OT/Gold

Answer me this, if gold is worth $800 plus per ounce and we have X amount in Fort Knox how can it not be backing up our dollar. Is this not net worth?

M1, the money supply, has to increase as population increases. One reason we went off the gold standard years ago was because there were more printed dollars around than gold to back it up.

Have you seen, first hand, the gold at Ft. Knox? In person, hand touching it? All those rooms, full of gold, clear out to the door frames? Ever hear of false fronts? Lead is as heavy as gold! Gold paint is cheap!

JMS, I understand this but it is an asset right? So it does add to the net worth of the country so it has to be somewhat backing up our dollat just like all of our natural rescources. These are tangible asset. And Rusty no I have not touched it or seen it.

Sorry but lead is not as heavy as gold. Lead does in fact weigh less and is also weighted different the gold is. Lead has 16 ounces to the pound and gold only 12 ounces to the pound. Gold is measured in the troy system and lead the standard system
Hobby farm

Buuuuuttt you do not own Fort Knox.

Money's worth is based on Labor cost not what you have to back it up.
Walt

Years ago we where on the gold standard but not any more. There is more paper money out then there is gold worth so the gold only can back up a small part of the paper money that we use now days. I don't remember what year it was the U.S. went off the gold standard but when we did we had more paper money out then what the gold was worth and that was decades ago

Also remember you can counterfit foney money. Real money can't be counterfited. After getting off the gold standard we are using foney money.

Went off the gold standard in Aug 15 1971.

No longer that much gold in the fort. I think the government sold a bunch of it several years ago. I believe Russia bought it ?

The gold standard is a monetary system in which a region's common media of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold. The gold standard is not currently used by any government, having been replaced completely by fiat currency, and private currencies backed by gold are rare.

NOTE from Wikopedia

Take a dollar out of your pocket and read the top above the face - it says FEDERAL RESERVE NOTE. This note was printed by the Bureau of Engraving and Printing (BEP), and issued by the Federal Reserve Bank - NOT the US government. The Federal reserve bank is NOT part of the US government so the gold in Fort Knoxx has nothing to do with the dollars in your pocket or bank account.


United States Notes (characterized by a red seal and serial number) were the first national currency, authorized by the Legal Tender Act of 1862 and began circulating during the Civil War. The Treasury Department issues these notes directly into circulation, and they are obligations of the United States Government. Those are backed by the assets of the US government (Fort Knox gold reserves, federal lands etc..) But only 300 million are allowed to be circulated at any one time. Chances are you'll go though life without seeing one of these.


http://www.ustreas.gov/education/faq/currency/legal-tender.shtml

The gold is audited and there was a big tour in 1975 with congressmen and media to refute the conspiracy theories that it had all been sold. Of course, some people just won't believe no matter how much evidence.

The US claims 8.1 tons in the reserve. At today's prices that is about $224 billion.

Take a dollar out of your pocket and read the top above the face - it says FEDERAL RESERVE NOTE. This note was printed by the Bureau of Engraving and Printing (BEP), and issued by the Federal Reserve Bank - NOT the US government. The Federal reserve bank is NOT part of the US government so the gold in Fort Knoxx has nothing to do with the dollars in your pocket or bank account.


United States Notes (characterized by a red seal and serial number) were the first national currency, authorized by the Legal Tender Act of 1862 and began circulating during the Civil War. The Treasury Department issues these notes directly into circulation, and they are obligations of the United States Government. Those are back by the assets of the US government (Fort Knox gold reserves, federal lands etc..) But only 300 million are allowed to be circulated at any one time. Chances are you'll go though life without seeing one of these.


http://www.ustreas.gov/education/faq/currency/legal-tender.shtml

The short answer is all the Gold ever mined in the recorded history of mankind is not enough to back up all the printed US dollars in present circulation, not even at $1000.00 per ounce. US currency, and all other major or ''hard '' currencies of the modern world are called ''Fiat'' currency because they are issued by Fiat from the issuing country. The phrase ''Backed by the full faith and credit of the United States Goverment'' is the modern gold standard. The way I look at it, if the US Goverment ever gets turned down for credit, I might as well get ready to scratch SH%% with the chickens.

