Posted: Feb 17, 2019 1:43 am
As I said, I've also considered investing in actual gold so have been doing a bit of reading about it. I've just stumbled upon the following article about gold price history and something I read has just startled me:
Defense of the gold standard helped cause the Great Depression. A recession began in August 1929, after the Federal Reserve raised interest rates in 1928. After the 1929 stock market crash, many investors started redeeming paper currency for its value in gold.
The U.S. Treasury worried that the United States might run out of gold. It asked the Fed to raise rates again. The rise in rates increased the value of the dollar and made it more valuable than gold. It worked in 1931.
Higher interest rates made loans too expensive. That forced many companies out of business. They also created deflation, since a stronger dollar could buy more with less. Companies cut costs to keep prices low and remain competitive. That further worsened unemployment, turning the recession into a depression.
By 1932, speculators again turned in money for gold. As gold prices rose, people hoarded the precious metal. They sent prices up even higher. To stem the redemption of gold, President Franklin D. Roosevelt outlawed private ownership of gold coins, bullion, and certificates in April 1933.
Americans had to sell their gold to the Fed.
In 1934, Congress passed the Gold Reserve Act. It prohibited private ownership of gold in the United States. It also allowed President Roosevelt to raise the price of gold to $35 an ounce. This lowered the dollar value, creating healthy inflation.
https://www.thebalance.com/gold-price-history-3305646
That reminds me of a snippet from the document in my previous post regarding the history of fiat, which wasn't mentioned:
By late 1720 prices in Paris were nearly twice of what they were compared to a mere two years earlier. This was mainly due the increase in paper currency circulated. Total money supply was four times larger in livre terms than gold and silver coinage previously used. Not surprisingly, people began to lose faith in the paper currency and started conducting payments in gold and silver. The speculators started to sell their shares and invest in real estate and precious metals. The Banque Royale and Compagnie des Indes were united and the buy-back of shares was announced to support stock prices that had declined to 5000 livres by December 1720 compared to their peak at 18000 livres in the January of the same year. During 1721, share price had dropped to 600.
“During Sept-1720, Compagnie des Indes was allowed to make house searches for precious metal and confiscate them. Carrying pearls, diamond and gems was forbidden.”
In the following years, the French state was a beneficiary of the crisis. The total debt of 2 billion livres from 1715 remained the same, but most of it was in pensions with a 2% interest rate – a significant improvement of public debt. Most of public’s wealth (an estimated 80%) in pensions, company shares, bank notes or bank accounts had been lost.
https://multi-act.com/evolution-of-mone ... cy-system/
These are the levels to which our governents and banks will go to fuck us over when the shit eventually hits the fan. Most of you think I'm being stupid by investing in decentralised cryptocurrency, but with the dark clouds that I see forming above the horizon and with history to draw upon for wisdom I feel strongly that you should reconsider having all of your eggs locked within a centrally controlled basket.
Defense of the gold standard helped cause the Great Depression. A recession began in August 1929, after the Federal Reserve raised interest rates in 1928. After the 1929 stock market crash, many investors started redeeming paper currency for its value in gold.
The U.S. Treasury worried that the United States might run out of gold. It asked the Fed to raise rates again. The rise in rates increased the value of the dollar and made it more valuable than gold. It worked in 1931.
Higher interest rates made loans too expensive. That forced many companies out of business. They also created deflation, since a stronger dollar could buy more with less. Companies cut costs to keep prices low and remain competitive. That further worsened unemployment, turning the recession into a depression.
By 1932, speculators again turned in money for gold. As gold prices rose, people hoarded the precious metal. They sent prices up even higher. To stem the redemption of gold, President Franklin D. Roosevelt outlawed private ownership of gold coins, bullion, and certificates in April 1933.
Americans had to sell their gold to the Fed.
In 1934, Congress passed the Gold Reserve Act. It prohibited private ownership of gold in the United States. It also allowed President Roosevelt to raise the price of gold to $35 an ounce. This lowered the dollar value, creating healthy inflation.
https://www.thebalance.com/gold-price-history-3305646
That reminds me of a snippet from the document in my previous post regarding the history of fiat, which wasn't mentioned:
By late 1720 prices in Paris were nearly twice of what they were compared to a mere two years earlier. This was mainly due the increase in paper currency circulated. Total money supply was four times larger in livre terms than gold and silver coinage previously used. Not surprisingly, people began to lose faith in the paper currency and started conducting payments in gold and silver. The speculators started to sell their shares and invest in real estate and precious metals. The Banque Royale and Compagnie des Indes were united and the buy-back of shares was announced to support stock prices that had declined to 5000 livres by December 1720 compared to their peak at 18000 livres in the January of the same year. During 1721, share price had dropped to 600.
“During Sept-1720, Compagnie des Indes was allowed to make house searches for precious metal and confiscate them. Carrying pearls, diamond and gems was forbidden.”
In the following years, the French state was a beneficiary of the crisis. The total debt of 2 billion livres from 1715 remained the same, but most of it was in pensions with a 2% interest rate – a significant improvement of public debt. Most of public’s wealth (an estimated 80%) in pensions, company shares, bank notes or bank accounts had been lost.
https://multi-act.com/evolution-of-mone ... cy-system/
These are the levels to which our governents and banks will go to fuck us over when the shit eventually hits the fan. Most of you think I'm being stupid by investing in decentralised cryptocurrency, but with the dark clouds that I see forming above the horizon and with history to draw upon for wisdom I feel strongly that you should reconsider having all of your eggs locked within a centrally controlled basket.