If money is a call option on future energy, is it fair for a banking entity to create new call option units by updating a spreadsheet, thus diluting the share of every other call option holder's share of available energy? Because that's what's happening. You trade work for an energy battery called money while bankers dilute your holdings day by day.

This is impossible in a hard money standard. But is that good or bad?

I still need to listen to the full interview, hopefully I'll have time today.

But what you described is no different than a company issung more shares when the stock price is at all time highs. It does dilute shareholders to be sure but if the economic output is greater, and theb$ raised by issuing new shares allows the company to reinvest in the business and further increase output then all shareholders are better off with the new issuance of shares.

The same argument is true for elastic money. As economic activity increase, more liquidity is required to increase the velocity of $. Business need cheap debt to grow their output. If they grow their output by more than the interests on the debt then the business grow. So if the FED increases money supply then it's easier for business to get debt to grow operations and overall increase GDP. The reverse is also true. When the economy slows down then elastic money reduces the supply so we don't see hyperinflation.

Problem is, we haven't really decreased the money supply. At least not substantially enough to combat inflation. Our debt to GDP is something like 130% when it shouldn't be more than 80-90% of GDP.

I was actually unaware of this speech. Had to look it up. And I'll probably need to do some more research before I have an opinion but interesting speech none the less.

I too had never heard of this speech. Great mention. I will watch this and see what he had to say.

Two things. First, does correlation always equal causation?

Second, we had paper money when we are on the gold standard as well. If I understand my economic history correctly, Congress also frequently devalued that paper money.

Without financial discipline, I suspect it does not matter which monetary standard we use.

I do think it's fair to assume taking the US off the gold standard in 71 directly lead to the 138% to GDP outcome. Certainly a causal effect wouldn't you say?

Second, I totally agree that the medium is almost irrelevant if Congress does t have any financial discipline. Doesn't matter what the currency is if we keep spending endlessly.

I do wonder tho about the possibility of combining a basket of commodities in reserve to back a currency. Why not have oil, gold, silver, coal, wheat, even BTC etc back the currency? This would in essence allow for more elasticity (buy or produce more commodities to print more $ and sell commodities to the public to reduce the number of $). Of course I'm no monetary expert so idk how practical this idea actually is.

Quote:

---

I do think it's fair to assume taking the US off the gold standard in 71 directly lead to the 138% to GDP outcome. Certainly a causal effect wouldn't you say?

---

Could very well be, but we also started massive and continuous deficit spending about that same time. I'm not sure that the absence of the gold standard enabled the deficit spending, either.

I believe that even while we were on the gold standard the govt issued paper money supposedly backed by gold. However, they kept diluting the amount of gold each bill represented. So a gold standard wouldn't seem to be a panacea either.

It's also my recollection from my brief study of history that almost everyone was opposed to the gold standard during the last century or two of its existence. It just didn't work. Countries and individuals started hoarding gold and it became almost impossible to settle international debts, particularly during times of war. Countries started imposing arbitrary values on the price of gold to keep its value from inflating. Financial panic and depressions followed one after the other with only a few years intervening. A financial history of the 19th century is not pretty.

The US left the gold standard in 1971 when the population was 207m. Since then we're up 60% to 333m. If the money supply is inelastic doesn't that mean that money is going to be more expensive simply due to greater demand from a higher number of users? I've believed for a long time that the money supply should grow in line with population growth.

Iirc, there still some decade7 years long gold transfer that hasn't happened between two countries' banks, I'll try to find the article.
Edit:

https://www.gainesvillecoins.com/blog/austrian-gold-via-london-switzerland-has-not-arrived


Reading through that... man I'd sure seems like 50-90 tones of shiny metal hidden away from humanity is a relatively poor reference to value. Obviously I'm biased.

At least bitcoin encourages new energy resources coming online improving humanity's access to cheap available energy... what does gold demand bring? Raping and pillaging the earth, new mining methods and ever cheaper labor to get it out of the ground? If we stopped using gold for any method if value, what would it turn into? Is the demand for gold (outside of store of value) so high it'd instantly be used in electronics? When bitcoin mining shuts of the miners that electricity goes right back into the grid for public consumption.

