Eurozone to prepare for Greek exit

clax · Jun 17, 2012

myp said:
Why are you going backwards in the discussion? You are comparing two floating values. It makes more sense to compare real changes because then you know the actual change (minus computing error).

A small correction on my explanation of the red line in the graph from earlier (although you probably won't care because I feel like you still don't understand the graph hence your regression to nominal arguments- again): the red line is actually gold vs. the changing commodities index with 100 on the right side being the value in 2000 at t=0. A graph using the commodities index at t=0 throughout vs. gold would be the same as the USD one This does not affect my arguments or weaken them as I was not using the red line graph (was using the USD one).

Your aguments make no sence what so ever. The dollar is mor stable than gold, so the value of gold (in dollars) sky rockets. Meaning inflation of gold skyrockets, but reality check states that gold has deflated. Being that an ounce of gold has just a little more buying power now then it once did.

I dont need a graph to know 1400 dollars from 40 dollars is a huge diffirence. Stop posting it, it is not relavant

myp · Jun 17, 2012

clax said:
Your aguments make no sence what so ever. The dollar is mor stable than gold, so the value of gold (in dollars) sky rockets. Meaning inflation of gold skyrockets, but reality check states that gold has deflated. Being that an ounce of gold has just a little more buying power now then it once did.

I dont need a graph to know 1400 dollars from 40 dollars is a huge diffirence. Stop posting it, it is not relavant

The graph shows the real price of gold has gone up and down A LOT. That is instability. All the points in the middle matter! Consumers don't care about the change in money value from today to 30 years from now. They care about the change from day to day because it affects what they can buy. Also, deflation is not good either so I don't know why you keep pretending it is good that gold has deflated.

All that aside, the dollar is IRRELEVANT in what the graph shows. Sorry, but if you still do not grasp what REAL means (versus nominal) I suggest you pick up a econ101 textbook because I really can't explain it anymore.

clax · Jun 17, 2012

Don't post a graph, i want to see numbers, how much has gold inflated, you keep klaiming it inflates mor than a dollar but it is trading at 1400 an ounce, it has never been hihger. If your graph dose not reflect that than it is false. Why if gold inflats more that dollars, why dosent the numbers produce that theory. Meaning if gold inflates at 4% where the dollar inflates aat2% the trading value in dollars would be going down not up. Meaning gold would be losing value

myp · Jun 17, 2012

I never said it inflates more than the dollar (go back and read each and every one of my posts and you will see I never said that). What I said is it is more volatile.

Let me put it this way: consumers don't want to go to the store to find milk costs 1 gold coin one day, 2 gold coins the next day, and 0.25 gold coins the day after. One of the goals of money is to be a store of value and a volatile currency like that does not fulfill that.

Take this example of US price levels and look at the stability after 1971- that volatility you see with gold is not there- we inflate at a mostly consistent rate. We don't see prices flying up and down based on the dollar. http://www.pbs.org/teachers/mathline/concepts/president/prc18991.gif

Also look at this graph of year-over-year change in core CPI and core PCE (the old and new indexes the Fed uses to monitor inflation, respectively): http://bigpicture.typepad.com/comments/images/cpi_vs_pce.jpg

Note that this is the rate of change (which would be the derivative of the price level graphs)- also note it is all positive, not positive then negative then positive then negative as the derivative of the gold graph from earlier would look like.

On a side note, am I the only one of us two that has google? If you want to see numbers, by all means, look them up. I didn't have these graphs on hand either, I just googled it

clax · Jun 17, 2012

If it doesn't inflate more than the dollar, how is it more unstable then the dollar

myp · Jun 17, 2012

clax said:
If it doesn't inflate more than the dollar, how is it more unstable then the dollar

Because inflation does not mean instability. Instability is volatility.

Let me put it in terms that make it more clear on a day-to-day basis:

Which option do you prefer:
1) You go to the store everyday in one month and find the price of milk to vary from $3 to $3.25. Everyday it might change a couple of cents up or down but it stays in that range.

or

2) You go the store everyday in one month and find the price of milk to vary from $1 to $30. Everyday it changes a couple of dollars up or down.

I really hope you say the first...

clax · Jun 17, 2012

myp said:
Because inflation does not mean instability. Instability is volatility.

Let me put it in terms that make it more clear on a day-to-day basis:

Which option do you prefer:
1) You go to the store everyday in one month and find the price of milk to vary from $3 to $3.25. Everyday it might change a couple of cents up or down but it stays in that range.

or

2) You go the store everyday in one month and find the price of milk to vary from $1 to $30. Everyday it changes a couple of dollars up or down.

