The Housing Bubble

azdude,

She’s selling her home and her HEART! She’s thrusting those things your way to get you to pull out your checkbook.

I don’t know what’s wrong with you.

Sounds like this example of a “professional” (realtor) is trying to pull a varient on the world’s oldest “profession” - paying money for her “companionship.” Right… whatever!

I like the spoiled princess mentality: fancy vacations, absurdly overpriced additions to the house, etc. I bet none of that includes: hard-work, saving money, investing properly, and NOT living a life in debt. In fact, I’d be willing to bet that her previous husband (I assume she had one at one time) was tossed to the curb since he wasn’t “exciting” enough and didn’t indulge in princess’s fantasies. You’d think the alimony and child support payments would be enough to fund this “princess’s” dream-world, but I guess not!

Anyone stepping up to the plate for this losing deal? I think I’d rather buy shares of Ambac or MBIA. At least they can only go to $0!

If I can see her bolt-ons, I may accidentally bruise her face as I whip out my checkbook (with the $500,000 amount for a $250,000 POS).

I generally view fake blondeness as a very reliable contrarian indicator of desirability in a potential companion.

(and fake other stuff is actually an even stronger contrarian indicator, just in case that doesn’t go without saying.)

Gritty,

Ditto. Fake hair, nails, boobs and I head the other direction.

Gritty,

Ditto. Fake hair, nails, boobs and I head the other direction.

Any guy wanting to do that ghastly broad is just too lazy to spank the monkey.

$500,000. She added it to the $340,000.

My friend Renate might be worth more. She has 3 kidneys.

She should subdivide and sell, I understand that’s the way to make real money.

Her “companion services” just like her house way too f*ckin overpriced. The way I see it she will eventually have to pay someone in cash or “companion services” to take that POS property off her hands.

The conflict of interest is so breathtakingly obvious, 50% of our population couldn’t believe it was real.

‘How do you explain the declining production in USA, Mexico, etc?’

It’s very easy. Low prices destroyed any incentive to drill and in Texas anyway, the independent oil industry was almost eliminated. You don’t rebuild that with a couple of years of high prices. Also, Mexico has a state run biz, which is inefficient.

There is plenty of oil. In TX, the wildcatters kept finding oil as long as they drilled.

The speculators are in trading rooms laughing their asses off as they keep screwing people.

Peak oil is a scare tactic.What declineing production?There is oil all over the world. The environmentalists keep stopping us from drilling to get it.They want people off the road so only the rich can drive.

Can’t wait till I do not have to buy oil anymore.I’m tired of getting screwed by these crooks.

I’ld say that prices have been pretty high for a few years now, especially these past 12 months.

There are major (read more than the output of Saudi Arabia) pools of oil and natural gas in Alaska that are never discussed in the MSM. Enough to make us completely energy independent for the next 200 years. The major aspect of this is that there are vested interests in the PTB that would prefer you believe there is a “shortage” of oil or that “peak oil” has been reached. These notions are false. What is true is that the very same banking interests that control the “Federal Reserve” - another name for an international banking cartel legitimitized in 1913 to print dollars - mightily prosper with high oil prices.
The American public is a disbelieving, passive, stuttering, stupefied, blithering idiot with respect to the forces that dominate the nation economically.

Mormon Tea, you periodically keep making the claim that Alaska has more oil than Saudi Arabia, then never answer the multiple posters who provide links demonstrating that your claim is pure horsesh*t.

Can you provide ANY proof of what you are saying, like a reputable link? I am starting to think you are either consulting a blatantly false source, misunderstanding something, or are making this up entirely.

That all comes from Lindsey Williams, a Baptist preacher who used to work as a chaplain for the oil companies building the Alaska pipeline.

Here’s a link to one of an eight-part videotaped lecture.

http://youtube.com/watch?v=NbakN7SLdbk

He may be for real, but who knows? He apparently believes in the ludicrous 9/11 conspiracy, too, but, then, so does Jesse (Desperately, Desperately Need to Wash Hair) Ventura, and Charlie (Spend Every Holiday in Rehab) Sheen.

The problem with oil (and natural gas) in Alaska is that it is all on the north shore and until enough ice melts that we can run tankers there, we will have to extend the Alaskan pipeline over a couple of more mountain ranges to be able to ship it to the lower 48.

As Ben postulated, oil companies got burned bad after the last run up and are not about to gamble 100’s of billions of dollars in Alaska.

At least not yet.

What concerns me is we’re paying fanatic desert nomads trillions of dollars for stuff that happens to be found under their feet.

It would be like striking oil in Appalachia. I’d be a little concerned with what the hill people would do if they suddenly stopped having to worry about surviving and wound up being multimillionaires and billionaires.

One benefit of getting off oil would be we could stop sending so much money to the middle east and to the people that revile us. This is the strongest argument I see for trying to reduce our dependence on oil

Prudhoe Bay is on the “north shore” (North Slope) just a few miles from the coast! There ain’t no further north you can go without being in the water.

The pipeline wouldn’t have to extend over any more mountain ranges if they developed the entire North Slope, from Point Lay to the Yukon border.

Steely Dan is touring? That totally rocks! Thanks for the tip.

Now I can finally get my Haitian Divorce.

Hey, DJ, there’s a little railroad town in Utah that bills itself as Utah’s Christmas Town and has lots of touristy type Christmas things - Helper, Utah - named for the helper engines they add to get the trains over Soldier Summit - this is a bad portent for their sales.

Hey Lost:

Congrads on the new job…squatting was fun….lol

also see the writing on the wall too…last week i dj’ed a senior citizens lucheon party (Frankie, Ella, Ray Charles)..and they want me back….feels weird to be the youngest person in the room, instead of the oldest.

But that may be the only way to make any money anymoret, Holiday parties maybe very scare this year and how much can you lower the price since parking, tolls and tickets in Manhattan are not cheap anymore.

I am still trying to get my zydeco rock and blues night off the ground but bar owners in nyc are such old fogeys…all they want is the swearing rap and hip hop… click on my link…i will be putting up more videos later

Nice videos. I love Zydeco.

After Katrina, there were some really nice fundraising parties here for New Orleans -with Austin and New Orleans musicians rocking out together, and great food.

Great videos, DJ, too bad you’re not out here, we need more of that kind of stuff. Country gets purdy old…

Did I mention the last week of the squat no hot water? I decided I liked cold showers, though, and that made it a little easier. Nice to be back in Colorado, back in the good old USA!

Hmmm…. Bubbles Ben Bernanke needs to explain to these poor, frozen folks that energy prices are not a problem since they are not a part of “core inflation” - that means that they clearly are not going up, so there cannot be a problem.

Now, get out there and buy some piece of junk made in a nation that hates us with money you don’t have to keep Amerika strong!

Read last week that current natural gas prices equate to $65bbl crude right now. What will those prices do, what can be expected?

If the summer’s hot it’s gonna be a double pentration screw job because across this country many of the “peaker” stations (for summer a/c peak demand) are gas turbines - even those in nuke territory. Electric will soar. Winter heating, heck, I don’t even want to think about it.

John:

Interesting thought, in CA if you look at energy usage throughout the day you see they use more then 2 times the energy at 4pm then at 4 am

So wouldn’t massive time shifting of workers to 2nd 3rd shifts eliminate the peaker need? Let alone spreadng out the rush hour traffic, and the eliminate the need for more peak time capaicty on mass transit?

————————-
across this country many of the “peaker” stations (for summer a/c peak demand) are gas turbines

Fortunately (for us) its harder to trasnport nat gas than crude, which means that there isn’t the same sort of global market for it as there is for crude.

