Gold Standard ?

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Vonz90
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Re: Gold Standard ?

Post by Vonz90 »

HTRN wrote: Fri Aug 20, 2021 11:30 am
I think a better idea that instead of fiat or commodity backed currency, perhaps defining a unit of currency to be worth exactly one hour of the average labor rate of the country? I got the idea from an old stainless steel rat novel.
That would be inherently deflationary. (As productivity increases the value of the money goes up.)
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blackeagle603
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Re: Gold Standard ?

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This week's events in Afghanistan have demonstrated the potential and value of DeFi (decentralized finance) for free movement of funds. Which IMHO is fundamental to liberty (Pursuit of Happiness)

to wit: Western Union vs Lightening Network
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BDK
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Re: Gold Standard ?

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For a long time, I think that’s about what a dollar was. I know 50¢ an hour was a fairly low paying job.
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Re: Gold Standard ?

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BDK
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Re: Gold Standard ?

Post by BDK »

The salaries listed is, I guess, one of the reasons Texas could survive not being permitted paper currency until the 50s or so.

I know it was part of DCs war on the Souterhn economy, just not sure what purpose it served.

(Most folks talked about their parents couldn’t get any cash from the bank, but they could always get silver dollars.

The “traditional” tall wallet in my home town could hold a check book. I think we all carried one, once we could drive. I know I carried a checkbook in HS.$
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Vonz90
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Re: Gold Standard ?

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blackeagle603
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Re: Gold Standard ?

Post by blackeagle603 »

Vonz90 wrote: Sat Aug 21, 2021 9:53 pm Related note on bitcoin. https://www.nationalreview.com/2021/08/ ... -collapse/
Seen a couple other countries going that path -- or discussing it openly. One might have been Peru also talking about adopting Bitcoin as legal tender
"The Guncounter: More fun than a barrel of tattooed knife-fighting chain-smoking monkey butlers with drinking problems and excessive gambling debts!"

"The right of the citizens to keep and bear arms has justly been considered, as the palladium of the liberties of a republic;" Justice Story
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Scott Free
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Re: Gold Standard ?

Post by Scott Free »

"The Gold standard is inherently broken - like all commodities, just about, it inherently gets cheaper, at a rate faster than inflation.
The best currency, really, is a tightly controlled fiat currency, which, TMK, is what cryptos are attempting to be."


That...is a lot to unpack in one statement.

To begin with, why do you think that the gold standard is "broken"? Where did it fail in the world? Did it work at the beginning of a given period (and define the period, please) and stop working at the end of this period or was it broken the whole time -- and if the latter, then why did it last so long? How, exactly, did it "break"? What was it that made the economically sophisticated nations of the world decide that they needed a replacement for the gold standard and what made them decide that fiat currency was being not only more "suitable" but superior to gold?

"[L]ike all commodities, just about, it inherently gets cheaper, at a rate faster than inflation."

Just curious, are you trying to cite an economic law here? All commodities always get cheaper at a rate faster than inflation? Really? Then is oil a commodity? If so, would you please inform my local gas station that their product should be a lot cheaper than it is now? After all, it's manufacture has been developing for over 100 years, so it's production should be about as refined as it can get, thus it should be at least as cheap as it was last year. But it's not -- why is that?

I'm presuming that your complaint about the gold standard being "broken" rests upon the bromide that is usually attributed to the gold standard: that it's deflationary. Okay, then first we need to define deflation:

"Deflation is a general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy. During deflation, the purchasing power of currency rises over time." [from Investopedia.com]

There are two questions that you have to answer at this point: one, where and when are you talking about? The United States? Britain? The rest of the world? Two, what was the cause of deflation in the country that you're talking about? Note that the definition reads: "typically associated with a contraction in the supply of money and credit in the economy" -- typically is not a synonym for exclusively.

If you're talking about the United States and its adoption of the gold standard (as enshrined in the Constitution), this period is about 100-125 years, encompassing a little more than the 19th Century. A $100 basket of goods in 1815 in the US cost in the upper $60 range in 1915. That is, "the purchasing power of currency rises over time." So you get the same for 30+% less? This is a bad thing? Was the economy ripped by massive unemployment, long-term economic disaster, or banks collapsing like dominoes? Outside of 1861-1865, hardly. The industrial base went from the economic adolescence to a global power -- the Age of Carnegie, Rockefeller, Vanderbilt and Hill -- all the while increasing agricultural output practically exponentially. I ask again: is this a bad thing? For those 100 or so years, and with the exception of the Civil War years, the price of gold remained $20/oz. How much price stability do you want?

What was "deflationary" about the price level in the United States under the gold standard was America's productivity. The explosive economic growth under a free market and a stable monetary regime propelled a minor new nation in the space of 100 years into a global power. That is what lowered prices. And it did so under the gold standard.

Was the gold standard perfect? I'm certain that it wasn't but you tell me: we've established that prices were stable during this period but if there was a problem with the supply of gold leading to some kind of economic ill during the 19th Century, outside of the Civil War and the sinking of the S.S. Central America in 1857, then where was it? Financially, the fundamental problem with the banking industry in the U.S. in the 1800s was that it was a) having to cope with the financial needs of a modern industrial economy (and all of its unique attendant requirements; after all, the Industrial Revolution hadn't ever been done before) and b) transitioning from a state-based economy to a national economy. The fact is that (with one exception), the economic depressions that occurred during the 19th Century are easily seen to have been caused by government interference in the economy (usually at the state level to affect the state & the region) -- but not because of some problem that gold inherently caused.

