32 million dollar for a 8cm wide porcelain cup

Even more, I may be a treasure hunter, I may have made invetsments into a search, buying equipment and such. But againb, that also is not important.

Actually it is important, if you was then perhaps you would know what you are talking about instead of just spouting the complete nonsense that you are.

Finders, keepers.

Maybe in infant school that logic would gain some merit, but terms and conditions always apply in the real world.

[Oberon]

Originally Posted by Skybird

Speculating (or getting benefits from unexpected value rises), and putting savings aside as reserves for bad times and emergencies - ARE TWO TOTALLY DIFFERENT THINGS.

This is true, but buy using the money that you gain through speculation you can put this aside as a reserve. Who is to say that this man who paid $32m for this cup won't sell it on in five years for $50m and buy $18m worth of gold? The point is, is that the cup is an investment that he expects will pay dividends in the future. It's a bit like the stock exchange only marginally safer as unless a horde of Ming cups are uncovered, the value of the cup will increase as it gets older whereas shares will fluctuate.

Also, let'S say there were two or three hundred people interested in the auction at Sothebys, some in the hall, some others via telephone. These are met by several dozen million people in Britain alone who simply do not care one bit about that soup cup.

Again, not disagreeing, you'll note that I already said in my reply that 'Certainly in the grand scheme of things it's a very small number compared to the vast population of the planet' however it is still a very large business with a lot of money behind it.

No, FIAT money was not created by gold being overvalued, but becasue a gold-based currency is not available in unli8mited quantity, never. There my have been or may have not been a growth in general wealth, which only means that when the amount of currency tokens stays the same the prices must fall to reflect that growing welkath means a growing value of the currency of which then lesser quantity is needed to pay for a given item.
FIAT money was created when gold items were stored in safes inside banks, and the receipts then were handed around instea dogf the (heavier gold). Banks then learned that they could strart to make deals with the stored gold, because they saw that normally not all customers simultaneously demanded their gold back. By taking interests for leasing gold around, additional abstract value was created for which no material basis existed. By this additional value, the existing currency however was devalued already, sinc ehtis pratcice led to a rai8se in ciurculating paper receipts. The fractional reservre banking wasborn and installed by politicians. They saw that by this mechanism they could spend more money than there was existing, and that they could control and manipulate the price relations on the market by the amount of paper money money they created. Receipts for gold stored in safes were turned into banknotes, and the state secured a monopoly for printing these receipts/banknotes. Et voilá, there you are. Its the principle mechanism. Of course there were individual exceptions from this blueprint model. In America for example one or two states could not pay their tropps they sent into the civil war, they had run out of gold, and so the troops were payed with written bond certifications that the state owed the soldier so and so much, combined with the promise that after the war he would be able to change this sheet of paper for pure gold dollars. But it did not happen, instead said state(s) abandoned the former gold or silver dollar completely and introduced central banks and paper money. That way, the state could left it to not paying the troops with gold. I do not know what led the Chines ein the 12 century to start experimenting with paper money, thy usually are seen as the first to have tried it - but they failed, like all others after them failed as well. Probably the ruling elites wanted to spent more than their realms could economically afford, and so they looked for ways to get rid of solid currencies and replace it with a cheat money. Later, we saw the same with medieval kings who notoriously lowered the amount of gold and silver in their coins, for which it was prerequisite of course that before they had secured a monopoly on minting, because until then, just anybody could mint coins - it did not matter and had not to be controlled, since a coin of gold is a coin of gold, and its value was negotiated by market participants basing on its weight (in ounces) and the purity of the gold in it. Like consumers avoid bad producers today and their products, forgers faced problems to barter their inferior coins as well.

Indeed, and surely the limited amount of gold available will cause its worth to raise, especially when we eventually mine the last of it out of the ground. Same with oil, when Peak oil hits, the price of oil is going to go up.

However, I will defer to you on the creation of Fiat currency because I haven't done much in the way of research into it.