LOL! My observations regarding Walmart, Kmart and Sears match yours 100%. We have a Kmart nearby and its always dead.

Love the tools in Sears.

Love to touch them, hold them, look at them, dream about how to use them. Got this from my Grandfather. He would take all of us kids (5) to Sears on Geary in San Francisco. We would get some popcorn and head for the tool section. Somehow he was able to keep all of us entertained in the tool section of Sears.

I remember those little square boxes of Sears popcorn like it was yesterday…

Yeah, I remember the small boxes. My grandpa made sure we each had our own box of popcorn. I also remember the candy they sold in Sears.

“Love the tools in Sears.

Love to touch them, hold them, look at them, dream about how to use them. Got this from my Grandfather. He would take all of us kids (5) to Sears on Geary in San Francisco. We would get some popcorn and head for the tool section. Somehow he was able to keep all of us entertained in the tool section of Sears.”

I loved reading your story, gal. I can tell you’re sentimental, a trait I very much appreciate.

We got the 4th of July flyers for Safeway and Kroger in the paper yesterday. Very weak (discountwise) compared to years past.

I’m barely eating any meat lately. I’ll go days without it, something unheard of in the past. I don’t like the prices, so I work around it. I’m eating lots of pasta, lentils, vegetables, etc.

I think there will soon come the time when the stock market will offer one, of maybe two or three in a lifetime, buying opportunities.

We had such an opportunity in the second half of 1974. I’m betting another one is just around the corner, a few months to a year or so away.

Such opportunities are surrounded by talk of Gloom & Doom.

Buy ‘em cheap, when everyone else is afraid to touch them.

“You think putting money into stocks will be considered a worse investment than buying houses? At least you can buy and sell stocks in small quantities…”

How about a solid currency? What would you buy as a hedge against the dollar falling down and breaking a hip? I’m thinking small-time — $25k. Must be a country out there with natural resources wealth that hasn’t been leveraged by its leadership.

Nope, all small countries and large have been severely leveraged by their despots.

Figuring out the least worst currency seems like a lot of work.

“worst investment decision one can make is to put money into the stock market.”

when this sentiment comes to pass…people will start investing in companies the old fashioned way…based on dividend yield.

“dividend yield” - BINGO.

In the second half of 1974, the period referenced by combotechie, I put every single penny I had into stocks. Even money retrieved from the pockets of worn-out raincoats. At that time, you could get blue chips yielding 5%, 6%, 8%. Stocks were never cheap again. But it could be true that a buying opportunity will arise in a year or so. Quicker than house-buying opportunities, perhaps.

Maybe you mean 1975? 1974 was one of the worst crashes in the stock market, the bottom was 12/06/1974 down 45%. Stayed there for a few months.

Forbes magazine interviewed a rather obscure Warren Buffett in the Fall of 1974 and asked him how he felt about the stock market.

“I feel like a sex maniac in a whorehouse”, said Buffett.

Forbes changed “whorehouse” to “harem” for their article.

The point is, bargains were everywhere. One went sort of nuts trying to decide where to put his money.

I suspect similar times aren’t very far away. Best to remain informed, liquid, and patient, IMO.

In 1974, The Chinese, Indians and Russians didn’t have a pot to piss in and you are expecting the same results of an era that bears no resemblance to here and now?

Yep. Not same but similar.

Same in a different way, or different in the same way.

The world was going to hell in 1974. Gas prices were going through the roof due to a mass shortage of crude, all because of OPEC. Gas lines prevailed. Odd and even numbered days determined when you got gas, if at all. Price inflation was raging out of control.

What to do? Why, sell stocks. Clean out your mutual funds. Dump everything into a declining market. Salvage what you can before it’s too late.

There was no hope. We were all screwed. Everybody knew it.

Oops — I spoke too soon; I forgot this is about when Jwhite typically takes his morning walk.

June 30, 2008 9:52 A.M.ET
BULLETIN
CHICAGO PMI FOR JUNE SHOWS FRACTIONAL IMPROVEMENT, STILL BELOW KEY 50 MARK

Stocks take mildly bullish tilt

Bulls manage to blunt bears’ momentum, but oil’s latest move higher still casts a long shadow.

Down 50+, must mean J’s about halfway done.

Please explain about JWhite? Is he a ppt? Anti-ppt?

I think all this stock stuff is the just people prematurely top-calling on oil (much like all the premature bottom-calling for housing). When they call an oil top, they are essentially calling the DOW trough, and bottom-feed accordingly. Then the oil folks speculate again, and oops it’s not an oil top, therefore oops it’s not the DOW bottom, buying stops, and the dead cat hits the floor again after its bounce.

i wonder how long this will go on. We can pretty much nail housing, but oil is uncharted territory.

JWhite is a poster here who takes a walk each morning and while he’s out, the market goes down. Invariably. But he’s not here today, who knows, maybe the Wall Street gangstas are holding him hostage until they can figure out how it all works.

I see the fact that these bubble era stock market darlings are dropping on the last day of the quarter as a sign that plunge protection measures are losing their heft. Thoughts?

“Down 50+, must mean J’s about halfway done.”

50+ and holding, suggesting the Visible Hand is at work painting a tiny bit of lipstick on the DJIA pig so the last day of the first half does not end on a sour note.

“We can pretty much nail housing, but oil is uncharted territory.”

I don’t know, many were calling 2003 the peak of the housing bubble.

Well, there sort of is - if the government props up enough banks, hands out enough “free” money, etc, you can drag out the delay in housing prices for a LONG time. But, yes, one cannot just jack up the housing market in a half-hour like one can the stock market.

Oops - I meant “decline” in housing prices, not “delay” although the decline is being delayed, if you know what I mean…

“But, yes, one cannot just jack up the housing market in a half-hour like one can the stock market.”

The other problem with trying to plunge-protect housing is the nature of the purchase contracts for “end users” — families who buy homes as a place to live in. At a fundamental level, if home prices were artificially “jacked up” by a version of the PPT aimed at propping up home prices, very few individual households will be qualified to buy, especially given the reality of a credit crunch and a reversion to lending standards that require a reasonably high probability the mortgagee will be able to repay the loan. I confess to wondering about what keeps home prices propped up so high in San Diego, especially given a huge drop in the volume of sales transactions, but I suspect the situation is not sustainable, as keeping homes vacant forever is a sure way to throw money down the drain.

I confess to wondering about what keeps home prices propped up so high in San Diego, especially given a huge drop in the volume of sales transactions, but I suspect the situation is not sustainable, as keeping homes vacant forever is a sure way to throw money down the drain.

People are trying to rent out their houses, hoping some cash inflow will help stanche the hemorrhaging. They’re hoping to hold on until they can get a buyer, and waiting to see what kind of government bailout they will get.

What does this mean for prices? Without government action, maybe another year or so before capitulation? My crystal ball is murky here. With government action? Depends on how it works out. If the government just takes the bad loans off the hands of the lenders, like BofA and other lenders want, and looks rather likely to happen, who knows. I don’t think the government has the political will to foreclose on debtors / registered voters.

I view Larry Kudlow as someone who has an act, not much different from Jim Cramer or some of the others who have financial or political shows. I generally turn on his show for 10 minutes or so a few times a week and it has been more and more difficult for him to make the case for a “goldilocks” economy. He has people like Don Luskin on, who has been about as wrong over the past 12-18 months as someone can be to advocate for the bullish position, but mostly he now just complains about the Federal Reserve and says things like we need to “drill, drill, drill” for oil. While moderately entertaining, it is very hard to consider it a serious prescription. The problem we face now is that for the economy to right itself we have a number of choices to make almost all of which are bad. I guess trying to determine what the least worst choice is doesn’t make for entertaining tv.

