21 Feb 11
Originally posted by KazetNagorraAccording to MB, governments are lying about the level of inflation, so you could very well be experiencing hyperinflation without even knowing it.
If all currencies were losing value in real terms, wouldn't you expect to see massive inflation? Inflation here is 2%.
22 Feb 11
Originally posted by KazetNagorrahttp://en.wikipedia.org/wiki/Mechanical_engineering
And apparently this guy has written five books on economics. Pretty hilarious if you think about it, how many people would take a physics book seriously if it was written by someone with a bachelor's degree in mechanical engineering?
Mechanical engineering is a discipline of engineering that applies the principles of physics and materials science for analysis, design, manufacturing, and maintenance of mechanical systems. It is the branch of engineering that involves the production and usage of heat and mechanical power for the design, production, and operation of machines and tools.[1] It is one of the oldest and broadest engineering disciplines.
22 Feb 11
Originally posted by zeeblebotNo kidding. You never heard of mechanical engineering before?
http://en.wikipedia.org/wiki/Mechanical_engineering
Mechanical engineering is a discipline of engineering that applies the principles of physics and materials science for analysis, design, manufacturing, and maintenance of mechanical systems. It is the branch of engineering that involves the production and usage of heat and mechanical power for the desi ...[text shortened]... peration of machines and tools.[1] It is one of the oldest and broadest engineering disciplines.
23 Feb 11
Originally posted by Metal BrainWhat is this, the economic analog of special relativity?
Don't you know how the dollar index is measured? It is measured in relation to a basket of other currencies. Those currencies are losing value as well. That creates the illusion that the dollar has not dropped when it has.
The best measure is to look at the dollar's value in relation to gold. Take a look and remember that gold isn't really gaining value, the dollar is losing value. So are a lot of the other currencies.
What is the difference between these two statements?
1) Gold has gone up in value relative to everything else.
2) Everything else has gone down in value relative to gold.
23 Feb 11
Originally posted by telerion1 is inflation
What is this, the economic analog of special relativity?
What is the difference between these two statements?
1) Gold has gone up in value relative to everything else.
2) Everything else has gone down in value relative to gold.
2 is deflation
My point is that if all the currencies (in the basket of currencies that measure the dollar index) were to lose value at the exact same rate they would all appear to not move at all. The value of gold does not change much so that should be the standard of measure to gauge a currency's true value.
Can you think of a better method of determining the value of a currency?
23 Feb 11
Originally posted by telerionNeither of your statements line up with the assertion that gold has remained fairly constant over time, in terms of what it can purchase (dollars notwithstanding). For instance, using the GDP per capita to determine what $1000 of 1964's dollars would purchase today, we see an increase to $13,300 in the dollars of 2009.
What is this, the economic analog of special relativity?
What is the difference between these two statements?
1) Gold has gone up in value relative to everything else.
2) Everything else has gone down in value relative to gold.
Relating that directly to gold, the $1000 in 1964 would have purchased a little over 28 ounces. 28 ounces of gold at the average cost of gold in 2009 ($972) would cost a little over $27,000, or double the increase of the GDP per capita.
From another angle, an ounce of 2009's gold would have been enough to buy four ounces of 1964's gold.
Still another angle, again directly related to gold. The cash equivalent of an ounce of 1964's gold ($35.10) was worth the cash equivalent of $242.91--- again, cash worth over four times less than what it was worth 47 years ago.
The fact that the standard of valuation has changed doesn't take away from what things cost. An average house here in the US would have set the buyer back by about $13,000 in 1964. In 2000--- eleven years ago--- the average house was nearly $120,000, or nearly ten times the 1964 amount! If a person were paying for the 1964 average house in gold coins, he would have needed 370 of them. Using 2000's price of gold ($279.11), and average price ($119,600), he would have needed about 429 of them. That makes gold look like it lost value, but such a perspective doesn't consider the difference in housing, which saw a more than two-fold doubling in square footage over that time.
However, if you consider something a bit more consistent and yet even more equally common, a loaf of bread ($0.21 in 1964 and $1.72 in 2009), you'll see that the dollars are now way out of whack while gold has remained very constant. 1964's gold $35.10/ounce would have purchased 167 loaves of $0.21 bread. 2000's gold $279.11/ounce would have purchased 162 loaves of $1.72 bread, despite the fact that the cash equivalent is over eight times of an increase.
24 Feb 11
Originally posted by Metal BrainAnd how is this 'value' calculated? Can one ounce of gold buy the same amount of food today as say 10 years ago? How do we know whether food prices have stayed the same? What if we look at how many computers an ounce of gold can buy? Or cars? Surely 'value' is always relative to everything else.
The value of gold does not change much ...
24 Feb 11
Originally posted by Metal Brain1 and 2 are neither inflation or deflation by the standard definition, unless you assume that gold is currency in which case both are deflation. Since the statements were originally posed with fiat currency, 1 and 2 are simply two ways of stating the same relative price change.
1 is inflation
2 is deflation
My point is that if all the currencies (in the basket of currencies that measure the dollar index) were to lose value at the exact same rate they would all appear to not move at all. The value of gold does not change much so that should be the standard of measure to gauge a currency's true value.
Can you think of a better method of determining the value of a currency?
As for your second assertion about gold not changing much in value, value is always relative to something else. For example, US prices are usually stated as dollars per unit of a good. There is no absolute measure.
24 Feb 11
Originally posted by FreakyKBHI don't follow. How does your post relate to my response to MB?
Neither of your statements line up with the assertion that gold has remained fairly constant over time, in terms of what it can purchase (dollars notwithstanding). For instance, using the GDP per capita to determine what $1000 of 1964's dollars would purchase today, we see an increase to $13,300 in the dollars of 2009.
Relating that directly to gold, t ...[text shortened]... 2 bread, despite the fact that the cash equivalent is over eight times of an increase.
You do see the point that I was making right? There's nothing controversial about it and I hardly expected that it warranted a long response about the time value of gold vs a dollar vs a good (like a house or a loaf of bread).
I'm not necessarily saying that you are wrong, but I really think you missed my very simple, very shallow point.