I really hope you say the first...

gold doesn't change that much.

myp · Jun 17, 2012

clax said:
gold doesn't change that much.

It's hyperbole obviously (you really like to take things literally don't you

). It does change a lot though (again I point you to the graph). And the worst part is there is nothing anyone can do about it. At least with the USD, the Fed can change the supply to counter effects of demand change. With gold, you can't change the supply really or at least it is much harder to.

clax · Jun 17, 2012

myp said:
It's hyperbole obviously (you really like to take things literally don't you ). It does change a lot though (again I point you to the graph). And the worst part is there is nothing anyone can do about it. At least with the USD, the Fed can change the supply to counter effects of demand change. With gold, you can't change the supply really or at least it is much harder to.

Not as much as the dollar, that dosent show up on your graph.

Why is it that i can buy the same thing today for a very similar amount of gold that i could. A century ago. But the dollar is way out there

clax · Jun 18, 2012

how is it a 1955 bel air, when new would sale for approx 50 oz of gold in 1955, and the 2012 toyota camry in 2012 sels for approx 50 oz of gold, am i to believe that cars are traded just like gold,

parabolic growth is not stability.

every year inflation is 2% is that compounded meaning if 100 dollars is inflated to 102 dollars the next year inflation is 2% 102 meaning it is exponitial groth, meaning the dollar will die no matter what you do, damned from the get go.

myp · Jun 18, 2012

clax said:
Not as much as the dollar, that dosent show up on your graph.

Why is it that i can buy the same thing today for a very similar amount of gold that i could. A century ago. But the dollar is way out there

Clax, I am sorry, but if you do not understand those graphs I really can't walk you through them again. Gold has gone up a lot, down a lot, up a lot, etc. several times. So over maybe a few decades you might end up with the same real value of gold as it swings up and down. But the datapoints from 1978 to 2008 (2 points when the value of gold was similar) do not matter because people have to buy stuff in between too! The value might have been similar in 1978 and 2008, but it was not in between. For example in 2008 gold is worth maybe half of what it was worth in 1980. Again, look at the milk example. You don't want huge jumping prices like that up and down. Also, since you bring a century up, you cannot buy the same thing for a similar amount of gold- you can buy it for less ( http://www.goldmoney.com/images/charts/CPI-Adjusted Real Gold Price.jpg ). Also not good because you hurt debtors tremendously with deflation.

myp · Jun 18, 2012

clax said:
how is it a 1955 bel air, when new would sale for approx 50 oz of gold in 1955, and the 2012 toyota camry in 2012 sels for approx 50 oz of gold, am i to believe that cars are traded just like gold,

I have no idea what you are trying to get at here. Also a camry and a bel air are not perfect substitutes.

clax said:
parabolic growth is not stability.

every year inflation is 2% is that compounded meaning if 100 dollars is inflated to 102 dollars the next year inflation is 2% 102 meaning it is exponitial groth, meaning the dollar will die no matter what you do, damned from the get go.

What do you mean by die? Nominal asset values including wages will increase with inflation. Yes, if you stuff a dollar under your mattress it might not be worth much in 100 years, but who cares? People need stable money in the short term and for those that want to save in the long term there are always bonds and other investment vehicles that can beat inflation. Also note that inflation does not happen in a vacuum- it happens in an economy where there is also real growth. Remember the famous equation of exchange:
MV=PY

where M=money supply, V=velocity of money, P=price level, Y=real GDP growth. Take the derivative function of that to get delta%M + delta%V = delta%P + delta%Y

(you can also apply this equation to gold and see that velocity matters which is the formulaic reason for why it would jump up and down when used as money even when M (supply) is constant).

clax · Jun 19, 2012

if we say that there is a fixed rate of inflation of 2% anually.

$100.00 dollars in 1971 would now be $225.22 that has over doubled.

that means what costed $1.00 in 1971, now costs $2.25 which isn't true because the increased in dollar amount much more. a gallon of milk by the link below was 1.18 in 1971 by now it would be roughly 2.70, but it is more like 3.89 that represents a 3.5% rise in inflation on average sence 1971 and if it continues in fifty years that gallon of milk will be $27.01 this is assuming that the 11 trillion dollars of debt has no effect on the current dollar.

http://www.1970sflashback.com/1971/ECONOMY.asp
http://www.treasurydirect.gov/NP/BPDLogin?application=np

I want evidence of this kind of extreme inflation in gold, to prove that it is less stable.