“When Bernanke and Paulson, in front of Congress, under oath state that…”

bernanke - you mean the same guy that said a weak dollar is only a big deal for folks traveling overseas and doesn’t impact prices at home?

paulson - you mean the same guy that keeps saying the bush administration has a strong dollar policy?

you mean…those two guys?

BBB and Paulson were always saying the devaluing dollar was no problem for the US. Now, what are they saying the opposite?
I remember watching them rah rah-ing their devaluations vigorously in the past few years.

I sure hope they get “theirs” soon and I hope it is worse than a JT.

Ummm,

If you cut taxes some revenues do go up. However, it generally means you are getting increased revenue due to inflation so its kind of a zero sum game.

Similar you are unlikely to find the magic tax rate that turns this into a paradise on earth either.

Ummmm… If that were the case then there wouldn’t be any deficit. Flip and flop it any which way. Only liars insist the Laffer curve works.

i wasn’t necessarily arguing against the statement that tax revenues go up when taxes are cut.

i was just pointing out that BBB and Paulson would not be the one’s i would site to support the position.

They’re honest enough to acknowledge that the fundamental of the Laffer curve is patently false. If supply side worked as some stubbornly insist, there would be no deficit.

It’s so easy to be a bully on tv, but not so much on the internet, as our voices don’t carry as well.

Did ya notice that one small French town is allowing Franc usage. I think that is great.
I frankly do not see the advantages to the masses for the Euro etc being the universal currency.
I miss all the monies.
Wish I had gotten some in gold and as they are doing now, making jewelry out of old unused currency coins.

I wonder how long before more places/countries/towns start using their old currencies again.

Most old school European currency typically was no good after a certain date, including Switzerland, where if you have 1,000 Franc notes from circa 1974, they can’t be exchanged anymore.

As in worth nothing.

I hadn’t heard the joke but it sounds about right.

I always laughed when they quoted stock volatility up to the second decimal. I was, like, if you get it right within 10%, you’re doing a fabulous job.

“What do people need most?”

Teeth?

In every instance leading up to hyperinflation…

Currency is always useful, until it isn’t anymore.

Evidently, the tooth-guy needed something far more than he needed gold OR currency OR teeth..

gold.. currency.. puka shells.. corn.. salt.. The medium of exchange is unimportant, as long as we all agree to it’s value in trade.
In a sophisticated modern society ruled by law and , you don’t need a “thing” behind currency. All you’d need is to trade IOUs for bookkeeping purposes.. which is kinda like the system we use today.

It boils down to basic needs (food-warmth-water) and $20.00 was the going rate of exchange for a $1000.00 faux tooth, to keep on keeping on another day.

Clearly, gold is highly liquid, and proves a great store of value. You can convert your teeth to cash but it requires more and more fiatscos to buy gold.

Currency is ‘what it is’ only as long as both parties agree that ‘it is’ currency. Otherwise, green rectangles are worthless paper.

‘In a sophisticated modern society ruled by law and , you don’t need a “thing” behind currency. All you’d need is to trade IOUs for bookkeeping purposes.. which is kinda like the system we use today.”

Fiatscos have a 100% failure rate thoughout history, but this time it is different? I don’t think so.

By the way, the ones who were saying in that topic yesterday that people trading in their gold, jewelry, etc. for cash was an example of Gresham’s law are incorrect. That’s no more an example than if I sell my expensive comic book collection or baseball collection or piano or any other thing to get cash. It’s just the exchange of goods for cash at the market price.

For this to be an example, there must be some kind implied guarantee and a U.S. dollar amount stamped on the gold or jewelry that says something like “Legal Tender: You must accept this gold ring to pay $50 debts” on it when the gold value of the ring is actually $90. An example of Gresham’s Law would be the Mercury Dime…

Currency is always useful, until it isn’t anymore.

Couldn’t one say that about pretty much anything, including guns, morphine, water, oil … and gold?

Mexico 1975: 12.5 Pesos to the Dollar

Mexico 1990: 10,000 Pesos to the Dollar

Ever see guns, morphine, water, oil or gold react like this?

..Currency is ‘what it is’ only as long as both parties agree that ‘it is’ currency. Otherwise, green rectangles are worthless paper…

lemme ask you something. Why do you fearlessly drive through a green light at an intersection?

Does the opposing red light force cross traffic to stop? Does that red light reach into cars and depress the brake? No, the red light doesn’t stop anyone from running the light.

We live in a society that is in everyway based on faith.. faith that, in general, we’ll all adhere to the agreed upon rules of society. At the core, this faith in eachother is what makes life possible.

Both parties agree that the RED light means stop and GREEN means go. So nevermind about the tiny details like what, if anything, backs the currency. Without basic agreement on all issues in general, society itself falls apart.

Oh man, do I remember the Mexican debacle. My dad was living in Mexico at the time, working for a Monsanto subsidiary (and paid in Pesos). Mexican credit cards could not be used outside Mexico. His AMEX card had the words “Valid only in Mexico” printed in bold letters right under the AMEX logo.

Ever see guns, morphine, water, oil or gold react like this?

Yes.

“Ever see guns, morphine, water, oil or gold react like this?

Yes.”

Please tell me where you’ve noticed an 800 fold increase in price on any of these items, not related to hyperinflation?

“Clearly, gold is highly liquid, and proves a great store of value.”

That “great store of value” of gold depends entirely on how much money the buyer is willing to fork over in exchange for your gold.

“Currency is ‘what it is’ only as long as both parties agree that ‘it is’ currency. Otherwise green rectangles are worthless paper.”

Agree. But that goes for anything of perceived value.
Historically it has been true of salt, large round stones with holes in the middle, gold, incense and mirh, animal hides, beaver furs, even knowledge and information.
Especially knowledge and information.

“In a sophisticated modern society ruled by law and you don’t need a “thing” behind currency. All you need is to trade IOUs for bookeeping purposes…which is kinda like the system we use today.”

A system that works quite well. It would be interesting for you to divulge to us what it is you for money if not these IOUs?

Please tell me where you’ve noticed an 800 fold increase in price on any of these items, not related to hyperinflation?

Is the current price of oil v. its price in the ’70s because of hyperinflation in currency? I’d argue that it’s primarily not (though I’m no expert).

Comparing a hyperinflation scenario using a currency in the developing world (or the infamously chaotic Weimar Republic) as an analog to a currency in the so-called “first world” is a bit misleading, at least at this juncture — though I’m willing to concede that our position is more tenuous than it may have been in the past.

China, Argentina, Chile, Hungary and a host of other countries have experienced hyperinflation, what’s make us immune from it’s charms?

Joey,

A faith-based traffic signal system certainly has flaws but we have chosen to accept a certain body count as the price of driving cars (unfortunate if you are part of the statistics). A faith-based currency offers no benefits to the majority of the people and is in fact a burden to them, resulting in the confiscation of their wealth while it exists and the destruction of whatever they might have left at the time of its’ collapse. Since it has no benefit, why engage in such a system?

‘China, Argentina, Chile, Hungary and a host of other countries have experienced hyperinflation’

Yeah, whatever happened to all that LatAM inflation? Haven’t heard about that much in 15 or more years. (Psst, they use paper money too)

Hyperinflation is usually just a brief saga only rarely perpetuated for long periods of time, as the results of it’s ruination are too much for any nation.

The ultimate basketcase so far in the 21st century is Zimbabwe, which just printed a $5 Billion banknote, and where $10 Million may or may not be enough for a soda.

