Comments on: What’s Money Worth? Gold Standard Myth http://www.pfadvice.com/2006/12/07/whats-money-worth-gold-standard-myth/ Bridging the gap between saving money and investing Fri, 04 Jul 2008 20:45:17 +0000 http://wordpress.org/?v=2.3.2 By: links for 2006-12-08 » Whatever’s Interesting http://www.pfadvice.com/2006/12/07/whats-money-worth-gold-standard-myth/#comment-10841 links for 2006-12-08 » Whatever’s Interesting Fri, 08 Dec 2006 23:47:36 +0000 http://www.pfadvice.com/2006/12/07/whats-money-worth-gold-standard-myth/#comment-10841 [...] What’s Money Worth? Gold Standard Myth Ever wonder? Some light on the subject. (tags: Money) [...] […] What’s Money Worth? Gold Standard Myth Ever wonder? Some light on the subject. (tags: Money) […]

]]> By: bluprint http://www.pfadvice.com/2006/12/07/whats-money-worth-gold-standard-myth/#comment-10832 bluprint Fri, 08 Dec 2006 15:48:53 +0000 http://www.pfadvice.com/2006/12/07/whats-money-worth-gold-standard-myth/#comment-10832 It is important to point out the affect of international trade on the value of the dollar. The fact that the dollar for years has been highly desired internationally has helped continue to prop up the value of the dollar. For example, oil is traded with dollars in international markets, so if countries want to buy oil, they first have to get dollars. Same for gold. Also, while many countries have gone away from the gold standard, many have replaced gold back currency with U.S. dollar backed currency, meaning they hold dollars in reserve instead of gold to support the value of their own currency. The impact of this (as well as the need for dollars to trade gold and oil) is that there is a huge international demand for the U.S. dollar. If these factors ever change, it would dramatically affect the value of the dollar. Some countries have already suggested that oil and gold be traded in Euros. China holds a huge amount of dollars in reserve. I don't have a source readily available, but I seem to remember that China has been selling dollars to buy gold. If we continue to piss off other countries, it seems likely to me that they will wise up and starting trading in Euros, and we will all be left with huge stacks of near worthless paper. It is important to point out the affect of international trade on the value of the dollar. The fact that the dollar for years has been highly desired internationally has helped continue to prop up the value of the dollar.

For example, oil is traded with dollars in international markets, so if countries want to buy oil, they first have to get dollars. Same for gold.

Also, while many countries have gone away from the gold standard, many have replaced gold back currency with U.S. dollar backed currency, meaning they hold dollars in reserve instead of gold to support the value of their own currency. The impact of this (as well as the need for dollars to trade gold and oil) is that there is a huge international demand for the U.S. dollar.

If these factors ever change, it would dramatically affect the value of the dollar. Some countries have already suggested that oil and gold be traded in Euros. China holds a huge amount of dollars in reserve. I don’t have a source readily available, but I seem to remember that China has been selling dollars to buy gold.

If we continue to piss off other countries, it seems likely to me that they will wise up and starting trading in Euros, and we will all be left with huge stacks of near worthless paper.

]]> By: Phil http://www.pfadvice.com/2006/12/07/whats-money-worth-gold-standard-myth/#comment-10817 Phil Fri, 08 Dec 2006 06:03:19 +0000 http://www.pfadvice.com/2006/12/07/whats-money-worth-gold-standard-myth/#comment-10817 One of my friends likes to remind me that McDonald's arch cards are worth more than money. At least the Arch cards are backed by something tangible (Big Macs). Scary. One of my friends likes to remind me that McDonald’s arch cards are worth more than money. At least the Arch cards are backed by something tangible (Big Macs). Scary.

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