I can only repeat: for gold you will be able to barter items you need for a longer time, than for most other items, and in a fiscal disaster like the one we are heading for, it is one of the most practical goods to safeguard your welath understood as an abstract ammount of buying/bartering power). In econo9mic troubles, after wars and disasters, governments repeatedly prohibited the private possession of items that enjoyed huge popularity ion the black market as in inofficial currency, cigarettes for example. Gold and silver have been more iften subject of such prohibitaiopns than any other item category, I think, inclduing cigarettes and alcohol, arts, or whatever. A currency that gets formed by the people in free market negotiation that decides the daily value, is a lethal competetion to any attempt of the state to implement power and control, again via state-monopolised money that sees its value fixed at the desk in the government's office. That'S also the reason why states then act draconically against black markets.

This would depend on the scenario. In most of the scenarios you have put in this reply there is still a semblance of government after the collapse, I believe that this is optimistic, especially in the event of an EMP or space object impact.

Still, the general acceptance of gold in human history is beyond competition, compared to that of a grain of porcelain. a 31 gr (=1 ounce) coin of gold can be molten or cna be broken into poieces - the sum of the pieces nevertheless equals the vlaue the negotiating partner sees in gold, because gold enjoys wide acceptance amongst humans and cultures. Even if gold is not what yoiuj wanted to barter when when agreed to give away your huge heap of wooden planks, you know that you have great chnaces that you will find somebody soon or has what you really wanted, and who accepts to barter that object for the gold you have. That is the essence of what differer goods traded on the market, and goods traded on the market and additionally getting accepted as general currency tokens.

Gold has acted as a good intermediary in the barter process, I'm not denying that. What I'm questioning is the viability of such a thing in a scenario where we have been reduced back to small communities with no major government, a sort of semi-feudal existence. Our technological level will be reduced to 19th century standards, but since we are primarily unequipped mentally as a society to exist in such standards we will likely slip back further to around the 16th century if we're lucky, if not further. However in the immediate aftermath it will be more like the 6th century, and since trade will be extremely localised and based around barter rather than currency, then gold will not be required. It will still be useful to have it, but it won't get you as far as food or clean water will.

Coins of that kind, our dollars and Euros, ARE paper money, coins are fiat money. Take away the state fixing its price, and you are left with cheap metal worth what 30 grams of that cheap metal are worth on the market. a 2 Euro coin, says the state, should be worth "2 Euros", whatever that should mean in fiat money philosophy. Melt that coin into a clump of said cheap metal, and it is nio longer worth 2 Euros, but just let'S say 5 cents.

I am reminded of something I posted a while back, let me see if I can find it...

Take a 1 ounce gold coin, and you see they give you the material value for it (plus minting costs, thats' why buying old in bars is cheaper: no minting), around 960 Euros in fiat currency. Melt it or brake it into pieces, and seer what you get for them. It will be around 960 Euros.

Which touches upon the problem I raised earlier, when a gold coin that you wish to use for one euro is worth over nine hundred euros, that's one of the reasons we use fiat currency, as the price of gold is such that it is impratical to use as a coin, especially if a grain, which is I believe the smallest amount you can get, is worth about three US dollars. So what happens if you want to buy something that is worth less than three dollars?

With bars, the value tends to stay the same, with coins, if some collector sees a sentimental desire in wanting to possess it, the trading price can be higher then. But it is stupid to buy special coins and rare collection coins as a reserve to save for disaster times, because in a TSHTF scenario, when you need to barter them for other items you need, the additional costs you had to pay for and that reflected their colelctor'S value and special rarity will not be hionoured: you payed for it, but will not get payed for them in bad times, people will only give you what the gold itself is worth to them.

You are totally wrong about that the amount of gold available decides whether it is practical to use it as a currency. You can intoruce a gold stanard even if there is only one ton of gold. You only need to leave the fixing of the prices to the market, then the market will correct prices that way that the value relations of all trading goods to each others remain the same, more or less. It is the state messing this up, because politicians would loose importance if they do not make people believe that they must control the amount of money circulating, and controling inflation to not have it to low or too high. Criminal braindead idiots! If the amount of currency triples over night, in the following days prices will triple as well. If the amount of circulating currency drops to one tenth of its former volume, in prices the decimal will move one digit to the left.

