/biz/ - Business & Finance

>>443896

>Investing

I don't think this word means what you think it means

>>443905
to put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value.

>>443907
lol. I'll rephrase it for him.

I don't think this word means what you think it means in regards to precious metals.

Metals aren't meant to be an investment, they are meant as a store of value to offset inflation. Basically an insurance policy. Can you "invest" in silver? Sure, but it's all speculation and the market is manipulated to shit so there is no point.

>>443922
Oh I see. That makes more sense than>>443905

But what do you mean its all speculation and the market is manipulated? Is there no demand for silver in technological devices or the jewelry (JEW lery, amirite?) industry?

>>443896
Gold and Silver are controlled markets. There are laws on the books that allow the US government to manipulate the price of Gold and Silver in US and abroad. That aside besides the naked short selling, if you acquire Gold and silver for the purposes of selling it to another party you could make a good return on it.

>>443922
Isn't the manipulation technically criminal though?

>>443958
If anyone but the Treasury does it then yes.

>>443922
Inflation is the source of the whole problem. In 1971 we destroyed money and adopted an inflation control system. The real problem with economy is that there is no money. We took the real money (gold and silver) and demonetized them.

>>443922
ya but silvers all about supply and command so when the shortage strikes from sliver mines not producing as many millions of ounces the people with silver will be able to sell for a really great extra amount of money

>>443980
A great investment for your precious metal dealers.

I miss honest money.

>>444005
so pretty
>in gold coin <3

>>444021
the coins are still out there thanks to savers.

>>443977
>The real problem with economy is that there is no money. We took the real money (gold and silver) and demonetized them.

Money (a universal trading medium) is itself an artificial construct. It didn't exist throughout most of human history. So there is no "real" money, just trading mediums that are widely accepted. This is why fiat systems work, because the units of trade are accepted very, very widely. This is also why normal inflation (3% per annum or so) is not a problem; it doesn't affect the day to day viability of a trading medium.

>>444036
Money has to retain value (which is what makes it a medium of exchange) also we have currency not money (people should know the difference). Inflation is a mechanism introduce by central banking to accelerate wealth transfer to creditors. Inflation has the added bonus of making every person work for practically there whole life as a result of there saving devaluing by your 3% every year.

>>444044
Also If you insist on having a currency backed by nothing then I suggest we use credit and not debt as a creation mechanism. Also eliminate the usury ( meaning spend it then tax it no interest rates).

>>444036

>This is also why normal inflation (3% per annum or so) is not a problem; it doesn't affect the day to day viability of a trading medium.

With "normal" inflation, you're quite right. There is a difference between the CPI as measured by the government and the actual money supply.

Gold and silver is a bet on higher levels of inflation, or instability in general.

>>443980
Then it would make more sense to invest in mines and mining technology than the metal itself.

>>444044
>Inflation is a mechanism introduce by central banking to accelerate wealth transfer to creditors

false, proves you know nothing more than the libertarian/tea party spiel... inflation actually helps the debtors and negates some of the interest they charge.

At the macro level, if I took out a 5 year loan for 1000, I'll get that cash right now and can use it to buy goods/services for what they're worth now. By the time I pay back the creditor 1000(plus interest), the 1000 likely buy less than what I bought now(because things will be more expensive 5 years later). The purchasing power of 1000 will be less by the time the loan is repaid. An on my end, if my earnings keep up with inflation, even though I'm on the hook for 1000, the number of hours I work to repay the loan 5 years later would be less.

This is why inflation is so essential during a recession, because it helps out people in debt, and it also forces people to spend money now(to stimulate the economy) because they know they could buy less in the future.

A thread about investing in silver?

crtl F shows /biz/ shame.

bizcoin, litecoin, cryptocurrency. precious metals.

Silver and Gold are highly manipulated. The industrial use does not merit the current price. Volatile and a generally bad investment as society and technology advances. Your only sure bet is investing in bitcoin related businesses like swarm.corp or ethereum. If you don't know the difference between XRP and BTC you are what's wrong with /biz/.

>>444036

fiat money is not money, fiat money is debt, everytime new fiat is created, new debt is also created. In a fiat money system, you cannot have everyone pay down their debt, if they do, then fiat money system is destroyed. A fiat money system operates by perpetual creation of debt

>>444070
>fiat money is debt
No....
>Fiat money is currency which derives its value from government regulation or law.
Learn your terminology.

