A New Kind of Money

[Alfonso Jones]

Then as we look at our wallets filled with Sheiks and Trojans we will know exactly what the banks and OPEC are doing to us.

Ba'al Chatzaf

Ye gods and small fish! Did anyone read this sentence? No more satire you you guys!

Ba'al Chatzaf

ROTFL.

Alfonso

[Michael Stuart Kelly]

Merlin,

I will have to read up on all this again and right now I don't have the time. I will point you to one of the sources I have read over the years (not the only one, but a very good one):

The Daily Reckoning

(The link goes directly to the gold section.)

I once read a good article from them detailing the different kinds of gold receipts that banks issue. It is probably archived on the linked site somewhere.

(As an aside, it has been a while since I have read my subscription emails from The Daily Reckoning, but I always get a kick out of The Mogambo Guru.)

Michael

[syrakusos]

Ye gods and small fish! Did anyone read this sentence? No more satire you you guys!

Ba'al Chatzaf

We don't pay that much attention to you. You also have a well established habit of hitting people over the head with your startlingly obvious ideas, like killing all Muslims or discovering that Ayn Rand once said something. So, when you amuse yourself with subtleties, the point is lost on us.

I do think that "Trojans" is a pretty dumb name for condoms. A few years back, I was subbing eighth grade science and one of the boys was passing a Trojan to a buddy and I said,"That's a dumb name for a condom because their walls were breached, right?" And there were giggles in the room because they got it. I didn't need to go into an extended monologue.

Edited January 27, 2008 by Michael E. Marotta

[syrakusos]

I'm pretty sure there'd be tax on the gold even if we exchanged ounce for ounce.

Never underestimate the willingness of the government to tax, but I am with Michael on this, based on what I know about real estate. One reason that people swap properties is to avoid the taxes. If trade a $10 million mall for a $10 million office building, there is no tax and both parties start over with the depreciations. So, I do not expect a general rule as to whether commodity swaps would or would not be taxable. You would have to read the relevant and applicable laws.

Edited January 27, 2008 by Michael E. Marotta

[syrakusos]

Obviously a bank could promise to only keep a depositor's gold in the vault and not lend it out. ... On the other hand, probably many depositors would prefer getting a positive return ....

I agree. Gold would work just like money... what a concept!

It cannot be said often enough, because conservatives are such idiots, but we do have a 100% convertible, gold-backed government currency, called the dollar. The US Mint strikes gold coins which it exchanges for paper dollars openly freely and at the market price. I know that you paranoids all prefer to be persecuted by the Trilateral Commission of Annuit Coeptis, but in this case, at least, you do have the freedoms you claim to dream of.

[syrakusos]

We acually have many currencies if you include ... all the IOU's out there, including treasury bonds, bonds of all kinds, stocks, safekeeping receipts, debentures,

Right you are, Michael! About 10 years ago, I heard Alan Greenspan on NPR or PRI saying that there were about 15 kinds of money, but that the Fed had models only for about eight or ten of them.

Also, you questioned whether a loan is an asset. Of course, double entry makes all assets liabilities and vice versa. The books have to balance. That said, you are right, commonly, we do not view credit card debt as "money." However, it works like money. Case in point would be the common transaction of goint to Walmart and buying a gift card for someone and putting it on your credit card. To the recipient of the card, it is money. In effect, all you did was lend them money from your own account, basically arbitrage for your Visa people, but the effect is the same as cash and cannot be distinguished from it.

I have recommended the ideas of E C RIEGEL here and elsewhere.

Edited January 27, 2008 by Michael E. Marotta

[tjohnson]

Money, like language, is symbolic. When the connection between the symbol and what it represents is not clear then the usefulness of the symbol is effected. The problem is not the symbolic nature of money it is the dangerous and irresponsible use of this symbol. Even gold is largely symbolic because we don't use gold (most of us), it only represents wealth and will only do so as long as the other guy acknowledges that.

[Michael Stuart Kelly]

I have recommended the ideas of E C RIEGEL here and elsewhere.

Michael,

There are several links to Riegel's works here on OL, including Riegel's progeny Greco, along with a poke in the ribs at you (without mentioning your name) for bashing the Money as Debt video while Greco endorsed it.

Michael

[Dragonfly]

It's Riegel, not Reigel.

[Michael Stuart Kelly]

Oops.

Thanks. I corrected it. "I" before "E" except after "Z," er... hmmmm...

Michael

[merjet]

Of course, double entry makes all assets liabilities and vice versa. The books have to balance.

The books have to balance, but that doesn't "make all assets liabilities and vice versa". The balancing equation is:

Assets = Liabilities + Equity. A person or business can have assets and zero liabilities.

If, hypothetically, a bank opened with a significant quantity of gold and made some loans, such loans would be against equity. On the other hand, if it took in a (non-equity) deposit, the assets and liabilities would increase by the same amount. If the bank then lent the same amount, the amount of assets and liabilities would not change. Only the makeup of assets would change -- part from actual gold to a promise to repay the gold.

Edited January 27, 2008 by Merlin Jetton