Venezuela currently has high inflation:
http://www.bloomberg.com/apps/news?pid=20601086&sid=aNflEEvxNj8I&refer=latin_america

Argentina may default on its debt again: http://www.forbes.com/feeds/ap/2008/06/25/ap5152682.html

Brazil has high inflation:
http://www.bloomberg.com/apps/news?pid=20601086&sid=aflfdEYMVdtI&refer=latin_america

and so on.

“…As US hegemony in Latin America becomes less profound and pervasive, Latin America’s local brand of neo-liberalism expands and goes global. The onset of the US recession and financial crisis has little or no effect in slowing Latin America’s export boom, demonstrating the growing de-coupling of the two regions’ economies, rendering obsolete the long-standing cliché…”When the US sneezes, Latin America catches pneumonia….”

http://www.globalresearch.ca/index.php?context=va&aid=9475
June 30, 2008

And what about the Argentine economic crisis from 1999 -2002?

There are bright spots in South America: Brazil, Columbia, Bolivia

But some SA countries are still ringing up 14% inflation/yr.

‘Since it has no benefit, why engage in such a system?’

‘Cause the shoe store won’t take payment in tadpoles. And don’t think I haven’t tried, either.

I do not know anyone that is getting any “cost of living” wage increases this year.

For hyperinflation, wages have to be going up as well.

I think wages are going down - not up.

Where will everyone get the the money to fill up their wheelbarrows??

Why should wages go up in the midst of hyperinflation?

Many consumer products (oil & food) have gone up demonstrably
and people still haven’t figured out what sort of Mad Hatter ride they are in for…

You think I don’t understand this?

My response was directed to Joey.

Let that float, and you would have a system indistinguishable from gold.

It would be better for sure. Arguably still weaker than gold, but for our purposes and the sake of argument I’ll agree to that statement.

One issue that still remains, and the reason for many gold advocates, is that political winds can change. It may be possible to have a central monetary authority that acts responsibly today, but there is no gaurantee of that continuing tomorrow. Fiat currency is by fiat. As long as a single body has the power to control the currency for “good” it also has the power to control it for “bad”.

A gold backed currency helps by taking the necessity of “responsible management” out of the equation. Why should we depend on responsible management of our money by a bunch of politicos influenced by a whole array of things on a regular basis, when we can just instead implement a currency that is virtually immune to those political forces.

Your argument doesn’t hold because as has been demonstrated by numerous countries over the ages, going “off” the gold standard is pretty much a tradition too.

The point is that fiscal restraint ain’t gonna happen.

You may think your gold is a panacea but a determined government will go off of it when it wants to.

You may think your gold is a panacea but a determined government will go off of it when it wants to.

Actually, I think we agree on this point. I’m not sure what I said indicates a panacea. I’m not saying gold is a panacea to anything, since on it’s own it’s just a lump of metal. I said it helps, but I never said it’s a fix all.

I’m just saying that maintaining a gold standard does help restrain government fiscally. However, as you point out, when you have a cetral authority, they get to make the rules. So if they are able to choose a gold standard then they can unchoose it as well (maybe They shouldn’t have the power to choose…).

What would be even better is a decentralized monetary system. However, I think many gold-standard advocates (myself included) advocate a gold standard in recognition of the political impossibility of a decentralized monetary system.

We have had decentralized systems before. We have even had decentralized systems on a gold standard.

So has Europe.

I suggest you study both the Continental and the Confederate systems, the former being immortalized as “not worth a continental”, and the latter ending up with most of the gold in Europe.

Happy happy, joy joy.

About 25 years ago, a veritable lode of Confederacy Bonds emerged out of the UK, as they had been backing the wrong side, and these tens of thousands of these attractive looking bonds were sold for around $15 a bond, en masse.

http://www.civilwarmall.com/bookseller/images/500Bond.jpg

It took awhile, but the UK salvaged a few Cents on the Dollar, of their investment, in the Confederacy.

All monetary systems fail.

yay!

I think it was best said that the free market will choose a gold/silver money standard and that such a standard is the result of an honest society.

No government enforced “standard” whether gold, fractional reserve, highly regulated, fiat, or monopoly money can succeed in the absence of an honest society.

Many advocates of the Gold Standard think that it will solve societies ills.

First you have to fix society, then a gold/silver/oil standard will emerge as the only money freely accepted by all parties without the use of force.

Our banking industry cannot even offer Gold/Silver ETF without naked shorting and short selling. Naked shorting IS exactly what Fiat / fractional reserve lending is!

You will NEVER “fix” society. It’s exactly that kinda thinking that sets you wrong (both towards the extreme left and the extreme right.)

Humans come in all flavors from naïvely good to irredeemably evil. That’s what makes them human.

So you can sit around waiting but I’m not holding my breath.

I agree than you cannot “fix” society except through voluntary education and changing your own habits. I was merely pointing out that gold standard is a reflection of a free society with integrity and fiat money is a reflection of a corrupt society where certain individuals are allowed to steal from others by printing more money.

A society that can maintain a gold standard (without government force) is an educated and honest society. Just like they say that a population gets the government they “deserve” they also get the monetary policy they “deserve”. This is not to say that every individual deserves that monetary policy, but the lack of wisdom and understanding of the average citizen will ultimately ruin the average citizen.

Gold/Silver == Economic Freedom, Fiat == Economic Slavery.

Please don’t put me on the “extreme left” or “extreme right” because I am 100% against all forms of government force, taxation, and regulation.

Whatever.

You can bandy about the slogans about economic freedom and slavery but I have given clear data about how even in the presence of a gold standard, credit was expanded beyond reason, and how it collapsed.

You seem to believe in magic. That your fellow humans will all turn decent some day, that they will all bandy around some putative system that they will never exploit, and it will be all reasonable, and all the bankers will be honest, and everyone will dance forever in the Garden of Eden.

If there were a gold standard, while my competitors around me did the “full reserve” thing, I’d expand credit like crazy, bribe everyone in sight including the “gold inspectors”, move my gold abroad, and let the system collapse behind me.

And guess what? That’s exactly what happened in the 19th century.

The human instinct wins out. Every single time.

If there are a buncha sheep, someone will shear them silly. And no bleedin’ gold standard will ever come in the way of that.

Why hasn’t gold kept up with inflation since the 70’s? (Should be over $3,000/ounce)

I would say that the high interest rates of Mr. Volcker may have had a hand in that, and the world in general had faith in the USD after that. But I think that its worth remembering that gold was as expensive back then in nominal dollars as it is today, meaning it rose much higher than it is now. Once the 15% interest rates kicked in the gold bubble popped.

I suppose once the stock market crashes that perhaps the Fed will focus on inflation instead of propping up the market. Once that happens I would expect gold to decrease in price.

Today a troy ounce of gold will buy me just under 200 gallons of gasoline, just as it did in the days leading up to 9/11, when it was worth $300 an ounce.

Imagine that, a 3-fold increase in the price of gold, and yet it remains constant with the price of oil, never changing.

Interest rates mean little, when most people can’t qualify for loans.

Wages have been flat, because Asian rates of pay are so very low in comparison to our wages and the only jobs of ours they can’t take over, tend to be the lowest paying ones in the service industry.

Bingo, Ben!

The point is that it’s easy to “explain away” the stuff via conspiracy stuff. Government keeping down the price of gold, blah blah blah.

These are not real answers.

The thing about this debate is, it was exactly the same the first time I heard it many years ago, when I bought my first gold coin. I can still not get a straight answer to just a few questions;

This is definitely a set of questions I hear a lot. When did you get your first ounce of AU>?