>>444036
>>444086
No, you're both wrong. Fiat literally means by declaration and due to the coincidence of wants, money is fiat. Bitcoin and gold can be fiat systems devoid of government.

How many plebs to scrwe in a light bulb on /biz/?

>>444086

no, fiat money is lent into existence by banks

read this and get red-pilled
http://mises.org/daily/4631

>>444091
>no, fiat money is lent into existence by banks

No, it's not. The central bank sets reserve requirements, and the banking system the multiplies the outstanding central bank fiat (in the US's case, federal reserve note) by 1/[reserve requirement]. The only fiat money in the system is still the liabilities of the central bank, which also has the power to control the supply of money. Banks don't "create" money in the sense that they print off fiat federal reserve notes.

>>444090
http://www.investopedia.com/terms/f/fiatmoney.asp
>Currency that a government has declared to be legal tender, but is not backed by a physical commodity.
http://en.wikipedia.org/wiki/Fiat_money
>Fiat money is currency which derives its value from government regulation or law.

>>444093

"We've reached the last step, to see the connection between our fiat money and debt. For what is the typical asset that the Fed buys, when it expands the monetary base? The answer is bonds issued by the US Treasury. This is a very complicated process that I explain here. But the gist of it is this: under normal circumstances, the Fed creates new dollars out of thin air and then lends them to the US Treasury."

>>444093

Every dollar of the monetary base (or "narrow money" or "high-powered money") comes into existence with a one-to-one increase in the public debt, collectively owed by the taxpayers. Then, private banks use that base to create more dollars (in "broad money") that come into existence with a one-to-one increase in private debt.

>>444096
That's all fine and dandy, but that's not what you said. You said Fiat Money is debt, that's simply not true.

The phrase you are looking for is "The Federal Reserve note is based on debt, and is also a fiat currency."

Not fiat money is debt, because it isn't always the case.

>>443958

>>444098

Going the other way, if people in the private sector ever paid off all of their debts, and the federal government paid off all of its bondholders, then the supply of US dollars would be virtually extinguished.

>>443922
best answer

>>444098
US dollar=fiat money, fiat money=debt created ex-nihilo.

>>444096

Yes. This is the actual fiat money. The Federal Reserve issues notes (creating a liability on its balance sheet) and then trades them to the Treasury for assets (t-bills). This is the actual _creation_ step of money and is usually referred to as the monetary base, narrow money, M0, or something similar. Later, as that money trickles out into the real economy and is multiplied by banks through the process of lending. This creates "money" in the sense that you or I know it, also known as broad money or M2/M3/MZM. Two different processes. You're confusing them.

Also, this is not some super-seekrit Austrian thing. Pretty much every economists knows and understands it to be true. The Austrians just seem to think that any bank can create unlimited fiat currency, which isn't the case anymore (but was during the Free Banking era, which was an unmitigated disaster from savers/lenders perspectives).

>>444101
There isn't enough physical money to pay off the debt that we have created with our monetary system. The system needs endless growth and relies on the fact that everyone doesn't require their debtors to pay them back at the same time.

>>444068

>At the macro level, if I took out a 5 year loan for 1000, I'll get that cash right now and can use it to buy goods/services for what they're worth now. By the time I pay back the creditor 1000(plus interest), the 1000 likely buy less than what I bought now(because things will be more expensive 5 years later). The purchasing power of 1000 will be less by the time the loan is repaid. An on my end, if my earnings keep up with inflation, even though I'm on the hook for 1000, the number of hours I work to repay the loan 5 years later would be less.

Only works for fixed rate loans, with variable rate you get fucked because as inflation rises, so do interest rates.

>>444113
>Only works for fixed rate loans, with variable rate you get fucked because as inflation rises, so do interest rates.

True, but I was never stupid enough to even consider a variable APR on anything so my apologies not considering it.

So what if we didn't have inflation? y'all think we should have deflation instead if it can magically be done...

>>444124

Money backed by nothing is easily manipulated by central bankers and politicians that use expansion of money to pay for wars, welfare and public spending.

Historically, whenever a government went to war, the first thing it did was disconnect the national currency from gold. See: Civil War and WW1. In fact, America being the great power WITH a link to gold is what gave it the world reserve currency in the first place.

Deflation in of itself isn't a bad thing.

>>444130
>Deflation in of itself isn't a bad thing.

