The spain example why the gold standard did not work is a horrible example. 1. Spain at that time was a monarchy. People did not have freedom and more gold (plundered from the americas) actually made Spain poorer not wealthy. It like when a poor person wins the lottery. most of the time those people go back being poor bc they did not know how to manage their own personal finances correctly. Same goes with Spain.
I love Khan Academy, but the comparison used in this video, of a pile of gold next to real wealth, is incongruous. Gold can be, and has been used as a means of "real wealth" transfer just as fiat dollars have. A better comparison would be between gold and fiat paper, perhaps with trust in the government and the ability of said government to tax thrown in on the fiat side.
I watched ... and now this? If everything is so wonderful why am I forced to stop using the clothes dryer and also to cook outside because I cannot afford my utilities..... and I've never been so poor while more educated than ever? Why was I forced to shut down my manufacturing business .... if everything is so rosy? This gov't doesn't do CRAP and I'm certainly not going to trust the US economy for it's full of deluded snots who think the world revolves around them, their ideas and opinions.
so tell the government to keep the gold its not worth anything, give us paper in return, but they can keep the gold and sell it back to us.. other than that i really apprecate your videos:) peace
As I watch this whole series, I am starting to think that it's useless because it doesn't address the most important question of all: INFLATION which diverts resources and is a tax. Inflation is a big problem (even not hyperinflation) because it compounds wildly.
Gold did not become more expensive. The $ became cheaper.
@DaniFazeres Not for ordinary people. It's good for those who get to create the money out of thin air and use it at its original value first. Also, the way that CPI is calculated is a massive fraud. All that should be considered is the money supply, and then you see that the real inflation (inflation is the increase in MONEY SUPPLY) is like >5% per year.
@ybulldog14 Wrong. Inflation is in the increase in money supply. That usually leads to an increase in prices, but prices can rise and fall independent of the money supply.
Read about how the CPI is "calculated" and you'll see what I mean. It's no secret, just look into it.
@IvanAndreevich That depends. An economy naturally is inflated in order to grow. The gold standard doesn't allow an economy to expand because the amount of actual gold in an economy is finite and based on external factors on the price of gold.
@IvanAndreevich The reason that Nixon took the US off the gold standard was that one British Ambassador appeared in the US treasury with the amount of money to purchase a third of the physical gold held. If the 1929 depression was caused by the contraction of only 3% of gold in the money supply, imagine what removing 33% would cause. The gold standard does lead to growth or else it would never be used. But the question is whether it is worth it when the currency is so volatile. cont...
@IvanAndreevich ...cont. The US dollar can be purely paper and backed by the US government if the people had the right to own it. Unfortunately that is not the case today due to the fractional reserve system which is the machinery of inflation and not the fact that the dollar itself is paper. The Spanish Empire had a major crisis in the new world when they discovered gold because its intrinsic value slumped. So the price of gold will always be based mostly on global uncertainties.
@lugankid It's a transfer of wealth. Increase in the GDP is not the end goal of existence, and it's not necessarily a good thing either. It could be, but not through inflation. If you have a 5% growth with 5% inflation that's just terrible.
5% RGDP growth +5% inflation wouldnt be terrible. It wouldn't be awesome either. Essentially it would expand the pie and keep your purchasing power constant. 5% NGDP growth and 5% inflation would be terrible because that would mean no real growth and a decrease in your purchasing power.
@lugankid And right now we have 5% inflation and 2% NGDP growth. Amazing shit right there.
When blowing up bombs results or destroying perfectly usable goods (cash for clunkers) is seen as "economic growth" you can tell how much good that is - none at all.
Also, you forgot to explain how there was good economic growth on the gold standard. So how?
Stop throwing numbers out of nowhere.We have 3.5% inflation (completely normal) and roughly 1.5% rgdp growth. I made a mistake in my preivouse post. 5% rgdp growth+5% inflation is actaully great because rgdp is already inflation adjusted. 5%NGDP +5% infaltion is neutral. The economy was in a horrible state in the past two yeaars becasue we had no inflation. Inflation keeps the economy rolling along and can induce production. I'd look at Keynesian model
@lugankid Out of nowhere? Google "real inflation rate". The CPI is a fucking scam of an index twisted to lie.
Now with the real inflation rate of over 5%, the economy is shrinking in real terms. Look around, people are worse off than they used to be in real terms.
Yeah, sure it can. It can give you a 10% inflation rate which will wipe out the savings of everyone and rape the elderly and the poor who are on fixed incomes.
did he mean that we have now SOLD the labor of every american citizen beyond our ability to produce ???? lol as our ability to produce has now ben limited by those who own the gold I would say that we as a nation are screwed
I'll tell you a simple paradox, if gold, platinum...(the rearrest materials) are money, then why is Africa the poorest continent yet its blessed in abundance of this yet its poor? And that is reality (& yes Im aware of the political factors that hinder it), but have you thought that?
Anyway, the meaning of money (be it anything), is what someone is willing to work for it. Besides that it has no value. **That's the meaning of the gold island paradox**
@j0hnc00 money isn't wealth.. this is the whole problem here. People are baffled by these terms. Wealth = abundance, labor, ideas, etc. Money = a means to do barter without having to have a 1-to-1 trade of goods and services. The reason why gold makes a good currency is because it is scarce. Gold backed currency is a means to keep the government honest. "If you trust the government to manage the money supply".. obviously we don't! Duh!
@quantumG Gold isn't a good currency because it can't expand to suit growing productivity (due to science & population growth). That scarcity will cause a deflationary spiral in this age... (see the inflation, deflationary spiral, stagflation vids).
Anyway what you are hoping for a system where productivity can always match money supply but gold doesn't do that.
@quantumG Are you coming from those Zietgiest videos that "expose the government for the crooks they are"?
Just a word of advice, I used to be hooked on those guys, but a little rationality/skepticism is important, I mean very important. But regardless, you can't have the best of both worlds, you either get "Immalleable /open currencies" (weak to no government) and the side effects... Or one which attempts to adjust the money supply to productivity & "the dishonesty".
@j0hnc00 no... I'm coming from reality.. where fiat currency after fiat currency has failed. The tradeoff between gold backed currency vs fiat currency is that with a fiat currency the government can pretend they can control prices, fail, and cause depressions. Gold-backed currency worked in the US for over 200 years.
@quantumG the economy of 200 years ago isn't like today and can grow as aggressively as today. Plus the gold isn't enough to cover the population today...(hence the deflationary spiral argument AKA the nightmarish "low prices miracle".
your "I'm coming from reality" statement kind of means you haven't understood the Zietgiest because they say exactly what you are supporting. And of cause they have fancy vids explaining it.
@quantumG BTW, I'm not oblivious to the gold standard (the modern variant is the 100% reserve system) currency since I used to be a supporter of it. It all seemed perfect and basically the desire for stable/static prices was sole reason for the heavy attachment to it.
And no doubt, I still have this desire in me, but a little rationality & knowledge has lead me to accept that these alternatives are all utopia & even PHD students fall victim to the reality.
@j0hnc00 it's so cute to hear someone so ignorant act so condescending. Might I suggest that you go read a few books.. perhaps more than your professor of the moment requires. You may discover that concepts like reserve currency and economic theory predate silly videos on the Internet. Although I expect you wont.
@quantumG You've dropped to ad hominem attacks and straw man arguments thus ending any rational emphasis in the argument.
I'm sure we all know that holding a professorship title or writing a book won't make your argument hold water, especially since words can be deceptive. But Regardless I'm actually interested in learning understanding various theories (the hard part is separating the utopian bias, especially with radical alternatives) and eventually testing my own one I've been developing.
Gold is money. Money is not wealth. Money is a commodity like any other commodity. We save gold/money so we can exchange for other commodities that we desire; or invest in businesses that would earn us more money and get more stuff that we might want. That's why you don't want that pile of gold in the island. You want food, clothes, tools etc.
Bottom line is, no one can mess with gold like they can mess with paper.
@limey36 Gold is more often an asset, - a very liquid one, a very safe one, one which take a lot of interest, but, most of the time, it's still use like a bond. Just look the language: to protect against devaluation of $, this is the same as collecting interest rate due to a double negation (not not B -> B).
This said, it could act as money sens some place will accept to trade goods against gold, but I can't go to starbuck&McDonald with a bullion without a "Sorry, dollar or credit only".
It is a VERY big deal when Nixon finally cut off our last link to gold. It is tantamount to declaring US bankruptcy - we cannot fulfill our obligation of redeeming US dollars with gold like we promised. Trust me, Nixon wouldn't do it if he has a choice. He was cornered by France who called our bluff! Please read Rothbard, and even your friend Mish's recommendation. Apparently, he is a libertarian.
We haven't seen hyperinflation despite the fiat money and excess credits, exactly because of what Sal said: innovations and productivity! They keeps prices down !!! (BTW, definition of inflation is not rising prices, it is the increase in money supply!)
Just imagine if we don't have govt fooling around with our money supply, like Peter Schiff said, we have to look to another solar system to find any places that can equal our living standards!
Three: Taxation is at best a redistribution of wealth and at worst outright theft.
Printing is a form of invisible tax which you will realize when you can only buy half of what you used to. Borrowing is to steal from the future generation to gratify your present wants.
If gold is just sitting there doing nth, how about we use oil as money? Who can store oil in their basement? Gold is the most time-tested commodity to be used as money because of its unique qualities.
Two: true, gold is pretty and is just sitting there doing nothing. But so are the pieces of paper. They are not even pretty!
Gold is scare. It has intrinsic value. It has all the qualities that make it the most desirable commodity to use for transaction. Govt hates gold because they can't print gold. We are so used to the paper that we even condemn gold or "goldbugs" as Keynes said: "barbarous relic". It is the product of 100 years of brainwashing in govt schools.
