The Global Minotaur: The Crash of 2008 and the Euro-Zone Crisis in Historical Perspective

[Sapocati]

As someone not educated in finance I learned fom catching Max Kaiser, he makes valid points, he would have had more credibility to me, if he spoke about Putin with the same language he uses about bankers. Best 1.5 hrs I spent in a long time, I did not understand how gold can be worth more than Platinum, ofcourse any 'fiat' currency like the Swiss franc can also go up in a time of uncertainty, but that is not necessarily a reflection of long term use or value.. Your last comment nailed it thanks

[Crossover521]

@Sapocati

In the long term there is no actual "vehicle" to store value.Gold can be worth more or less than platinum just like your hair can be worth more or less than platinum if the "markets" believe so.In order for your equity to have worth,it is needed that others believe so.

[Sapocati]

@Crossover521 The price of gold is linked to interest rates...I now understand that fundermental now...It cost money to store Gold, it cost money to prove the purity of gold, gold is not very liquid. It becomes overvalued when interest rates fall below inflation. Some people who should know better seem too take things too far. It helps to have a historical perpective, I read extracts of a book called 'Now things are different, A history of financial folly' ...Thanks for your reply

[Crossover521]

@Sapocati More or less interest rates affect all prices not just gold's.After all thats the reason interest rates are used as a mechanism to control inflation.Still the actual price of gold is what it is because the markets say so.(Be it they say so because of the interest rates or bcause of anything else is irrelevant).Lets say that they found a new metal with better qualities than the one's of gold.Would the gold price be the same?lets say we found that the moon is made of gold.what happens?

[Sapocati]

@Crossover521 High cost of going to Moon does not justify resulting deflation, because not allot of use for it. Not even if it was made of a metal with better qualities, Platinum.If the moon was made of hydrocarbons however...yes they would, because of many uses for it. Nice thought experiment. 70-80s had higher inflation and high interest rates, so many factors have an effect, it b hard to simplify problem, Things affected by less facotrs should be easier to judge in my opinion.

[Sapocati]

@Sapocati P.s I think the Moon would be an ideal place to dispose waste, radioactive and highly toxic matirial...Yet all we can think of is of what riches might be there. Our decendants will wounder at the stupidity of defacating in the same place we live and eat. We are yet to evolve out of the small village mentality, and start to become global citizens.

[Crossover521]

@Sapocati my example was probably wrong.Forget the moon.It was an example to imagine a condition where gold wouldnt be that scarce.Imagine we could dig really deep and at a certain level this layer was pure gold all over earth.Then what would happen?my assumtion is that people are not aware that platinum has better qualities? (i didnt know,never cared).The point is all goods have the values our demand gives them in relation with their scarcity,even when we have more demand for the wrong things

[Crossover521]

@Sapocati for example if platinum does have better qualities then it is wrong for us to have greater demand for gold than platinum,still this cant affect the price at all.

[Crossover521]

@Sapocati by the way i just looked up the platinum market

Gold is at 1744

Platinum at 1619

pretty similar compared to silver being at 33.80

[Sapocati]

@Crossover521 I have bad memory for languages, spelling, peoples names, but I never forget first Economics lesson in school, Teacher said the same thing as u. Moon a gd example, bcause it illustrates NEED side of equation, even high gold price would not cover travel cost, but world need 2 move goods+people could at fraction of 1744. Gold production on a commercial scale is v. expensive...Platinum much more so, some say, costs 1680 to produce, surely a sign of crazy economic times.

[Sapocati]

@Sapocati I think Economics can be tricky to explain well, because there is a big element of human psycology involved, eg Maslow's Hierachy Of Needs. Think of how anxious people are to own the latest I-phone, with more capacity than they will probably ever use, now imagine the day when there is no longer any food in supermarket shelves, very suddenly the 'need' to own an I-phone just fades away.

[Crossover521]

@Sapocati I think Economics arent tricky to explain,but they are damn tricky to predict and thats exactly because of human psychology.And as the markets are becoming more complex in terms of participants and the "financial devices" available to them predictability becomes even more difficult.

[Crossover521]

@Sapocati You are right.Though i may be wrong but i think that in the markets,such as the commodities ones,when someone buys lets say 5000$ worth of gold thats just some kind of an illusion.By illusion i mean no gold is shipped to the buyer (although it can if he asks for i guess).Its just digitized.So its more like a betting place.we could even have done the same for the moon if there was a way for someone to originally claim ownership at the beginning while no gold would have to be shipped

[Sapocati]

@Crossover521 I assumed you must be an economics teacher by your explaination, I dont think you were wrong, I was just trying to take your concept further. Spain became a world superpower by finding Silver in Potosi, on the West coast of S. America, they were able to under-cut the Portugese by having a shorter route to China. The Chinese deemed silver to have some sort of magic powers, then suddenly it went out of fashion, and that was the begining of the end of Spain's empire.

[Crossover521]

@Sapocati

mhm thats a nice description to explain that value is a subjective matter!

No,im not a teacher :) Im an economics student though

[ETTA48]

@vH3cticZz Nice to read your comment... but could not resist to react on your commenting the "red shirt scenario". You refer to a video from 1993 ( watch?v=s0IG4jREsvs ).

With the eyes of what we call "today" it is always a bit hilarious watching back into the history and noticing what we were wearing ourselves!! :)

So: in twenty years you will be here again and ask the same for the nice purple shirt Yanis is wearing here?

Personal add: I like the red, I like the hair, he is good looking! :)

[ETTA48]

Very clear and interesting explanation! Now we "just" have to find the right "architects" to reconstruct the €uro. "Just"have to find the ears of the European leaders, the world leaders. Their intelligence. To kill that Minotaur. To avoid there will be another one. Because the beast obviously is not a myth, but a part of humankind, as long as we want to be slaves and are afraid of its anger. Waiting for the next video in a serial that started here, and will be followed up, in time.