>Austrians actually believe this

Deflation is hugely destructive. A low and stable inflation rewards investors (by allowing them to preserve the value of their wealth) and encourages productive work and creation of real value. Deflation discourages private investment (why start a business when the cash under my matress will be worth 5% more next year), raises unemployment (why pay workers to produce goods when I could just keep the cash) and increases the burden of debt, making economic crises longer and deeper.

>>444130
>Deflation in of itself isn't a bad thing.
Wouldn't the velocity of money plummet and trigger hoarding of cash, deferred spending, etc?

For example if 2-4% annual historic inflation flipped and became 2-4% deflation I wouldn't have bought any rental properties with mortgage debt. I'd also sell my mutual funds and hoard cash since at least cash holds at 0%.

>>444137

low and stable inflation has always been a feature of the gold standard. Every year miners dig out a small amount of new gold, add to its supply. FIat money system simply try to mimic this feature of the gold standard.

>>444130
Hate to say it but you remind me of myself about 5 years ago. You'll soon be able to tell the difference between the good points of Austrian economics and the shit points.

>>444137

what fiat money system does wrong is instead of maintain a low and stable inflation of the money supply, it try to target CPI, which underestimates real inflation

>>444141

>Inflation is defined as growth in the money supply and not price level

>Again, Austrians actually believe this

The level of the monetary base has identically zero impact on people lives if it is not reflected in an increase int he price level. Joe Schmo cares about things like food prices, rent costs, transportations costs, medical expenses, &c. Whether they're two trillion or twenty trillion federal reserve notes in circulation doesn't matter as long as the price of a burger stays at $3 for the next five years

>>444141
>>444144
Ok, but explain why you think deflation (other than being beneficial to savings) is a good thing?

>>444146

>CPI accurately reflect price level
>paper bugs actually believe this

>>444150
>straw man argument

please address my actual point here >>444140

>>444150
>>CPI

Nowhere do I mention the CPI. I refer instead to the price level, which can be measured in any way you please (CPI, PCE, GDP deflator, MIT's BPP, etc.)

>>444156

actually general price level is just an abstract concept, it cannot be calculated in practice. Price level can be effected by change in supply/demand, change in raw material cost and monetary inflation.

>>444160
Way to skirt around the issue...

>>444160
>>444152
>please address my actual point here >>444140
Still waiting.

>>444164

not skirting around, there are many price indexes, and you can't really say one is more accurate than another, so CPI-targeting is arbitrary.

>>444140
>Wouldn't the velocity of money plummet and trigger hoarding of cash, deferred spending, etc?

yep, not only that, but hoarding of cash=no lending of cash which leads to drying up of liquidity, and we all know what happened when liquidity dried up back in 2008/9.

seriously, too many people have drank the gold-bug/ron-paul koolaid

>>444168
The question we have all essentially asked you is here:
>>444148
>Ok, but explain why you think deflation (other than being beneficial to savings) is a good thing?

>>443922
If you had more money then anybody do you actually think things like laws matter?

>>444140
>Wouldn't the velocity of money plummet

interesting it looks like the more liquidity the fed inject, the more money velocity plummet

>>444172

>>444174

>imply you can prove causation in economics

>>444172

>M2V
>not MZMV

>>444168

>CPI targeting
>not PCE targeting

Seriously you're bad at this.

>>444146

>Joe Schmo cares about things like food prices, rent costs, transportations costs, medical expenses, &c.

And all of those things are influences by the monetary base, eventually. There will be a "trigger" in the future where the Emperor will have no clothes, and price inflation will be readily apparent.

The Chinks, Ruskies and most of the BRICS are trying to evade the dominance of the dollar by settling trade between themselves in either the Ruble or the Yuan.

>>444148

If the costs of goods/living are being lowered, then average wages can also retreat downwards with no effect on standard of living.

Stagnating wages and an inflationary monetary policy= current system.

>>444169

>yep, not only that, but hoarding of cash=no lending of cash which leads to drying up of liquidity, and we all know what happened when liquidity dried up back in 2008/9.

The rich don't have vaults with their life savings in it. "hoarding" is just putting it in the bank, which is a good thing, it sures up financial institutions.

I would rather a society that encourages saving and being thrifty with your shekels than one that mandates excessive, debt fueled consumption.

>>444172
>M2
>>444178
>MZMV

I need to get to bed so I can move the MZMV needle a couple thousand dollars tomorrow @ the office. But this chart definitely makes its point.