You are correct that there is a difference between US Notes and Federal Reserve Notes. You are wrong that they are not backed by the US government.

Section 16, Paragraph 1 of the Federal Reserve Act: "The said notes shall be obligations of the United States".

If all of the money was backed by Gold again the value of an ounce of gold would be worth $2000.00 dollars.This is from Wikipedia.

This is a simplistic way to look at it but here it is.We went bankrupt,the whole world went bankrupt,due to inflation,caused by us taking our money off of the gold system.England was bankrupted by WW2.

Nobody has money backed by gold now.

It gets real complicated after that.One thing I know is the crops we raise and sell to other countries is some of our worth,that amount of gold in Ft Knox,if its still there is some,natural resourses,and people in the workforce.

Besides that I dont know.Im sure illegal activity figures in too like drugs and just plain stealing.So its way out of my understanding as what is figured nowdays.I know its painful on us when we change ways of doing things.There was way less inflation when it was backed by gold.We have been sold out for the most part,and now they are spending the GDP before it even comes in for the year,that means more inflation and higher interest rates most likely for years to come,unless we can get something to raise our worth to where inflation doesnt hit so hard,which would be a big rise in the economy for everybody,which raises wages to where inflation doesnt matter.Not likely to happen.If this doesnt happen people on the low end will be in real bad shape when the price of everything more than doubles or triples,and nobody,not even rich people will be doing good.

The said notes shall be obligations of the United States".


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True, but what is the obligation? They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank.

Lawful money is the 300 million issued by the Treasury Dept - so you won't be seeing any of those and T-bills . You can exchange your federal reserve notes for T-bills that are payble in federal reserve notes.

Good luck.

I never knew Fiat printed currency---I thought they built tractors and cars...I guess conglomerants are like that, always branching out...
(FIAT means "Fix It Again, Tony")!

I have never understood why everyone thinks Gold is worth so much.Has very little real world uses other than jewelry and other useless trinkets.Its worth is just as much of a mental thing as a paper Dollar.

That was an excuse they gave years ago.What would have been necessary to do is raise the price of gold.Thats happened before.When they raise the worth of gold(like they do daily on the stock market) except everybody had to agree before to raise golds worth.Its even more complicated than that the reason is like our dollar is only worth half of an English pound.My brain is already hurting and not close to answering it.For a while after WW2 the USA owned more of it than anybody,and it was based on dollars.Our dollar is devalued so bad now,and with all the other crooked stuff thats gone on,gold would need to be worth 2000 dollars an ounce to cover the worlds currency.I dont know how much it would take for just the USA to cover its currency,but whatever amount it is,would have to be worth 2000 dollars an ounce.

T-40, When you say raise wages until inflation doesn't matter then you are descibing one aspect of inflation. In order for wages to increase without inflationary consequences it has to be the result of supply and demand for labor forcing the free market to pay more for needed services. The real danger of the coming decade is deflation. This is because most people are too far in debt. Deflation happened in the 1920's, this was the main reason so many farms were lost to foreclosure during the 1930's depression. Farmers could feed themselves and provide most of what else they needed to live but there was very little cash money to be made, and people with high debt simply could not pay.

Yeah, but: If you would hold each one in yer hand, separately, could you really tell which one was heavier, or lighter?

Yes you can, gold is over twice as heavy as lead. Off the top of my head, specific gravity of gold is like 19.4 and lead is around 7 something, I know these figures are not exact but there is a very noticable difference in weight.

Well now thats true to an extent.However if something raises our net worth somehow,say we were to put men on Mars or something,which would raise our technology level to where we were worth more,and that raised our economy,and wages,it would lower inflation.Right or not?

I know that it is way more complicated than wages going up causes inflation,thats not completely right.If it was it will soon collapse by wages being low,heres how,nobody can pay their bills any more.Electric company,gas company,rent,is going to come behind the family eating.Thats why it was always stupid for inflation to start with.The way it should work is wages go up before prices,I mean why are you beating on the people who are holding up the economy,those who are working?

There really is no reason to hurt everybody economically.When that happens something is wrong,and that wrong thing has to get fixed to make it better.Speculators running the stock market caused this one.

