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Where Is Germany's Gold?

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Re: Where Is Germany's Gold?

#71

Post by dragontamer »

tdees40 wrote: post #3

So here's how this works. Gold bugs are big fans of buying gold. They have lots of gold. Their narrative of the financial system is that gold is the uber-asset that all other assets must be denominated in, and that fiat currency is doomed to collapse. The massive run-up of gold prices during the financial crisis played into this narrative, and despite the fact that mainstream economists, politicians, bankers, etc. st…

The only conspiracy is the Gold Bug conspiracy.

The US did not have a Gold-backed dollar in practice. From 1933 onward, Executive Order 6102 was in effect, making it illegal for any individual to own more than 5 ounces of gold.

The majority of people living today have never lived in a time period where you could practically exchange dollars to gold. That's the true conspiracy. The Gold-standard arguably never even existed in the first place. (At least, from 1933 onwards)

Re: Where Is Germany's Gold?

#72

Post by dragontamer »

Grazester wrote: post #58
ceejayoz wrote: post #2

The recent Bloomberg redesign is truly bizarre. Microsoft WordArt-esque text popping out as you scroll...

It's terrible is what is it. I have started keeping away from the site because of it unfortunately. On a smaller screen laptop I find that I have to scroll more to catch roughly the same number of headline I use to previously

Despite your downvotes, I agree with you.

Re: Where Is Germany's Gold?

#73

Post by dragontamer »

ekianjo wrote: post #36
tdees40 wrote: post #3

So here's how this works. Gold bugs are big fans of buying gold. They have lots of gold. Their narrative of the financial system is that gold is the uber-asset that all other assets must be denominated in, and that fiat currency is doomed to collapse. The massive run-up of gold prices during the financial crisis played into this narrative, and despite the fact that mainstream economists, politicians, bankers, etc. st…

> So now, gold prices have been weak for a few years, so they have to come up with a new narrative Not sure about the narrative you describe, but it's a clear fact that it's harder and harder to buy gold anonymously, without declaring to the State where you stash it. Makes it practical the day they come to get it back and give you worthless paper instead.

Harder, or easier? It was straight up illegal to own more than 5-ounces of Gold between 1933 and 1971 in the US.

Re: Where Is Germany's Gold?

#74

Post by AnimalMuppet »

orik wrote: post #22
nosuchthing wrote: post #12

Earlier quoted context omitted.

People should really try and understand what makes things valuable beyond the beanie baby pokemon hype bandwaggon. Gold as a raw material is useful to a degree, just as diamonds are, but artificial scarcity [1] [2] and wild speculation create a mess of distortions. [1] http://www.theatlantic.com/magazine/archive/1982/02/have-you... [2] http://archive.wired.com/wired/archive/11.09/diamond_pr.html

At the end of the day we live in a world governed by supply and demand. We're not going to shift to a 'usefulness' based mindset, and we should avoid shifting to the mindset that an object is equal to the sum of it's parts. Supply and Demand are king.

But demand for gold is not just jewelry and electronics. Demand for it as an alternative to fiat money is inversely proportional to peoples' trust in fiat money. So gold can be unneeded as an alternative for decades, and then be needed. Gold can be completely written off as a relic, a dinosaur... and then suddenly it's not.

Re: Where Is Germany's Gold?

#75

Post by xrange »

maratd wrote: post #54
lisa_henderson wrote: post #21

Whenever I find myself in a conversation with a goldbug, and they complain about something like "the craziness of unbacked monetary systems" I say "I like your shirt. I will give you $500 for that shirt." (This assumes the shirt is clearly worth less than $500.) If they ask why I make such an offer, I ask if they would accept such an offer. If they suggest they would, then I ask why they would accept such an offer. I…

> So why would they take a fiction over a real shirt that that gives them real value? Ok, relax, I'm a fan of fiat currency as much as anyone, but your argument is a bit off. Most people who argue for a gold standard aren't debating some innate worth of money. They're generally arguing that a backed currency restricts the government's ability to simply print money and create out of control inflation, which has actual…

>government's ability to simply print money and create out of control inflation, which has actually happened many times.

...I suppose that it doesn't even have to be out-of-control for it to have a fairly dramatic effect...

http://observationsandnotes.blogspot.com/2011/04/100-year-de...

Re: Where Is Germany's Gold?

#76

Post by AnimalMuppet »

dragontamer wrote: post #73
ekianjo wrote: post #36

Earlier quoted context omitted.

> So now, gold prices have been weak for a few years, so they have to come up with a new narrative Not sure about the narrative you describe, but it's a clear fact that it's harder and harder to buy gold anonymously, without declaring to the State where you stash it. Makes it practical the day they come to get it back and give you worthless paper instead.

