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You’re defining risky from your perspective, just because YOU don’t perceive an asset designed to keep pace with inflation as risky doesn’t mean it’s not and it

You’re defining risky from your perspective, just because YOU don’t perceive an asset designed to keep pace with inflation as risky doesn’t mean it’s not and it also doesn’t mean those investors wouldn’t prefer to keep it in cash. If being your own bank weren’t threatening to govts, why don’t they just let gold backed currencies circulate and compete (eg see the Liberty Dollar — https://en.m.wikipedia.org/wiki/Liberty_dollar_(private_currency) https://en.m.wikipedia.org/wiki/Liberty_dollar_(private_curr...)

arcticbull 8y ago
Based on a cursory skim of the wikipedia article you linked the liberty dollar was taken down because it was a haven for "...money laundering, mail fraud, wire fraud, counterfeiting, and conspiracy." You still haven't explained how you're any worse off by buying literal gold, or if you don't want to carry it around yourself, shares in a gold ETF like GLD. In what way is a share certificate of GLD any different than a gold-backed currency? It's even government-regulated (albeit by the SEC instead of the department of the treasury). Salaries track inflation, so you're always getting the same in real dollar terms. Inflation is irrelevant if you don't hold money. If you want a gold-backed dollar, you can achieve the same result buy using your money as quick as you get it to buy gold or in lieu, shares of GLD. You can even buy precious metal currency minted by governments like the platinum, gold and silver coins from the Royal Canadian Mint [1] -- not that they're a good value. This isn't a problem. AFIAK you can even put any of the above into an IRA. [1] https://www.mint.ca/store/buy/gold-and-platinum_coins-cat120004 https://www.mint.ca/store/buy/gold-and-platinum_coins-cat120...
- sbenitoj 8y ago
  My point is that it is NOT legal to circulate claims to gold in storage as money, that’s why it doesn’t exist. GLD is not the same as a gold backed currency because you cannot use GLD as money in everyday transactions, it is literally illegal to compete with fiat currency. If hard money is non-threatening, why not let the two standards compete and see who wins?
  - arcticbull 8y ago
    Right, you exchange gold (or GLD shares) for money, then you trade that money for goods and services. The recipient is free to obtain new shares of GLD if that's what they want, or anything else they'd prefer to invest in. That's kind of the definition of a medium of exchange (compare to: an asset). A medium of exchange need not be an asset. You're again describing the intention of the system: this is how it's designed. By standardizing on USD (or any other currency) as your medium of exchange it dramatically simplifies accounting. If one person trades a few dozen eggs for a hat, then a hat for some gold, then that gold for a few dozen eggs, how can you possibly determine taxes due? And in what 'currency' are they due? Eggs? Or even just how a business is doing? By making every transaction happen using a common intermediate (USD, etc) the whole system is just so much simpler. It all really only works if everyone is doing it, though, for every transaction. Mixing and matching is inefficient. At the risk of sounding like a broken record... You still haven't explained how you're any worse off by buying literal gold, or if you don't want to carry it around yourself, shares in a gold ETF like GLD. Why are you trying to force everyone to invest in gold for some reason, instead of whatever they want, through a neutral medium of exchange?
    - sbenitoj 8y ago
      “Why are you trying to force everyone to invest in gold for some reason, instead of whatever they want, through a neutral medium of exchange?” We are working with wildly different definitions of “forcing” — the market (millions of people acting voluntarily over thousands of years) settled on gold at the world’s medium of exchange, store of value, and unit of account (aka money). Governments using coercion made it illegal to transact with gold as money. Explain how this is me “forcing” people to invest in gold? The history is exactly opposite of your claim, governments have forced people to use fiat. If it were otherwise, it would be legal to use gold as money, which it is not.
      - arcticbull 8y ago
        You keep completely ignoring my core point. You still haven't explained how you're any worse off by buying literal gold, or if you don't want to carry it around yourself, shares in a gold ETF like GLD. I'll happily engage the other aspects of the conversation once you address this. It's not different, though, is it -- it's literally the same thing. The modern economy decouples store of value from medium of exchange, the old economy coupled the two, that's the only thing that's changed from a practical perspective.

arcticbull 8y ago

Based on a cursory skim of the wikipedia article you linked the liberty dollar was taken down because it was a haven for "...money laundering, mail fraud, wire fraud, counterfeiting, and conspiracy." You still haven't explained how you're any worse off by buying literal gold, or if you don't want to carry it around yourself, shares in a gold ETF like GLD. In what way is a share certificate of GLD any different than a gold-backed currency? It's even government-regulated (albeit by the SEC instead of the department of the treasury). Salaries track inflation, so you're always getting the same in real dollar terms. Inflation is irrelevant if you don't hold money. If you want a gold-backed dollar, you can achieve the same result buy using your money as quick as you get it to buy gold or in lieu, shares of GLD. You can even buy precious metal currency minted by governments like the platinum, gold and silver coins from the Royal Canadian Mint [1] -- not that they're a good value. This isn't a problem. AFIAK you can even put any of the above into an IRA. [1] https://www.mint.ca/store/buy/gold-and-platinum_coins-cat120004 https://www.mint.ca/store/buy/gold-and-platinum_coins-cat120...

sbenitoj 8y ago
My point is that it is NOT legal to circulate claims to gold in storage as money, that’s why it doesn’t exist. GLD is not the same as a gold backed currency because you cannot use GLD as money in everyday transactions, it is literally illegal to compete with fiat currency. If hard money is non-threatening, why not let the two standards compete and see who wins?
- arcticbull 8y ago
  Right, you exchange gold (or GLD shares) for money, then you trade that money for goods and services. The recipient is free to obtain new shares of GLD if that's what they want, or anything else they'd prefer to invest in. That's kind of the definition of a medium of exchange (compare to: an asset). A medium of exchange need not be an asset. You're again describing the intention of the system: this is how it's designed. By standardizing on USD (or any other currency) as your medium of exchange it dramatically simplifies accounting. If one person trades a few dozen eggs for a hat, then a hat for some gold, then that gold for a few dozen eggs, how can you possibly determine taxes due? And in what 'currency' are they due? Eggs? Or even just how a business is doing? By making every transaction happen using a common intermediate (USD, etc) the whole system is just so much simpler. It all really only works if everyone is doing it, though, for every transaction. Mixing and matching is inefficient. At the risk of sounding like a broken record... You still haven't explained how you're any worse off by buying literal gold, or if you don't want to carry it around yourself, shares in a gold ETF like GLD. Why are you trying to force everyone to invest in gold for some reason, instead of whatever they want, through a neutral medium of exchange?
  - sbenitoj 8y ago
    “Why are you trying to force everyone to invest in gold for some reason, instead of whatever they want, through a neutral medium of exchange?” We are working with wildly different definitions of “forcing” — the market (millions of people acting voluntarily over thousands of years) settled on gold at the world’s medium of exchange, store of value, and unit of account (aka money). Governments using coercion made it illegal to transact with gold as money. Explain how this is me “forcing” people to invest in gold? The history is exactly opposite of your claim, governments have forced people to use fiat. If it were otherwise, it would be legal to use gold as money, which it is not.
    - arcticbull 8y ago
      You keep completely ignoring my core point. You still haven't explained how you're any worse off by buying literal gold, or if you don't want to carry it around yourself, shares in a gold ETF like GLD. I'll happily engage the other aspects of the conversation once you address this. It's not different, though, is it -- it's literally the same thing. The modern economy decouples store of value from medium of exchange, the old economy coupled the two, that's the only thing that's changed from a practical perspective.