Why hasn’t gold kept up with inflation since the 70’s? (Should be over $3,000/ounce)

I think it matters greatly on supply here. We do know that the world’s governments do have a significant supply of gold. There have been rumors, some confirmed, about how the governments were able to lease the gold at ridiculously low terms to keep the price depreciated. I’m not sure I buy this, but it would probably keep the gold price low, at least for awhile. Remember, we’ve only been off a partial-gold-standard for 37 years. Not even a generation, Biblically-speaking.

Why are interest rates so low?

Money multiplier effect, Ben! If you could use $100 to loan out $1000 at 6%, you’d do it. If you could BORROW $100 at 2% to lend $1000 at 6%, you’d do it. What I don’t understand is why the banks don’t borrow $100 at 2% and lend $1000 at 1%, because they’d STILL make more money than they have to pay out, unless the risk-for-default is low.

As long as the money multiplier effect is in effect, rates can stay very low, even lower than the FFR theoretically.

Why are wages flat and have been for 30 years?

Supply. Women went to work = increased supply of labor = decreased wages. People work more hours = increased demand to work = decreased wages. Lots of supply inputs.

These are pretty basic questions, that need to be resolved. And repeating Fed printing slogans and names like fiatscos does nothing to answer anything. I heard all that stuff in 1980!

So had I, well, late 80s when I hit about 15 years of age.

A lot of these problems depend NOT on the lack of a gold standard, but the lack of full reserve banking. By allowing the banks to create liquidity (bank-fiat), you’re allowing them to keep wages down, interest rates “low” and prices moving upward.

Sad, but true.

You don’t need full reserve banking if you let the short rate float.

If the short rate were floating, banks would truly have to compete for each marginal dollar, and you would end up with a system indistinguishable from a gold standard.

But please don’t let facts interfere with your opinions.

Incidentally, your respone to the idea of a gold standard, i.e. that govts can choose to move away from it, also applies to your position of allowing the short rate to float. They can move away from that and back to a manipulated system as well. And while either a gold standard or floating rate would help with fiscal responsibility, it seems we both agree that a central authority is likely to want to manipulate the currency at some point or other.

It seems to me that centralized money control inevitably leads to a misallocation of resources on a very, very large scale.

You think I don’t understand this?

Now, you’re singing my song.

There are NO perfect systems so quit harping about the gold standard, and start learning how to understand the nexus of money and credit.

With or without the gold standard, the game is still the same as it always was, say, during the rule of the Medicis.

Who needs a Gold Standard?

We’ve been without one for 75 years now, and so far, so good.

The Continentals and the Confederates were also, putatively, on your oh-so-beloved, gold standard.

So were the Florentines. Didn’t stop their credit-based prestiti from devaluing either. Twice. Once at gunpoint.

Where was your “precious” gold then?

Why hasn’t gold kept up with inflation since the 70’s? (Should be over $3,000/ounce)
My take, as an asset class it went out of favor after the Fed interest rate spikes of Volcker. Gold doesn’t pay dividends or interest, and a shift into equities during the Regan years was due to the economic expansion of the time. I also think the world never doubted the reserve status of the US dollar during the 80’s and much of the 90’s. Confidence is key…

Why are interest rates so low?
Could be too much money chasing the bond market. Given the expansion of the global monetary base and the penchant for foreign central banks to buy bonds, that has driven long-term yields down below what one would expect given expectations for inflation.

Why are wages flat and have been for 30 years?
Free trade/Globalization, the decline of bargaining power (i.e. decline of Unions), and the deflationary impact of technology on manufacturing and services (i.e. increased productivity).

It is also very probable that all of the above are interlinked into a feedback loop where flat or declining wages and FCB buying of bonds have lulled market participants into a false sense of “low inflation expectations” and that we just haven’t seen the jump in Gold prices yet (meaning maybe $3000/oz is coming). I know I was expecting a stock market meltdown last year, and here it is June and we’re finanlly entering bear market territory. Same with housing prices… taking way longer to decline than I expected.

Just my 2 ¢ … that and $1.48 might get you a cup of coffee (unless inflation has pushed that up too).

Faster,

I wish you knew what you were talking about…

The first Gold and Silver coins were issued by our government in 1794, about 15 years after Continental Currency hyperinflation period.

The Confederacy never issued Gold coins (unlike the Federal Government, which struck them from 1861 to 1865, without missing a beat) and their currency had no backing whatsoever aside from blind faith.

The banks were backed by gold, supposedly. Clearly, they were not. They claimed they were but there was no proof.

And the Confederates were backed by gold too. The same stuff that got shipped to Europe as payment upfront for the arms while telling everyone how well they were “capitalized”.

Your, monomaniacal fervor notwithstanding, I have seen no data in the last 2000 years that supports this ridiculous gold fantasy. All I have seen is the same BS, gold or no gold.

I might as well go with the simpler version. No gold.

I might as well go with the simpler version. No gold.

I guess that’s where you and I diverge. I consider gold (or certificates for gold or digital images for gold or whatever) to be simpler. Fiat money is a complex fantasy, it only seems simple when you are in the midst of it’s grasp.

And one final consideration, it seems that most of your beef with the idea of a hard money standard is not with the money itself, but with the underlying institution (dishonest govt’s or whatever form it takes). While pertinent, it’s not fair to evaluate one form of money in the context of the malintent of central authority and evaluate the other without that context.

At least, that’s what I percieve you to be doing. You dismiss gold (or even floating currency if you are true to your logic, as we agreed on above) as ridiculous because it’s impossible to achieve the degree of discipline needed within the context of the humans that run the place, and at the same time accept fiat money as the only alternative, when in fact it’s no alternative at all.

At best, the choice of fiat is no more stable than a hard money or floating standard and at worst it’s much less stable.

We basically agree.

Even if there is a slight degree of difference in emphasis.

My point is simple. I’ll take any system, any system at all. I’m not terribly chuffed either way. I’ll figure out how to get my money from A to B.

If the freakin’ system changes its rules, so be it too. We all anticipated the Fed bailing out Wall Street, didn’t we?

If that means “gold”, so be it. If that means “not gold”, so be it too.

These purist, idealistic arguments are boring and irrelevant.

Faster…

You still haven’t a clue of what are you talking about in regards to Continental Currency and Confederate Currency.

Want to give it another go?

I have a really clear clue.

I don’t believe in gold. I want to be the shyster that f*cks over all the other believers in gold.

Deposit it here, mindless morons.

I may or may not store MY wealth in gold. I expand credit and default.

Sounds good, paisano?

Faster,

I’m disappointed that you pulled a ‘hannity’ and started bullying the conversation, in a curious attempt to not admit you are dead wrong about something you know nothing about, as it turns out.

Pull a $20 out of your wallet and give it a one minute stare, and tell me why it’s worth $20, other than the fact that other people will accept it as payment for goods or services?

The IRS and the California Franchise Tax Board only takes payment in dollar-denominated instruments.

THAT is the foundational fact as to why a piece of paper is worth $20.

If people will accept it as payment for goods and services then nothing else about it is of any importance.

Keep the blind faith.

I’m keeping the faith but it’s not blind.

When conditions warrant moving out of cash and into something else … such as stocks …then I’ll make the move.

Until then holding dollars works quite well for me.

Amen.

These gold bugs seem to have a certain purist streak. It’s this or nothing else. They are the same people that demand absolute certainty where none exists.

No fluidity in their thought process. As circumstances change, I move my money around. What else would one do?

