Australian Politics Forum - backing a currency with gold

freediver

Gold Member

Offline

www.ozpolitic.com

Posts: 53256
At my desk.

backing a currency with gold
Mar 17^th, 2024 at 2:23pm

thegreatdivide wrote on Mar 17^th, 2024 at 11:16am:

freediver wrote on Mar 17^th, 2024 at 10:28am:

Quote:

No, because there isn't sufficient gold in the world to account for '90% of foreign exchange transactions'

You don't need more gold every time there is a transaction.

But if a nation can't pay on demand in gold, a 'run on the bank' will occur - and the whole system will collapse, which is why the US abandoned the gold standard

You are missing the point I was making. The amount of gold needed to back a currency has nothing to do with the number of transactions.

Also, can you explain why you think the US abandoned the gold standard because doing so would cause a run on the bank?

Back to top

People who can't distinguish between etymology and entomology bug me in ways I cannot put into words.

IP Logged

Bobby. Gold Member Offline Australian Politics Posts: 120776 Melbourne Gender:	Re: backing a currency with gold Reply #1 - Mar 17^th, 2024 at 2:42pm I read somewhere that if they brought back the Gold Standard Gold would be valued at over US$100,000 per ounce. That is how much money they printed.
Back to top	IP Logged

thegreatdivide

Gold Member

Offline

Australian Politics<br
/>

Posts: 15446
Gender: male

Re: backing a currency with gold
Reply #2 - Mar 17^th, 2024 at 5:20pm

freediver wrote on Mar 17^th, 2024 at 2:23pm:

thegreatdivide wrote on Mar 17^th, 2024 at 11:16am:

freediver wrote on Mar 17^th, 2024 at 10:28am:

Quote:

No, because there isn't sufficient gold in the world to account for '90% of foreign exchange transactions'

You don't need more gold every time there is a transaction.

But if a nation can't pay on demand in gold, a 'run on the bank' will occur - and the whole system will collapse, which is why the US abandoned the gold standard

You are missing the point I was making. The amount of gold needed to back a currency has nothing to do with the number of transactions.

Also, can you explain why you think the US abandoned the gold standard because doing so would cause a run on the bank?

See bobby's post, and read

https://en.wikipedia.org/wiki/Nixon_shock#:~:text=The%20Nixon%20shock%20was%20a,...

The Nixon shock was a series of economic measures undertaken by United States President Richard Nixon in 1971, in response to increasing inflation, the most significant of which (responses) were wage and price freezes, surcharges on imports, and the unilateral cancellation of the direct international convertibility of the United States dollar to gold.

That is, the gold standard didn't prevent inflation in the US, so Nixon abandoned it because he didn't want to face other nations making a "run" on US gold - demanding payment in gold - because they were losing faith in the US currency. But:

Although Nixon's actions did not formally abolish the existing Bretton Woods system of international financial exchange, the suspension of one of its key components (the gold standard) effectively rendered the Bretton Woods system inoperative.[3] While Nixon publicly stated his intention to resume direct convertibility of the dollar after reforms to the Bretton Woods system had been implemented, all attempts at reform proved unsuccessful. By 1973, the current regime based on freely floating fiat currencies de facto replaced the Bretton Woods system for other global currencies.

Back to top

« Last Edit: Mar 17^th, 2024 at 5:29pm by thegreatdivide »

IP Logged

freediver Gold Member Offline www.ozpolitic.com Posts: 53256 At my desk.	Re: backing a currency with gold Reply #3 - Mar 17^th, 2024 at 6:13pm Do you understand what I posted TGD?
Back to top	People who can't distinguish between etymology and entomology bug me in ways I cannot put into words. IP Logged

thegreatdivide Gold Member Offline Australian Politics<br /> Posts: 15446 Gender:	Re: backing a currency with gold Reply #4 - Mar 19^th, 2024 at 9:14am freediver wrote on Mar 17^th, 2024 at 6:13pm: Do you understand what I posted TGD? The problem is YOU are too mentally crippled by your delusional ideology to understand the refutation in #2.
Back to top	IP Logged

freediver Gold Member Offline www.ozpolitic.com Posts: 53256 At my desk.	Re: backing a currency with gold Reply #5 - Mar 19^th, 2024 at 9:26am Suppose I give you US$1,000,000 in exchange for Euros. Then you give me the Euros back in exchange for US$. And we repeat a million times. How much gold would be required to account for all of those transactions?
Back to top	People who can't distinguish between etymology and entomology bug me in ways I cannot put into words. IP Logged

thegreatdivide Gold Member Offline Australian Politics<br /> Posts: 15446 Gender:	Re: backing a currency with gold Reply #6 - Mar 21^st, 2024 at 9:07am freediver wrote on Mar 19^th, 2024 at 9:26am: Suppose I give you US$1,000,000 in exchange for Euros. Then you give me the Euros back in exchange for US$. And we repeat a million times. How much gold would be required to account for all of those transactions? None. Next question?
Back to top	IP Logged

MeisterEckhart Gold Member Offline Australian Politics Posts: 17122 Gender:	Re: backing a currency with gold Reply #7 - Mar 21^st, 2024 at 9:13am The gold price is skyrocketing again. It has hit a USD 2210 (AUD 3330) intraday high so far. This Friday's COMEX market close prices will determine whether it can be sustained. Moves like this often immediately follow a world event (if not significant bad news about the US economy)... I wonder what's up.
Back to top	IP Logged

freediver

Gold Member

Offline

www.ozpolitic.com

Posts: 53256
At my desk.

