Back to the gold standard

Three minor things:

1. I really need to get back to writing. So I may not be able to check back as much.

2. I'm not out to 'prove' anyone wrong. I would honestly like to understand everyone's opinion. It'd be nice to have a real conversation here.

3. Why are weak posts responded to instead of interesting ones?
 
How are you on Ingersol or Rand for that matter?

Hong Kong is international Banking and their free market tradition started in piracy as much as anything, Opium Wars anyone?

In a free market drugs would be freely available, not so in Hong Kong is it?
 
Is this is a "look whoes book Iv'e read there for im smarter than you" sort of question?


Opium wars is something different.
Drugs were freely available for the majority of Hong Kong's history.

And yes drugs would be freely available for trade as they should be under the prescribed free market system mentioned.

Its called the 50 year experiment as it ended in 1997, I am still waiting for an example of when a government controlled economy with their various programmes, has left a country in better economic health than Hong Kong was left in.

Ill continue waiting I guess.

Just to bring everything back to bar, my original point as is still standing, is that the current economic mess in the modern west, is a result of government meddling in private enterprise.

I had no intention of debating ones opinion of capitalism neither about the socialist policy's of Britain, that was merely dragged out from a quote I offered. It was not me)who wrote the paper. Write a counter paper if your so sure of your convictions (though this last point is not directed solely at you     adouglasmhor_

Raz
 
Not at all, I was just pointing out how Hong Kong started up, and why.

Also the Economy of Hong Kong as I pointed out was based on multinationals investing there possibly to avoid government oversight, it is hardly a national economy in the usual sense.

Though for standard of living rather than GDP and public debt Sweden stacks up pretty well TBH and has a higher level of government interference that the UK.

I have no need to write a counterpaper any more than you have any need to swallow the quoted one wholesale.


Also HK relies on imigrant labour to function.
 
Oh, yes, in that case. I didn't know if you meant to only speak out complex/structured products. Thanks for the clarification.

Well, what you describe is gambling. And, yes, some people do think those indicators are scientific. I agree with you, they are wrong. However, although that's the public perception of what professional traders do. It isn't, at all (I know). Even banks who tended to go for that voodoo approach at some point in history have canned most of their 'technical analysis' guys by now. It's the financial equivalent of astrology.




There's a difference between 'turnover' and 'contracts outstanding'. They are very different things. Turnover can be huge, but outstanding - which is the real 'held' will not in excess of the total stock of silver. Since the Hunt brothers people have become sensitive to that sort of thing. Not to mention that since those contracts are centrally cleared, that sort of thing can't happen. There are position limits and such in place.

High turnover is healthy. It means that people are able to hedge more often and more cheaply. Options have non-linearities in the payoff, which it sounds like you probably already know. Things like the gaofftopic cause the delta to change as the price moves. If the market is liquid the option holder can hedge with less friction. This reduces everyone's risk and it a net benefit to everyone.

Although individual people who like to 'play' the market in their spare time tend to think of options contracts as a 'bet' on the rise or fall. That's really not how they're used professionally, which is more than 99% of the volume. Options are contracts on volatility, which is why they need to be hedged with the underlying or another book. Professional traders don't want the delta risk, it's an annoyance, whereas individuals who do it in their spare time tend to see it as a good way to get big exposure for cheap and limit their risk (which it is, just remember you're paying for it with the theta! No such thing as a free lunch!)

You have to remember this second-order thing as well. If I'm a silver mining company and I have physical silver and I hold short contracts against that, the contracts outstanding will show a short position, but you have to add everything up. That's the trick. The market isn't a closed system. I think that point isn't obvious and it's the real barrier between what it is and the public perception.



Well, I have a lot of colleagues who are gold bugs as well, so you're in good company. They're very smart people. But, personally, I never understood it. It's no more 'real' money than anything else unless you're able to pay your taxes with it (which, as an interesting aside, is pretty much what defines a currency and gives it value.). Although that's not my real objection as there's a good point for the inflation hedging part of it.

My real problem with investing in physical commodities is that there's essentially a negative dividend yield as you have to pay for storage at some point, unless you're buying Krugerrands. But, then you probably should get a safe, and then you're paying for that and I imagine you'd want to have it insured - so that's storage costs as well. If you're not getting insurance, you're just speculating on the idiosyncratic risk component of the safety of your home, or storage space. Although, I suppose a bank safe deposit might be low cost all in, in that case.

In any case, with commodities, at best, you're getting a 0% yield + the market movement, and I'd seriously question if you have edge in predicting the market. It's nothing personal, it's just the same reason I don't pick stocks or otherwise speculate with my savings. Considering that there are people who dedicate their life full time to trading these things on those time frames; that's tough competition. I prefer to stick to what I'm good at.