Heres a short excerpt of what our so called allies did to us:

Possessing more dollars than they wanted and preferring gold, some nations—France in particular—demanded gold for dollars. American gold reserves fell from $23 billion in December 1947 to $18 billion in 1960, and anxiety grew. When gold buying on the London gold market pushed the price of gold to forty dollars an ounce in October 1960,

Say in a period of economic expansion wages rise to attract or retain employees, businesses pay the cost of these wage hikes with profits earned from increased production, same profit per unit, more units sold, not raising the cost per unit to the consumer, this scenario is not supposed to be inflationary. I really cannot see your point about speculators and the stock market, stocks go up or down in price due to supply and demand, the same as a barrel of oil or a bale of cotton. Someone has to be willing to invest money, more or less gambling on a satisfactory return and there will be winners and losers. If the markets were really some gigantic conspiracy controlled by a few Multi-Billionaires then what would be the point? trade money back and forth between themselves? Most Politicians are not smart enough to be involved in something so complex, much less keep quiet about it. The dishonet Politicians typically turn out to be unimaginative little common theives, taking bribes or diverting money because they think their position will protect them from exposure. The price of oil and the resultant fuel prices of the last 5 years are what got us down, the refusal of our Goverment to treat domestic oil production as a key National Security issue is mind boggling.

Well when sh*t hits the fan, your paper dollar will be worth, sh*t. Gold will be worth whatever you can barter for it.


Gene

Does the USA even have the gold at Ft.Knox or anywhere else any more. There has not been an actual audit since the mid 1950's. Wayne

M1, the money supply, has to increase as population increases. One reason we went off the gold standard years ago was because there were more printed dollars around than gold to back it up.

This post by JMS/MN is a common myth and incorrect. An easy way so see past that statement is to ask: If I have an ounce of gold, how many dollars can I buy with it? It doesn't matter how much gold OR dollars there is in the world. One can always express the value of one to the other. Even if it takes a billion dollars to buy a gram of gold, that is what the gold would be worth in dollars.
Someone else wondered why the big deal about gold. This is why:
Gold is compact, easily divisible, useful in many industrial applications as well as jewelry and medical items. Is is relatively scarce, consistent in quality and does not tarnish or corrode. It's also impossible to destroy it. All the gold ever mined is still in existence. If gold were to suddenly become unfashionable as money, one could still exchange it for something of equal value with anyone who wanted it for its productive or enjoyment values.
Consider this also... Gold wasn't invented by anyone or any government. It's use as a store of value evolved over thousands of years, going way back before the Egyptians even, for the exact reasons put forth above. One could have and save gold for extended lengths of time and know that it would still have the same value when they wanted to buy something with it.
Because it became inconvenient to pack around quantities of gold, paper receipts for gold were invented that were exchangeable with gold at any time. That's how our monetary system came to be. Gold backed currency is unpopular with politicians, though, because you can't print more money unless you have more gold to back it up at the official price. Once the gold backing is removed, governments can print all the money they want, which results in inflation and rising prices.
That, in a nutshell is why gold is valuable and paper currency not backed by gold becomes worthless. One could read many books on the subject if they were interested.
Before I go, it might be interesting to note that in all of history there has never been a fiat currency (i.e. not gold-backed) that didn't fail at some point. Makes me wonder if our dollar is headed down that path today.

Avoirdupois.[16oz] except precious metals [ Troy 12oz ] and medicines.

Thats true about the refusal to treat oil as a national security issue.The speculators rigged the stock market.What they did was change the law(with the help of crooked nnalert in congress)and then claimed a future stock was real.Then bought up more than a years worth of oil stocks and other "key"commodities 10 I think.Claimed since they could not get this oil(even though they knew it had not been pumped out of the ground yet)that there was a shortage.
The reason?Well they tried to say that it was investors fault because they were just trying to make stocks make a profit and everybody that was investing invested in them.We all know better because stocks went up and down before when the market wasnt rigged,just not as drastic.Anyway,its not over yet.It will take years to recover from it,if we ever do recover.Also has lowered everybody in the worlds opinion of us,and starved a lot of people in other countries to death.It is probably a step towards WW3.