen this message but not replied

  
Taq
Member
Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


Message 42 of 174 (904236)
12-23-2022 12:37 PM
Reply to: Message 40 by Phat
12-23-2022 12:34 PM


Re: Videos, Books, and Propaganda
Phat writes:
If we were on the gold standard neither could happen and we would be stuck. stable.
The Great Depression happened when we were on the gold standard.
If being stuck means not being in debt, I'm all for stuck. Explain how 30 trillion in debt is not worrisome. Explain how inflating both money and debt helps anyone.
It is better than a massive recession.
Life is a risk, carnale.
Bonds are less of a risk than gambling on commodities. Don't you agree?

This message is a reply to:
 Message 40 by Phat, posted 12-23-2022 12:34 PM Phat has replied

Replies to this message:
 Message 44 by Phat, posted 12-23-2022 12:42 PM Taq has replied

  
Taq
Member
Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


Message 46 of 174 (904240)
12-23-2022 12:47 PM
Reply to: Message 44 by Phat
12-23-2022 12:42 PM


Re: Videos, Books, and Propaganda
Phat writes:
Yes, but I would say that bonds are less of a risk than gambling and that commodities are less of a risk than bonds in todays current environment.
How in the world are commodities less of a risk than bonds? Bonds come with a guaranteed interest rate. Show me a commodity with the same guarantee. It doesn't exist. The unadjusted price of commodities can go down, but bonds will not. At worst, the interest on bonds will be less than inflation. With commodities, the unadjusted price could go down, much less the inflation adjusted price.

This message is a reply to:
 Message 44 by Phat, posted 12-23-2022 12:42 PM Phat has replied

Replies to this message:
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Taq
Member
Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


(1)
Message 48 of 174 (904246)
12-23-2022 1:59 PM


Bonds or Gold?
The current rate on a federal I bond is 6.89% right now, and the rate fluctuates with inflation. If you cash out before the 30 year term you lose the last 3 months of interest. So let's say an average of 6.5% interest over 2 years, losing the last 3 months so 1.75 years total.
A $10,000 I bond held over those two years would yield $11,137.50, by my math.
Gold was at $1862.31 per ounce on 12/22/20 and $1795.21 on 12/23/22. That's a reduction of 3.6%.
A $10,000 gold purchase held over those two years would yield $9,640.
Hmmm, which would have been the better investment?

Replies to this message:
 Message 52 by Phat, posted 12-24-2022 9:09 AM Taq has replied
 Message 54 by Phat, posted 12-24-2022 9:27 AM Taq has not replied

  
Taq
Member
Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


(1)
Message 83 of 174 (904345)
12-27-2022 10:57 AM
Reply to: Message 52 by Phat
12-24-2022 9:09 AM


Re: Bonds or Gold?
Phat writes:
The bonds worth are calculated in U.S. Dollars.
Gold's worth is also calculated in US dollars. Gold would have yielded fewer dollars than bonds over the last 2 years.

This message is a reply to:
 Message 52 by Phat, posted 12-24-2022 9:09 AM Phat has seen this message but not replied

  
Taq
Member
Posts: 10195
Joined: 03-06-2009
Member Rating: 3.2


Message 86 of 174 (904348)
12-27-2022 11:03 AM
Reply to: Message 77 by Phat
12-27-2022 8:17 AM


Re: Bonds or Gold?
Phat writes:
Did it ever occur to you that the value of the gold is inflating even as the market holds it down?
Gold prices are actually down over the last 2 years. If gold prices were inflating they would be going up, just like prices for many other goods are going up.

This message is a reply to:
 Message 77 by Phat, posted 12-27-2022 8:17 AM Phat has replied

Replies to this message:
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