I don't need charts to know see the writing on the wall.

clax · Jun 19, 2012

http://workwithbrianandfelicia.com/...1/03/013e009e-f1eb-4021-8884-b13e7f477588.gif

a stable decline is still a decline.

http://blogs.reuters.com/commodity-corner/files/2007/10/gold_dollar_new.gif

i don't see any stability in the dollar

clax · Jun 19, 2012

myp said:
I have no idea what you are trying to get at here. Also a camry and a bel air are not perfect substitutes.

better than anything you have provided

myp said:
What do you mean by die? Nominal asset values including wages will increase with inflation. Yes, if you stuff a dollar under your mattress it might not be worth much in 100 years, but who cares?

that is the point i have been making, gold would be. i.e. more stable.

clax · Jun 19, 2012

a government controls the value of a dollar, not people. if by chance the USA desolved the dollar would be worthless, but gold would not be.

and you had a weak argument that the people would still use dollars as currency if the government where to say they were not valuble, just like Daric, Sigloi, stator, Tetradrachm, Drachma, Ma'ah, Prutah they are all still used as currency today? why would the dollar go against statistics and survive after the entity that owns it says it is no longer valuble.

gold survived

myp · Jun 19, 2012

clax said:
if we say that there is a fixed rate of inflation of 2% anually.

$100.00 dollars in 1971 would now be $225.22 that has over doubled.

that means what costed $1.00 in 1971, now costs $2.25 which isn't true because the increased in dollar amount much more. a gallon of milk by the link below was 1.18 in 1971 by now it would be roughly 2.70, but it is more like 3.89 that represents a 3.5% rise in inflation on average sence 1971 and if it continues in fifty years that gallon of milk will be $27.01 this is assuming that the 11 trillion dollars of debt has no effect on the current dollar.

http://www.1970sflashback.com/1971/ECONOMY.asp
http://www.treasurydirect.gov/NP/BPDLogin?application=np

I want evidence of this kind of extreme inflation in gold, to prove that it is less stable.

I don't need charts to know see the writing on the wall.

You can't use actual prices of a gallon of milk from 1971 to now as a measure of inflation. Because the supply and demand of milk has changed a lot since then too and that has nothing to do with inflation.

And about gold being volatile- again I showed you the graph, which is obviously based on numbers. If you want the numbers, why don't you just loo them up? (although again a graph IS numbers)

myp · Jun 19, 2012

clax said:
http://workwithbrianandfelicia.com/...1/03/013e009e-f1eb-4021-8884-b13e7f477588.gif

a stable decline is still a decline.

When did I say it is not declining? In fact, I admitted it since I said we target 2% inflation. And look at that graph from after 1971- looks pretty damn good.

clax said:
http://blogs.reuters.com/commodity-corner/files/2007/10/gold_dollar_new.gif

i don't see any stability in the dollar

The USDX is vs. a basket of foreign currencies, which is more volatile than the basket of goods in core CPI or PCE. Anyway, stop arguing that gold is more volatile than the USD factoring in the Fed right now- it simply is not true. The numbers including volatility numbers are out there. The only thing you can argue is gold keeps its value better in the long-run, but as I showed that does not matter because consumers need relative stability in the short run.

myp · Jun 19, 2012

clax said:
a government controls the value of a dollar, not people. if by chance the USA desolved the dollar would be worthless, but gold would not be.

Actually people do, otherwise the government could just keep it stable. Again
MV=PY

clax said:
why would the dollar go against statistics and survive after the entity that owns it says it is no longer valuble.

Just because other currencies have failed means nothing (ironically a lot of failed currencies can be explained through the body of work that supports my argument anyway). Furthermore, there have been many many civilizations who used various types of gold currency which have also failed. Gold itself survived because it is an element! What kind of argument are you making? It's like saying, oxygen has survived all these years because we care about it.

That aside, gold would be so impractical to use in real life- how the hell are you going to divide up gold? Do you realize how small a piece of gold worth $1 is?

But seriously, I am not even going to get into the practicality of using the currency because the monetary argument for gold in itself fails, especially in the manner that you are presenting and supporting it in.

clax · Jun 19, 2012

myp said:
You can't use actual prices of a gallon of milk from 1971 to now as a measure of inflation. Because the supply and demand of milk has changed a lot since then too and that has nothing to do with inflation.

And about gold being volatile- again I showed you the graph, which is obviously based on numbers. If you want the numbers, why don't you just loo them up? (although again a graph IS numbers)

You showed me a graph using comodities, which are irrelavent due to supply and demand.

Eurozone to prepare for Greek exit

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