cab21 Posted October 28, 2015 Posted October 28, 2015 how would a gold standard affect real estate transactions? http://www.constitution.org/mon/greenspan_gold.htm looking at a alan Greenspan article advocating a gold standard, one quote that caught my attention was the following. When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. real estate loans seem to have huge time lengths, and not the rate of return as productive and profitable endeavors. home loans are for many some of the biggest purchases people make, other from perhaps equipment in industrial industries. would it be safe to just say that with a gold standard people would be free in their banking and financing decisions to trade with one another? a gold standard seems like it could drive prices down, if the money supply is attached to real wealth, and not just speculation or a government system of forcing weights and measures and currency values.
Very Ape Posted October 29, 2015 Posted October 29, 2015 If people started trading housing in gold the currency would hyperinflate - in other words, in the short run it would drive prices up because people would realize the value of holding gold outside the financial institutions to begin with. But this would also drive more people into owning gold as well and would, for a short period of time, make gold transactions more sought after (especially since these can be managed outside the financial system's purvey) which would mean that in gold terms, yes the prices would drop dramatically. But you can also see why the central planners are so freaked out over this possibility. They could make gold transactions illegal but that would only drive the price up in dollars higher. I mean, there's really no way out for them but its funny watching them dancing around, waiving their hands like they have some magic ability to control it all. I actually think we will reach this point very soon ironically. So get your gold (and silver) now while its still cheap...
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