If people will accept it as payment for goods and services then nothing else about it is of any importance. ”

LOL. Oh, they will always accept them, in greater and greater numbers for everything you buy. They can print faster than you can hoard.

If people will accept it as payment for goods and services then nothing else about it is of any importance.

The other important point is whether people will continue to accept it in the future (and to what degree). This is directly pertinent for anyone with a desire to store some wealth for any future date. It is in this regard that advocates of strong money rightly dismiss paper/fiat money.

Political whims can influence whether people will continue to accept dollars. Those politics can come in the form of foreign relations or politicos counterfitting money to support their spending habits. Historically, gold is not subject to those whimsical forces.

If someone invented a wand that would magically create gold out of thin air, no doubt that the value of gold would drop and potentially approach zero (depending on how the wand was used/distributed). However, until that happens, gold is historically the best store of wealth while fiat money is well-established to lose value consistantly over time.

Gold was fungible when we had a gold standard. Now, not so much. Like diamonds, art collections, Italian sports cars and houses, it is as good as money only in the hands of people who view it as such. In mainstream American society, that perception is relatively rare, though in currency markets internationally that might still be the case.

Ive decided to get in to good the easy way.
http://www.legendsofamerica.com

“These gold bugs seem to have a certain purist streak.”

It’s called fundamentalism. It’s more usually associated with certain religious movements, and not without good reason, but really it’s just a basic human trait that can show up anywhere. There can still be lots of truth to be found within a movement that turns fundamentalist. Though IMHO the prevailing dogmas eventually get to a point that dealing with the true believers isn’t worth the bother.

Should read “gold the easy way”.
http://www.legendsofamerica.com/CA-LostMines

I went to a movie a couple of weeks ago. I forked over $8.50 and received in turn a rectangular piece of paper with some writing on it. I wasn’t at all disturbed by this but apparantly there are some on this blog that think I should have been.

I then walked several feet where I encountered a person who took from me this rectangular piece of paper and promptly tore it in half. Was I outraged? Not at all, although probably some readers here think I should have been.

Then I sat down and watched a movie.

The point? The ticket, although merely of paper with writing on it, had value - a value not inherent in itself but by what it could be exchanged for, in this case a movie.

Same with our dollars. The value of our dollars lies in what each of them can be exchanged for, which is a dollar’s worth of goods and services.

It’s called fundamentalism.

Yep, bingo.

As I pointed out above, going “off” the gold standard is also a tradition.

I have a wall full of boring books that talk about the history of interest rates, and how governments went off the gold standard when it suited them. These facts don’t matter. That it has happened repeatedly through history doesn’t matter. Nothing matters.

Gold is the Sweet Baby Jeebus and that’s all there is to it.

As I once told my dad about this very subject, I have thrown facts at you, and all you can throw back is the same tired opinion with no facts to back it up. He shut up after that never to bring it up again.

DUNG

Speaking of currencies, there is a tv show tonight at 9pm pst, maybe History Channel, or maybe Discovery, whatever, it is about the history of DUNG worldwide then as currency and NOW as currency.

All kinds of Dung, speaking of our own currency.

“I went to a movie a couple of weeks ago. I forked over $8.50…”

You proved our point, but it still escapes you.

Actually, it proved nothing.

Movie prices in Manhattan which peaked at about $11.50 have edged their way back to $10.25. And they have reintroduced matin&ecute;es which have been MIA for as long as I can remember.

What, say you, O great masters of gold, did the laws of demand and supply prove immutable?

You proved our point, but it still escapes you.

watcher .. I believe the point was that when we agree on a currency, the currency has value based on the agreement alone.

It’s a barter society. I want to see a movie. I promise to walk your dog all next week and in return you give me one ticket to your movie theater.

I fall ill and i trade the ticket for a cab ride home. The cabbie trades with a friend for a CD. The friend exchanges it for bread at the store and the storekeeper sees the movie.

There’s really no need for paper theater tickets to be backed by anything more than our mutual agreement. The little piece of paper has genuine value because we agree it has value.

I went to a movie a couple of weeks ago. I forked over $8.50 and received in turn a rectangular piece of paper with some writing on it. I wasn’t at all disturbed by this but apparantly there are some on this blog that think I should have been.

I then walked several feet where I encountered a person who took from me this rectangular piece of paper and promptly tore it in half. Was I outraged? Not at all, although probably some readers here think I should have been.

Then I sat down and watched a movie.

The point? The ticket, although merely of paper with writing on it, had value - a value not inherent in itself but by what it could be exchanged for, in this case a movie.

Same with our dollars. The value of our dollars lies in what each of them can be exchanged for, which is a dollar’s worth of goods and services.

The problem with this gold bug argument (on both sides) is that we’re not acknowledging the context of the medium exchange.

In the existing age / context - a stable socio economic system - gold in reality has very little intrinsic value. It has some, for electrical components and for jewelry, but that by itself is probably worth only about $100 or so an ounce.

Most gold bugs don’t save gold for use in this environment - at least that’s the case with me anyhow, and I think with most others who own gold. We save it for use in extremely unstable economic and/or political conditions - e.g. revolutions or hyperinflation or the like. The timeframe of such conditions is very uncertain - it may be 2 years from now, or may be 200 years from now. Almost certainly it will happen at some point, in any given society. The big question is how close we are to that point. The perception of that closeness is what drives the price of gold, for the most part (in addition to other occasional factors affection some portion of supply).

Now back to your movie ticket example. A more apt analogy would be - what if the following happened?:

- You had pre-purchased 10 years supply of movie tickets (e.g. in the form of gift certificates) to Theater X. You’re a really big movie fan, and knew you’d end up using them.

- After 2 years Theater X went out of business, say the theater burned down or went bankrupt or whatever.

- Movie Theater Y down the street won’t accept your pre-purchased tickets for Movie Theater X. Before Theater X went out of business Theater Y would buy them for say 80% face value, since they knew they could re-sell them for 90% of face value, but now that X is out of business, they’re worthless and thus Y won’t pay a penny for them.

Now how do you feel about the value of those Theater X paper tickets?

Sure the chances of Theater X going out of business are slim - but if it does you’re screwed. On any given day Theater X’s tickets are certainly worth their face value - if you buy them that day. Pre-buying them in large quantities is most likely safe - chance are Theater X won’t really be going out of business - but would you really want to invest all of your life savings in that bet?

Isn’t the paper ticket backed by one viewing of a movie?

Further more, the situation you describe could conceivably happen. And it’s plausible because the ticket is backed by something of value other than just of trade value.

But as soon as the next potential recipient determines the ticket to be worthless, say it has an expiration date by which the movie must be seen, and to the extent that everyone also agrees (or gradually starts to agree) the ticket is worthless, it actually becomes (or starts to become) worthless.

In short, your analogy would be more appropriate if we then imagine that the ticket has expired, but is still in this “musical chairs” of trade. At some point the music will stop and everyone will realize it’s just a worthless piece of paper with the ONLY value being for trade based on value for trade, etc. It used to have value outside that of just currency but now it doesn’t.

If I’m gonna be cryogenically preserved and re-awakened in 10,000 years… please stuff some gold coins in my pockets. Otherwise, I’m gonna live in the world I’ve got and keep my head on the proverbial swivel.

- You had pre-purchased 10 years supply of movie tickets (e.g. in the form of gift certificates) to Theater X.

packman.. pre-purchased them with what?

If the theater went out of business, you’d supposedly recover whatever you originally traded for the unused tickets’ value.

If i promise to mow your lawn for the next 50 years in exchange for some amount of money or trade, would you not be interested in how old i was? When i said 65, would you wonder if you’d ever get your “money’s worth” and if not, turn down the proposed trade?

