Full Circle’s Mutterings on Money
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24-08-2016, 03:07 PM (This post was last modified: 24-08-2016 03:17 PM by Full Circle.)
RE: Full Circle’s Mutterings on Money
(24-08-2016 10:09 AM)Slowminded Wrote:  Thanks for the replay FC.

Just one more thing ( and please excuse my ignorance , I'm not an economist ) since dollar is not backed by gold , and as I understand US just prints more money to service it's debt and for other purposes , doesn't that devalues it? It kinda makes sense that other countries don't like this one bit and that they will look for other options because of that?

If some powerful countries like Russia and China start trading in currencies other then dollar and Arab countries start accepting payments for oil in currencies other then dollar would this become a problem for the US?

Your question is a good one and not easily answered in few words.

I’m no economist either, but I find finance extremely interesting so I read a lot about it. I had to go back and reacquaint myself with the history of the gold-standard and this piece is succinct and explains the history.
https://www.thebalance.com/what-is-the-h...rd-3306136

Most every country in the world prints its own money, or rather it used to until the Euro came about. Some countries around the world use the USD as their own and forgo the headache altogether! http://qz.com/260980/meet-the-countries-...-currency/.

The more money in circulation the more it devalues and drives up inflation. A simple way to think about it is the more common things are the less people value them, the more rare something is, the more valuable. It is a very delicate dance between interest rates, inflation and the money supply.

Money supply is measured as M1 and M2 https://www.federalreserve.gov/faqs/money_12845.htm this is how the US government calculates how much is in circulation. Suppose they want to prop up the dollar? They take money out of circulation. They wish to weaken the dollar? Put money back in circulation. This is easily done by changing what the Reserve Requirements are for financial institutions (dictated by the Federal Reserve Bank http://www.investopedia.com/university/thefed/fed1.asp).
The Federal Reserve Bank is the entity by which the US government establishes monetary policy.

Too much money = inflation. Too little = deflation. Just the right amount = lown inflation + growing economy.
http://www.investopedia.com/articles/inv...=0&o=40186

As for other countries accepting other currencies, they already do. The recent Brexit gives you a perfect view of how currencies, including gold, change in value relative to other currencies. The British pound as well as the Euro lost a good bit of value in comparison to other currencies when the Brexit was announced. No one likes uncertainty. The USD and the Yen gained in value and so did gold. If tomorrow something drastic happened to the US that worried investors they would immediately sell dollars and buy one of the other currencies or gold (or ammo or soup or whatever).

But let’s face it, currently the US is the biggest single economy in the world http://www.investopedia.com/articles/inv...nomies.asp with the most stable government (though the outcome of this year’s election may shake that up a bit) and has a formidable military force. Those three things make owning the USD a great place to store value.

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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24-08-2016, 03:14 PM
RE: Full Circle’s Mutterings on Money
(24-08-2016 07:10 AM)SYZ Wrote:  
(23-08-2016 09:32 PM)Full Circle Wrote:  The U.S. dollar has never been devalued...

This is not totally correct. The US dollar value was halved—almost overnight—against gold in the early 1930s. $40-ish versus $20-ish an ounce.

I am not aware of the US Government ever devaluing its own currency. Sure currencies change in relation to one another but unlike, say China, that until very recently did not allow its currency to float in the open markets the US, as far as I know, has never artificially controlled the value of the USD.

If you have a source stating it has I’d like to read it. Thumbsup

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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24-08-2016, 03:21 PM
RE: Full Circle’s Mutterings on Money
One more thing to add to how the Fed manipulates money supply and that is by increasing or decreasing the interest rate is charges private financial institutions.
http://www.investopedia.com/articles/eco...=0&o=40186

"The mechanics are relatively simple. By lowering interest rates, it becomes cheaper to borrow money and less lucrative to save, encouraging individuals and corporations to spend. So, as interest rates are lowered, savings decline, more money is borrowed, and more money is spent. Moreover, as borrowing increases, the total supply of money in the economy increases. So the end result of lowering interest rates is less savings, more money supply, more spending, and higher overall economic activity - a good side effect. (For related reading, see How Interest Rates Affect The Stock Market.)

On the other hand, lowering interest rates also tends to increase inflation. This is a negative side effect because the total supply of goods and services is essentially finite in the short term - and with more dollars chasing that finite set of products, prices go up. If inflation gets too high, then all sorts of unpleasant things happen to the economy. Therefore, the trick with interest rate manipulation is not to overdo it and inadvertently create spiraling inflation. This is easier said than done, but although this form of monetary policy is imperfect, it’s still better than no action at all."