Also, if the market seems 'crazy' that's a bad sign, because if something truly screwed up you bet the professionals would be all over it. (There's two lessons I teach to new traders without fail. One of them is, 'if you, at any point, don't understand what's going on. Stop trading! Wait until you have a handle again and then go back.') You could theorize some crazy collusion, but that's just not going to be the case. The benefits to a defector to the cartel are too high. Especially in this electronic, anonymous world. Back in the day where the other traders in the pit might kick the crap out of you, perhaps it was more possible. But, now you could defect in complete anonymity.

As for the CP-risk, if you're not holding physical, then you have no CP on the contract, but you still do with your brokerage. If you're in the UK that could be significant because of the lack of segregated funds. Also, if you're in the UK, I imagine you'd be dealing in CFDs because of the tax savings. But, that's CP risk with the house as well.

Re: the debt: that's simple. Governments are just like people, but worse. The median credit card debt to income is something like ~10%. Governments are worse because you get to charge that wide-screen LCD TV to everyone else in the neighborhood as well. Just too much spending. Completely unrelated to the market. The only way in which it is slightly related, in the US, is that the USD is effectively the world's reserve currency and so the US can borrow cheaper than anyone else. When something is too cheap, people tend to buy too much of it.

The Eurozone is a great example. Giving economies like Greece, Spain, and Portugal the ability to borrow at German yields is like giving Bill Gates' credit card to some club-kid who's spent his 25 years living it up and being shocked when it gets maxed out.
 
An issue here , my quoting was in reply to someone else you got involved later down the line so thats why it is off kilt. It would be wise to apply my quote in context.

How does asking my views about Ingersoll and Rand relate to how Hong Kong started?

I made a post on page 1 referring that the current mess we are in is a result of government meddling. Someone said this was the great lie, so I quoted Milton Friedman about Hong Kong and Britain following different policy's after WW2 and who has come out better as a result of those different policy's.

Hong Kong also had a very big exporting business and was a go to place for labour, as much as it was for banking.

Yes Sweden is another ball and an interesting one. Sweden however does often push for de-regulation at the EU.

Sweden's GDP has been coming down slowly if you look at the bigger picture.

In truth, the Swedish economy's best years are long gone. Between 1870 and 1950, average growth in Swedish GDP and productivity was, by some measures, the fastest in the world. In 1970 Sweden was the fourth-richest member of the OECD club of industrial countries. But for most of the past 50 years the story has been one of relative decline, including a deep recession in the early 1990s .

1998 Sweden had fallen to 16th in the OECD rankings. It has since climbed back a bit, but the relatively strong growth of the past decade should be seen mainly as a rebound from the 1990s trough.

Also as Sweden is a known prime example of cooking its books when it comes to numbers.


So what are your views then? You think the Gold standard is the way forward?

Are you keen on government control's in economics?

What school of economics do you apply to?

Raz
 
Thanks for the info and the reply. I'd be interested in anything else you have to share.
With Gold /silver I accept that there is no dividend, but look at bank rates, and I've heard it said that the next bubble will be bonds, so it's very difficult times.I'm currently thinking about property
This may interest you
Bob Murphy on the debt crisis, the Great Depression, and gold - YouTube
 
Just did some quick checking as well. If you're trading physical you're probably paying something like a 2 or 3% spread. And CFDs are about a tenth of that. And futures are probably a third of that again. So, like anything, you're paying for not having that risk - or in the case of CFD you're paying also for the tax arb.

Oh, and no problem. I can't give advice or anything that looks like it because of the licenses I hold. (It's more restrictive than a 'normal' private citizen, I'm not even supposed to give advice to family.) The other reason is like I said, I know I don't have any edge in stuff over a day - so I assume I'll get run over by the people that do, and so would anyone I 'give advice' (read: 'talk bollox') to.

But, I am more than happy to explain any of the workings, contract specs, where the costs are (like in the spread stuff I put above), and general knowledge stuff that a non-professional might overlook simply because they haven't been doing it for 10 hours a day for 10 years. So, fire away if you think of anything. I'll watch that vid later today, thanks for the link!
 
Economies have and always will be based on natural resources. The ability for a society to produce goods efficiently is in direct relationship to the value of the economy. Now if your suggesting that the monetary system be backed by natural resources such as oil, natural gas, coal, lumber, iron ore, and such, I think that's a slippery slope. If you think we are wasting natural resources now imagine letting governments base their power and influence on it. AFA "sustainable natural resources" that seems to me to be an oxymoron. If your talking about wind, and solar I think history will show that this was a folly to think they were a viable source of energy.
 
Hi there everyone.
I'm sorry,but i coulden't come in sooner.
I have to say that your reactions are high above my expectations,so i would like to thank you all.
Hawever,it dusen't explain why some peaple still believe that the goldstandard could solve our economic problems.
It has been tryed before,after ww1,and it failed,but some peaple still want to return to the past.
Just supose that the next president is Romney,haw mutsh pressure will there be from the teaparty to go "back to the past" ???
This can sound stupid to you,but it's a genuine question that procupies many peaple over here.
I don't want to take sides in this,but to us,the USA is still the dominating economic factor in the world.
Some newspapers over here see the theaparty as"nutcases",but honestly it's very difficult for someone in Western Europe to find out what the real feelings are in the USA.
If Romney becomes president,as i think he will,what will he do ????
 