One, with all the inventions and increase in productivity, if we are still on the gold standard, the prices of goods will drop accordingly. You don't need to discover more gold because every dollar that you get will keep getting you more stuff as prices drop. Are you afraid of the prices of iphone and ipad dropping so you will wait out and not buy it? Eventually, you will buy it even though you are well aware that you will be losing money.
I think this is a great learning video. Khan is exceptional with teaching and I've visited quite a few of his videos- all great. But I still support causeimthesquad's argument here that "the price of gold is not fixed - its relative."
Educated people are stupid. Money must be accepted in circulation, divisible, and hold value. Debt notes and gold do not fill this need. Bank notes are in hyper inflation, where prices are up 1,000% since 1971. America is being raped by the Fed with bank debt notes. I predict $4,000 gold and $4,000 Dow by 2020. Protect yourself. America is being destroyed by debt notes, at $14 Trillion now. You are obviously misinformed regarding politics and history. Gold is money. Debt is not money. Get it?
humans need a natural limit to their greed, fears, and desires to control the world. Gold fills that limit. Humans are not to be trusted. Humans are evil. Humans have unlimited greed, fears, and desires. Rule of law controls humans. Gold controls rule of law. Gold is not food. Money is not food. Gold is limited by nature. Debt notes have no real limit. I trust gold. I do not trust evil people like Alan Greenspan. Debt notes are not money. Island example is flawed. Gold is a brake on humans.
If gold no longer backs our currency why do we hold so much in reserve? We currently hold 8,133.5 Tonnes. At market value that's $428 Billion. I realize we couldn't dump it overnight but a systematic divestiture could put a significant dent in the debt. Since it's our gold, confiscated in the 30s, I think the government owes it to us to do just that.
Currently the US $ is backed by oil. In this video, as Sal pointed out that we are now going off the Gold standard and rely on paper money - that is because the economy of the world has increased to an extend where Gold simply is not enough to support the real wealth. However, there is enough oil to back up the $ though, which is why US has control over the most oil in the world and goes to wars to keep the oil flowing in order for the $ to have value in the international market.
Sal asks where does the gold come from and how do you get the gold if you want to further your economic aims. The answer is that an exporting surplus attracts gold.
Gold as a standard is indicative of successful productive capacity and it serves as a reference point . It also regulates the trading cycle of surplus and deficit so that these cycles are moderated. The US currency ,as a standard ,does not follow as a consequence of productive success . It facllitates future potential success.
Isn't the power to print New Bank Notes the cause of inflation, the cause of Boom and Bust climate, the rich and the poor, the Them and Us? Generally? Sounds like a VICIOUS CIRCLE.
@Cecelle8910 It depends if the new bank notes exceed productive capacity. If there is an imbalance in the money supply in so much as the money xerts pressure on productive capacity then inflation occurs.
The value of Gold is rising, isn't it? It holds its value more than cash. You can stuff a $million in a mattress, but it would de-value over time. Gold of same initial value @ same time increases in value, (I think); but certainly hold its value at the rate of inflation or more. The raw & physical Gold is Working, doing something, appreciating, perhaps. Money in the bank appreciate less than Gold in the bank, unless invested in a successful business (Oil). But I get the Lecture. Thank U.
Stick to tutorials on mathematics. You are either incredibly naive, are being paid to be a spokesman for this criminal enterprise, or are just ignorant of reality. You discount for inflation and THEN say see there is no inflation! LOL. The price of oil is up 300% in just two years. That is hyper-inflation. There are multiple ways this system is gamed to redistribute wealth to a plutocracy and to old boy networks. Educate yourself, then try again.
You have a great idea behind your online class program, and it could very well be the future of education.
But, you need to get away from this central banking propaganda and realize that the gold in the vault is there to restrain the central banks and governments from getting $14 trillion in debt.
I haven't checked, but would be willing to bet that you don't have any history classes that discuss the great hyperinflations caused by abusing monetary policy.
Nixon took the US off the Gold Standard in a panic after countries holding major volumes of US dollar denominated assets grew doubtful of the US's ability to honour the 35$ per ounce promise, and started to demand en-masse payment in gold.
The US dollars new found status as a world reserve currency, facilitated the US current account deficit policy, which has fueled the (global) economy on prevaling BOOM, very soon to be followed by an almighty CRASH!
golds a constant, thats why its valuable. gold is not growing in terms in wealth, the dollar is just dropping compared to it. why? inflation, and lack of confidence. who would even consider having confidence in a currency where you need 14 gabilliongiilliontrillion to pay back china and other lenders. i'm better off collecting those POGS things from the 90's. Probably worth more than a dollar will be soon.
You don't want to increase the money supply. The gold is how much wealth we have. Scarcity is what gives money value. He's just proven that paper money is worthless. Each dollar now is worth less than 1000th an oz of gold. Everyone recognizes gold as an international commodity. Gold is wealth. The dollar is not. The Government being an all powerful lone entity should not be able to tax us at will by continually increasing the money supply. I can see how much less my money is worth.
@Luigi84289 Gold's supply is constant that is exactly why it's a better currency. If this guy knew anything about the constitution or American history he'd know why Gold and Silver are supposed to be the only types of legal money. One of the biggest reasons we fought the revolutionary war was because George was going to introduce unbacked paper currency into the colonies. Look at the dollar it takes more and more to buy gold every day
@Luigi84289 Stability and unbacked paper don't go together. The greedy in control will always print money for what they want taxing us all. Who designates how much Bernanke makes or the whole board? And why does this video promote blind submission to a minority of men who are our agents?
@Luigi84289 Taxation without representation included inflation. A product of the out of control printing of money. It is a tax. Asking people for more money for a service they paid less for a day before is taxation. That's why we didn't have a central bank for 80 years.
gold 700? that was when the vid was done. now its above 1400. seems like a lot of ppl value it more than these fed notes. the important thing about gold, its perfect for exchanging goods (trading). the US chose silver as a currency in its beginnings, thats why a dollar actually meant 371,25 grains of silver, 2 dollars 742,50 grains...
actually, with gold (or any agreed on value) backed IOUs, the value of the circulating note wld rise, due to the technological development of humanity. so today even with 0% inflation and prices being constant someone is getting that surplus of our own work or the amount we pay more (which has to be worked and earned for). the biggest con in history.
Whoever made this video really needs to read the Creature from Jekyll Island by G. Edward Griffin. I like what you are doing Khan Academy but several of the theories put forth in the video are full of holes.
Khan, You gave a good talk on this topic. But you ignored the reason why people over historic times have always come back to gold. Currency ALWAYS was debased by governments. The hint is that NO govt can be trusted to think long term.
Drives me nuts when you bean-counters struggle (and continuously look incredibly dumb on FOX), when trying (for decades), to figure out that potential available "unskilled labor", and industrial assets, are the real measure of future growth of a country. Such geniuses, yet still shooting in the frigging dark! Create nothing, yet survive by fabricating a perception of value.
Degreed in Moronism! Useless as tits on a mule (which cannot genetically procreate!) Majority are a watse of mass....
In '77, my ex-wife (student at an American University) was to buy gold by an economics professor. We did, and quadrupled our investment within 4 years. We sold, and the gold market dropped by better than 50%. Turns out the Hunt Bros. manipulated the market to create this bubble, & subsequent crash. Moral of the story is that the filthy rich control every aspect of the market, and there's not one damed thing we can do (other than have incredible timing, or insider ties), to benefit! Killem-all!
@onion77478 Yeah, I've seen a few "precious metals" merchants trolling around here, trying to increase their sales base. Anyone reading should do a simple search about "Silver Thursday".
Just like any "chain letter" or "pyramid scheme". If you weren't in early....
Hey, I guess they'll find out soon enough, like the other 95%'ers of past history!
Khan, thank you for the videos. You aroused a question in my mind.
Do you agree FRB is the real evil here? With10:1 R.R, private banks get 10 x interest rate. This money again becomes a banks asset and multiplies like weed and hits the common man in the form of inflation. Isn't FRB a way to retain poverty ? ... we havn't seen price of apple go down from $1 to 0.90 as a result of wealth creation as you cited in earlier videos.
It is not about gold or bonds, but FRB. Gold can pull down FRB.
@covingtonium While true, the cost of goods increases when you print money, those costs are distributed across the economy though. So if there is $100 in circulation and the government prints $100 new dollars at a cost of printing of $1, they have just halved the value of the $100 currently in circulation. This means that they can now purchase $50 worth of goods at the cost of $1 (printing costs).
@Micah71381 I have some problems understanding this. I don't think it costs them only one dollar to purchase 50 dollars worth of goods. The money they use to pay is either from taxes or from the sale of treasuries. I don't know if the govt is allowed to use money they just printed from the bureau of engraving and printing for immediate purchase of goods or services. If so, it is because they give it to the fed, who then buys treasuries with it.
@covingtonium I recommend checking out the Wikipedia articles on "Quantitative easing" and "Money creation". The first talks about how modern governments put money into circulation while the second talks more broadly about money creation, whether it be free market minting or government quantitative easing. However, to answer you they are able to spend the money immediately. The $1 for $50 was just some numbers I made up but in reality it is far cheaper than that for them to create money.
@covingtonium I agree, it costs the taxpayers but only because the value of their money is decreased every time new money is printed. When looking at money creation as a tax is unfair because it hurts people who save and invest while it helps people who are in debt. Also, unlike taxes it is unknown to most people that this is occurring so they are essentially being taxed without their knowledge. Also, the money that is created is never "paid back".
Wrong analysis. Cause gold represents labour. It's a medium of exchange. The farmer puts labour in harvesting crops, the carpenter puts labour in making a chair, etc. etc. and a banker should put in labour by mining gold. Right now "banksters" are the parasites of the society. And taxation is enslavement by your goverment! Watch movies like Money as Debt, Zeitgeist II: Addendum and The Money Masters.