Harder, or easier? It was straight up illegal to own more than 5-ounces of Gold between 1933 and 1971 in the US.

Well, easier than that. But after 1971, you could go to a coin dealer, hand them cash, get gold, and I'm pretty sure they didn't report your name to the authorities.

Re: Where Is Germany's Gold?

#77

Post by tdees40 »

carsongross wrote: post #70
tdees40 wrote: post #11

Earlier quoted context omitted.

I think a dinosaur lives in the subways under Manhattan. I would be convinced otherwise only by a full audit of all subway tunnels conducted using a dinosaur scanner (which someone will need to invent). But seriously, there are lots of things that are hard to prove wrong, but that's hardly a good reason to believe them. In your case, what motive would the Fed have? Has an employee of the Fed (or any other central ban…

Well, the Federal Reserver produces a paper currency, the dollar, and gold has historically been a competitor of paper currencies. So it makes sense that the Fed would not want competition in currencies, and would attempt to both disparage and devalue it. The Federal Reserve is also intimately bound up in fractionally reserved expansion of the paper currency, so it is reasonable to assume that they might use the same…

If the Fed were lending gold on a fractional reserve basis, a huge number of people would know about it: employees of the Fed, bankers, counter-parties. Why are all of them keeping silent? Why does the Fed endear such intense (some would say insane) loyalty? How do they cover the tracks of this huge operation (both in terms of people and dollars)?

Also, to believe this you have to postulate that:

1) Employees of the Fed are personally concerned about gold destroying the dollar.

2) They are willing to do something illegal (or at least unauthorized) to protect the dollar.

3) So they came up with a complicated, elaborate plan to manipulate the price of gold down that perfectly plays into the narrative of gold bugs (note the nefarious fractional reserve lending).

It's not impossible!

Re: Where Is Germany's Gold?

#78

Post by AnimalMuppet »

mschuster91 wrote: post #49

Serious question: what exactly is the value of gold? I mean, with other rare metals as palladium or titanium their value can be inferred from industrial consumption, but what is the actual usage of gold and silver other than for filling teeth, making jewelry (we have had artificial "prices" with the diamond cartels) and trace amounts used in electronics?

It's an alternative to paper currencies. How much that's worth to you depends on how much you distrust paper currencies. How much that's worth to the global economy depends on how much the global economy collectively distrusts the money supply (and the central bankers and/or politicians that control the money supply).

This is a big part of why the price of gold moves the way it does. It's not that the value of currencies changes compared to gold, which is the unmoving reference point. Instead, what's going on is that peoples' trust in paper currencies fluctuates, which changes their desire to hold gold as an alternative.

Re: Where Is Germany's Gold?

#79

Post by AnimalMuppet »

geofft wrote: post #57
wolfgke wrote: post #47

Earlier quoted context omitted.

> But that would then imply that the five-hundred-dollar bill has value, because it can be exchanged reliably and easily for value. No this is IMHO no valid implication. Say, goldbugs don't believe that money is something other than fiction. But they do believe that at least for the next few days this fiction will not break down in the society: This is enough time to buy gold. But they are not sure how much longer th…

OK, fair. You're effectively defining "value" as "can be exchanged reliably and quickly for other things with/requiring value indefinitely ". So the goldbug assumption is that there's a constant and nontrivial risk of people no longer accepting fiat money in the near term, but there is little to no risk of people not accepting gold. I think we can dispute the data informing this worldview, but that's a self-consisten…

There have been historical incidents where that worldview was correct. To say that such circumstances will never occur again seems optimistic. (To say that they will occur as soon or as often as the goldbug expects seems unrealistically pessimistic.)

Re: Where Is Germany's Gold?

#80

Post by ArkyBeagle »

WalterBright wrote: post #29
ArkyBeagle wrote: post #17

Earlier quoted context omitted.

Or gold was in a bubble that collapsed. The Depression proves that the gold standard doesn't work. There was no stability; there was deflation. Since the concept behind the gold standard means "gold always..." - a universal quantifier, one needs only show a counterexample to blow it out of the water.

> The Depression proves that the gold standard doesn't work. Not really. The government went off the gold standard in 1914 when it began printing whatever dollars it needed. A legally fixed exchange rate, however, continued. This led to an increasing disconnect between the dollar and gold, by 1929 gold was worth about twice as many dollars as the legal exchange rate. This is what lead to the banking collapse, as ever…

But that's not what happened.

http://www.nber.org/papers/w16350

The hypothesis is that France "hoarded gold" - kept more gold reserves than it printed currency. This led to a paucity of gold. Those nations that played by the rules could issue less currency than was needed. This led to deflation.

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