'@rphb' "I also said that I am not convinced that that equation is even valid. Because where in it is the base?"
That will be part of the Q. As for the joke, if they've both valued utility of seeing the other one eating shit so high then not only did they raise the GDP, but also provided a valuable service to each other.
Also, author of the joke did not think it through in terms of efficiency - both parties could increase their profit by recording a video and capturing some revenue in niche market of coprophiliac fetish videos. Maybe some goldbugs would pay to see it as well. If you think about, it's just a sad story of wasted opportunity.
"Anyway, the point is that money can’t be controlled, all that the experiment with fiat currencies have done, is shown itself to be one giant pyramid scheme, the people closest to the central banks have grown rich and the rest have been struggling."
Inflation targeting is more or less works, constraining or increasing supply of money so far did it's job in US. Not so much in Zimbabwe, where Gideon Gono thought that his estimates of value were important.
"considering that gold is a hundred times below its fair value we would need to increase the supply a hundred fold just to make the current price fair"
Gold is already above it's fair value, there isn't nearly enough demand for industrial applications to support it's current price. Supply shocks that wipe out savings aren't something good either.
As for article, if author is right then it's best to invest in a house next to a river, hydroelectric generator, tools and a lot of metal stock.
By the way, a lot of people actually forget that personal reserve of gold means that for every transfer you make you have to assay it first. High transaction cost and lag are major downsides.
2) "Deflation is bad for people in debt, and debt is bad so it is good for society when people that over consume are adequately punished for their overconsumption"
And we're back to a system where growing a business takes decades instead of years and entrenched elite with huge money reserves are the only ones who can utilize market opportunities fast enough. Also, remember that deflation is also bad for employers and employees as well, depending on how easy it is to cut wage or fire workers.
3) "What immediate concerns we have does not change the innate properties of the metal. "
In desert scenario you chose ownership of water over ownership of gold. Usefulness of innate properties of item changes dependent on your current or expected situation.
"Its value is intrinsic, that means that it does not depend on anything else, or vary based on anything else."
Properties is what fixed, value is not because it depends on utility and scarcity within reach.
"To take another example we can also take a sandwich. It also have intrinsic value."
Put a peanut butter on a bread and it will have vastly different value for someone who is suffering from peanut allergy. Value may even become negative, as in "pay me or I'll force feed you this sandwich". So far in every example you provide that intrinsic value is set by your estimate.
"Doubling or tripling the supply wont change that but it will allow us to use the yellow metal in ways that are today too expensive."
Like adding gold flakes to food? :)
Mechanical properties of gold are so bad that making entire components out of it is one of the worst options. Corrosion resistance, IR reflectivity or aesthetics require only a thin plating, which can also be recycled. And it is being done already.
"Think about how much longer a car would last if all of its metal parts were plated in gold?"
It won't be of much use if you put gold plating over the lead in battery :)
About as long as car that has all relevant components made from stainless steel, since plating is still going to wear out in places, and with proper lubrication corrosion will not be an issue with already available materials. You will eventually scrap it anyway.
4) "Arbitrary scarcity is when the scarcity of something is purposefully limited by a human decision. Such as a limited edition, book coin or something like that. It is a manipulation technique and it is a scam."
Ok. Gold is a scam as well, it's availability is constrained by use in jewelry which could be as easily made from more dilute alloys or cheaper metals with plating.
Arbitrary scarcity of bitcoin is secured by the fact that in order to change emission setting someone has to persuade an impractically large number of people to agree with that. If someone manages to do it, it probably means that this action is warranted.
"Real economic activity is all about finding ways to overcome scarcity, to make it easier to bring about the underlying value of the good to the consumer"
Oh, like overcoming scarcity of available funding when you have to, say, build a new business, just what stocks and fractional reserve banking do?
"Elemental scarcity, that is a scarcity that comes from it being a basic element. As such it cannot be manufactured in any way but have to be found in nature"
"Artificial scarcity, where the scarcity is purposefully limited in order to drive up price, this is often the case of things with little or no intrinsic value such as beaniebabies or bitcoin."
Yep, so elemental scarcity cannot be controlled and guaranteed, unlike scarcity of bitcoin. While, by the way, scarcity of gold depends on both inability to yet find deposits massive and concentrated enough to change the status quo, conspicuous consumption that ties up excessive material in jewelry and agreement to punish people who put a tungsten cores in gold bricks.
"I don’t know when the bitcoin bubble will pop,"
SEC decision on ETF is likely to cause a spike in one direction or another.
"but the fact that it have gotten bigger don’t change the fact that it is a bubble"
The fact that it is immediately useful as a way of transferring money is important. Investors who bought in early are at no risk of loss unless you count opportunity cost and ability to make ideal trades constantly. People who buy near the top with more money that they can afford to lose and do not use stop loss orders... Well, fool and his money are soon parted.
Actually, I was working with accountant who in 2011 insisted that his plan to put all his savings in gold was a sound decision and guarantees that his deposit will grow at 10% annualy, thereby securing him and early and comfortable retirement. Yeah... Almost feels bad that I've quit, now I can't ask him how well his plan worked.