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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24-08-2016, 04:07 PM
RE: Full Circle’s Mutterings on Money
Back in February I posted that IEX had applied to be an Exchange, this July they were approved.

http://www.wsj.com/articles/iex-gains-se...1466206325

Smile

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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30-08-2016, 10:10 PM
RE: Full Circle’s Mutterings on Money
(24-08-2016 03:14 PM)Full Circle Wrote:  If you have a source stating it has I’d like to read it. Thumbsup

Forbes: 12/09/2008.

Quote:In 1933, through a series of gold-related acts, culminating in the Gold Reserve Act of 1934, America realized a dollar devaluation of 41% when the price of gold was adjusted from $20.67 per ounce of gold to $35 per ounce.

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30-08-2016, 10:24 PM (This post was last modified: 30-08-2016 10:30 PM by Full Circle.)
RE: Full Circle’s Mutterings on Money
(30-08-2016 10:10 PM)SYZ Wrote:  
(24-08-2016 03:14 PM)Full Circle Wrote:  If you have a source stating it has I’d like to read it. Thumbsup

Forbes: 12/09/2008.

Quote:In 1933, through a series of gold-related acts, culminating in the Gold Reserve Act of 1934, America realized a dollar devaluation of 41% when the price of gold was adjusted from $20.67 per ounce of gold to $35 per ounce.

Thanks.

You were right. I even missed it on the very hyperlink I provided a few posts up. Blush

"On January 30, 1934, the Gold Reserve Act prohibited private ownership of gold, except under license. It allowed the government to pay its debts in dollars, not gold. The President was authorized to devalue the gold dollar by 40%. He increased the price of gold, which had been $20.67 per ounce for 100 years, to $35 per ounce. The government's gold reserves increased in valued from $4.033 billion to $7.348 billion. This effectively devalued the dollar by 60%. (Source: Bloomberg, How Franklin Roosevelt Secretly Ended the Gold Standard, March 21, 2013; FEE.org, Gold Policy in the 1930s)”

Basically by proclaiming that gold was more expensive it took more dollars to buy and ounce of gold, and at the time the dollar was backed/pegged to the price of an ounce of gold.

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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02-09-2016, 05:25 PM (This post was last modified: 02-09-2016 05:34 PM by Full Circle.)
RE: Full Circle’s Mutterings on Money
Home prices in every US county. The gif looks more like a tumor than anything else.

http://metrocosm.com/3d-map-us-real-estate/

Monroe County, Florida $405/sf Gasp

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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22-09-2016, 06:56 AM
RE: Full Circle’s Mutterings on Money
[Image: Screen-Shot-2016-09-21-at-10.36.03-AM.png]

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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22-09-2016, 07:01 AM
RE: Full Circle’s Mutterings on Money
(30-08-2016 10:24 PM)Full Circle Wrote:  
(30-08-2016 10:10 PM)SYZ Wrote:  Forbes: 12/09/2008.

Thanks.

You were right. I even missed it on the very hyperlink I provided a few posts up. Blush

"On January 30, 1934, the Gold Reserve Act prohibited private ownership of gold, except under license. It allowed the government to pay its debts in dollars, not gold. The President was authorized to devalue the gold dollar by 40%. He increased the price of gold, which had been $20.67 per ounce for 100 years, to $35 per ounce. The government's gold reserves increased in valued from $4.033 billion to $7.348 billion. This effectively devalued the dollar by 60%. (Source: Bloomberg, How Franklin Roosevelt Secretly Ended the Gold Standard, March 21, 2013; FEE.org, Gold Policy in the 1930s)”

Basically by proclaiming that gold was more expensive it took more dollars to buy and ounce of gold, and at the time the dollar was backed/pegged to the price of an ounce of gold.

There are those who might argue that the dollar was devalued again by Nixon in August 1971 when he took it "off the gold standard" (and there are nutty loons who, to this day, want that un-done, and the gold standard re-established). Laugh out load

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16-10-2016, 12:01 PM
RE: Full Circle’s Mutterings on Money
When money isn't real, an illuminating TEDx talk and how to educate the next generation on money.

When money is but an abstraction the human mind treats it very differently than when it is tangible and real. Great speaker too.




“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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