I'll defer to you again, again this is not something I've done much reading in, economics in general gives me a headache, however it strikes me that using gold in coins is a good way to run out of gold. A gold standard, a reserve, that's fair enough, and a different kettle of fish entirely.

Ther eis nothing wrong in having a reserve banking system, and storign your gold in their safes for a fee, and getting receipts, and trading these receipts. Do it, it does no harm.

I wonder if people have considered doing the same with platinum...

The arch-sin lies in the FRACTIONAL reserve keeping. As long as there are no more receipts in circulation then there is gold covering them located in the banks ALL TE TIME, and the gold not being traded around parallel to the receipts (which would mean an increase of the circulating currency but prices NOT ADAPTING to that and no additional material value being present in the world), as long as you keep it this way, it nevertheless is effectively a gold standard currency, and when you stored ten ounces of gold in the bank's safe, in no way does it matter whether you have one receipt for ten ounces of gold, or five receipts for 2 ounces of gold each.

But if one receipt for a grain of gold is worth about three dollars and you want something that is lower than that, how do you pay for it?

Think about it, the very monent a bank does not maintain full reserves for all receipts it gave out, but keeps only 99 ounces of gold where receipts for 100 ounces of gold had been given out, this bank is BANCRUPT. It cannot honour all it'S payback obligations, if the owners of those ten ounces of gold demand back all the 100 ounces they had agreed to store in that safe.

I think Banks have been playing that game for decades, hence why runs on banks tend to be messy affairs. It reminds me of when Northern Rock went belly up, the queues of people outside banks to get their money.

On an earlier opportunity I illustrated that the real world math is much much worse, and that banks must maintain only tiny fractions in reserve assets, and fractions of fractions, and fractions of fractions of fractions and so on. That is the reason why our fisacla systenm is destroying all the weklath and wonderful things we have build. We build it in super-speed except of letting it grow, and we build on quicksand. For these two reasons, our creation will not last.

It's entirely possible, the ultimate creation on quicksand can be seen in China, a nation which skipped the industrial revolution and went straight to the modern age. I won't deny that a total breakdown of the global economic system is possible, but equally it is also possible that it will not take place. It's a 50/50 chance really, there could be something that will change the system, or it will be altered to adapt to the modern age. I doubt it, but since rich people usually manage to find a way to stay rich, and governments usually find a way to keep themselves in power, I suspect that something will change eventually.

The history of mankind over the past thousands of years have judged over that already. By empirical experience we can say that the probability is most in our favour if we need to barter for items, help, food, shelter, escape in a state of emergency.

See, I think the problem here is that we're thinking of two different SHTF scenarios. You seem to be thinking of one where government will remain in power, whereas I am thinking of one where it is not. You earlier used two examples which I returned to and shall do so again, a pandemic or an asteroid strike. Both of these would remove government from large sections of the nation, electricity would be lost, once we lose electricity, we lose food and water, the likelihood of states of emergency will be low because there will be no-one to enforce them. Sure the military will try to enforce things, and maybe in America with their National Guard they will succeed (unless it's an EMP in which case only those with hardened equipment will) however for the most part it's going to be every town for itself. In essence, a survivalists wet dream.

Now, with no electricity, no food, no water and only what's left in the stores to keep an entire town alive (providing that the pandemic hasn't already reduced the population), as well as having to deal with people coming from the cities, do you really think that gold is going to be worth a damn? I think you're going to be disappointed.
Sure, a couple of decades down the line, when enough people have died that towns can become self-sustaining through agriculture then trade between towns may open up a return to an economic system, however in the early days the only trade there is going to be is barter and labour. If you want some eggs, then give some ammunition, if you want to eat, then you've got to work. Very DPRK, but that's the sort of society that will have to exist if people are going to continue to live.

