Was the gold standard good or bad? (Page 1 of 2)
You Must Be Logged In To Vote
Posted: Today 12:49:47 PM EDT
| Was the gold standard good or bad? |
|
It was good, but it's impossible to go back. Switching to fiat currency worked out much better for the government than the citizens. The government holds all the power, citizens bear all the risk, and wealth held as cash is guaranteed to lose value. |
|
It's great. The big limitation is that it precludes growing your economy faster than other fiat economies. Deficit spending within modest limits is sustainable and what you have to do to win the economic race, but deficit spending beyond those limits leads to what much of the world is dealing with now. That deficit spending is what allowed us to win two world wars and cause the soviet union to fail. Then we got greedy, the wheels came off, and that got us to where we're at today. |
|
What Has Government Done to Our Money? In ancient times China tried fiat currency... it failed... they went back to metal Crypto was designed to be a modern alternative to always depreciating paper currency. |
per aspera ad astra
|
Tying currency to a physical asset limits it by the limit of the physical asset. It is simple: grow the amount of currency by the amount our GDP grows. In years of contraction, withdraw some currency. There: now you have a stable currency. In fact, make this a law so that politicians and the FED cannot manipulate it. |
| Idk if our digital life is compatible with the gold standard, but I’d like to find out. |
"My gun fight is going pretty bad if it involves anything but super soakers at a wet t shirt contest" -Aimless
“3:50 from post to lock, who's the champ? Me, mother fuckers” -Aimless
“3:50 from post to lock, who's the champ? Me, mother fuckers” -Aimless
|
There is an interesting graph that shows a marked correlation between going off the gold standard in the 70's and a big divergence in wages leading to the opposite of "trickle down" for lower wage earners. I'll see if I can find it.Attached File Attached File |
Live your life as you would wish to have lived, when you come to die. Confucius
When words lose their meaning, a people can move neither hand nor foot. Confucius
When words lose their meaning, a people can move neither hand nor foot. Confucius
|
Originally Posted By KitBuilder: It was good, but it's impossible to go back. Switching to fiat currency worked out much better for the government than the citizens. The government holds all the power, citizens bear all the risk, and wealth held as cash is guaranteed to lose value. M2 money supply is supposedly 23.22 trillion dollars. Value of US Federal government gold reserves is $1.2 trillion at market value. The gap is significant, but not absurd. Mainstream economists try to make it sound like you'd need a million times more gold to cover the currency in circulation, but that's not the case. |
|
Overall bad. I remember when gold was $35/oz. It was set by the govt. Why should the govt. set commodity prices? Gold is a semi-volatile commodity with some industrial uses. The govt. should not be involved in setting the price. Why not a "milk standard"? Or a "copper standard"? Or a "microchip standard"? |
| A currency that has no basis in gold or some other real physical valuable material is doomed. |
"I guess you already know that there are angels masquerading as people walking around this planet and your mom was the bravest one of those." - Idgie Threadgoode, Fried Green Tomatoes
|
Originally Posted By M855Bukkake: M2 money supply is supposedly 23.22 trillion dollars. Value of US Federal government gold reserves is $1.2 trillion at market value. The gap is significant, but not absurd. Mainstream economists try to make it sound like you'd need a million times more gold to cover the currency in circulation, but that's not the case.  How could it be done, if everyone wanted to? |
Decadence is no longer morally acceptable.
Joined:
Jan 2014
Posts:
43534
EE: 100% (6)
ID, USA
|
Originally Posted By Morgan321: It's great. The big limitation is that it precludes growing your economy faster than other fiat economies. Deficit spending within modest limits is sustainable and what you have to do to win the economic race, but deficit spending beyond those limits leads to what much of the world is dealing with now. That deficit spending is what allowed us to win two world wars and cause the soviet union to fail. Then we got greedy, the wheels came off, and that got us to where we're at today. See, that’s the problem. Within Modest Limits. Asking a government to stay within modest limits is like politely asking a kid to keep their hand out of the cookie jar. It might work if you’re Switzerland or Germany. Where fiscal responsibility is something akin to a cult. But with most cultures, it ain’t going to happen. Kinda funny bringing up the Soviet Union and their… fiscal policies. As for world wars, well. There’s no point in being sane in an insane time. That’s the time you do all kind of crazy shit with money and send submariners to kill your enemies railroads. |
Exaggerate the essential, leave the obvious vague.
