Some Tuesday humour

[Edward Boyes]

Hello MF,

for those with some interest in economics and some sarcasm, I have two clips about two unusual bankruptcies. The bankruptcy of the UK in 1931 and the United States in 1971. Most people believe that the US never went bankrupt. This is wrong. It did in 1971 when it defaulted on its obligation to exchange Federal Reserve Notes aka US Dollars into gold.

https://manxeconomics.wordpress.com/

[the stinking enigma]

You must be a barrel of laughs on a night out ed.

[Edward Boyes]

Thank you for your feed back.

 

[Mr. Sausages]

 Were you head boy at school?

[quilp]

Peter Pumpkinhead. 

[Neil Down]

40 minutes ago, Mr. Sausages said:

 Were you head boy at school?

I’ll bet he was a feckin prefect 

[Chinahand]

Rather odd as no one is on the gold standard these days.  Currencies are all fiat currencies.

Plus any gold bug needs to understand the Triffin Dilemma - there is a paradox at the centre of any gold standard system.

[Seagull]

3 minutes ago, Chinahand said:

Rather odd as no one is on the gold standard these days.  Currencies are all fiat currencies.

Plus any gold bug needs to understand the Triffin Dilemma - there is a paradox at the centre of any gold standard system.

Jesus, I was just going to say that. 

[Edward Boyes]

Yes, how could I forget to mention the Triffin Dilemma? It reminds me of month ends when I run out of cash. The Triffin Dilemma stems from a time when government overspending (world wars, Vietnam war) ruined public finances. Politicians were desperate for some backup to justify their profligacy. To me it is a piece of university propaganda.

The term "Gold Standard" is problematic. It tends to obscure the difference between money and currency. In today's world, fiat money/paper money is used as currency. But in reality it is a credit note, an IOU. You can check this with one look at a bank note. On it it says: "Promise to pay the bearer..." And guess who puts the wealth into this IOU. It is not the Bank of England. It is the population with its daily labour, producing goods and services that are then exchanged for the IOUs that the central bank produces. The bank note is actually a note that puts the people into debt first and is then used to pay these same people for their work. It is utterly wicked. And guess who has unlimited economic power over the populaton on this planet. It is not governments but the central banks and the commercial banks (who actually issue more IOUs than the central banks) who have the power to put us into debt on an unlimited scale.

Gold in contrast (and silver) is the only real money because it has no counter party. The value of a currency is tied to the fate of the issuer. Try to buy something with Saddam Hussein's money. Or with Reichsmark. The issuers are gone and so is the purchasing power of the "money". Paper currencies come and go. Gold has been a monetary asset for thousands of years. It is just obscured by the mainstream media and by politicians. It is often descibed as a relic of the past. Nothing could be further from the truth. In London at the LBMA, within a year, roughly 500,000 mt of gold claims are traded. This is a volume of $20,000,000,000,000. You may add a similar number for the COMEX, the US gold market. Not included is the turnover in all the other gold markets like Shanghai for example.