Not iron coins. I can only reiterate: gold has not been given the wide acceptance to serve as a value safe for no reason. Gold and silver showed to be better qualified to serve that purpose, than any other items being used before. In the cosmos, indication are that gold is anything but a rare element out there. If we would run space travel programs worth the name, and would have access to other world'S rssoucesd, we probablöy would be drowning in gold, and today would use it to piant toys for children with it. Then , something else would take over the bartering function of it. But that is science fiction, and does not lead us anywhere, for us there only is that gold that were have access to. Also we find no value in recalling that the Indians in Central and South America had so much gold that it was nothing precious for them at all, whereas for the Spaniards, it was, obviously. Not mkly where the Indians drowning in gold, they also had a different and less developed, economic system, which was part of why their society already were in trouble when the Spaniards arrived. I follow those theoreticians claiming that their society would have collapsed anyway even without the Spaniards, the Spaniards only were a catalysator speeding up the development. Now some people want to spank me again, I can imagine.

Well, the whole American thing is open for debate but I guess we'll never know. Might makes right after all.

We live in the global world of today, and we have had the global hsitory of people int he way it has been. And that is why gold for us is what it is. .

This is true, however only minor S has HTF for humanity over the past millenia which is why we have been able to grow as a civilization. There have been no major asteroid impacts, pandemics have happened, but not enough to kill off society or infrastructure, and the key factor is that the population at the time were in a position to survive them. We have built our society on very thin ice, remove all the electricity from the world and whilst technologically we would return to the 19th century, the shock to society would catapult us back a lot further to somewhere in the region of the 10th century, if not earlier, until power is consolidated.

Let's keep metaphysical phrases out of this. In the end, we all die. So why living, why doing, wokring, sitting, resting? Lets just sit still and wait until we stop breathing.

I'm not being metaphysical, I think that if the S did HTF tomorrow then it would be at least four decades before what is left got organised enough to have a need for gold, by which time we would likely be dead or not in a position to use it.

Most Jews fleeing in the night from the Nazis, to Scandinvia or Switzerland, did not carry paintings and big boxes of medications, but rings, jewelry, necklaces.

Again, we're thinking of different types of S which are HTF, in the example you give, governments are still in existence, so gold is actually worth something to people. A German corporal can trade in his gold gained from the fleeing jew for some Reichmarks to feed his family.

In fiscal downbreaks, gold is easier to hiden, than huge quantities of big things. It also can be traded on the black market with less attention-raising, than a big painting by Monet.

Again, different SHTF, a fiscal breakdown retains some form of governmental control, albeit most likely a dictatorial one.

The point is gold and the like trumps in more emergency situations where you need to barter for something you need, than most other items.

Depending on the emergency, yes, in a fairly minor SHTF situation, gold will be useful. In a major one, it will be inedible.



Look, this has taken me most of the day to type, I don't get much time to sit down for longer than half an hour at a time anymore, so things like this time a while to go through, and whilst it is a fascinating discussion and I do enjoy it, I know that if I put it to one side to get back to it, I probably won't. So what I'll do is agree to disagree, and hope that we'll never have to find out. In the meantime, I recommend checking out 'One Second After', I think you'll enjoy it.

[TarJak]

Very cup.
So money.
Much pointless.
Such argument.
Wow.
Good coin.

[Skybird]

Originally Posted by Oberon

This is true, but buy using the money that you gain through speculation you can put this aside as a reserve. Who is to say that this man who paid $32m for this cup won't sell it on in five years for $50m and buy $18m worth of gold? The point is, is that the cup is an investment that he expects will pay dividends in the future. It's a bit like the stock exchange only marginally safer as unless a horde of Ming cups are uncovered, the value of the cup will increase as it gets older whereas shares will fluctuate.

You talk of speculation there. Which is leading a bit far here to discuss. Speculation is not production, nor does it procues additional wealth. It compares to the hope of rising wekath by investing debts and then wrongly assuming that you would create lasting wealth by that that you could own. You cannot. The only way to increase wealth is by investing what you have saved before from your real gains. Gains that you have taken from the general pool of wealth there is, not artificially declared to have fallen out of the blue sky. But really, that leads a bit too far here.

