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Abandoning The Gold Standard Was A Fatal Error We're Now All Paying For

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http://www.telegraph.co.uk/finance/comment/edmundconway/8699815/Abandoning-the-gold-standard-was-a-fatal-error-were-now-all-paying-for.html

That's right: come Monday morning we will have managed to survive four decades of fiat money – though, given the chaos in markets in recent weeks, it is anyone's guess how much longer it will last.

On 15 August 1971, with the US public finances straitened by the cost of the war in Vietnam, Richard Nixon finally cut the link between the US dollar and gold. Until then, the US Treasury was duty bound to exchange an ounce of gold with central banks willing to pay them $35.

Suddenly, for the first time in history, the level of the world's currencies depended not on the value of gold or some other tangible commodity but on the amount of trust investors had in that currency. Central banks were allowed to set monetary policy based on their instincts rather than on the need to keep their currency in line with gold.

Well I looked for a birthday cake and this appears to be the most appropriate one I could find:

toilet-40th-birthday-cake-21322529.jpg

Fiat life expectancy is about 40 years.

Either we get a commodity backed currency or its....

mushroom-cloud-hb.jpg

Let's start with first principles: for as long as anyone can remember, politicians have sought to spend more than they can afford. Since the invention of money they have discovered ever more ingenious ways to do so.

The initial method involved debasing the currency. Henry VIII earned his nickname "Old Coppernose" because he added so much copper to what were supposed to be silver coins that eventually it would show through on the nose of his portrait.

These bouts of debasement typically end in disaster, as faith is lost in the currency, inflation shoots through the roof and the economy collapses, after which politicians introduce a new, more credible system.

...

As ever these days, any hope, such as it is, lies in China. It is fast realising that its investment in US debt will not be fully repaid.

However, in the long run it has two options: to allow the US to debase or default; or to negotiate, forgive a chunk of the debt and dramatically reduce those imbalances.

It can afford to do so economically; whether it can afford it politically is another question. However, such a bold move (and I do not expect it any time soon) would at least mark a fitting gesture from an economy which will help construct the next international monetary system.

Not that the end conclusion is right I think Bernanke will disagree he's aiming that the US gets to set the next currency not China.

Anyone on Monday have a beer, global fiat is 40.

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It's amazing that a single decision made one hot summers day in Camp David 40 years ago, has rippled down the decades to explode in everyones faces. The Nixon Shock could be the final undoing of America.

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Do any of you HPC'ers know anyone or know of anyone who acted on this news 40 years ago ?

To those that knew the signs, it would have been a clear signal to get into property etc / sell up your PMs and get into property ?

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Do any of you HPC'ers know anyone or know of anyone who acted on this news 40 years ago ?

To those that knew the signs, it would have been a clear signal to get into property etc / sell up your PMs and get into property ?

Apparently the growing size of women's feet means that it is easier nowadays for transvestites to buy high heels :blink:

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To those that knew the signs, it would have been a clear signal to get into property etc / sell up your PMs and get into property ?

Not really. Gold went from $35 an ounce in 1971 to $850 an ounce in 1980. We know that RB claims to have sold at the top of the market so it can be done. ;)

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Abandoning the gold standard was a fatal error we're now all paying for...

That's right: come Monday morning we will have managed to survive four decades of fiat money – though, given the chaos in markets in recent weeks, it is anyone's guess how much longer it will last.

On 15 August 1971, with the US public finances straitened by the cost of the war in Vietnam, Richard Nixon finally cut the link between the US dollar and gold. Until then, the US Treasury was duty bound to exchange an ounce of gold with central banks willing to pay them $35.

Suddenly, for the first time in history, the level of the world's currencies depended not on the value of gold or some other tangible commodity but on the amount of trust investors had in that currency. Central banks were allowed to set monetary policy based on their instincts rather than on the need to keep their currency in line with gold.

It was one of those seminal moments whose significance has only gradually become apparent, obscured as it was at the time by Vietnam and then Watergate. But the more one examines economic history, the more obvious it is that this was one of the most important policy decisions in modern history.

Were it not for that decision, it is quite feasible that we would not have suffered the financial crisis of the past four years; or indeed the crisis after crisis that have beset the world's markets. We might not have just faced the most volatile few weeks in markets since 2008.

Read More.... http://www.telegraph.co.uk/finance/comment/edmundconway/8699815/Abandoning-the-gold-standard-was-a-fatal-error-were-now-all-paying-for.html

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Since that time money has been linked to property and land. Massive double digit inflation has happened in recent years giving the effect of higher and higher house prices. Of course wages haven't kept up for the majority. "Gord help us Brown" of course was the worst chancellor in history and lied about most things. His measure of inflation was akin to using a rubber band to measure the length of his dick.