When you buy 10 years of tickets ahead of time, you’d first want assurances the theater would be around that long. If such assurances weren’t available, put the money in escrow.. or discount the value of the tickets due to high risk.. or something..

Anyway, we DO have a common currency so that if a business fails the “tickets” can be exchanged for anything… problem solved.

But gold too is only worth something if someone wants it. Why is the current trend toward people turning in their gold for cash, when dollars are supposed to be the poorer investment.

If I want to really prepare for truly apocalyptic hard times, I’m going to put in two enormous storage tanks in my yard - one for gasoline, the other for water. And oh yes, the veggies will be stocked. And there will be solar panels too. Guns, yes guns, although I’ve never owned any to date. I could go on, probably about 100 more staples, before I got to considering gold, if ever. Lead would be higher on the list, I can make batteries out of it.

I doubt if anyone here cares whether others choose gold as part of their preparation strategy for hard times. I sure don’t. We each get to pick our own poison, for better or worse, no one really knows what it really will be like if everything falls apart. It’s the preachyness about it that gets at me after a while. Kind of like listening to one of those “evangs”, I think someone here has called them. They love to talk about this kind of stuff. Especially the “fundies”.

Isn’t the paper ticket backed by one viewing of a movie?

Exactly. What was purchased was the right to see a movie, not a paper. The ticket is merely a recept that said puchase was made.

My father’s family had a stash of Gold coins hidden away, when he grew up in occupied Europe during World War 2…

The 2 forms of money at that time were Gold and cigarettes, and one could buy almost anything if you had one or the other, or both.

My father went to university in Switzerland soon after the war and received his degree in economics, while the rest of Europe was full of hungry D.P.’s (displaced persons) wondering where the next meal was coming from, my dad was skiing on the weekends.

He would have been just another one of around 10 million D.P.’s, if his family hadn’t had foresight.

Isn’t the paper ticket backed by one viewing of a movie?

Originally, yes… But as soon as the cabbie accepted it as the fair value of a cab ride, it is backed by both a movie viewing or a cab ride.
The market has decided that movie = cab ride = ticket.

As more trades are agreed upon, the theater ticket is accepted as being fairly exchanged for a wider variety of goods and services. It could be (has been) redeemed for any one of them.
The ticket will be a useful, convenient medium of exchange for as long as we remain in agreement as to it’s value… It’s value being determined by what people are willing to exchange for it.

iftheshoefits .. i agree.

Goldbugs are preparing for a certain degree of mayhem.. a particular amount of armageddon.. for a managable portion of apocalypse.

Gold is not the wisest hedge against too much or too little disaster.

Would you consider World War 2, too much or too little disaster?

Yep bluprint - you read my mind (guessing you posted before reading mine). The movie ticket analogy given by combotechie has the flaw in that it assumes you’re only holding the currency for a very short time - in the case of a movie ticket it’s usually only about 30 seconds.

Most people hold $$ (in the form of cash, CD’s, savings accounts, checking accounts, etc.) for years and tens of years, not 30 seconds.

Certainly there’s very little guarantee that if I buy a movie ticket today, that it’ll be worth one movie viewing 40 years from now when I’m in retirement. (assuming it’s a “generic” ticket good for any movie not just one specific movie). It might, but I wouldn’t want to bank my life savings in movie tickets on it.

But gold too is only worth something if someone wants it. Why is the current trend toward people turning in their gold for cash, when dollars are supposed to be the poorer investment.

If I want to really prepare for truly apocalyptic hard times, I’m going to put in two enormous storage tanks in my yard - one for gasoline, the other for water. And oh yes, the veggies will be stocked. And there will be solar panels too. Guns, yes guns, although I’ve never owned any to date. I could go on, probably about 100 more staples, before I got to considering gold, if ever. Lead would be higher on the list, I can make batteries out of it.

What if your generator or car breaks and you have to buy a new one or fix it? Is it easier to haul 400 lbs of lead to make this purchase, or one ounce of gold? (assuming that $$ are no longer an option)

Point is that gold is just the best medium of currency exchange if paper or digital is not an option. Or you can stay home and live on your veggie garden, but that’s not much of a life. See aladin’s comments on WW2 above - it’s not an outlandish possibility. Not necessarily likely in the near future - but not outlandish.

“Goldbugs are preparing for a certain degree of mayhem.. a particular amount of armageddon.. for a managable portion of apocalypse.

Gold is not the wisest hedge against too much or too little disaster.”

Joey, that’s probably the most sensible defense of “gold for hard times” that I’ve ever heard. I can relate to that, particularly if I was living in a city, without arable land and 100% dependent on some sort of currency for obtaining everything I needed in life. We’ve chosen to own land instead, grow our own food, etc. Barter already is a way of life here, and if the currency were to fail, barter and pulling together as a community is our fallback position.

I don’t have blind faith in the currency. I certainly am taking precautions wrt savings in banks, to spread the risk. But I’m not persuaded that the currency itself is in danger of total failure. I could be wrong, and I’m free to change my opinion if facts indicate otherwise.

My biggest worry? We’re in the west, and I don’t trust that water will remain available for anything other than cooking and showering. We may relocate back east as a result.

Originally, yes… But as soon as the cabbie accepted it as the fair value of a cab ride, it is backed by both a movie viewing or a cab ride.
The market has decided that movie = cab ride = ticket.

The market may have determined that the values are the same, but “backing” has a specific meaning. In this case, the ticket is backed by a movie, as long as you trust the movie theatre will redeem the ticket. It is not backed by a cab ride.

In this case, the ticket is backed by a movie, as long as you trust the movie theatre will redeem the ticket. It is not backed by a cab ride

The movie ticket is primarily backed by the movie viewing, but what is backing the ticket when a movie is not available?

If the movie theater cannot redeem my ticket, I certainly am entitled to and will demand something of equal value… and it can’t be a movie because there is no movie.

Is there anything we know of that could fairly replace the value of a lost movie?

“Tickets” are ultimately backed by a promise to repay some agreed upon value. The value might manifest itself in any form. Do we agree the cab ride and movie are of equal value?

Out of pure coincidence I have a business-card looking thing to see 20 movies at the Joy Theater in Tigard, Oregon. I believe there are 19 holes left to punch (movies to watch). It’s from 1982 and I’ll sell it to ya real cheap.

Joy Theater in Tigard, Oregon?

It’s still there.. why cheap?

Tigard Joy Theatre
503-653-9999
Sex and the City (R: Restricted, 145)
Showtimes
5:00 - 7:35

That explains why cheap.. one movie.. and a lame girlie flick at that..

Sure, in this case the ride and movie are of equal value, but that doesn’t mean the ticket is backed by all things of that value.

Consider that valuations change. Let’s say tomorrow the value of a cab ride has dimished for some reason so that no one would accept a cab ride for a movie, as a movie is now worth two cab rides. No matter what happens, as long as the theatre continues to act in good faith, that ticket will always get a movie. (the issue of timing of when a movie is available is a contingency built into the value of the ticket). That is the significance of backing.

Similarly, if you had a note for some amount of gold, and the institution backing the note remains good, no matter what price other things get in terms of gold, the note is “backed” by only the gold as it is always worth the same amount over time when denominated in gold, but may be worth a variable amount of other things over time when denominated in those other things.

“backing” in this context has a specific meaning and shouldn’t be manipulated.

Similarly, if you had a note for some amount of gold, and the institution backing the note remains good,..

Interesting.. You say that it is the institution which backs the gold-note.. a freudian slip.

I happen to agree. Ultimately, a currency is backed by something much more reliable and stable than stuff locked away in vaults.