What do you mean by gold shoring up mining contracts?

What percentage of mined gold, currently in vaults as a store of value would instantly be consumed by electronics, were it released tomorrow.

I didn't want to wait for someone else to answer:

Global gold demand share by sector 2021
May 23, 2022

The jewelry industry accounted for a 55.4 percent share of global gold demand in 2021, which amounted to about 2,229 metric tons. Jewelry was the largest gold demanding industry worldwide in most recent years, although it was the second after investment demand in 2020.

What is gold used for?
Gold is a transition metal that has characteristically bright yellow coloring. Besides its most famous use, in jewelry, it has many different useful applications. Because is a very efficient conductor that can carry tiny electrical charges, gold is found in cell phones and televisions. In 2021, gold used for technology accounted for 8.2 percent of global gold demand. It is also used in dentistry, as it is the best material for fillings and crowns since it is easy to insert. Gold used for investing was the second-largest demand sector in 2021, accounting for one-quarter of global gold demand.

Gold mining worldwide
The world production of gold mines has increased steadily over the years since 2005. In 2005, about 2,470 metric tons of gold was produced. In 2021, about 3,000 metric tons were produced. That was a slight drop in production compared to the previous three years. The countries that produced the most gold in 2021 were China, Australia, and Russia. China produced an estimated 370 metric tons, Australia produced 330 metric tons, and Russia produced 300 metric tons.

Jewelry 55.43%
Investment 25.02%
Central banks 11.33%
Technology 8.21%

I wonder how much jewelry would be made, and the demand if gold were no longer considered an investment/store of wealth vehicle.

36% of demand is investment and Central banks. 55% is for the artistic value (and alleged store of value). 8% is in demand for electronics.

[More]
Total above-ground stocks (end-2021): 205,238 tonnes

Jewellery ~94,464t, 46%
Bars and coins (including gold backed ETFs) ~45,456t, 22%
Central banks ~34,592t, 17%
Other ~30,726t, 15%
Proven reserves ~53,000t

Does that change anything perceptively?
What happens tomorrow to gold if all the central banks say, hey we've stopped storing gold as bitcoin is better? That would release around 133,000t of gold onto the market as a shiny metal. Is electronic demand gonna scoop that much up for contacts?

FAT SEXY said:

---

The point I was addressing is that people love to cast aspersions on Gold with the adage "Gold Mining is harmful to the environment".. I was just simply pointing out that bitcoin mining equipment has to be created from a plethora of mined materials(including Gold)...

I just think it's a tone deaf argument.

---

So mining "rare" Gold for storage in an underground vault never to be moved again is the same as mining to be used immediately upon arrival for extremely in demand chips and processors are the same thing and the argument is tone deaf?

Tomato tomato.. apparently.


And if the Gold wasn't valued as a store of value (isnt) we'd have 133,000TONNES on the open market, we wouldn't need to mine for a iota of gold for a long damn time to supply the electronic industry.

Nothing imaginary about the bitcoin ledger.

Portugal and Spain destroyed the civilitizations of South America to bring shiny metal for kings to use in the Taj mahal for artsy stuff. Rape and pillage indeed.

The artifical price of diamonds due to debeers among other things should get your panties in a wad if you're wanting that feeling.

Simple question now that the facts are laid out: what gold mining would be done if we released the gold hoarded by governments (and other PM's) if PM's weren't considered a store of value?

Now do silver.

ac04 said:

---

i don't understand people who like gold or bitcoin but not both. they are both outside money and the people who invest in them are trying to accomplish the same thing. and they are fundamentally so similar. gold is much safer but bitcoin has way more upside. own both.

---

I'm not arguing one way or another, but I can't say straight-facedly that gold is "safer" for anyone. More gold has been seized violently in human history than you can imagine.