Correct me if I am wrong, but to increase the money supply on a gold standard the Fed would have to make each note worth less in terms of gold we do have, thereby creating inflation, or the government would have to see if the Incas have some we could steal. With a fiat currency, we could keep inflation in check by simply regulating the supply.
Really nice set of Videos, Khan. I realize it's much more complicated than you get into, but you're review of the ideas involved is unmatched.
Central banking, fractional reserve, single currency, etc. are all good ideas as long as the central reserve bank (the one issuing the standard currency) is fully backed. If this is the case all of the other banks that are backed by the central reserve bank can partake in fractional lending and therefor multiply the money supply. As the economy develops and the the ability to produce resources becomes easier then the cost of goods will decrease and this is not a problem.
As you eluded to in the video a fiat currency is based on the assumption that human beings (government) can do a better job of anticipating and controlling the market than the market can do for itself. If the currency is backed by some commodity (gold, soy, energy, etc.) then the market will dictate the value of the currency at all times. If a commodity becomes easier to produce it doesn't matter because the value of the currency will adjust accordingly. Government can't adjust accurately.
In the ideal world we can have a fiat money but only if they compete with gold people need to have choice. If instood of saying gold you said silver than you can say it is not only preatty but has a 10.000 industrial uses. We need to have booth money system competing in the same time. You can also have a corporate money backed by the corporation assets and future production of goods and services.
@Alexiscom1 regardless if you use a fiat currency you must have someone in control of printing it because eventually the paper dollar will get torn and worn out and must be replaced, so there will always be a printing authority
Secondly, your thesis presupposes that government are the people. Imagine a world with no government, the population you see is made of individuals or, people. My question to you is, what makes you think government is more people than people themselves? Do you understand the fallacy in your assertion now?
The government are people, they are not "the people". And they have a rational self-interest, with decision making power with minimal liabilities. They will always pull the rug their way.
Sorry Khan, but there is a point where even taxes cannot repay the liabilities over any amount of time.
Gold requires mining effort, handy for semi conductors, it is also a great metal for space travel, jewelry of course which is much more than any paper can provide.
You are comparing gold to the government which is a monopoly on decision-making and force that can tax and empoverish society as it desires. Every time you invest in the government, you invest in your own demise. Rethink this.
your dichotomy 'gold' or 'us govt' doesn't sound right. if we had free banking, where banks can print their own money, paper money would be backed by.. the people, banks, investors, governmentS, land gold, silver, oil, etc, basically anything that has value, therefore spreading the risks. i think the fed is bad at doing their job coz they don't have a profit motive.
An excellent video. And you do properly have that caveat "if you trust the government to be able to pay it back."
Greece right now has gotten to a point where they can't make good on their debts through taxation. Should the US get to that position, it would HAVE to print money and force deflation. Gold therefore is not "real value", it's just a currency like a dollar bill. But one that a government can't intentionally deflate.
(I'm just echoing your "if", not predicting myself.)
I see your point with fiat currency being more representative of real wealth since it is an obligation of the government, and that would be fine if governments in general could be trusted with money supplies backed by nothing but hopes and dreams. Monetary policy is inextricably linked to fiscal policy, and with the US government being fiscally suicidal pressure to print will eventually come up. I'd prefer something of fairly stable value I can change for other currencies.
Gold's main value (outside of some industrial purposes) are that it is scarce and we as humans find it very aesthetically attractive. This allows it to be used as a universal unit of exchange. The point of this video is not to insult gold, but to point out the difference between wealth (land, food, labor, skills) and things that can be exchanged for wealth (gold, paper money, etc.). Also, when you have a "gold standard", the price of gold is inherently fixed.
Why is the price of gold fixed? It's all relative. The quantity of gold is rather fixed.
The purchasing power is what the value of gold. Gold's value is dependent upon the market demand. The difference between gold and paper currency is that gold has some intrinsic value and the supply cannot be inflated.
The "money isn't wealth" argument is moot when there's a working market (trade). The fact is fiat currency is managed and abused by those in power. A monetary system based on such is unstable, by definition. Look into Sound Money. The Gold Standard and pre-1971 Brenton Woods system are NOT Sound Money. If you look into it, you'll find Sound Money is indeed immune from inflation, by definition, and doesn't necessarily mean gold.
Correct, under a true gold standard we would have a fixed gold price. People are beginning to realize that abusing monetary policy leads to unsustainable entitlement systems, perpetual war and deindustrialization.
Mr. Khan, PLEASE consider offering classes on Austrian economics, sound money, and liberty. If you want to remain relevant, and be ahead of the curve you'll have to. Stand out from the crowd! That seems to be your vision, after all.
One last note: I hope you're reading all of your "feed back" below and are realizing that you are losing all credibility by endorsing fiat currencies and central banking. I beg you to consider including material by Mises, Rothbard and Hayek.
Stand up and use your growing influence to promote sound money and a return to fiscal sanity. God knows the classrooms aren't teaching our kids this. I refuse to believe that you truly buy into Keynesian dogma, you seem to be a smart guy.
@khanacademy You need to ask the Chinese if the US governments promise to pay is as sound as gold.
Clearly you are mistaking contractual issues with intrinsic value. I would say that the whole subject should have been avoided by your academy or that it should have suggested the pros and cons of each idea .
Fiat currency has allowed many growth projects to emerge but its weakness is that can be overused.
@khanacademy Gold is wealth. The axiomatic, factual reality that if I go to my local Walmart, gold is (and consistently has been) a valuable commodity. Its ability not to corrode and look shiny is being downplayed as meaningless, but observable reality shows that gold truly is valuable. There is no "price of gold" in a gold standard. You see, gold itself is the standard by which price is defined. Price is a ratio between a product and gold. Commodities relative value to one another will not
@khanacademy change due to an increase or decrease in the supply of gold, ceteris paribus. That is, if the commodities themselves don't become more or less valuable, their ratio to gold will be relatively equal. I took economics in college and the textbooks made philosophic assumptions. For example, psychological egoism, the assumption that everyone acts in self-interest, is incompatible with the gene-centric view of evolution where alleles are the logical unit of evolution.
@khanacademy I do not believe in the Illuminati and other conspiracy theories circulating the internet. I do, however, think that Ron Paul is onto something. Economist Murray Rothbard set forth ideass to mainstream economics in "What has Government Done to Our Money?" that I believe counter at least some of your objections to the gold standard (like the price ratio to gold I mentioned). You might really enjoy it if you get a chance to check it out.
The internet, as great as it is, allows certain dumb ideas about gold and economics to flourish. Sal is just pushing against these ideas and trying to make us all less dumb.
@khanacademy The dollar's inflation is attributed to people's dependency on the government allocation of the dollar bill. Fiat currency has always fails, and due to today's HYPERINFLATION, gold is valued not at $800/ounce, but fluctuates between $1,500, and $2,500!!! The fake dollar bill has been demolished on an astronomical level, and has allowed the central bank to set artificial interest rates resulting in trickle down economics. Gold is superior because it cannot be manipulated...
I don't think the attractiveness has that much to do with it although it may have played a part, it's really quite subjective and in fact I know plenty of people who don't like what gold looks like and they're a sizeable minority. The real reason why gold became money is because of its properties, easily divisible and perfectly fungible mixed, as you said, with the scarcity factor. It lends itself to being a unit of account which is what money is, just an accounting system.
@BlindWebster, I don't understand why someone who believes gold is better store of wealth than anything else would want our currency to be on a gold standard. You are effectively saying that over the long term, the buying power of a fixed amount of gold will inflate more rapidly that the fiat currency it costs at any particular time. Why would you want the government to get involved in any way (as a large buyer or seller of gold) because that could only influence gold's price artificially?
@covingtonium In the US monetary system gold is not a measure. In a gold backed currency though it is used to give value to the paper currency. If it costs 10 unskilled man hours to mine and process 1 oz of gold and you can redeem $1 (paper currency) for one oz of gold then what you can buy with that $1 will always be equal to 10 unskilled man hours of labor. If it now takes 9 hours of unskilled man hours to get 1 oz of gold then $1 will now be worth 9 unskilled man hours.
Not sure how old Khan's presentation is, but gold is now selling at about $ 1,120 per ounce. That means it has increased 31.428 times in value since 1970.
To Khan's point, though, the U.S. GDP has increased at a slightly higher rate, from about 3.8 billion dollars in 1970 to over $ 13.1 trillion in 2009.
If the U.S. economy had not grown at the rate it has since 1971, then we'd have a problem.
And let us remember, Nixon wasn't exactly a "radical."
Has gold increased in value? I would argue it hasn't, but rather, that increase in value you are seeing is just the devaluation of the dollar. If you price assets in gold, you will see a very consistent price. However if you use dollars, inflation is enormous. The supply of dollars has increased dramatically, as such, the value has dropped.
Also, lets note Nixon was in fact quite radical. Took the US off the gold-standard, directly against the Constitution.
"Would you rather have something backed by gold or the U.S. government?" Excellent question, on the flip side a bad answer when you look at the criteria and the formulation. You define gold and the U.S. Government, the last one in the way a legal monopoly (right/authority) of taxing works. The criteria you stated for gold and wealth were cant do work; cant be eaten; it cant make us more motivated; cant make us happier. So if you would apply these criteria on the U.S. Gov., you would reach
the same conclusion that is not real wealth. You were comparing by using different criteria. If you look at the legal monopoly of taxing, it is a mere medium for retrieving wealth from the population for redistribution and it is by definition not wealth. So what backs a Gov? When looking at my own situation over here in the Netherlands it is the legal monopoly of taxing and the legal monopoly on violence. That is the respectively for example taxing income and enforcing that that tax takes place.
