Home Forums Hunting & Shooting Hunter's Campfire Greece to Default ??

MacLorry -
I knew that I would get your attention with the first link. He just comes out and says what we both know to be a false statement. Sorry but I just couldn't help myself. He is reaching to far in trying to make the point that because the USD is the Worlds Reserve Currency, other currencies are dependent upon it.

The Korolev video is valuable as a history lesson. You obviously have some dissagreements with him on some of the points he makes, but this is one of those situations where you disagree with him because of a difference in the filter through which you view lifes events. Two honest people can look at the same set of facts and come up with different conclusions. If you can get past some of your differences in interpretation, there is a valuable history lesson to learn from. No, he is not a hack just because you don't happen to agree with him on cause and effect regarding historical events.

Your link titled "bunch of reasons why no nation backs its currency with gold", is not that at all. The link is in fact a list of disadvantages of backing currency with gold - - - - along with a long list of Advantages of backing currency with gold.

I have not said that other currencies are "pegged" to the dollar. I have said that the value of the dollar has an effect on the value of other currencies because it is the worlds reserve currency. There are many other factors which affect exchange rates, which I have also pointed out.

I think we both agree that none of the worlds currencies are backed by gold, silver or anything else except "faith" in the government, so the point that the USD is the only thing backing the worlds other currencies is really moot. Nothing backing nothing is still nothing. The world is relying on "full faith and credit" of the USA (a country whose credit rating was just downgraded). I think we can also agree that the USD is in fact the Worlds Reserve Currency. The significance of that fact is that if the USD fails, all of the worlds currencies will fail. Where I think we part company, is when it comes to the idea of backing the currency with gold or silver. The crux of my arguement is that never in history has a currency backed by gold failed. In fact, gold backed currencies work so well that politicians can't play their games of deficit spending, war and manipulation, so they eventually find a way to abandon the gold backed currency. The gold backed currency does not fail. Every fiat currency throughout history has eventually failed. Link: http://www.rapidtrends.com/examples...ghout-history-could-the-us-repeat-this/. Our other departure of opinion is on the value of a gold backed currency. I believe that a gold linked, fully redeemable currency is more valueable than one which is not. You seem to disagree, which is quite illogical to me.

Now lets go back and try to pull this all together. I entered this discussion when you pointed out the gold price chart as an example of what a bubble looks like. Here is your post

Here's an article on Reuters. Potential market impact of a Greek default

Likely the value of the dollar will increase, so oil and gold prices will drop some. If the European stock markets take a big dip, many investors will have a second chance to make lots of money by getting in after the drop. They only need to look at the drop and recovery of the U.S. stock market to see a tremendous opportunity to make lots of money.

Of course, if they have their money in gold, they'll have to sell it to take advantage of this rare opportunity. As with any commodity, the risk of holding gold is that the market price may drop. Being Gold's value is primarily as a hedge investment, once investors feel they can make a lot of money in the markets they'll get out of gold and they know that once the price starts to drop it will drop fast and far, which will turbo-charge the sell off. Maybe I'm wrong, but you only need to look at housing prices over the last 20 years to see that this is what a bubble looks like.

Originally Posted by MacLorry

Here's an article on Reuters. Potential market impact of a Greek default

Likely the value of the dollar will increase, so oil and gold prices will drop some. If the European stock markets take a big dip, many investors will have a second chance to make lots of money by getting in after the drop. They only need to look at the drop and recovery of the U.S. stock market to see a tremendous opportunity to make lots of money.

Of course, if they have their money in gold, they'll have to sell it to take advantage of this rare opportunity. As with any commodity, the risk of holding gold is that the market price may drop. Being Gold's value is primarily as a hedge investment, once investors feel they can make a lot of money in the markets they'll get out of gold and they know that once the price starts to drop it will drop fast and far, which will turbo-charge the sell off. Maybe I'm wrong, but you only need to look at housing prices over the last 20 years to see that this is what a bubble looks like.

Here is a link http://dollardaze.org/blog/posts/00751/mb.png to the chart of the US Monetary supply that I presented as a better example of what a bubble looks like and also to explain why the gold chart looks like it does. I was hoping that you would look at the two charts and comment but you did not and instead avoided comment by offering TIPS as a better investment than gold. I would like to ask you to comment on the two charts now. It is my possition that the US Monetary Base chart is an infinitely better example of what a bubble looks like. What do you think?

I believe we agree that every fiat currency in the history of man has failed. I would assume that you know the definition of insanity, so why would you want to continue with a world monitary system based on fiat currencies??? Can you look at the US Monitary Base chart and tell me you don't recognize a bubble? Wasn't the US credit rating recently downgraded? If the world would go to gold backed currencies , we would not have the world financial crisis we are facing today. In addition it would keep politicians quite a bit more accountable, wars would be much less common, prices would be much more stable and inflation wouldn't rob us of our savings. What say you?

An important point of clarification. When I refer to a "gold backed" currency, I am using that term in a general sense. There are important and significant differences between the terms "gold backed" vs "gold linked" vs "redeemable in gold".