Of course.

Because the mindset right now has been changed.

Once upon a time, countries cannot buy oil unless they use USD. This has changed recently. Now you can sell your oil to China in Yuan.
You can trade directly if you are in Singapore with China in SGD.

Paradigm changes my friend. You are still in the old paradigm.

Gold is of course the ultimate value storage because people has recognize it since the beggining of time. There are characteristics in gold that everyone recognizes.

I don't see crude oil quoted in the futures market in SGD.

Yuan is not an international freely trade currency like USD.
Until Yuan become free trade worldwide which is not at the moment, there is obstacle to use Yuan.

I don't deny is a historical "value" asset, but it is not good money (medium of exchange) or being used as to back currency.
Currency, money needs to have limitless upside for modern economy to function, while gold quantity if fixed in this world.

Yes, paradigm change and USD may be less as a force in the old day, but up until now USD is still the one major currency traded in the world, and not going to chance soon and there is no other major alternative can replace it.
By right, second largest economy China, its currency should be challenging it, but Yuan is not international freely traded currency, so the option is not there until China opens up the Yuan, which I don't think China willing to do so at forseeable future.

Debt can be perpetual as long as you can service the debt interest, and sufficient cashflow to support the debt.

Debt can be solved by inflation.

No one will ask the debt being paid entirely at anytime.

Banker doesn't wish to see borrower pay down the debt entirely, and raise no debt.
Bank can go broke if everyone repaid their debt and no one borrow.

So does countries front, no one want to see US repaid back its trillion of treasuries.
Received trillion of USD, what to do with it? Nowhere to keep as well.

As long as debt is manageable, serviceable, and supported by income, it is not a big deal.

1st generation, raise 1 billion debt
2nd generation raise 2 billion debt to repay the 1st generation
3rd generation, raise 3 billion to repay 2 billion.

In between have income to support/service the debt, the debt become perpetual just like treasuries, sovereign bond.
And over the time inflation solved the growing debt.

Yup i've heard this explanation about why deflation is bad for the economy...profit margins compressing as time goes by... company go out of business etc...but doesn't make sense... auto industry also experience the same thing... computer industry also same... phone company etc... yes some go out of business... they couldn't compete... but many others can compete... and the industry as a whole grows larger... auto industry... computer industry... phone industry... if the deflation explanation is used... these industries wouldn't be profitable in the long term... but they are... and they keep growing... thats why i don't quite believe the deflation explanation... i've got real life industries and companies who keep defying what the explanation says should happen... they haven't stopped hiring... they haven't retrenched anymore than other industries have... employees don't really earn less than counterparts in other industries...

Don't get me wrong... your explanation makes perfect sense... and i believe it happens as you say in many companies... the industries i've pointed out and those companies in those industries are some of the most inovative firms and brands on the planet... the ones who aren't just die the way you described... i can't see that as hurting the economy... in fact i think it improves overall efficiency of the economy... its a tragedy if you happen to work for one of the failed companies...

Yup still need money... but not talking about no money... just limited money.... your example... Credit was extended... but you not taking the example far enough

C has RM 90 which he deposit in bank...
So now bank has RM 190 in deposit
RM90 in loans outsanding
follow your exmple and say that fractional reserve is 10%
Means now bank just need to keep RM 19 and can lend out the rest....
Which mean they can lend out another RM 81

So say D come and borrow the RM 81 to buy the car from C... not same model as B, so cheaper
deal goes through...so now

A deposit RM 100
B loan outstanding RM 90
C deposit RM 90 + RM 81
D loan outsanding RM 81

The bank now has deposit RM 271 and oustanding loans of RM 171, ... so still can lend out another RM 73...

keep repeating the cycle...Available money in physical cash only the original RM 100 amount ... but you can see we can keep increasing it to more...

thats what im refering to as the credit supply growth... true some ppl still consider it part of money supply...

so let me be more specific about gold back currency... just the original RM 100 will be backed by gold... the rest which you can think of as money or whatever is not backed by gold.
instead it is backed by the loans outstanding

A gold backed currency coupled with a fractional reserve system will set a hard mathematical limit to how much 'money' we can have in the system... and that will cause deflation as the number of goods start to increase over time... but i think deflation is better than inflation... true many companies wont beable to exist in the new situation... but we have examples of companies who can make it... and make it really big in deflationary industries... in fact phone companies and pc companies had it real bad... deflation for product price but inflation for raw material inputs...

i just don't see why we can't force more companies to run that way... efficient... innovative...

