trying to make sense of economics..
 

Economics.. - we made it but have lost control ? - the amount of misdirection and ritualism that goes on makes it fiddicult to grasp..

i have dwelt on this question occasionally... what is money .. a instrument to facilitate exchange of goods and services .. - barter 501 ? now if you want to back this with something solid..you would choose ? - why gold?

bear me as i have a technical background not economics..

It's interesting you just posted this. I read/listened to something on the internet the other day about the collapse of America and it's based on the pending financial doom.

The end result? Buy gold :) It will always be worth something as paper money needs to be based on something tangible.

well why gold...? gold rate varies and during times of trouble the goldbacking is not as reliable as essential goods and services originally backed by the paper money... i imagine vital goods and infrastructure etc being pledged and a global body is essential or countries powerful enough can do funny business with their currency .. like china..but not the first culprit.. the US infusions backed by nothing are also crazy..over printing leads to inflation they say..why do it then, plus that money is gonna become Foreign investment in other countries..buy up assets overseas with a strong currency and replenish+weaken it by printing more.. ? there has to be a global body to govern currencies , take out the probable manipulations ?

wish to understand the system .

I think 'gold' because it has historically been used as currency throughout the world. When a king said "look at me..I'm a king with wealth" he wasn't showing off paper currency, he had chests/rooms of gold and other precious metal/stones.

Now if you are talking a complete breakdown of society..then yeah, gold is mud. You need canned food, water, ammo...etc to have any 'wealth'. If you are talking strictly a monetary collapse, where the US dollar becomes worthless, other countries should still value gold as a financial commodity.

My .02

As a druid-elf, I don't value money. My people value food/water/shelter/and leather pants.

It's a terrible time to be buying gold. No one knows whether it's a bubble or not and you'd be buying at historically high prices. You're probably better off just sitting in cash. Your best option right now is looking for undervalued stocks. It's like a massive sidewalk sale out there right now.

Here is some general advice: if everyone is doing it, you should seriously consider doing the opposite.

then again....some financial analysts are predicting an economic disaster in the next year. Their advice...."your savings/money will be worthless...invest in gold."

If the US dollar takes the hit they are predicting...cash won't be worth toilet paper :(

The only problem I see with gold is that one political party has a lot more interest in deflating the dollar and hence raising the price of gold...

Especially don't buy gold in the form of "Rare Collector Coins". You're paying extra for the jacked-up, dubious 'collector' status and usually low-quantity of actual gold in the mix. Scam, scam, scam.

There are foreign currencies that are stable.

The thing with "some analysts" "predicting" "disaster" is that it basically drives people to bet against the unknown if not the improbable. "Some analysts" are notorious for being wrong.

Society tends to obsess over gold, and that in itself should be a warning sign.

What do you do when institutional investors dump gold if they get jittery over the price run-up and/or want to cut a profit after a ten-year gain? Retail investors might find themselves holding $200 less per ounce than what they paid for it. Or worse.

What if disaster never comes? You've just wasted money on something that is only theoretically secure in a theoretical disaster.

How much of the gold price is speculative do you think? How high will it go before people take profits and push the price down?

The standard method for making sense of economic data is to first decide on some sort of governing philosophy, (ie supply side, Keysianism). Then you simply wedge whatever data you come across into this philosophical framework. Occasionally, you will come across data that seems to invalidate the basic assumptions of your chosen philosophy- these data should always be treated as outliers and ignored, because hey, you already know how the market works, so it's the data that's wrong, not you.

@ filtherton.. that sounds very redneck bro! lol .... keep stepping on it even if theres no gas? as they say "its all in the mind" -- lol

about gold..given theres a global disaster - gold wont do much, the value will be reduced to nothing.. plus gold rate varies..so how much gold do i get for a dollar ? - keeps changing? there is no real link, just a proxy to bring all the independent barter currencies of the world.. but surely they could create a system where the money you print is based on "suitable" resources the country holds..? Gold by virtue of its few uses is overpriced-and soon wearing gold will be passe i think, as we evolve beyond the primitive affinity to shiny stuff ? ..i wonder why they didnt pledge assets of a country like minerals and infrastructure and the paper currency would be akin to shares...?