It wasn’t a slip. If you have a note of any sort, it’s value resides partly in the thing/person/institution standing behind the note. If the theatre is sound, the ticket has a certain value, if the theatre is on the verge of closing down/bankruptcy, the value of the ticket is less since the likely hood of being able to redeem the ticket is lessened.

The same holds true with bonds or with gold notes.

Though not with physical gold - it is its own backing.

Though not with physical gold - it is its own backing.

Why isn’t it obvious to goldbugs that it is they who back gold?

Things have no more and no less worth than what we agree to bestow upon them.

‘Who wants to flee? Way too much work.

Nah, I’ll just hunker down if it gets bad, with my home-grown food, and firewood to stay warm. Does gold work well as plant food? I might want some if it does.’

Now, THERE you go! Speaking of, I am going to get another load of firewood this weekend, and stack it up all nice and tidy so it can dry out in time for winter. It’s green wood, at this time, and also a lot cheaper to get, at this time of year. My house is little, and last winter I mostly heated with my wood stove. I’d get home and sit on my squashy leather couch and wiggle my toes into my Persian carpet and and read and imbibe hot toddies by the fire while the rain drummed down. Does life get better? Nope.

Amen.

I would think that drying out firewood in the PNW, particularly out on the peninsula could be a challenge at times. Although you get to burn woods that burn a lot slower than paper. Guess it all evens out. Nothin’ heats better than a wood stove.

imbibe hot toddies

hotty toddy, gosh all mighty, who in the hell are we? hey
flim flam bim bam ole’ miss by damn.

go pigs. I don’t like the rebs but partying in the grove rocks.

‘hotty toddy, gosh all mighty, who in the hell are we? hey
flim flam bim bam ole’ miss by damn.

go pigs. I don’t like the rebs but partying in the grove rocks.’

What ARE you blathering about? Is that some sort of olden time hot-toddy disrespecting song?
Hot toddies are good! I’ll fight anyone who says they aren’t. Holding a hot toddy in one hand, too!

I’m a good southern boy. We breathe football.

‘I’m a good southern boy. We breathe football.’

Well, okay, then. For a minute there I thought you was disrespecting hot toddies.
Whew!

Too bad you were not posting circa 2005 when this blog was infested with dumb trolls. I had some fun times back then enlightening them on why all real estate ain’t local, and other Econ 01 concepts.

I couldn’t.

I was “reading” since late 2003-early 2004 (the old blog) but I couldn’t post back then.

Don’t get me started on why not. Oh well.

The question is, when should I dump my oil stocks. I have CVX, COP, and XOM. Have had them for about 2 years.

COP is up 32.86% in the past two years
XOM is up 30%
CVX is up 40.02%

What am I afraid of? The “Windfall Profits Tax” that Barack Hussein Obama is pushing. I’m not sure if that will cause a collapse in oil company stock prices.

Doesn’t he realize he’ll just be taking money from savers and investors–peoples 401K plans–who have this stock in their portfolios? Is he really too stupid to know what a publicly traded company is?

Of course, McCain also has wacky ideas, like the gas tax holiday.

“Doesn’t he realize he’ll just be taking money from savers and investors–peoples 401K plans–who have this stock in their portfolios? Is he really too stupid to know what a publicly traded company is?”

1) No.
2) Yes.

‘I’m gonna steal it.’

I’m honored.

You should tell the Republicans that you are a ‘family’ to elicit their sympathy and get a tax writeoff too.

That’s the whole point of libertarianism. We don’t impose on each other.

To your religion, I call hoo-ey.

I believe in f*cking. If it moves, I f*ck it; if it doesn’t move, I might f*ck it the same.

Your silly laws and church vows don’t mean jack shee-yat to me. I’d bed someone, married or unmarried, possibly of either sex, and I have.

That’s what libertarian means. I don’t give a flying f*ck.

libertarianism doesn’t preclude common decency either.

Now, now, Fasty. Your response makes you seem grumpy. And also like you habitually jump on turnips and squirrels and sushi bars and other stationary or semi-stationary objects, in some sort of wild and unseemly s*exual delirium. I mean, show some discrimination, man! Can a turnip really be ‘all that’? I wouldn’t know, as a turnip is one of the very few things I haven’t tried.
But my points are, bluprint is actually very open-minded as far as ‘Christians’ go. I mean, look at him, he’s all attempting to be understanding and tolerant! That’s just cute. I approve of that.
I had another point, but I forgot it. Anyway, I’m busy—I gotta go find a turnip.

Nothing wrong with common decency. Believe it in myself.

That’s the beauty of libertarianism. You get to exploit common decency, and there’s not a whole lot they can do about it.

Now, now, Fasty. Your response makes you seem grumpy. And also like you habitually jump on turnips and squirrels and sushi bars and other stationary or semi-stationary objects, in some sort of wild and unseemly s**xual delirium. I mean, show some discrimination, man! Can a turnip really be ‘all that’? I wouldn’t know, as a turnip is one of the very few things I haven’t tried.
But my point is, bluprint is actually very open-minded as far as ‘Christians’ go. Look, he’s attempting to be understanding and all tolerant like! That’s just cute.
I had another point, but I forgot it. Anyway, I’m busy—I gotta go find a turnip.

( sorry if this is a repost. My first post hasn’t shown up in a half hour. Maybe because of the ‘s’ word in it. ‘S’ word! ‘S’ word! Huh? Huh? That’s right.)

Long ago, I once had to peel a buncha turnips for a broth. I must admit that I didn’t know a whole lot about turnips back then. It was my first encounter with turnips.

Don’t blame me. Who wasn’t stupid, once upon a time?

That broth was in winter, and it rocked something fierce.

You will not hear anything against turnips from me. THE END. I stick by my turnips now.

Everyone has a first time with turnips. Just ask them to be gentle with you. Hahaha!

Anyway, I’m not speaking against turnips. I love turnips. Tasty greens, very nourishing vegetables, easy to grow and they store great. Turnips are super–dooper.
When I first got to Olympia I rented on the other side of the peninsula from where I am now, a house over on Eld Inlet. It was a short-term rental to end in early summer when the owners came up from CA, why I got such good rates, and I did what I always did, which is, I started an early spring garden, heavy on the cold weather crops; chard, peas, kale, so forth. I planted two packets of turnip seeds. Two packets. Two little packets. Two little TINY small packets of turnip seeds… three months later, when the owners came by to see how things were going I was able to point out the .5 metric tonnes of turnips growing in their front yard. You’d think they’d be grateful, right? I would be–Iike I said, turnips are great! But they were not that excited, strangely. They did like the hollyhocks, poppies, nigella and so on, and that mitigated the astounding turnip excess, in their minds.
Boy, did I eat a lot of turnips that spring.

Well, jeeze! I didn’t know turnips could grow like that! I’d only ever grown them in Utarrr, where they mostly behave themselves.
It was a learning experience for everyone.

Peas? Chard? Kale? Nigella?

DROOOOOOOOOOOOOOOOOOOOOOOOL!!!

I’ll take the turnips if it comes with that.

Yes, those cold weather crops are soooo good. I think I may love the cold weather crops best. Have you ever gone out to the snowy fields in December, all those neat long plowed sleeping furrows all covered up in white snow, and you in gloves and the breath steaming out your nose, and then you sweep the snow off of a big frosty lump and oh, joy! There’s a heap of kale, bowed under a crusty white blanket, but still tender and deep green? Man, that’s a good time!

I want some kale. Oh, and I want some snow, too, come to that.

Re vera, cara mea, mea nil refert.