I think our backing is similar to the U.S., I am -of course- not sure about this. The analogy you sketched has little to do with answering the original question, its answer is a quite logical one. If you are a human that relies on substance to survive, you would always choose for an island filled with recourses as cows, fruit-trees, fresh H2O etc. You make it seem that there is a choice between these things, but that choice is already pre-determined by human psychology, human urge for survival.
To answer the original question, "Would you rather have something backed by gold or the U.S. (Dutch in my case) government?" I would choose for gold or other precious metals. My foundation for this choice would be that my own government and every other one -I know of- have a reserve of precious metals for when they need it. They place their trust in the stuff, so do I.
When governments collapse, their currency becomes worthless and gold always retains it's value. My family lost a lot of money when they had the old Mexican Pesos and the new ones came out with different values, had they had GOLD they would have lost no value between the currencies. Hindsight is 20/20.
So true about the hindsight. We, Dutch citicens, lost 10% of our net worth when trading the guilders to the euro. Wish I went into precious metals before the change.
The U.S. military packs these into paratroopers' survival kits when they do missions behind enemy lines because they are acceptable currency anywhere in the world, whereas the U.S. dollar is not.
Deficit spending is simply a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.
From "Gold and Economic Freedom" a 1966 Essay by Alan Greenspan
Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies...What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment.
If fiat currency is so fantastic it can be printed or digitized in unlimited quantities as is the current path of the US then why manipulate to supress the price of gold and silver to support the US$. This indicates the officially even the powers that be view fiat cash as trash.
Check out "The Creature From Jekyll Island" - or even better Mike Maloney's "Guide to Investing in Gold and Silver". There are fundamental differences between money, currency, and fiat currency. The reason it is important that money has the three properties: 1) medium of exchange, 2) unit of account, and 3) store of value, is that the value couldn't be slowly drained, or instantly removed from the people, it was distributed, not centralized. I respect your work, but you should reconsider this.
The two islands is a silly analogy. The question should be which 2 islands one with gold other the Federal reserve notes is more accurate. I would probably just keep flying but more people would search for the island of gold than of fiat currency and so have better chance of being rescued.
land on the island with the gold, transport it to the other island to barter with. landing on somebody else's inhabited island and taking all their shit was how america was founded :)
@funisverygood since the fed creates "notes", backed by an obligation of the government and in reality the obligation of the people to pay it back via simple work, it creates debt, and has to be payed back. so if you lend me anything and i write you an IOU backed with my house, and pay off my debt with more IOUs and so on, at somepoint you will see that my debt is greater than the value of my house and you will want to get payed back before that, and before others i owe to realize that, too.
@jcvjcvjcvjcv in this economy i can see one problem: prices will always fall down nominally if the economy grows. businesses will have to get used to the notion of getting less and less nominal profit, people will have to take paycuts. of course purchasing power will increase with each gold coin in time. but you just get less and less of it. im not sure if that looks nice. any thoughts?
The spain example why the gold standard did not work is a horrible example. 1. Spain at that time was a monarchy. People did not have freedom and more gold (plundered from the americas) actually made Spain poorer not wealthy. It like when a poor person wins the lottery. most of the time those people go back being poor bc they did not know how to manage their own personal finances correctly. Same goes with Spain.
MrIKnowNADA 3 days ago
He said it! metals never lie, steal, cheat etc. + people DO want to return to markets based on metals, commodities + barter. Quick History lesson:
South american gold + silver didn't enrich spain because
a. more than half went on venture capital repayments to banks of london + amsterdam.
b. spanish aristocracy's cowardly system of favours meant that the remainder wasn't properly accounted for + was squandered.
c. london is STILL the bankster capital of europe. metals ARE the standard.
rothkoaintdead 2 weeks ago
You made me think of 'Money is not Wealth' again. I like the example you used in this video.
In the past,I thought money is important (actually,it is), but now I know that the wealth is more important.
We all chase for money, but sometimes we can only see the money but ignore something that deep inside.
What is money for? It is for our real life, not just the number in our deposit accounts.
And I think inflation made us know that money is not that important, because the wealth is shrinking...
dadac123 3 weeks ago
I love Khan Academy, but the comparison used in this video, of a pile of gold next to real wealth, is incongruous. Gold can be, and has been used as a means of "real wealth" transfer just as fiat dollars have. A better comparison would be between gold and fiat paper, perhaps with trust in the government and the ability of said government to tax thrown in on the fiat side.
FeelingBlueTubes 1 month ago
This has been flagged as spam show
I watched ... and now this? If everything is so wonderful why am I forced to stop using the clothes dryer and also to cook outside because I cannot afford my utilities..... and I've never been so poor while more educated than ever? Why was I forced to shut down my manufacturing business .... if everything is so rosy? This gov't doesn't do CRAP and I'm certainly not going to trust the US economy for it's full of deluded snots who think the world revolves around them, their ideas and opinions.
watchthemoviefitna 1 month ago
i mean technology
GoLoudProductions 2 months ago
gold is used in technolody so it does have a use
GoLoudProductions 2 months ago
im lost...
dillon1austin 2 months ago
so tell the government to keep the gold its not worth anything, give us paper in return, but they can keep the gold and sell it back to us.. other than that i really apprecate your videos:) peace
youfinallymadeit 3 months ago
I'm watching this video because of Ron Paul.
lnr08f 3 months ago
How did I know this video would stir up a ton of controversy.
I did like the quick explanation of why we went off the gold standard. Convenience? lol no. It was a way for America to welch on its obligations.
Equity213 3 months ago
gold has gone up in price.... government has bombed. wonder why...
blessmess 3 months ago
As I watch this whole series, I am starting to think that it's useless because it doesn't address the most important question of all: INFLATION which diverts resources and is a tax. Inflation is a big problem (even not hyperinflation) because it compounds wildly.
Gold did not become more expensive. The $ became cheaper.
IvanAndreevich 4 months ago
Comment removed
DaniFazeres 3 months ago
@DaniFazeres Not for ordinary people. It's good for those who get to create the money out of thin air and use it at its original value first. Also, the way that CPI is calculated is a massive fraud. All that should be considered is the money supply, and then you see that the real inflation (inflation is the increase in MONEY SUPPLY) is like >5% per year.
IvanAndreevich 3 months ago
@IvanAndreevich inflation is the increase in prices. also please explain the "massive fraud" of the CPI; I would love to hear it.
ybulldog14 3 months ago
@ybulldog14 Wrong. Inflation is in the increase in money supply. That usually leads to an increase in prices, but prices can rise and fall independent of the money supply.
Read about how the CPI is "calculated" and you'll see what I mean. It's no secret, just look into it.
IvanAndreevich 3 months ago
@IvanAndreevich That depends. An economy naturally is inflated in order to grow. The gold standard doesn't allow an economy to expand because the amount of actual gold in an economy is finite and based on external factors on the price of gold.
AdversusHaereses 2 months ago
@AdversusHaereses Are you saying there was no economic growth until the US left the gold standard? LOL
IvanAndreevich 2 months ago
@IvanAndreevich There indeed was, but this was due to the fractional reserve system which had to inflate the actual amount of gold.
AdversusHaereses 2 months ago
@AdversusHaereses Are you saying there was no economic growth before fractional reserve banking was invented? LOL.
Nonetheless, even with your flawed understanding you just admitted that inflation is not necessary for economic growth.
IvanAndreevich 2 months ago
@IvanAndreevich The reason that Nixon took the US off the gold standard was that one British Ambassador appeared in the US treasury with the amount of money to purchase a third of the physical gold held. If the 1929 depression was caused by the contraction of only 3% of gold in the money supply, imagine what removing 33% would cause. The gold standard does lead to growth or else it would never be used. But the question is whether it is worth it when the currency is so volatile. cont...
AdversusHaereses 2 months ago
@AdversusHaereses It was to print endless fiat currency so as to continue funding the Vietnam War.
TheHiddenMatrix 1 week ago in playlist More videos from khanacademy
@IvanAndreevich ...cont. The US dollar can be purely paper and backed by the US government if the people had the right to own it. Unfortunately that is not the case today due to the fractional reserve system which is the machinery of inflation and not the fact that the dollar itself is paper. The Spanish Empire had a major crisis in the new world when they discovered gold because its intrinsic value slumped. So the price of gold will always be based mostly on global uncertainties.
AdversusHaereses 2 months ago
@IvanAndreevich
No inflation is the increase in prices. Long term inflation can only be caused by an increase in the money supply
lugankid 2 months ago
@IvanAndreevich
moderate inflation helps the economy expand and grow
lugankid 2 months ago
@lugankid It's a transfer of wealth. Increase in the GDP is not the end goal of existence, and it's not necessarily a good thing either. It could be, but not through inflation. If you have a 5% growth with 5% inflation that's just terrible.
IvanAndreevich 2 months ago
@IvanAndreevich
5% RGDP growth +5% inflation wouldnt be terrible. It wouldn't be awesome either. Essentially it would expand the pie and keep your purchasing power constant. 5% NGDP growth and 5% inflation would be terrible because that would mean no real growth and a decrease in your purchasing power.
lugankid 2 months ago
@lugankid And right now we have 5% inflation and 2% NGDP growth. Amazing shit right there.
When blowing up bombs results or destroying perfectly usable goods (cash for clunkers) is seen as "economic growth" you can tell how much good that is - none at all.
Also, you forgot to explain how there was good economic growth on the gold standard. So how?