OK, I'll bite. Which political party and why do you think so?

I think the the main reason the price of gold is increasing in the market is due to investor uncertainty.

You're right... Gold never loses value. Except in the late '70s to '90s when Gold more than halved it's value.

It's reached it's peak that it had back in the '70s... which means if you bought Gold in the '70s you would have a 0% profit margin after 30 years! Or how about Palladium that lost 80% of it's value almost overnight in '01. You're right... gold has never been worthless. But to say it's never lost value could not be more incorrect.

Hell at least buy platinum where it lost 66% of it's value after '08 and has been climbing back since. Never buy shit at the peak... you'll only be sure to lose money. You know what the "Buy Gold!" people call those that actually buy gold because they were told to?
"Dumb Money".

below is a post i posted elsewhere..reposting here -

gold silver are scarce... if shit became scarce would you hoard it ??
shiny is all they are.. people wanting diamonds and "precious" metal jewelry if they like to wear to adorn themselves or industries wanting it for tech applications..i.e an actual USE is ok.. i think its a outdated concept of gold backed stuff.. -

electronic money rotting! ? - why would that happen... ? - is the holder stupid to not buy up some assets with it.. or simply issue loans at lower rates ? - or even invest in creating a new market.. - money never stagnates..if it does it means trouble..

money is a medium for exchange of goods... the most basic ones are the ultimate guarantee not luxury products..- if a region produces 200 million tons of food, and theres enough water - if food and drink are the only commodities with a significant market.. - you cannot have more money than what will buy up the 200 million ! - or the excess money is a waste and available for abuse/tricks and will cause inflation.... - but if theres a market for healthcare,leisure,sports,communications etc ... it is possible to put in more money - jobs created etc..- given theres enough food and water, there is no problem..- ? money allows the exchange of goods to sustain ... creative pursuits find greater importance, etc

but assume there is a famine, money from before is hoarded up - but there isnt enough grain so price keeps rising ! ? assuming gold was used as a backer, grain can be imported from overseas , - but only if there is an excess elsewhere.. - prices go up to a lesser extent...but as a seller, do i accept the countries currency or demand gold? how do i ascertain the REAL Value of the billion dollars- that it will actually be equivalent to something of equal worth.. if they do the quantitative easing like the US did? -- or more money than actual goods will mean wealthy people act as a sponge and live well OR more money less goods = inflation.. - i could instead take a promisorry note for replenishment of equivalent grain plus 10% as profit in gold/currency ? they can avail credit by offering up anything of value, their infrastructure, agricultural lands could be pledged on paper.. much easier to trade ? - akin to stock markets.. i would prefer such security over gold... - its always marketeable. plus the price/volume is irrelevant now.

what i am trying to resolve is how are currency values arrived at - and whether gold is relevant still - why are incredibly smart bankers and countries..i assume filled with rooms of people smarter or atleast who give more thought to this still running with gold... and allowing the US currency to stay steady when its being diluted all the time plus has weak fundamentals... i beleive it might be that institutions and countries sitting on stock piles of euros and dollars are trying to find as many suckers as they can to offload and minimize their losses ??

OR the US and EU buy up assets overseas with an overvalued currency.? by giving out stakes they can enhance or diminish to the world, they keep their own currencies inflated.., print more whatever ? i know countries cannot be so stupid they dont catch on so i assume theres more to the picture ????