[quote]
This would depend on the scenario. In most of the scenarios you have put in this reply there is still a semblance of government after the collapse, I believe that this is optimistic, especially in the event of an EMP or space object impact.
[/quote
I based not on events that would extinct mankind, but that would mean either the collapse of the fincial and economic order, or the civilisational order. The latter would see the lkevels of the civilidsaitonal hierarhcy getting destroyed in reverse order in whci they have been formed. The latest and most complex levels die first, the older levels are more robust, last longer, and die later.

Gold has acted as a good intermediary in the barter process, I'm not denying that. What I'm questioning is the viability of such a thing in a scenario where we have been reduced back to small communities with no major government, a sort of semi-feudal existence. Our technological level will be reduced to 19th century standards, but since we are primarily unequipped mentally as a society to exist in such standards we will likely slip back further to around the 16th century if we're lucky, if not further. However in the immediate aftermath it will be more like the 6th century, and since trade will be extremely localised and based around barter rather than currency, then gold will not be required. It will still be useful to have it, but it won't get you as far as food or clean water will.

But already the Romans used coins as currency. And that was a bit earli8er than just the 6th century. Already before them, other forms of currency items were used. I think you are under a misperception when you think that currencyies were used not before the 16th or even 6th century. The forming of a currency must be seen in cintext of people discovering that the welath for all would rise faster if not everybody stays to be a generalist and does and proiuces everything himself, but if people turn into specialists and do what they can do better than others. For the common wealth, it is better if Peter goes not fishing and goes not into the field and goes hunting and tree chopping and erasing, and Chris and Karl and johnny do the same, but if everybody of them specialises in one thing. In the end, they all together will have produced a higher quantity things that way. Which means the whole group became faster wealthier. Next, after specilaisation, came the establishing of complex production chains. And already here you see the need to have intermediaries to serve as a temporary way to save value until you can spend it on what you really wanted or needed, becasue you are a working chainwheel in a complex production chain. You can safely asume that already here, currency items will get established. Maybe not coins from all beginning on, but goods that get accepted to serve as such tokens due top their practicality.

Which touches upon the problem I raised earlier, when a gold coin that you wish to use for one euro is worth over nine hundred euros, that's one of the reasons we use fiat currency, as the price of gold is such that it is impratical to use as a coin, especially if a grain, which is I believe the smallest amount you can get, is worth about three US dollars. So what happens if you want to buy something that is worth less than three dollars?

You use a small sack with gold dust. Or mint smaller coins. Or, as I explained later in my earlier reply, you use a reserve banking system, store your gold there, and trade the paper receipts (the certification that prove ownership rights) only. As long as you do not make that a fractional reserve banking, such doing still is a fully valid gold-standard system, sicne there cannot be more receipts than there is gold stored in the safes of the banks. Ignoring criminal energy for now, of course.

I'll defer to you again, again this is not something I've done much reading in, economics in general gives me a headache, however it strikes me that using gold in coins is a good way to run out of gold. A gold standard, a reserve, that's fair enough, and a different kettle of fish entirely.

No, it isn't, and varying amounts of gold available for circulation also are not that big a problem, since the prices of goods get calibrated on the basis of gold, and when the value of gold falls or rises due to fluctuation in its availability, then prices will adapt, but tend to maintain there relation to each other nevertheless (as long as the items itself remain at the same availability standard as well: what is rare becomes more expensive, and what is in low demand and high offering, will drop in prices of course).

I wonder if people have considered doing the same with platinum...

Why not. If it serves the purpose of being a commodity currency and finds the wide acceptance needed... Leave it to the market.

I cannot reiterate it often enough: gold standard currency means nothing else than to have gold, no matter in which form, being traded freely on the market, and have its price negotiated freely on the market. Let every private pesons mint gold coins, if they want, it doe snot matter who makes the coins: the only thing that counts is the content of gold, the mass at weight of gold. Coins only serve as a tool to standardise that, so that you must not weight the nuggets each time the go from one hand to the next. Commodity currency means the item category serving as tokens of that currency are a commodity just like any other that gets traded in the market. There is not the goods and the currency as two separates - there is only the goods that get traded, gold being one of them. A state monopoly for minting only is inspired by criminal energy to cheat the system.