And you do know that the reason that the Founders put the gold & silver clause in the Constitution was expressly because of the screwing that the colonists (eventually, Americans) took because of the fiat money fiasco that occurred during the Revolution, right? The saying "Not worth a Continental" had a specific history and it wasn't positive. Call me an ignorant reactionary if you like, but I trust the Founders more on the nature of man (greedy power-lusters that need to be checked at every opportunity) than J.P. Morgan droning on about the need for a "flexible" quantity of currency in case of "emergencies" -- mainly because (surprise!) it's in Morgan's best interests to establish a national bank that (surprise again!) he's going to be one of the shareholders in and that profits from such a financial industry-government monopoly. Funny that, innit?

A gold standard has a lot of virtues, especially to people who, in trying to form a practical government, admit that they consider men quite fallible and capable of unjustly manipulating the government's monopoly on force to their own ends. You know, of course, how the people who first get the newly minted fiat currency -- the elite people with the proper political connections (the ones that you don't have and never will) -- get the benefit of non-inflated funds and can make a profit on that difference whereas the poor schlep who gets them last is screwed because he's the last to get the funds that are now devalued, right? So this is morally fine with you? Or do you rationalize it as merely the "cost of doing business"?

Can you explain to me why anyone would want a currency that becomes more worthless as time goes on? Intuitively, how does that work? Monetary inflation is not a good thing because inflation robs you of purchasing power in proportion to the severity of the inflation which, by the way, is quite insidious to those of us on low or fixed incomes. For example, do you want bracket creep in your income taxes, i.e., pay more for the same amount of work, usually without more pay, too?

What fiat currency lacks that would make it money is the fact that it is not and cannot be a store of value; it's not worth anything as anything else and it hasn't proved that it has maintained its value for long periods of time. At least gold has other uses besides currency. It's not intrinsically valuable in every situation but it is an indisputable fact that it has been a store of value due to its scarcity for over 5,000 years all across the globe. Under the fiat regime, the US dollar has lost well over 95% of its value in the last 100 years. Again, this is a good thing?

Another thing that the gold standard avoids is government deficit spending. Oh, you can deficit spend under a gold standard -- but not for long and certainly not ad infinitum. The inherent limitation enshrined in the principle that you can't spend more than you can make (or tax, in this case) tends to avoid tragic fiscal side effects -- like the financing of World Wars, entire welfare states, the insanity of foreign aid, the unneeded and perpetually ravenous & bloated government bureaucracies (thus, the surveillance state, the military-industrial complex), government corruption of the economy (and thus, the culture) and, well, you get the idea.

If the government couldn't borrow for the programs that the pols and the bureaucrats want/need to fund, then just how much mischief could these people cause? They would be deprived of the means to do so. But they do so because a fiat monetary regime enables them to do so, even without your permission. It was inevitable that the Fed would be corrupted to create the fascist state. If you don't think that government control of the money supply and government control of your life was by design, then I don't think that you were paying attention in class.

If it makes you feel better, then I agree that, in an ideal world, fiat money is fine as a currency. But we don't now, we never have and we never will live in an ideal world. A monetary standard based on anything without physical, tangible, intrinsic value of some sort is always going to be -- eventually -- manipulated by those who can manipulate it to their own benefit and necessarily at the expense of yours to the point that it will collapse. History tells you that there's nothing "special" about the United States attempt at a fiat currency; it will end the same as they all do.

And a bitcoin -- a receipt for energy expended in a computation -- being considered as a "currency"? Oh, puhleeze...

Happy Thanksgiving and Merry Christmas, gents!
Reality is that which, when you stop believing in it, doesn’t go away.- Philip K. Dick

It’s Ayn Rand’s world, we’re just living in it. -- Glenn Reynolds
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Vonz90
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Re: Gold Standard ?

Post by Vonz90 »

Scott Free wrote: Sat Nov 27, 2021 4:06 am

Happy Thanksgiving and Merry Christmas, gents!
https://www.forbes.com/advisor/investin ... deflation/ because deflation is much worse than inflation. Understand that first. If you have something that is becoming more valuable over time, then you do not need to invest in anything to make money. Pile money under your bed and get rich over time, bit money is not wealth itself, it is a liquid means to transfer wealth from among various commodities, including labor, land, intellectual property, etc. Deflation makes the transfer mechanism more important than what it represents.

Add to that the inherent volatility of gold, one cannot schedule the money supply up or down. Yes that helps take people out of the equation and there is value in that, but it replaces people with random events. More gold ces to market (49'ers, Alaska gold rush, whatever) inflation, economy grows faster than gold supply deflation.

Sure it balances out over time, but if you have to get a loan to build a business now how do you value it, how does a bank set an interest rate? In practice it meant they set the rates relatively low but made the terms and qualifications very onerous. This throtted growth and concentrated wealth.

The Gold standard worked post WW2 because everyone else pegged again us and our economy was larger than everyone else's by enough to straighten out the wrinkles. As soon as that was not true any longer it fell apart. The ink would not be dry and it would fall apart again if we tried to go back to it.
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Termite
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Re: Gold Standard ?

Post by Termite »

SCOTT FREE SHOWED UP??? AFTER ALL THIS TIME??? :o

Holy Shit. Dude, are you actually alive, or did mentioning "the gold standard" bring you back, like saying "Beetlejuice" 3 times?
"Life is a bitch. Shit happens. Adapt, improvise, and overcome. Acknowledge it, and move on."
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