IvanAndreevich 2 months ago
@IvanAndreevich
Stop throwing numbers out of nowhere.We have 3.5% inflation (completely normal) and roughly 1.5% rgdp growth. I made a mistake in my preivouse post. 5% rgdp growth+5% inflation is actaully great because rgdp is already inflation adjusted. 5%NGDP +5% infaltion is neutral. The economy was in a horrible state in the past two yeaars becasue we had no inflation. Inflation keeps the economy rolling along and can induce production. I'd look at Keynesian model
lugankid 2 months ago
@lugankid Out of nowhere? Google "real inflation rate". The CPI is a fucking scam of an index twisted to lie.
Now with the real inflation rate of over 5%, the economy is shrinking in real terms. Look around, people are worse off than they used to be in real terms.
Yeah, sure it can. It can give you a 10% inflation rate which will wipe out the savings of everyone and rape the elderly and the poor who are on fixed incomes.
IvanAndreevich 2 months ago
@IvanAndreevich
1.Can you please tell me where you got this 5%+ number and what metric was used to calculate it?
2. The economy is not shrinking in real terms because there is RGDP growth.
3. 10% inflation rates would hurt the hoarders and the creditors more than the savers.
lugankid 2 months ago
@IvanAndreevich
the gold standard comment wasnt me
lugankid 2 months ago
Who the heck would trust the government today,especially with 15 trillion in debt?
Gold and silver are honest means of exchanges(money). Paper is not honest,it's counterfeiting.
EDTHEWATERGUY 4 months ago
The way things are going, I think I would rather have the gold over US backed securities!
LiveUnderground1 4 months ago
did he mean that we have now SOLD the labor of every american citizen beyond our ability to produce ???? lol as our ability to produce has now ben limited by those who own the gold I would say that we as a nation are screwed
twoboysareenough 4 months ago
@thegoldislanders
I'll tell you a simple paradox, if gold, platinum...(the rearrest materials) are money, then why is Africa the poorest continent yet its blessed in abundance of this yet its poor? And that is reality (& yes Im aware of the political factors that hinder it), but have you thought that?
@thetruth
Anyway, the meaning of money (be it anything), is what someone is willing to work for it. Besides that it has no value. **That's the meaning of the gold island paradox**
j0hnc00 4 months ago
@j0hnc00 money isn't wealth.. this is the whole problem here. People are baffled by these terms. Wealth = abundance, labor, ideas, etc. Money = a means to do barter without having to have a 1-to-1 trade of goods and services. The reason why gold makes a good currency is because it is scarce. Gold backed currency is a means to keep the government honest. "If you trust the government to manage the money supply".. obviously we don't! Duh!
quantumG 4 months ago
@quantumG Gold isn't a good currency because it can't expand to suit growing productivity (due to science & population growth). That scarcity will cause a deflationary spiral in this age... (see the inflation, deflationary spiral, stagflation vids).
Anyway what you are hoping for a system where productivity can always match money supply but gold doesn't do that.
j0hnc00 4 months ago
@quantumG Are you coming from those Zietgiest videos that "expose the government for the crooks they are"?
Just a word of advice, I used to be hooked on those guys, but a little rationality/skepticism is important, I mean very important. But regardless, you can't have the best of both worlds, you either get "Immalleable /open currencies" (weak to no government) and the side effects... Or one which attempts to adjust the money supply to productivity & "the dishonesty".
j0hnc00 4 months ago
@j0hnc00 no... I'm coming from reality.. where fiat currency after fiat currency has failed. The tradeoff between gold backed currency vs fiat currency is that with a fiat currency the government can pretend they can control prices, fail, and cause depressions. Gold-backed currency worked in the US for over 200 years.
quantumG 4 months ago
@quantumG the economy of 200 years ago isn't like today and can grow as aggressively as today. Plus the gold isn't enough to cover the population today...(hence the deflationary spiral argument AKA the nightmarish "low prices miracle".
your "I'm coming from reality" statement kind of means you haven't understood the Zietgiest because they say exactly what you are supporting. And of cause they have fancy vids explaining it.
j0hnc00 4 months ago
@quantumG BTW, I'm not oblivious to the gold standard (the modern variant is the 100% reserve system) currency since I used to be a supporter of it. It all seemed perfect and basically the desire for stable/static prices was sole reason for the heavy attachment to it.
And no doubt, I still have this desire in me, but a little rationality & knowledge has lead me to accept that these alternatives are all utopia & even PHD students fall victim to the reality.
j0hnc00 4 months ago
@j0hnc00 it's so cute to hear someone so ignorant act so condescending. Might I suggest that you go read a few books.. perhaps more than your professor of the moment requires. You may discover that concepts like reserve currency and economic theory predate silly videos on the Internet. Although I expect you wont.
quantumG 4 months ago
@quantumG You've dropped to ad hominem attacks and straw man arguments thus ending any rational emphasis in the argument.
I'm sure we all know that holding a professorship title or writing a book won't make your argument hold water, especially since words can be deceptive. But Regardless I'm actually interested in learning understanding various theories (the hard part is separating the utopian bias, especially with radical alternatives) and eventually testing my own one I've been developing.
j0hnc00 4 months ago
This has been flagged as spam show
I think this video needs an update
xecut10n3r 5 months ago
obviously the gold island
ehmcheng 5 months ago
Sal is wrong #6
Gold is money. Money is not wealth. Money is a commodity like any other commodity. We save gold/money so we can exchange for other commodities that we desire; or invest in businesses that would earn us more money and get more stuff that we might want. That's why you don't want that pile of gold in the island. You want food, clothes, tools etc.
Bottom line is, no one can mess with gold like they can mess with paper.
limey36 6 months ago
@limey36 Gold is more often an asset, - a very liquid one, a very safe one, one which take a lot of interest, but, most of the time, it's still use like a bond. Just look the language: to protect against devaluation of $, this is the same as collecting interest rate due to a double negation (not not B -> B).
This said, it could act as money sens some place will accept to trade goods against gold, but I can't go to starbuck&McDonald with a bullion without a "Sorry, dollar or credit only".
therrydicule 5 months ago
Sal is wrong #5
It is a VERY big deal when Nixon finally cut off our last link to gold. It is tantamount to declaring US bankruptcy - we cannot fulfill our obligation of redeeming US dollars with gold like we promised. Trust me, Nixon wouldn't do it if he has a choice. He was cornered by France who called our bluff! Please read Rothbard, and even your friend Mish's recommendation. Apparently, he is a libertarian.
limey36 6 months ago
Sals is wrong #4:
We haven't seen hyperinflation despite the fiat money and excess credits, exactly because of what Sal said: innovations and productivity! They keeps prices down !!! (BTW, definition of inflation is not rising prices, it is the increase in money supply!)
Just imagine if we don't have govt fooling around with our money supply, like Peter Schiff said, we have to look to another solar system to find any places that can equal our living standards!
limey36 6 months ago
Sal is wrong also on:
Three: Taxation is at best a redistribution of wealth and at worst outright theft.
Printing is a form of invisible tax which you will realize when you can only buy half of what you used to. Borrowing is to steal from the future generation to gratify your present wants.
If gold is just sitting there doing nth, how about we use oil as money? Who can store oil in their basement? Gold is the most time-tested commodity to be used as money because of its unique qualities.
limey36 6 months ago
Sal is wrong also on:
Two: true, gold is pretty and is just sitting there doing nothing. But so are the pieces of paper. They are not even pretty!
Gold is scare. It has intrinsic value. It has all the qualities that make it the most desirable commodity to use for transaction. Govt hates gold because they can't print gold. We are so used to the paper that we even condemn gold or "goldbugs" as Keynes said: "barbarous relic". It is the product of 100 years of brainwashing in govt schools.
limey36 6 months ago
Sal is wrong on a at least 2 things:
One, with all the inventions and increase in productivity, if we are still on the gold standard, the prices of goods will drop accordingly. You don't need to discover more gold because every dollar that you get will keep getting you more stuff as prices drop. Are you afraid of the prices of iphone and ipad dropping so you will wait out and not buy it? Eventually, you will buy it even though you are well aware that you will be losing money.
limey36 6 months ago
THIS IS WHY THE US IS GOING BANK ROBED DUMM ASS
AlainGTO 6 months ago
@AlainGTO You sound like an inteligent, educated young man who knows what he's talking about. I think the bold letters really help to.
Zander101084 5 months ago
reminds me of the leprechaun in alabama video where one guy is saying "where da gold at? i want da gold. gimme da gold"
tIs4gatorbait 6 months ago
its great
panchalsurya1 6 months ago
I think this is a great learning video. Khan is exceptional with teaching and I've visited quite a few of his videos- all great. But I still support causeimthesquad's argument here that "the price of gold is not fixed - its relative."
rmanandhar7 7 months ago
Real wealth is a red herring.
Trust is the issue with currency.
Kahn fail.
tnekkc 7 months ago
Educated people are stupid. Money must be accepted in circulation, divisible, and hold value. Debt notes and gold do not fill this need. Bank notes are in hyper inflation, where prices are up 1,000% since 1971. America is being raped by the Fed with bank debt notes. I predict $4,000 gold and $4,000 Dow by 2020. Protect yourself. America is being destroyed by debt notes, at $14 Trillion now. You are obviously misinformed regarding politics and history. Gold is money. Debt is not money. Get it?
jackgoldman1 8 months ago
humans need a natural limit to their greed, fears, and desires to control the world. Gold fills that limit. Humans are not to be trusted. Humans are evil. Humans have unlimited greed, fears, and desires. Rule of law controls humans. Gold controls rule of law. Gold is not food. Money is not food. Gold is limited by nature. Debt notes have no real limit. I trust gold. I do not trust evil people like Alan Greenspan. Debt notes are not money. Island example is flawed. Gold is a brake on humans.
jackgoldman1 8 months ago
"Gold is money." - JP Morgan
3500 failed fiat currencies seem to indicate he was right.
artdeco101010 8 months ago
If gold no longer backs our currency why do we hold so much in reserve? We currently hold 8,133.5 Tonnes. At market value that's $428 Billion. I realize we couldn't dump it overnight but a systematic divestiture could put a significant dent in the debt. Since it's our gold, confiscated in the 30s, I think the government owes it to us to do just that.
wordpresswidget 8 months ago
I asked my friend this question and he rolled his eyes. Then said "Please. Don't make me answer that question so early in the morning."