>>444186
>The rich don't have vaults with their life savings in it

Yeah, but you could bet you ass they would in a prolonged period of 5%/year deflation. You can't argue "deflation would be good if everyone behaved in exactly the same way they do in an inflationary system". The most damaging part of deflation isn't the deflation itself, but rather the structural shift in behavior/the economy's organization that it creates.

>>444190

>but rather the structural shift in behavior/the economy's organization that it creates

You mean under-consumption and savings. Terrible.

>>444137
The key word being investor, if we had deflation with a money backed currency then the profit would be the source of investment. Don't just trust me go and ask any corporation that has been around more than a hundred years how they expand in that climate.

>>444140
initually yes but like any recovery once the shock is over then we will emerge with a real stable economy (minus the inflation Kings). So it depends on who's economy it would effect.

>>444141
a product of nature not an economic theory.

>>444190
The only example I could think of is JP Morgan causing the banking crisis in 1907. Which was used as the Core argument for the creation of the FED. I'm sorry I meant rational. But that was a crisis caused by above market interests.

>>444477
> once the shock is over then we will emerge with a real stable economy (minus the inflation Kings).


You mean "if" we emerge.. Economic growth cannot be achieved in a deflationary environment because people and companies will not invest in capital expenditures to grow(eg. why should I buy a new tractor my farm if it will be cheaper a year from now)

>>444510
In a deflationary environment- cash becomes the investment instead of the products/goods that are bought with cash. That's fine and all for the Ron Paul nuts, but like gold, cash by itself doesn't do anything, it won't lead to producing more cash or gold just by sitting in a vault/savings account.


Example: I use $3 in cash to buy a gallon of gas, but the main reason I buy gas is that it does work for me - I can use that gas to drive to the office, or visit a client- the end result that gallon of gas returns way more value than the $3 that it costs me. Money sitting in a bank account or gold on a value does not achieve this.

>>444510

>Economic growth cannot be achieved in a deflationary environment because people and companies will not invest in capital expenditures to grow(eg. why should I buy a new tractor my farm if it will be cheaper a year from now)

If that was true, there would have been no economic expansion under the gold standard.

>>444538
>If that was true, there would have been no economic expansion under the gold standard.

Being under the gold standard does not mean automatic deflationary economy

>>444538
>If that was true, there would have been no economic expansion under the gold standard.

Go look up what happens when a huge amount of gold is injected into a country running a gold standard.

Ever wonder how Spain went from world power to, you know, Spain? Part of the answer is all that gold they looted from the New World. They got back to Spain with loads of it and it got smelted into new coins that had more gold in them and were worth more than the old coins. Well, uh... that's deflation. New Spanish coins bought more goods than old ones. Instead of spending, the wealthy (who had the gold coins) wanted to wait for the next ship to come, so they could trade their old gold coins in for new, more valuable ones.* Then the next ship with gold arrives, and the next, and the next. Rampant deflation retarded economic activity in Spain and allowed other empires (which had conquered areas with tradeable goods, rather than gold) to flourish rather than falter.

So, yeah, all a commodity-standard does is make your economy vulnerable to large changes in the supply/levels of whatever commodity you choose, be it gold or clam shells.

*Fun fact: countries on the gold standard would deliberately inflate or deflate their currency all the time by varying the amount of gold coins contained. They'd recall all coinage and resmelt it with more or less gold with the old coins being illegal to possess.

>>444557
that is the the true source of the argument. Why did we leave the Gold standard? Was it because we can't be moral people?

What the fucking hell happened in this thread? Jesus Christ

>>446216
What did you expect when you ask about PMs? The discussion always end up being about the Gold Standard, the Fed, and fiat currency. Always.

>>446216
>>446255
The issues are linked and people think they can separate the issues but to do that would be unwise if you are considering any PM or any commodities as an investment.

>>445170
Because if we hadn't, all the counties who left the gold standard starts inflating their currencies(think china), making their stuff cheap for us to buy, while making our exports expensive to them. Say good by to our domestic manufacturing on an epic scale- our economy tanks, satan rises and Hillary Clinton becomes the supreme leader of the universe.

To fight foreign manipulation is to manipulate your own currency. Fortunately for china, there's too many dollars for us to manipulate radically, so they get away with manipulating theirs.

>>446457
they better start taking dollars out of the system or no one will be able to afford anything.