Obviously when say Russia sells it's oil to china, they are not going to sell in USD because there's an agreement between those 2 nations not to do that.

When Korea trade with china, or UK trades with China. They can bypass the USD.

I never ever indicated that oil is traded in SGd. I am saying that when china trades with Singapore, they do not have to use USD to trade.

Seriously, you twist what i say at every chance.

Are you only interested in twisting facts just to win the argument.?

As I said, in the past, almost every trade between nations are conducted using USD. And I have already that though increasing amount of swap agreements, countries are already starting to bypass the USD. You are asserting yourself when proved otherwise. You are forever in denial.

You obviously do not understand what swap agreements mean etc

Chinese is obviously happy to pay oil in rmb. Unless the oil seller intend to purchase Chinese goods in rmb, how many will want to keep rmb? Will chinese pay for Russian oil in Russian ruble or gold? Russian as a gold producing country, will accept oil payment in gold? Nearly forgot gold is priced in US$, would oil payment in gold more expensive and more uncertain than US$?

This post has been edited by icemanfx: Dec 11 2014, 04:29 AM

On gold back currency; why countries like Japan, France, Germany, Korea, China, Taiwan, etc need to buy gold to print currency? And gold producing countries like Australia, Russia and south Africa could print currency with mined gold?

When Korea trade with China, yes they can by pass USD.
But what currency they want to use as payment?

RMB? I don't think Korea company want RMB as not freely traded currency.
Won? I don't think that something China company prefer.

Yes, swap agreement can get rid of USD, but everytime there is need for a deal for it, not something as convenience as USD that is freely traded around the world.

As already said, USD may not the sole international trade currency like the pass, but one cannot deny USD is still the major trade currency around the world.
Countries still need USD to pay their import.
The one in denial mode is USD is still an international important trade currency.

Saudi export oil, they want being paid in USD.
So does majority export countries including Malaysia.

This is flawed.

Both Rm100 and RM90 should be backed by gold, if adopted gold backed currency.

It is impossible to differentiate the RM100 is original and RM90 is not.

Gold backed currency basic is
when you pass back the RM100 or RM90 to central bank, they return you with equivalent amount of gold, aka like Rm100 = 0.8g of gold.

Just like you pocket has RM100 note and Rm50, someone tell you RM100 is original while Rm50 is backed by outstanding loan?

Because over the pass, we do not have deflation so economy still going.

Deflation in ordinary phone resulted, the last time leading phone manufacturers Nokia, no longer exist.

You can argue Iphone is doing well, but Iphone doesn't have deflation, Iphone price never drop.

You can see how deflation kill company/industry in ordinary phone.

That's why you see intel processor won't drop to RM100 per piece, last time Pentium 4 cost Rm400, now i3 also Rm400.
There is no deflation in computer, last time you bought a PC at Rm1000~1500, now still need Rm1000~1500, just spec upgraded.
If PC having deflation drop to less than Rm500, then whole PC industry will crumble down. Nobody can survive with a new PC just cost Rm500.

This post has been edited by cherroy: Dec 11 2014, 09:54 AM

Seriously, do you even check the facts before you write?

Nokia was affected not because price of phone dropped. But because they were specialist in mobile phones not smart phones. The recent years saw a boom in smart phones and normal mobile phone has lost it's significance.

And Nokia is still here. In fact, Nokia stocks went up 4 times compared to 2 years ago.

Really.

I wonder if you actually even understanding what currency swap means. If USD was so stable and trusted, there will not be a need to do this in the first place.

Also for computers, they are getting cheaper actually. I mean the amount of monies you need to get a computer of decent spec is getting lesser and lesser.

I think 17 years ago, you need at least 2.5-3k to get a decent computer.

And dun forget even by your definition, the price of computer remains at current price despite the fact that currency decrease in value. In other words, in real terms, the price of computer actually dropped.

Do you even analyze what you say carefully?

Did you seriously make money from the stock market? Because you cannot even do basic analysis.

You just want to win arguments right?

This post has been edited by sylar111: Dec 11 2014, 10:24 AM

Last time there were ordinary phone last time cost more than RM1000 (my first hp), just can text and phone, now there is no ordinary phone can be sold at more than RM300~400. Price tumbled for ordinary phone.

There was no ordinary phone at sub Rm100, but now there is even at Rm60!