He's hilarious.
vickiormindyb 9 months ago
I would land the plane on the island full of gold and then buy the other island. Just trying to show the flaw in this boy's logic.
rapolitical 9 months ago
@rapolitical he explicitly stated you could not get to the other island. Gold doesn't float and you have nothing on the island that does.
wordpresswidget 8 months ago
Currently the US $ is backed by oil. In this video, as Sal pointed out that we are now going off the Gold standard and rely on paper money - that is because the economy of the world has increased to an extend where Gold simply is not enough to support the real wealth. However, there is enough oil to back up the $ though, which is why US has control over the most oil in the world and goes to wars to keep the oil flowing in order for the $ to have value in the international market.
FarhadTv 9 months ago
Sal asks where does the gold come from and how do you get the gold if you want to further your economic aims. The answer is that an exporting surplus attracts gold.
Gold as a standard is indicative of successful productive capacity and it serves as a reference point . It also regulates the trading cycle of surplus and deficit so that these cycles are moderated. The US currency ,as a standard ,does not follow as a consequence of productive success . It facllitates future potential success.
MrSmackdown100 9 months ago
Isn't the power to print New Bank Notes the cause of inflation, the cause of Boom and Bust climate, the rich and the poor, the Them and Us? Generally? Sounds like a VICIOUS CIRCLE.
Cecelle8910 9 months ago
@Cecelle8910 It depends if the new bank notes exceed productive capacity. If there is an imbalance in the money supply in so much as the money xerts pressure on productive capacity then inflation occurs.
MrSmackdown100 9 months ago
The value of Gold is rising, isn't it? It holds its value more than cash. You can stuff a $million in a mattress, but it would de-value over time. Gold of same initial value @ same time increases in value, (I think); but certainly hold its value at the rate of inflation or more. The raw & physical Gold is Working, doing something, appreciating, perhaps. Money in the bank appreciate less than Gold in the bank, unless invested in a successful business (Oil). But I get the Lecture. Thank U.
Cecelle8910 9 months ago
@Cecelle8910 You use an improper analogy. Money may be stored in an unproductive way but its
application to create wealth may make it more valuable than gold.
MrSmackdown100 9 months ago
Stick to tutorials on mathematics. You are either incredibly naive, are being paid to be a spokesman for this criminal enterprise, or are just ignorant of reality. You discount for inflation and THEN say see there is no inflation! LOL. The price of oil is up 300% in just two years. That is hyper-inflation. There are multiple ways this system is gamed to redistribute wealth to a plutocracy and to old boy networks. Educate yourself, then try again.
RobertMOdell 10 months ago
You have a great idea behind your online class program, and it could very well be the future of education.
But, you need to get away from this central banking propaganda and realize that the gold in the vault is there to restrain the central banks and governments from getting $14 trillion in debt.
I haven't checked, but would be willing to bet that you don't have any history classes that discuss the great hyperinflations caused by abusing monetary policy.
msjche 10 months ago
Comment removed
PixyPalace 10 months ago
Khan when you mollested my dauughter in your academy, was it gold?
darkdavegmail 11 months ago
Nixon took the US off the Gold Standard in a panic after countries holding major volumes of US dollar denominated assets grew doubtful of the US's ability to honour the 35$ per ounce promise, and started to demand en-masse payment in gold.
The US dollars new found status as a world reserve currency, facilitated the US current account deficit policy, which has fueled the (global) economy on prevaling BOOM, very soon to be followed by an almighty CRASH!
Sal is surely smart enuff to know this.
MatDerKater 11 months ago
TAX is simply a way of robbing people of their labour, sweat and blood.
According to the bible, Pharaoh began taxing the Egypians from the produce of the land because he bought the land from the people through Joseph.
The Roman empire enslaved nations and taxed them as well.
Why should be people be taxed in democratic nations ? Do the government own the people or land ?
Taxes result when the government goes through the bank to print money. Taxes shd be abolish and govt shd print the money.
dapo4u 11 months ago
So.. you think taxation which- is basicly slavery is better then gold which is just arbitrary picked shiny rock??
What you call a "obligation of the goverment" is nothing more then obligation of its citizens forced upon them through taxation.
I rather have a a shiney rock be the standard of value then be a slave i don't know about you.
But anyway. Good show series overall. Explains allot
dzikv01 1 year ago
golds a constant, thats why its valuable. gold is not growing in terms in wealth, the dollar is just dropping compared to it. why? inflation, and lack of confidence. who would even consider having confidence in a currency where you need 14 gabilliongiilliontrillion to pay back china and other lenders. i'm better off collecting those POGS things from the 90's. Probably worth more than a dollar will be soon.
sirlensalot2 1 year ago
If you want inflation hedges buy useful commodities, not overbought stuff like gold
dayjun 1 year ago
You don't want to increase the money supply. The gold is how much wealth we have. Scarcity is what gives money value. He's just proven that paper money is worthless. Each dollar now is worth less than 1000th an oz of gold. Everyone recognizes gold as an international commodity. Gold is wealth. The dollar is not. The Government being an all powerful lone entity should not be able to tax us at will by continually increasing the money supply. I can see how much less my money is worth.
Luigi84289 1 year ago
@Luigi84289 Gold's supply is constant that is exactly why it's a better currency. If this guy knew anything about the constitution or American history he'd know why Gold and Silver are supposed to be the only types of legal money. One of the biggest reasons we fought the revolutionary war was because George was going to introduce unbacked paper currency into the colonies. Look at the dollar it takes more and more to buy gold every day
Luigi84289 1 year ago
@Luigi84289 Stability and unbacked paper don't go together. The greedy in control will always print money for what they want taxing us all. Who designates how much Bernanke makes or the whole board? And why does this video promote blind submission to a minority of men who are our agents?
Luigi84289 1 year ago
@Luigi84289 Taxation without representation included inflation. A product of the out of control printing of money. It is a tax. Asking people for more money for a service they paid less for a day before is taxation. That's why we didn't have a central bank for 80 years.
Luigi84289 1 year ago
@Luigi84289 talk to people from Zimbabwe see how much they like paper currency. Everyone there carries gold now.
Luigi84289 1 year ago
gold 700? that was when the vid was done. now its above 1400. seems like a lot of ppl value it more than these fed notes. the important thing about gold, its perfect for exchanging goods (trading). the US chose silver as a currency in its beginnings, thats why a dollar actually meant 371,25 grains of silver, 2 dollars 742,50 grains...
kirador218 1 year ago
actually, with gold (or any agreed on value) backed IOUs, the value of the circulating note wld rise, due to the technological development of humanity. so today even with 0% inflation and prices being constant someone is getting that surplus of our own work or the amount we pay more (which has to be worked and earned for). the biggest con in history.
kirador218 1 year ago
First thought:
Government says - tomorrow you have to change all your green money into blue money...with the same numbers on it. Green money is invalid.
Would you believe and change your money? Yes, you would.
Second thought:
Government says - tomorrow gold and silver is not a medium of exchange anymore. It is invalid.
Would you believe and change your gold and silver into blue money? No, you won't.
Why?! :-)
Hint: All over the world you can still buy food with gold and silver (-coins).
norwayte 1 year ago
Sal... we are a little bit of philosophers ourselves. Great videos.
nalcow 1 year ago
Whoever made this video really needs to read the Creature from Jekyll Island by G. Edward Griffin. I like what you are doing Khan Academy but several of the theories put forth in the video are full of holes.
AgoraTelegraph1 1 year ago
Sal.. again thanks for this video.. i liked your burning plane.. the example is pretty cool to show where real wealth comes from.
nalcow 1 year ago
What happened to the gold? we dont need gold! we can do whatever we want.. let's print money yee!!
nalcow 1 year ago
Khan, You gave a good talk on this topic. But you ignored the reason why people over historic times have always come back to gold. Currency ALWAYS was debased by governments. The hint is that NO govt can be trusted to think long term.
rlrlhyatt 1 year ago
Drives me nuts when you bean-counters struggle (and continuously look incredibly dumb on FOX), when trying (for decades), to figure out that potential available "unskilled labor", and industrial assets, are the real measure of future growth of a country. Such geniuses, yet still shooting in the frigging dark! Create nothing, yet survive by fabricating a perception of value.
Degreed in Moronism! Useless as tits on a mule (which cannot genetically procreate!) Majority are a watse of mass....
laaxe 1 year ago
In '77, my ex-wife (student at an American University) was to buy gold by an economics professor. We did, and quadrupled our investment within 4 years. We sold, and the gold market dropped by better than 50%. Turns out the Hunt Bros. manipulated the market to create this bubble, & subsequent crash. Moral of the story is that the filthy rich control every aspect of the market, and there's not one damed thing we can do (other than have incredible timing, or insider ties), to benefit! Killem-all!
laaxe 1 year ago
@laaxe correctamundo if your not on the inside your out
onion77478 1 year ago
@onion77478 Yeah, I've seen a few "precious metals" merchants trolling around here, trying to increase their sales base. Anyone reading should do a simple search about "Silver Thursday".
Just like any "chain letter" or "pyramid scheme". If you weren't in early....
Hey, I guess they'll find out soon enough, like the other 95%'ers of past history!
laaxe 1 year ago
Khan, thank you for the videos. You aroused a question in my mind.