Anyways, love you all. Gold is getting devalued.

Edit: you meant "safer" as an investment vehicle, now I realize. Maybe, maybe not. Times are stranger than they've ever been. Historically gold has been relatively stable. Hard to predict the future.

WreckingCrew12 said:

---

Now do silver.

---

I'm more familiar with gold, you do it.

Does silver have the same nigh indestructible quality as gold? It has far more use cases industrially outside of shiny metal for hoarding. Although 36% is being stored as coinage/bars, and/or 2billion tonnes being held by investors versus industrial use.

Fill me in.

Amen. I'm all for self sovereignty. I own physical gold and silver, and self custody bitcoin. With bank runs in China and Sri Lanka, and Canadian overreach related to the truckers protest how can you not? Not sure why there is animosity between btc investors and precious metal investors. Both enable a level of financial/personal freedom in my opinion.

No animosity, I just think the value of gold is overstated and the supply of gold, location of said supply and logistics of moving said gold is underrated by gold proponents.

I do agree that historically it represents a safe haven if sorts, but consider the paper gold to possibly be a risk factor in its representation of value.

Without a king being a final backer of gold for his baubles and bigD energy to prove his hoighty-toighty royalty, I don't personally see what the hubbub is about.

People seem to fall back on "well of the world goes to ****, gold will still be valuable" or something to that nature.... if the world goes to ****, you can't eat gold. And twere it valuable due to warlords and brigands getting gold fever, you'd not be able to keep it long wete it known you had any.

I dunno sell me on it without referencing the past. I'm open.

I've realized what bugs the hell out of me on gold/PM's

How is the general consensus that "Gold is valuable in a disconnected society, because always" different than "brawndo, it's what plants crave" from idiocracy?



Talk to me like an idiot (not hard, i am) or as if I just landed on planet earth after an apocalyptic event. Why is everyone trading a relatively common soft shiny metal? How did anyone create a trading ratio of eggs to gold?

Making a thread, dont respond here and derail further.

Right, it's a meme. Just one you have to lug around and be cautious displaying it ostentiously.

Gold has value because it is the scarcest, most difficult element to produce more of that humans have found. There's no way to synthesize it through chemistry. It's literally made in stars and you have to expend energy to get some of it. Physical possession of gold is akin to proof-of-work (the work done to mine it). Proof-of-work, as we know from Bitcoin, is an effective representation of energy.

Why does this matter? Money is an information technology of energy. Money is a claim on future energy that you earn by expending energy today. You trade your energy today for a claim on energy tomorrow. Money is the tool or the technology we as humans have coalesced around to make this system work.

Gold's scarcity and resistance to corrosion makes it ideal for money. This quality makes it preserve value, or energy, very well over time.

While it's true to say "gold has value because people believe it has value", I think the above explanation does more to explain *why* humans value it. Humans have a need for money to enable skill specialization and trade. Given that humans need money to cooperate in this way, it follows that humans would seek out the most uncorruptible form of money, which throughout history has been Gold.

I think you're being way to dismissive and flippant about the notion that gold is valuable, AE. I know you pride yourself on understanding complex topics of money and Bitcoin, and I think you are missing the mark as it pertains to gold. Yes, if society and societal cooperation breaks down, money of all kinds becomes ineffective. That doesn't negate the value of money within a still functioning civilization.

We both know that Bitcoin does money better than gold in every respect - it's more scarce, harder to produce, easier to transport across space and time, easier to subdivide - and over time Bitcoin will likely at least partially demonetize gold as holders of gold realize Bitcoin is a superior store of value and form of money. But I doubt gold will ever be completely demonetized.

Adverse Event said:

---

Right, it's a meme. Just one you have to lug around and be cautious displaying it ostentiously.

---

"Lug around" is a bit of hyperbole. Less than 1lb of gold at today's spot price is enough to buy a new corolla. 18lbs of gold is a half mil and probably the size of a loaf of bread. That's about as portable as wealth gets.