Re: backing a currency with gold
Reply #8 - Mar 21^st, 2024 at 9:16am

thegreatdivide wrote on Mar 21^st, 2024 at 9:07am:

freediver wrote on Mar 19^th, 2024 at 9:26am:

Suppose I give you US$1,000,000 in exchange for Euros. Then you give me the Euros back in exchange for US$. And we repeat a million times. How much gold would be required to account for all of those transactions?

None.

Next question?

Why did you post this?

Quote:

No, because there isn't sufficient gold in the world to account for '90% of foreign exchange transactions'

Back to top

People who can't distinguish between etymology and entomology bug me in ways I cannot put into words.

IP Logged

MeisterEckhart

Gold Member

Offline

Australian Politics

Posts: 17122
Gender: male

Re: backing a currency with gold
Reply #9 - Mar 21^st, 2024 at 12:13pm

MeisterEckhart wrote on Mar 21^st, 2024 at 9:13am:

The gold price is skyrocketing again.

It has hit a USD 2210 (AUD 3330) intraday high so far. This Friday's COMEX market close prices will determine whether it can be sustained.

Moves like this often immediately follow a world event (if not significant bad news about the US economy)...

I wonder what's up.

Ah... The long-awaited US rate cut.

Unemployment rate falls to 3.7pc in February, US Federal Reserve likely to cut rates in June, ASX higher after Wall Street soars

Back to top

IP Logged

Goose

Gold Member

Offline

Australian Politics

Posts: 630

Re: backing a currency with gold
Reply #10 - Mar 21^st, 2024 at 4:34pm

MeisterEckhart wrote on Mar 21^st, 2024 at 9:13am:

The gold price is skyrocketing again.

It has hit a USD 2210 (AUD 3330) intraday high so far. This Friday's COMEX market close prices will determine whether it can be sustained.

Moves like this often immediately follow a world event (if not significant bad news about the US economy)...

I wonder what's up.

It's just all the BTC and ETH liquidation gains being poured into exchange reserves and driving the price. Wink

Back to top

IP Logged

MeisterEckhart Gold Member Offline Australian Politics Posts: 17122 Gender:	Re: backing a currency with gold Reply #11 - Mar 22^nd, 2024 at 8:55am While it is rumoured that Russia and China are moving towards gold backing the Rouble and Yuan, the CCP currently offers convertibility to gold for Yuan on the Shanghai Stock Exchange.
Back to top	IP Logged

thegreatdivide

Gold Member

Offline

Australian Politics<br
/>

Posts: 15446
Gender: male

Re: backing a currency with gold
Reply #12 - Mar 22^nd, 2024 at 10:29am

freediver wrote on Mar 21^st, 2024 at 9:16am:

thegreatdivide wrote on Mar 21^st, 2024 at 9:07am:

freediver wrote on Mar 19^th, 2024 at 9:26am:

Suppose I give you US$1,000,000 in exchange for Euros. Then you give me the Euros back in exchange for US$. And we repeat a million times. How much gold would be required to account for all of those transactions?

None.

Next question?

Why did you post this?

Quote:

No, because there isn't sufficient gold in the world to account for '90% of foreign exchange transactions'

Because that's what Nixon concluded: the US didn't have enough gold if US trading partners lost faith in the US dollar and demanded payment in gold.

"Nixon publicly stated his intention to resume direct convertibility of the dollar after reforms to the Bretton Woods system had been implemented, (but) all attempts at reform proved unsuccessful".

Back to top

IP Logged

thegreatdivide

Gold Member

Offline

Australian Politics<br
/>

Posts: 15446
Gender: male

Re: backing a currency with gold
Reply #13 - Mar 22^nd, 2024 at 10:32am

MeisterEckhart wrote on Mar 21^st, 2024 at 12:13pm:

MeisterEckhart wrote on Mar 21^st, 2024 at 9:13am:

The gold price is skyrocketing again.

It has hit a USD 2210 (AUD 3330) intraday high so far. This Friday's COMEX market close prices will determine whether it can be sustained.

Moves like this often immediately follow a world event (if not significant bad news about the US economy)...

I wonder what's up.

Ah... The long-awaited US rate cut.

Unemployment rate falls to 3.7pc in February, US Federal Reserve likely to cut rates in June, ASX higher after Wall Street soars

"Bad news" about the US economy?

Back to top

IP Logged

freediver

Gold Member

Offline

www.ozpolitic.com

Posts: 53256
At my desk.

Re: backing a currency with gold
Reply #14 - Mar 22^nd, 2024 at 10:35am

thegreatdivide wrote on Mar 22^nd, 2024 at 10:29am:

freediver wrote on Mar 21^st, 2024 at 9:16am:

thegreatdivide wrote on Mar 21^st, 2024 at 9:07am:

freediver wrote on Mar 19^th, 2024 at 9:26am:

Suppose I give you US$1,000,000 in exchange for Euros. Then you give me the Euros back in exchange for US$. And we repeat a million times. How much gold would be required to account for all of those transactions?

None.

Next question?

Why did you post this?

Quote:

No, because there isn't sufficient gold in the world to account for '90% of foreign exchange transactions'

Because that's what Nixon concluded: the US didn't have enough gold if US trading partners lost faith in the US dollar and demanded payment in gold.

"Nixon publicly stated his intention to resume direct convertibility of the dollar after reforms to the Bretton Woods system had been implemented, (but) all attempts at reform proved unsuccessful".

What does the 90% of foreign exchange transactions bit mean? That there was enough gold to cover 10% of all foreign exchange transactions?

Back to top

People who can't distinguish between etymology and entomology bug me in ways I cannot put into words.

IP Logged