Do you agree FRB is the real evil here? With10:1 R.R, private banks get 10 x interest rate. This money again becomes a banks asset and multiplies like weed and hits the common man in the form of inflation. Isn't FRB a way to retain poverty ? ... we havn't seen price of apple go down from $1 to 0.90 as a result of wealth creation as you cited in earlier videos.
It is not about gold or bonds, but FRB. Gold can pull down FRB.
advait4u 1 year ago
@covingtonium While true, the cost of goods increases when you print money, those costs are distributed across the economy though. So if there is $100 in circulation and the government prints $100 new dollars at a cost of printing of $1, they have just halved the value of the $100 currently in circulation. This means that they can now purchase $50 worth of goods at the cost of $1 (printing costs).
Micah71381 1 year ago
@Micah71381 I have some problems understanding this. I don't think it costs them only one dollar to purchase 50 dollars worth of goods. The money they use to pay is either from taxes or from the sale of treasuries. I don't know if the govt is allowed to use money they just printed from the bureau of engraving and printing for immediate purchase of goods or services. If so, it is because they give it to the fed, who then buys treasuries with it.
covingtonium 1 year ago
@covingtonium I recommend checking out the Wikipedia articles on "Quantitative easing" and "Money creation". The first talks about how modern governments put money into circulation while the second talks more broadly about money creation, whether it be free market minting or government quantitative easing. However, to answer you they are able to spend the money immediately. The $1 for $50 was just some numbers I made up but in reality it is far cheaper than that for them to create money.
Micah71381 1 year ago
@Micah71381 also, the treasury note is eventually payed for with taxes, so it costs all taxpayers.
covingtonium 1 year ago
@covingtonium I agree, it costs the taxpayers but only because the value of their money is decreased every time new money is printed. When looking at money creation as a tax is unfair because it hurts people who save and invest while it helps people who are in debt. Also, unlike taxes it is unknown to most people that this is occurring so they are essentially being taxed without their knowledge. Also, the money that is created is never "paid back".
Micah71381 1 year ago
@Micah71381 wrong
covingtonium 1 year ago
Wrong analysis. Cause gold represents labour. It's a medium of exchange. The farmer puts labour in harvesting crops, the carpenter puts labour in making a chair, etc. etc. and a banker should put in labour by mining gold. Right now "banksters" are the parasites of the society. And taxation is enslavement by your goverment! Watch movies like Money as Debt, Zeitgeist II: Addendum and The Money Masters.
Michiel1972 1 year ago
LOL I'd land on the island with the gold and rule both islands. :)
asbytec 1 year ago
@asbytec no you wouldnt, because benjamin lynus would bum rape u
covingtonium 1 year ago
Correct me if I am wrong, but to increase the money supply on a gold standard the Fed would have to make each note worth less in terms of gold we do have, thereby creating inflation, or the government would have to see if the Incas have some we could steal. With a fiat currency, we could keep inflation in check by simply regulating the supply.
Really nice set of Videos, Khan. I realize it's much more complicated than you get into, but you're review of the ideas involved is unmatched.
asbytec 1 year ago
Central banking, fractional reserve, single currency, etc. are all good ideas as long as the central reserve bank (the one issuing the standard currency) is fully backed. If this is the case all of the other banks that are backed by the central reserve bank can partake in fractional lending and therefor multiply the money supply. As the economy develops and the the ability to produce resources becomes easier then the cost of goods will decrease and this is not a problem.
Micah71381 1 year ago
As you eluded to in the video a fiat currency is based on the assumption that human beings (government) can do a better job of anticipating and controlling the market than the market can do for itself. If the currency is backed by some commodity (gold, soy, energy, etc.) then the market will dictate the value of the currency at all times. If a commodity becomes easier to produce it doesn't matter because the value of the currency will adjust accordingly. Government can't adjust accurately.
Micah71381 1 year ago
In the ideal world we can have a fiat money but only if they compete with gold people need to have choice. If instood of saying gold you said silver than you can say it is not only preatty but has a 10.000 industrial uses. We need to have booth money system competing in the same time. You can also have a corporate money backed by the corporation assets and future production of goods and services.
Alexiscom1 1 year ago
@Alexiscom1 regardless if you use a fiat currency you must have someone in control of printing it because eventually the paper dollar will get torn and worn out and must be replaced, so there will always be a printing authority
covingtonium 1 year ago
Have you read The Road to Serfdom?
DesmondCCM 1 year ago
Secondly, your thesis presupposes that government are the people. Imagine a world with no government, the population you see is made of individuals or, people. My question to you is, what makes you think government is more people than people themselves? Do you understand the fallacy in your assertion now?
The government are people, they are not "the people". And they have a rational self-interest, with decision making power with minimal liabilities. They will always pull the rug their way.
ExquisiteDoom 1 year ago
Sorry Khan, but there is a point where even taxes cannot repay the liabilities over any amount of time.
Gold requires mining effort, handy for semi conductors, it is also a great metal for space travel, jewelry of course which is much more than any paper can provide.
You are comparing gold to the government which is a monopoly on decision-making and force that can tax and empoverish society as it desires. Every time you invest in the government, you invest in your own demise. Rethink this.
ExquisiteDoom 1 year ago
@tetleydidley
If you save, your saving is gone a life-time later. Also, printing fiat money is market manipulation. Nobody has worked to expand the money supply.
jcvjcvjcvjcv 1 year ago
your dichotomy 'gold' or 'us govt' doesn't sound right. if we had free banking, where banks can print their own money, paper money would be backed by.. the people, banks, investors, governmentS, land gold, silver, oil, etc, basically anything that has value, therefore spreading the risks. i think the fed is bad at doing their job coz they don't have a profit motive.
tetleydidley 1 year ago
An excellent video. And you do properly have that caveat "if you trust the government to be able to pay it back."
Greece right now has gotten to a point where they can't make good on their debts through taxation. Should the US get to that position, it would HAVE to print money and force deflation. Gold therefore is not "real value", it's just a currency like a dollar bill. But one that a government can't intentionally deflate.
(I'm just echoing your "if", not predicting myself.)
notme222 1 year ago
I see your point with fiat currency being more representative of real wealth since it is an obligation of the government, and that would be fine if governments in general could be trusted with money supplies backed by nothing but hopes and dreams. Monetary policy is inextricably linked to fiscal policy, and with the US government being fiscally suicidal pressure to print will eventually come up. I'd prefer something of fairly stable value I can change for other currencies.
doctorx777 1 year ago
Are tape measures wealth? Tape measure like gold are a method to measure and standardize
Are a peacocks feather's wealth to the peacock? The feathers like PMs are a way to advertise ones value to others.
Under a proper gold standard you need a free floating gold price.
His island example is a straw man. It is only relevant if we got to a Mad Max level.
Khan's technical knowledge is excellent; philosophy and macro thinking not so much.
BlindWebster 1 year ago
Gold's main value (outside of some industrial purposes) are that it is scarce and we as humans find it very aesthetically attractive. This allows it to be used as a universal unit of exchange. The point of this video is not to insult gold, but to point out the difference between wealth (land, food, labor, skills) and things that can be exchanged for wealth (gold, paper money, etc.). Also, when you have a "gold standard", the price of gold is inherently fixed.
khanacademy 1 year ago
Why is the price of gold fixed? It's all relative. The quantity of gold is rather fixed.
The purchasing power is what the value of gold. Gold's value is dependent upon the market demand. The difference between gold and paper currency is that gold has some intrinsic value and the supply cannot be inflated.
causeimthesquid 1 year ago 4
@khanacademy
The "money isn't wealth" argument is moot when there's a working market (trade). The fact is fiat currency is managed and abused by those in power. A monetary system based on such is unstable, by definition. Look into Sound Money. The Gold Standard and pre-1971 Brenton Woods system are NOT Sound Money. If you look into it, you'll find Sound Money is indeed immune from inflation, by definition, and doesn't necessarily mean gold.
See:
mises dot org/daily/2623
someguy3sg3 11 months ago
@khanacademy
Correct, under a true gold standard we would have a fixed gold price. People are beginning to realize that abusing monetary policy leads to unsustainable entitlement systems, perpetual war and deindustrialization.
Mr. Khan, PLEASE consider offering classes on Austrian economics, sound money, and liberty. If you want to remain relevant, and be ahead of the curve you'll have to. Stand out from the crowd! That seems to be your vision, after all.
msjche 10 months ago
@khanacademy
One last note: I hope you're reading all of your "feed back" below and are realizing that you are losing all credibility by endorsing fiat currencies and central banking. I beg you to consider including material by Mises, Rothbard and Hayek.
Stand up and use your growing influence to promote sound money and a return to fiscal sanity. God knows the classrooms aren't teaching our kids this. I refuse to believe that you truly buy into Keynesian dogma, you seem to be a smart guy.
msjche 10 months ago
@khanacademy You need to ask the Chinese if the US governments promise to pay is as sound as gold.
Clearly you are mistaking contractual issues with intrinsic value. I would say that the whole subject should have been avoided by your academy or that it should have suggested the pros and cons of each idea .
Fiat currency has allowed many growth projects to emerge but its weakness is that can be overused.