317
'@rphb' "I also said that I am not convinced that that equation is even valid. Because where in it is the base?"
That will be part of the Q. As for the joke, if they've both valued utility of seeing the other one eating shit so high then not only did they raise the GDP, but also provided a valuable service to each other.
Also, author of the joke did not think it through in terms of efficiency - both parties could increase their profit by recording a video and capturing some revenue in niche market of coprophiliac fetish videos. Maybe some goldbugs would pay to see it as well. If you think about, it's just a sad story of wasted opportunity.
"Anyway, the point is that money can’t be controlled, all that the experiment with fiat currencies have done, is shown itself to be one giant pyramid scheme, the people closest to the central banks have grown rich and the rest have been struggling."
Inflation targeting is more or less works, constraining or increasing supply of money so far did it's job in US. Not so much in Zimbabwe, where Gideon Gono thought that his estimates of value were important.
"considering that gold is a hundred times below its fair value we would need to increase the supply a hundred fold just to make the current price fair"
Gold is already above it's fair value, there isn't nearly enough demand for industrial applications to support it's current price. Supply shocks that wipe out savings aren't something good either.
As for article, if author is right then it's best to invest in a house next to a river, hydroelectric generator, tools and a lot of metal stock.
By the way, a lot of people actually forget that personal reserve of gold means that for every transfer you make you have to assay it first. High transaction cost and lag are major downsides.
2) "Deflation is bad for people in debt, and debt is bad so it is good for society when people that over consume are adequately punished for their overconsumption"
And we're back to a system where growing a business takes decades instead of years and entrenched elite with huge money reserves are the only ones who can utilize market opportunities fast enough. Also, remember that deflation is also bad for employers and employees as well, depending on how easy it is to cut wage or fire workers.
3) "What immediate concerns we have does not change the innate properties of the metal. "
In desert scenario you chose ownership of water over ownership of gold. Usefulness of innate properties of item changes dependent on your current or expected situation.
"Its value is intrinsic, that means that it does not depend on anything else, or vary based on anything else."
Properties is what fixed, value is not because it depends on utility and scarcity within reach.
"To take another example we can also take a sandwich. It also have intrinsic value."
Put a peanut butter on a bread and it will have vastly different value for someone who is suffering from peanut allergy. Value may even become negative, as in "pay me or I'll force feed you this sandwich". So far in every example you provide that intrinsic value is set by your estimate.
"Doubling or tripling the supply wont change that but it will allow us to use the yellow metal in ways that are today too expensive."
Like adding gold flakes to food? :)
Mechanical properties of gold are so bad that making entire components out of it is one of the worst options. Corrosion resistance, IR reflectivity or aesthetics require only a thin plating, which can also be recycled. And it is being done already.
"Think about how much longer a car would last if all of its metal parts were plated in gold?"
It won't be of much use if you put gold plating over the lead in battery :)
About as long as car that has all relevant components made from stainless steel, since plating is still going to wear out in places, and with proper lubrication corrosion will not be an issue with already available materials. You will eventually scrap it anyway.
4) "Arbitrary scarcity is when the scarcity of something is purposefully limited by a human decision. Such as a limited edition, book coin or something like that. It is a manipulation technique and it is a scam."
Ok. Gold is a scam as well, it's availability is constrained by use in jewelry which could be as easily made from more dilute alloys or cheaper metals with plating.
Arbitrary scarcity of bitcoin is secured by the fact that in order to change emission setting someone has to persuade an impractically large number of people to agree with that. If someone manages to do it, it probably means that this action is warranted.
"Real economic activity is all about finding ways to overcome scarcity, to make it easier to bring about the underlying value of the good to the consumer"
Oh, like overcoming scarcity of available funding when you have to, say, build a new business, just what stocks and fractional reserve banking do?
"Elemental scarcity, that is a scarcity that comes from it being a basic element. As such it cannot be manufactured in any way but have to be found in nature"
"Artificial scarcity, where the scarcity is purposefully limited in order to drive up price, this is often the case of things with little or no intrinsic value such as beaniebabies or bitcoin."
Yep, so elemental scarcity cannot be controlled and guaranteed, unlike scarcity of bitcoin. While, by the way, scarcity of gold depends on both inability to yet find deposits massive and concentrated enough to change the status quo, conspicuous consumption that ties up excessive material in jewelry and agreement to punish people who put a tungsten cores in gold bricks.
"I don’t know when the bitcoin bubble will pop,"
SEC decision on ETF is likely to cause a spike in one direction or another.
"but the fact that it have gotten bigger don’t change the fact that it is a bubble"
The fact that it is immediately useful as a way of transferring money is important. Investors who bought in early are at no risk of loss unless you count opportunity cost and ability to make ideal trades constantly. People who buy near the top with more money that they can afford to lose and do not use stop loss orders... Well, fool and his money are soon parted.
Actually, I was working with accountant who in 2011 insisted that his plan to put all his savings in gold was a sound decision and guarantees that his deposit will grow at 10% annualy, thereby securing him and early and comfortable retirement. Yeah... Almost feels bad that I've quit, now I can't ask him how well his plan worked.