A house from 25 years ago is still only worth one house.

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Abandoning the gold standard was a fatal error we're now all paying for...

That's right: come Monday morning we will have managed to survive four decades of fiat money – though, given the chaos in markets in recent weeks, it is anyone's guess how much longer it will last.

On 15 August 1971, with the US public finances straitened by the cost of the war in Vietnam, Richard Nixon finally cut the link between the US dollar and gold. Until then, the US Treasury was duty bound to exchange an ounce of gold with central banks willing to pay them $35.

Suddenly, for the first time in history, the level of the world's currencies depended not on the value of gold or some other tangible commodity but on the amount of trust investors had in that currency. Central banks were allowed to set monetary policy based on their instincts rather than on the need to keep their currency in line with gold.

It was one of those seminal moments whose significance has only gradually become apparent, obscured as it was at the time by Vietnam and then Watergate. But the more one examines economic history, the more obvious it is that this was one of the most important policy decisions in modern history.

Were it not for that decision, it is quite feasible that we would not have suffered the financial crisis of the past four years; or indeed the crisis after crisis that have beset the world's markets. We might not have just faced the most volatile few weeks in markets since 2008.

Read More.... http://www.telegraph...paying-for.html

I'm a metals enthusiast and encourage anybody with savings to consider holding some gold but the idea that we could or should return to a gold standard national currency is just wishful thinking. The fact is that we experienced steadily rising living standards for decades with a fiat currency. IMO, the primary cause of the financial crisis was failure to regulate banks. Abolishing the Glass-Steagall Act and Thatcher's deregulation of financial markets laid the foundations for creation of a massive financial services industry that has become too big to fail.

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Not really. Gold went from $35 an ounce in 1971 to $850 an ounce in 1980. We know that RB claims to have sold at the top of the market so it can be done. ;)

Yes, and $274 an ounce in 1999 when Gordon Brown decided to sell 400 tons of Britain's gold reserves, now $1,600 per ounce.

http://www.dailymail.co.uk/news/article-1378784/Price-gold-hits-record-1-500-What-Gordon-Brown-sold-2bn-fetch-13bn.html

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Bill Still sometimes mentions how the gold standard didnt prevent the problems of the late 20s/early 30s.

Karl Denninger doesnt seem to think its the way foward either.

Its certainly a good time to own gold, but no gold standard isnt a fatal error.

But then given this is a MSM article, we knew that already.

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but no gold standard isnt a fatal error.

There's nothing automatically flawed about a fiat money system.

But you need to be able to trust those in charge not to take the easy way out and just turn on the printing presses.

Whoops! :o

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There's nothing automatically flawed about a fiat money system.

But you need to be able to trust those in charge not to take the easy way out and just turn on the printing presses.

Whoops! :o

That to me is the ultimate point about the gold standard. It is there to keep the politicians honest (provided they let you audit the gold of course).

Let's face it all of us would print our own money if we could.

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the gold standard is simply a fixed exchange rate mechanism across the world.

if thats the way forward then we may as well join the euro.

Edited by mfp123

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the gold standard is simply a fixed exchange rate mechanism across the world.

No it's not.

The gold standard means that you can't keep printing more money without gold to back it. If you do then pretty soon you have no gold left as people return the notes and demand gold instead, and then no-one wants your worthless pieces of paper anymore.

The gold standard is precisely intended to prevent the kind of 'borrow and spend and load the kids up with all our debts' policies that have completely ******ed the world since it was abolished by Nixon. Of course the Boomers were more than happy with what they got out of it, but now the party is over.

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http://www.telegraph...paying-for.html

Well I looked for a birthday cake and this appears to be the most appropriate one I could find:

toilet-40th-birthday-cake-21322529.jpg

Fiat life expectancy is about 40 years.

Either we get a commodity backed currency or its....

mushroom-cloud-hb.jpg

Not that the end conclusion is right I think Bernanke will disagree he's aiming that the US gets to set the next currency not China.

Anyone on Monday have a beer, global fiat is 40.

Word fun

"Shitory" (a place where one does it) - is an Anagram of "History" :rolleyes:

Purging round a 'U' bend (some corruptly rewriting it - with a 'shit' stick)

"Hit Rosy"

"Riot Shy"

"Shy Trio"

Edited by erranta

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Can I have it if you don't want it.

I worked at this place. I've made bullion, krugerrands and lots of other gold based frittery. What does it all mean? Not much. The value in gold is only that which you ascribe to it. I've always found it funny that in a forum dedicated to pointing out the stupidity of prices in one non-growth asset, so many think this one is different.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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