MrSmackdown100 9 months ago
@khanacademy Gold is wealth. The axiomatic, factual reality that if I go to my local Walmart, gold is (and consistently has been) a valuable commodity. Its ability not to corrode and look shiny is being downplayed as meaningless, but observable reality shows that gold truly is valuable. There is no "price of gold" in a gold standard. You see, gold itself is the standard by which price is defined. Price is a ratio between a product and gold. Commodities relative value to one another will not
streetmagicstyle 9 months ago
@khanacademy change due to an increase or decrease in the supply of gold, ceteris paribus. That is, if the commodities themselves don't become more or less valuable, their ratio to gold will be relatively equal. I took economics in college and the textbooks made philosophic assumptions. For example, psychological egoism, the assumption that everyone acts in self-interest, is incompatible with the gene-centric view of evolution where alleles are the logical unit of evolution.
streetmagicstyle 9 months ago
@khanacademy I do not believe in the Illuminati and other conspiracy theories circulating the internet. I do, however, think that Ron Paul is onto something. Economist Murray Rothbard set forth ideass to mainstream economics in "What has Government Done to Our Money?" that I believe counter at least some of your objections to the gold standard (like the price ratio to gold I mentioned). You might really enjoy it if you get a chance to check it out.
streetmagicstyle 9 months ago
The internet, as great as it is, allows certain dumb ideas about gold and economics to flourish. Sal is just pushing against these ideas and trying to make us all less dumb.
jsymons1985 9 months ago 2
@khanacademy The dollar's inflation is attributed to people's dependency on the government allocation of the dollar bill. Fiat currency has always fails, and due to today's HYPERINFLATION, gold is valued not at $800/ounce, but fluctuates between $1,500, and $2,500!!! The fake dollar bill has been demolished on an astronomical level, and has allowed the central bank to set artificial interest rates resulting in trickle down economics. Gold is superior because it cannot be manipulated...
bissinger 7 months ago
@khanacademy
I don't think the attractiveness has that much to do with it although it may have played a part, it's really quite subjective and in fact I know plenty of people who don't like what gold looks like and they're a sizeable minority. The real reason why gold became money is because of its properties, easily divisible and perfectly fungible mixed, as you said, with the scarcity factor. It lends itself to being a unit of account which is what money is, just an accounting system.
BlunderCity 7 months ago
@BlindWebster, I don't understand why someone who believes gold is better store of wealth than anything else would want our currency to be on a gold standard. You are effectively saying that over the long term, the buying power of a fixed amount of gold will inflate more rapidly that the fiat currency it costs at any particular time. Why would you want the government to get involved in any way (as a large buyer or seller of gold) because that could only influence gold's price artificially?
ananiasacts 1 year ago
@BlindWebster i dont think gold is a method to measure or standardize. explain yourself.
covingtonium 1 year ago
@covingtonium In the US monetary system gold is not a measure. In a gold backed currency though it is used to give value to the paper currency. If it costs 10 unskilled man hours to mine and process 1 oz of gold and you can redeem $1 (paper currency) for one oz of gold then what you can buy with that $1 will always be equal to 10 unskilled man hours of labor. If it now takes 9 hours of unskilled man hours to get 1 oz of gold then $1 will now be worth 9 unskilled man hours.
Micah71381 1 year ago
@Micah71381 wrong
covingtonium 1 year ago
This has been flagged as spam show
@BlindWebster, do you even know what a Straw Man argument is? He's not personally attacking anybody.
voutasaurus 6 months ago
Not sure how old Khan's presentation is, but gold is now selling at about $ 1,120 per ounce. That means it has increased 31.428 times in value since 1970.
To Khan's point, though, the U.S. GDP has increased at a slightly higher rate, from about 3.8 billion dollars in 1970 to over $ 13.1 trillion in 2009.
If the U.S. economy had not grown at the rate it has since 1971, then we'd have a problem.
And let us remember, Nixon wasn't exactly a "radical."
Clerkpro 1 year ago
Has gold increased in value? I would argue it hasn't, but rather, that increase in value you are seeing is just the devaluation of the dollar. If you price assets in gold, you will see a very consistent price. However if you use dollars, inflation is enormous. The supply of dollars has increased dramatically, as such, the value has dropped.
Also, lets note Nixon was in fact quite radical. Took the US off the gold-standard, directly against the Constitution.
causeimthesquid 1 year ago 4
Gold and Silver is real money... if anyone is interested in selling gold or silver, hit me up.
charlesfuchs 1 year ago 3
"Would you rather have something backed by gold or the U.S. government?" Excellent question, on the flip side a bad answer when you look at the criteria and the formulation. You define gold and the U.S. Government, the last one in the way a legal monopoly (right/authority) of taxing works. The criteria you stated for gold and wealth were cant do work; cant be eaten; it cant make us more motivated; cant make us happier. So if you would apply these criteria on the U.S. Gov., you would reach
DutchBullion 1 year ago
the same conclusion that is not real wealth. You were comparing by using different criteria. If you look at the legal monopoly of taxing, it is a mere medium for retrieving wealth from the population for redistribution and it is by definition not wealth. So what backs a Gov? When looking at my own situation over here in the Netherlands it is the legal monopoly of taxing and the legal monopoly on violence. That is the respectively for example taxing income and enforcing that that tax takes place.
DutchBullion 1 year ago
Very good points Dutch. I have enjoyed your posts!
causeimthesquid 1 year ago
I think our backing is similar to the U.S., I am -of course- not sure about this. The analogy you sketched has little to do with answering the original question, its answer is a quite logical one. If you are a human that relies on substance to survive, you would always choose for an island filled with recourses as cows, fruit-trees, fresh H2O etc. You make it seem that there is a choice between these things, but that choice is already pre-determined by human psychology, human urge for survival.
DutchBullion 1 year ago
To answer the original question, "Would you rather have something backed by gold or the U.S. (Dutch in my case) government?" I would choose for gold or other precious metals. My foundation for this choice would be that my own government and every other one -I know of- have a reserve of precious metals for when they need it. They place their trust in the stuff, so do I.
DutchBullion 1 year ago
When governments collapse, their currency becomes worthless and gold always retains it's value. My family lost a lot of money when they had the old Mexican Pesos and the new ones came out with different values, had they had GOLD they would have lost no value between the currencies. Hindsight is 20/20.
ang60 1 year ago
So true about the hindsight. We, Dutch citicens, lost 10% of our net worth when trading the guilders to the euro. Wish I went into precious metals before the change.
DutchBullion 1 year ago
@DutchBullion I (and I imagine most people) did not know the Dutch lost purchasing power when going over to the euro - that is a bad deal.
silverfuturist 1 year ago
we lost about 50% in purchasing power as 1 euro spends like 1 guilder
preciousmetals168 1 year ago
Yea but that was a couple of years later, not immediatly . Devaluation would've happened -I think- either way considering the global situation.
DutchBullion 1 year ago
The U.S. military packs these into paratroopers' survival kits when they do missions behind enemy lines because they are acceptable currency anywhere in the world, whereas the U.S. dollar is not.
edmack4me 1 year ago
Deficit spending is simply a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.
From "Gold and Economic Freedom" a 1966 Essay by Alan Greenspan
edmack4me 1 year ago
Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies...What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment.
-Alan Greenspan, 9 Sep 2009
edmack4me 1 year ago
If fiat currency is so fantastic it can be printed or digitized in unlimited quantities as is the current path of the US then why manipulate to supress the price of gold and silver to support the US$. This indicates the officially even the powers that be view fiat cash as trash.
edmack4me 1 year ago 2
Check out "The Creature From Jekyll Island" - or even better Mike Maloney's "Guide to Investing in Gold and Silver". There are fundamental differences between money, currency, and fiat currency. The reason it is important that money has the three properties: 1) medium of exchange, 2) unit of account, and 3) store of value, is that the value couldn't be slowly drained, or instantly removed from the people, it was distributed, not centralized. I respect your work, but you should reconsider this.
artdeco101010 1 year ago
The two islands is a silly analogy. The question should be which 2 islands one with gold other the Federal reserve notes is more accurate. I would probably just keep flying but more people would search for the island of gold than of fiat currency and so have better chance of being rescued.
edmack4me 1 year ago
I will take the gold and US$ is trash and is now being issued towards infinity like Zimbawe. Trust no government.
edmack4me 1 year ago 2
land on the island with the gold, transport it to the other island to barter with. landing on somebody else's inhabited island and taking all their shit was how america was founded :)
preciousmetals168 1 year ago
Hilarious! Nice comment =)
whygoldandsilver 1 year ago
khanacademy, your videos are incredible. However, it seems you have made up your mind about gold and you are not open to new ideas.
When the currency crisis comes and we see real suffering in America, perhaps you will look more into the history and nature of money.
silverfuturist 1 year ago 12
@silverfuturist How can you see a currency crisis coming? I can't.
funisverygood 1 year ago
@funisverygood since the fed creates "notes", backed by an obligation of the government and in reality the obligation of the people to pay it back via simple work, it creates debt, and has to be payed back. so if you lend me anything and i write you an IOU backed with my house, and pay off my debt with more IOUs and so on, at somepoint you will see that my debt is greater than the value of my house and you will want to get payed back before that, and before others i owe to realize that, too.
kirador218 1 year ago
Why did Roosevelt seize gold in America if it isn't or wasn't "real wealth"?
jjh15 1 year ago 2
@jjh15 One of my favorite quotes:
"gold is money, and nothing else" - J.P. Morgan.
I suspect he knew something about money. :)
silverfuturist 1 year ago
haha YUP, this guy is simply a fucking schmuck
odin422 1 year ago
The money supply doesn't have to grow with GDP.
If the economy becomes more efficient, purchasing power increases automatically with a fixed money supply.
Gold = money. Yeah, there was some inflation a few hundred years ago. But the dollar lost 98% of it's 'value' in the last 40 years alone.
Many fiat currencies have gone to zero. Gold never did.
What do you think will happen more often or earlier:
-A large comet of gold landing on earth
-The Fed creating an enormous amount of dollars
jcvjcvjcvjcv 1 year ago 15
@jcvjcvjcvjcv in this economy i can see one problem: prices will always fall down nominally if the economy grows. businesses will have to get used to the notion of getting less and less nominal profit, people will have to take paycuts. of course purchasing power will increase with each gold coin in time. but you just get less and less of it. im not sure if that looks nice. any thoughts?
tetleydidley 1 year ago