No, he can;t go down the road of the gold standard, government spending is far to high these days.
 
The reason people want it is simple, and it has nothing to do with gold. If they wanted a monetary policy that 'looked' like gold. They could do it now.

It's thought that pegging the currency to gold will not allow the treasury to engage in (modern) seignorage. Now, the treasury can print money which, thorough inflation, is essentially a direct wealth tax. If the treasury really wanted to stop collecting this tax they could.

I might be for something like this if it hasn't been shown on numerous occasions that the government will just ignore it at some point. So, I think it's probably less harmful to have a persistent somewhat-bad thing going on in a way everyone expects and can plan for. I think going on a gold standard, and then at some point, overnight, the government devaluing the currency when they decided to renege on the peg is probably much worse.

Just because the government says, 'Oh, yeah, it's pegged to gold forever.' doesn't mean at some point it won't be. There's really no one to hold them accountable, they've got the guns and tanks.
 
But how long do you think that the US will be the major power of the world?.
It's interesting that China is buying up so much Gold,as is India and all the central banks, even our good friend Soros is buying Gold.
I think that China could have the next reserve currency, and that backed by Gold. There are many countries now who won't deal in dollars. One of the reasons given for the attack on Iraq was that Saddam wanted to pay for oil in Euros not dollars, and Iran is paying for it's goods in gold, which is probably why there is so much Sabre rattling going on.
 
The tea party is portrayed as nut cases only in the media, well the media is tremendously biased to the point they don't even deny it. Truth is the Tea Party movement is made up of many different segments of the population who's main goal is to restore the principles which built America into the prosperous nation it once was, generally speaking.

What we need to understand is that it seems (not quite sure) that the far left would like to see those principle undermined to the point of restructuring the USA into a European style of society. The problem with that is in order to rebuild you first have to destroy or tear down the current system. The danger in that is that the western civilizations security is at stake. The military might of the USA has kept the free world safe for the last sixty seventy years. American citizens are highly in tune with that and when we see our security in jeopardy that's when we act.

So if Romney get's the presidency although he is on the moderate side he understands that a strong America economically and militarily is important not only for the security of America but of the world as a whole. He will restore some of that security and if not he will be a one term president as well.

I don't think it's feasible to go to a gold standard monetary system, but what we have now is a debt standard monetary system and that's what is tearing down the USA's fabric and the World economy's as well.

So the choice this November is simple the destruction of the USA and western society or restore the world economy.
 
That simple, huh. as simple as your either with us or with the terrorists or one of our ministers when talking about our government's new internet intrusion laws 'your either with us or with the child pornographers"

All of which are equally illogical. Leftists dont want to destry economy any more than being against Vic Toews makes you a child porn supporter.

for those who have no idea what I'm talking about:

http://www.cbc.ca/news/technology/story/2012/02/13/technology-lawful-access-toews-pornographers.html
 
Overreacting Mich Obewan? Seriously. Obama isn't out to see the US get destroyed. Just as I'm sure Bush wasn't out to make citizens feel like they were being sphere on. Obama came into a a bad economic situation (and an even worse political one). No reasonably intelligent human being could expect him to fix it in for years. Especially when his oppositions only goal is (and I quote): "To not see Obama get another four years."
 
Maybe I'm just calling them as I see them. Obama probably isn't trying to physically destroy the USA, he just wants to ultimately change the political and economic structure to a more quasi European system. In fact I'm not sure he even knows what he wants. I believe that others are, and always have been shaping his politics behind the scenes.
 
Right basic outline.

You separate renewable and non-renewable resources.

You work out how much resources can be produced in a sustainable manner and how much is required to sustain the population.

Then everyone is allocated a portion of work to provide these resources. This is the core economy and it tightly regulated. Non-renewables can be use to sustain the core economy in times of trouble. However the goal is to return to sustainability as soon as possible.

Then you have the excess economy This allows people who want to produce goods and services outside the core economy. However all excess ecomonic activity must be resource neutral and cannot spend non-renewables.

Then there is the research economy. This is special project that can apply to the benefit to both core economy and excess economy. It uses resources to improve technology and infrastructure to improve efficency and sustainability. These project can use both types of resources.

The resource ecomony hinges on population control and responsible resource managment.

Rough outline anyway.

The Bear.
 
I agree that is what Obama is doing. The current political/economic setup in America was fine for a young large nation of 100 million. It doesn't work for a mature nation of 300 million. Obama realises this and was trying to transform America to realise it no longer is a young nation.

The Bear.
 
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