Fed raises interest rates by 0.5%

[RoadKingLarry]

Isn't any "money"  fiat currency? Gold only has value because people have agreed that it has value.
Sure, gold is somewhat rare and has certain characteristics that make it useful in decorative as well as technical applications but it's still just a lump of metal.

[K Frame]

"Isn't any "money"  fiat currency? Gold only has value because people have agreed that it has value. "

Exactly. Why people think gold is somehow this magical "real" money is beyond me.

[K Frame]

FDR shrank the real money supply by outlawing possession of actual money (gold) and forcing everyone to use fiat currency.

 

So I guess World War I War Bonds were patriotic, but World War II War Bonds were tools of the Commies.

Jesus.

[Pb]

"Isn't any "money"  fiat currency? Gold only has value because people have agreed that it has value. "

Exactly. Why people think gold is somehow this magical "real" money is beyond me.

There is truth to what you say, but gold is "magical" because the fed can't inflate it to worthlessness like fiat money.

[dogmush]

Oh?  The relative value of hard items can't be manipulated?

DeBeers would like a word.

[K Frame]

There is truth to what you say, but gold is "magical" because the fed can't inflate it to worthlessness like fiat money.

 

Right... sure...

[charby]

"Isn't any "money"  fiat currency? Gold only has value because people have agreed that it has value. "

Exactly. Why people think gold is somehow this magical "real" money is beyond me.

If we went back to a gold standard, we'd have vicious economic cycles.

[cordex]

Oh?  The relative value of hard items can't be manipulated?

DeBeers would like a word.

I thought his statement related specifically to inflationary pressure. Artificial scarcity is literally the opposite issue.

The gold standard is unworkable in the modern era, but compared to a currency that can be generated in unlimited quantities without even printing on paper, a high value, difficult to inflate commodity like a precious metal certainly has appeal as a store of value in times of high inflation.

[Bogie]

Land. Tools.
 
Friends.

[dogmush]

I thought his statement related specifically to inflationary pressure. Artificial scarcity is literally the opposite issue.

They can flood the market and depress prices as easily as they can withhold and keep prices high.

Anyone with sufficient  reserves (like a nation state) that wanted to cause an inflationary run on gold could choose to dump gold on the market at below the current price. Viola.


You are correct that it's harder to do than the Fed just adjusting a spreadsheet, because someone would need enough of the commodity, but it's far from impossible.

[K Frame]

"They can flood the market and depress prices as easily as they can withhold and keep prices high."

A number of America's worst financial panics were caused by ham fisted manipulation (by both government and private individuals) of the specie (both gold and silver) markets in the US.

A hard-good backed currency isn't some magical buffer against inflation and all sorts of other economic ills -- it only makes dealing with those ills a lot more difficult.

[HankB]

100 years ago, a $20 gold piece (containing just under 1 troy ounce of gold) would buy you a high-quality pistol or a well-tailored suit. So would a paper $20 bill printed by the government.

Today, that same $20 gold piece - or a troy ounce of gold - will still buy you a high quality pistol or a well-tailored suit.

Will a $20 bill printed today by the government do the same?

What does the answer say about what the government prints?