If Nokia still can sell ordinary phone at RM1000, Nokia still going strong.
Fyi, Microsoft has bought over Nokia, and they don't intend to use the name Nokia for the future model.

That's why computer industry is not doing well, many old computer shops closing one and another. Only very competitive players can survive at razor sharp thin margin.

Deflation/inflation is measured by price, not currency value.
Price Rm1500 in 90's, now Rm1600, there is inflation of Rm100, even though the value of Rm1500 is different nowadays. 2 totally different front of issue.

What I interest to post is fact and figure, and the consequence of money supply of gold backed currency, never know nor interest whether there is win or not in argument. No prize for it.

Well this thread getting interesting by the day. Good to read all the opinion & comments

apparently you can buy car with gold bullion. some people here are accepting it as currency..

Likewise, one could buy car with silver bullion also. The question, how the car is priced? In oz of gold/silver or fiat money RM? Will seller accept price in gold/silver lower than fiat money RM? Will buyer pay price in gold/silver higher than fiat money RM?

Double posted


This post has been edited by icemanfx: Dec 11 2014, 03:49 PM

so far some seller is selling slightly below market some slightly above but always with petrol money for 12(or more) months ranging from RM200-500 (some offer even higher) depends on model. In 100gm P.A.M.P gold 999.9 denomination.. remember, its equivalent to cash sale, so it doesn't fall under "higher purchase"..

This post has been edited by Sham903n: Dec 12 2014, 01:58 AM

Your argument is very flawed and you know it. You like to use USD as the benchmark. So did computer price decrease in terms of USD then. After all, for most major hardware company, they are measured based on this standard. You are starting to look more and more absurd really.

Most analyst out there would not argue that computer prices are getting cheaper and cheaper. You are the only 1 who is saying otherwise just to prove a point. But you know in your heart it is totally absurd.

Why dun u use zimbabwe dollars then. I am pretty sure the price of computers increase a lot in terms of zimbabwe dollars.

Anyway you are wrong regarding Nokia not being around. That is a ridiculous assumption since Nokia was once the dominating player and they could easily get into the smartphone arena given that even Samsung is doing that

I am pretty sure that if Apple did not come in, Nokia will still be dominating in the mobile phone industry. Nokia could sell their phones at 150 and still make a profit. The thing is, there may be other brands that sell at a cheaper price but then Nokia is already an established name and that commands a premium as well. I think you are the only one out there who says that Nokia died off because of price competition. Also the reason why phones are sub 100 right now is because they are not in demand. Nokia could still sell some of the higher end phones for 400 even 500 plus if not for the ascendency of smart phone. The fact of the matter is, mobile phones are now obsolete because of the smart phone. Nokia suffered because of this. You are twisting something that everyone knows just to fit your argument. Most people with a brain would know how absurd your basis are.

Even in the smart phone arena, phones are getting cheaper. You have Xiao Mi and the others creating really cheap phones. Apple sell their phones at a very high premium. Everyone except you knows that. That explains why they have such a strong balance sheet. It's the brand. They can afford to sell their phones at a high price and people will still buy because they are brand conscience.

I have said that a gold backed currency is not ideal but necessary. But then seeing that you do not even get your basics correct, it is pointless going further on this.

This post has been edited by sylar111: Dec 12 2014, 05:02 AM

If there is no smart phone pop up in the market, ordinary phone may still around RM1000 per piece.
And Nokia won't be at current state.

Ordinary phone drop in price? Yes --> deflation. Disregard the demand issue or not, we are talking about deflation effect to company, not company competitive or not.

Nokia is doing fine and making hefty profit? They may manage to turn the loss recently, but was bleeding severely previously few year.
I don't think need to find article to tell the state of Nokia, common known issue.
But this is first time, I came across saying Nokia is doing fine in phone business.

Did Iphone price have deflation (drop in price), this answer all the mother question of deflation.

Gold backed currency issue is not about not ideal, but unworkable.
Remember the previous 9 person hoarding 99% of the money example I gave?
This simple model already illustrate how unworkable gold backed currency. Don't need to dig into more details.

I stop posting long explanation simple Q&A will answer all (if not saying twist again )

Ordinary phone drop in price? Yes --> deflation -- company struggling
Iphone drop in price? No --> no deflation, company making decent profit.
Xioami drop in price? No it starts off with currency pricing --> company still doing ok.