But if one receipt for a grain of gold is worth about three dollars and you want something that is lower than that, how do you pay for it?

You rip into pieces the 3 dollar receipt and write three new ones with 1 dollar v alue. Or replace in these examples "dollar" with "ounce". In other words: the bank hands out not one million ounce note, but a million one ounce notes when you put one million ounces of gold in their safe. Its not much different to the paper bits we now have . Just that the paper bits we now have, are not covered by real assets, by real value. Banks must store only 10% or so of the gold in their safes for which they have given credit.
Do you recall the example I gave some weeks ago in another thread about fractional reserve banking and how cataclysmic it works for any currency? I will try to find it and quote it again after I finished this one here.

Now, with no electricity, no food, no water and only what's left in the stores to keep an entire town alive (providing that the pandemic hasn't already reduced the population), as well as having to deal with people coming from the cities, do you really think that gold is going to be worth a damn? I think you're going to be disappointed.

No. But if mankind survives as a spoecies, they again will rally and form civilisational structures. Sooner or later there will be specialisation, labour division and complex production chains - and thus: currencies. Because it makes bartering so much easier.

But I never thought on those long time dimensions, of aeons and whole eras of history, but our present dramas, and the forseeable future, and the possible dramas of the forseeable future. A scenario where mankind goes extinct anyway, must not be my concern, because such a scenario will take care of itself all by itself anyway. the next one, two or three centuries are what I am about. However, coins have been around since the 7th century B.C. I wonder why. Earlier versions of money go back i think almost 4 thousand years. A systemtic effort to have a raw material as a primary intermediary for bartering, dates back to I think 11 thousand B.C. - it was obsidian.

Sure, a couple of decades down the line, when enough people have died that towns can become self-sustaining through agriculture then trade between towns may open up a return to an economic system, however in the early days the only trade there is going to be is barter and labour. If you want some eggs, then give some ammunition, if you want to eat, then you've got to work. Very DPRK, but that's the sort of society that will have to exist if people are going to continue to live.

And I tell you, even then you will already see attempts to standardize tokens that simplify the bartering process.

This is true, however only minor S has HTF for humanity over the past millenia which is why we have been able to grow as a civilization.

The pülague has killed one third of the European population its time. Beforte the age of globalizatoon a ndn globla traffic, falls of regional powers and local civilizations pretty much equalled a doomsday scenario, resulting in the complete disappearance of said culture - and its neigbouring cultures not even noticing it, since they lived in isolation to each other and did not know of each other.

There have been no major asteroid impacts, pandemics have happened, but not enough to kill off society or infrastructure, and the key factor is that the population at the time were in a position to survive them. We have built our society on very thin ice, remove all the electricity from the world and whilst technologically we would return to the 19th century, the shock to society would catapult us back a lot further to somewhere in the region of the 10th century, if not earlier, until power is consolidated.

You build a house from bottom to top, and when you deconstruct it, you work from top to bottom. Its pretty much like a complex organism that is dying. Higher perception and cognition goes first, autonomous functions are dying second, and uncoordinated organic functions die last.

I'm not being metaphysical, I think that if the S did HTF tomorrow then it would be at least four decades before what is left got organised enough to have a need for gold, by which time we would likely be dead or not in a position to use it.

As you said yourself, we are talking different scenarios apparently. You consider extinction-level events. I do not. If they were worth to be considered, they would not be called extinction-level events.

Again, different SHTF, a fiscal breakdown retains some form of governmental control, albeit most likely a dictatorial one.

Sure, to my great displeasure. Without governments there would be many fiscal breakdowns less. If any at all. The state daring to mess around with currency issues is reason enough already to line politicians up against the wall. I would like to see a total and undisputable separation between political business. No politicians should be allowed to have any influence on fiscal issues and currencies. Shoot anyone who dares to try that. All central banks, the whole conception, should be destroyed, and by draconic penalty any attempt to build again such institutions should be prohibited. We are talking about the most profound level of basic essentials here, not just some symptoms or some issues. We are talking about the very core of the causes for the global fiscal collapse of today's money. It is what usually gets abbreviated by calling it "paper money".