Price of gold, inflation adjusted, for the past few decades:

http://www.finfacts.ie/img/goldjan182008.jpg

i dont get this sub ron paul militia world obsession with gold as if some abstract notion of fixity of supply makes the value imputed to it more "Real" than the value imputed to script.

and unless you loop this onto questions of the nature of value (where it comes from, what it is) writing buzzy little screeds about how safe gold is gets you nowhere close to "understanding economics"---all it does is allow you to express some anxiety about uncertainty, which is all this ultra-right libertarian stuff about money seems to be about.

we'll all get together and use this here scarce shiny shit for money and abolish the federal reserve and regress to some warped and incompetent society-for-creative-anarchronism version of feudalism but we'll be able to fool ourselves into thinking how very Moral it is because the Evil State won't be running around Distorting Stuff and we'll all have our little tiny piles of shiny stuff and everything will be grand, just grand, because ayn rand tells us so.

The science fiction novelist?

krugman is right:

http://www.nytimes.com/2010/12/20/op...ef=global-home

it's beyond stunning that in the face of disastrous outcomes produced by exactly this lunatic "free market" thinking that politically/ideologically the united states continues to be so dominated by it that people would prefer to cancel involvement with reality to attempting to fashion a more coherent image of socio-economic activity, the state and relations between them.

Almost no industrialized nation attaches their currency to gold. The reason is a gold fluctuation could ruin an economy that is otherwise running fine. By controlling their own money, a government can in real time decide the import/export percentage of it's economy. In addition, a terrible crash can immediately spurn global investment akin to Mexico in the mid '90s. They almost had a governmental collapse, their peso dropped almost overnight to 1/4 it's original value. This caused enormous investment from America and Europe to take advantage of the value and started industrial parks which very quickly brought the Peso back up and restarted the economy.

If it had been tied to Gold they probably would have lost the entire government as there would not have been enough to replace the peso/gold oz. scramble. Their exports would have stayed extremely expensive and imports would have ground to a halt.

i know - but current spike in gold is attributed to dollar and euro weakness...as a hedge against it, which doesnt make sense.. and if currency isnt pegged to a "real" security, what stops govts from simply printing more to repay debts, or to secretly buy up assets overseas ..since its worth just the paper and no one can scrutinize the internal workings of a govt. ? it also muddies up trade, have a tech background but everything can be traced by logic..but this seems to be illogical.. especially the quantitative easing and supposed currency wars.. - if it meant anything real, the scope to manipulate it is greatly reduced to less feasible ways. ..

Do you know what currencies are pegged to? Market value. With the exception of China (and probably a few others), who manipulates their currency unfairly, nations are at the mercy of what markets will pay for their currency. The U.S. "simply" doesn't print money to repay debts because that would further devalue the Greenback, which is something they want to avoid. The current value isn't all bad. The depressed value makes it easier for domestic U.S. companies to export to those who would take advantage of a higher purchasing power for American goods.

Generally, most nations don't necessarily want a "high" or "low" value for their currency; what they want is a value they can manage. They want a stable value, rather than volatility. They want to influence the money supply when they strive for certain goals.

The quantitative easing isn't illogical; it's merely risky. The hope is to bolster the stock markets, which essentially infuses an economy with needed cash to produce and expand. The risk is devaluing the currency without that effect.

Economics is tough. In a way it's like trying to herd cats.

money only makes barter elegant - basic premise is always equal value...and i am sure this is not too hazy or currencies are just arbitrary values ? - and why would countries accept each others currencies..without knowing how they value their currency.. simply printing without any real linkage to real "value" i.e goods or assets means what ?? - there has to be a link, or countries like the US could simply print more dollars and keep their currency strong, pay people in dollars for consumer goods -- they are getting paid or buying a stake in the dollar! - now if everyone has a large amount of dollars, who will want the USD to crash...obviously they want to collect!- in a truly globalized scenario i assume people would can buy up US assets !- here again the US imposes restrictions on investment...50% tax on gains i beleive ? -- but more USD = inflation, your property appreciates but your gains are again in USD as well, BUT - the strong USD allows US investors to pick up assets cheaply abroad..

above likely has holes in it - but i dont see them or wouldnt post here.. pick holes for me.