|
Originally Posted By KitBuilder: 23 to 1 sounds absurd to me. How could it be done, if everyone wanted to? Originally Posted By KitBuilder: Originally Posted By M855Bukkake: M2 money supply is supposedly 23.22 trillion dollars. Value of US Federal government gold reserves is $1.2 trillion at market value. The gap is significant, but not absurd. Mainstream economists try to make it sound like you'd need a million times more gold to cover the currency in circulation, but that's not the case. How could it be done, if everyone wanted to? Well step one is for the US government to buy larger gold reserves. The $1.2 trillion figure is just what they have in the vaults now (supposedly, assuming it wasn't all stolen at some point). This accomplishes two things, it both grows the stockpile and also drives the price of gold up. Once they reach a rough equilibrium, the transition to a backed currency is possible. It would also be using fiat to expand the debt of the US government and thus money supply, which is bad, but due to the nature of pricing the aggregate value of held gold would rise faster than the fiat money supply. You'd basically be murdering the fiat dollar to birth a gold backed one. Is this a good idea? In a sane world, no. But it might be better than letting maniacs with a printer produce all the dollars they want. Pick your poison. |
|
Good versus Bad Deflation: Lessons from the Gold Standard Era our empirical evidence suggests that deflation in the nineteenth century was primarily good. |
per aspera ad astra
|
Originally Posted By Lou_Daks: I say that the standard should be shoes. Or tires. Either would be OK and both are more important than gold. Originally Posted By Lou_Daks: Originally Posted By piperpa24: A currency that has no basis in gold or some other real physical valuable material is doomed. I say that the standard should be shoes. Or tires. Either would be OK and both are more important than gold. Neither are durable stores of value. Gold was selected as the king of trade materials for good reasons. Mainly, it can sit for a thousand years in any conditions and not deteriorate. |
|
Originally Posted By M855Bukkake: Neither are durable stores of value. Gold was selected as the king of trade materials for good reasons. Mainly, it can sit for a thousand years in any conditions and not deteriorate. True, but so what? Gold has limited usefulness in the real world. Why should "durability" be the metric? Why shouldn't usefulness be the metric? How about water? It never changes. It can take several forms - liquid, solid, gas - but it's always water. |
I am Government Man, come from the government.
Joined:
Jan 2013
Posts:
28013
EE: 100% (18)
PA, USA
|
Originally Posted By KitBuilder: It was good, but it's impossible to go back. Switching to fiat currency worked out much better for the government than the citizens. The government holds all the power, citizens bear all the risk, and wealth held as cash is guaranteed to lose value. Originally Posted By KitBuilder: It was good, but it's impossible to go back. Switching to fiat currency worked out much better for the government than the citizens. The government holds all the power, citizens bear all the risk, and wealth held as cash is guaranteed to lose value. This. Effectively impossible to bring back. Not enough gold exists at current prices and money supply. The gold supply doesn't increase in parallel with desired economic growth, making the gold standard inherently deflationary. Doubly so when there is a trade deficit. Deflation sounds cool / desirable to the economically illiterate, but it's actually extremely damaging because of it's adverse incentives. Deflation was a component in the severity of the great depression (1930's), recession of 1920 & 21, the long depression (1873 to 1879), panic of 1893 (1893 to 1897), and depression of 1837 (1837 to 1843) Eliminates monetary levers to regulate the economy. Skimming it, I don't agree with that paper. The late 1800's deflation was tied to the advance of industrialization and railroads, dramatic positive economic factors coming into play. Even with that backdrop, you had some major and pronounced economic downturns correlating with deflation in that period. |
|
Originally Posted By Lou_Daks: True, but so what? Gold has limited usefulness in the real world. Why should "durability" be the metric? Why shouldn't usefulness be the metric? How about water? It never changes. It can take several forms - liquid, solid, gas - but it's always water. Originally Posted By Lou_Daks: Originally Posted By M855Bukkake: Neither are durable stores of value. Gold was selected as the king of trade materials for good reasons. Mainly, it can sit for a thousand years in any conditions and not deteriorate. True, but so what? Gold has limited usefulness in the real world. Why should "durability" be the metric? Why shouldn't usefulness be the metric? How about water? It never changes. It can take several forms - liquid, solid, gas - but it's always water. I don't know why I have to explain why valuable things that don't rot are better than valuable things that do. And if your argument is "it doesn't have intrinsic material value", well, neither do fiat dollars, or people, if slavery isn't allowed. It's an argument against the realness of market value, actually. The market doesn't have to explain shit to you. The market has valued gold before we could write down how valuable it was. |
|
Originally Posted By governmentman: This. Effectively impossible to bring back. Not enough gold exists at current prices and money supply. The gold supply doesn't increase in parallel with desired economic growth, making the gold standard inherently deflationary. Doubly so when there is a trade deficit. Deflation sounds cool / desirable to the economically illiterate, but it's actually extremely damaging because of it's adverse incentives. Deflation was a component in the severity of the great depression (1930's), recession of 1920 & 21, the long depression (1873 to 1879), panic of 1893 (1893 to 1897), and depression of 1837 (1837 to 1843) Eliminates monetary levers to regulate the economy. The total spot value of gold in vaults is more than the US M2 Money Supply. |
Decadence is no longer morally acceptable.
Joined:
Jan 2014
Posts:
43537
EE: 100% (6)
ID, USA
|
Originally Posted By Lou_Daks: True, but so what? Gold has limited usefulness in the real world. Why should "durability" be the metric? Why shouldn't usefulness be the metric? How about water? It never changes. It can take several forms - liquid, solid, gas - but it's always water. Water can go stale. Also it’s a little difficult to carry it in your pocket. But the big reason is probably because it used to fall from the sky randomly. Can’t have a commodity based currency that any random poor can set up a collector for and become a millionaire overnight. Unless we're on Arakkis or Tattoine or course. Attached File |
Exaggerate the essential, leave the obvious vague.
|
Originally Posted By M855Bukkake: I don't know why I have to explain why valuable things that don't rot are better than valuable things that do. And if your argument is "it doesn't have intrinsic material value", well, neither do fiat dollars, or people, if slavery isn't allowed. It's an argument against the realness of market value, actually. The market doesn't have to explain shit to you. The market has valued gold before we could write down how valuable it was. Water doesn't rot. Data doesn't rot. Air doesn't rot. Taco Bell sauce packets don't rot. Lil' Debbie donuts don't rot. The market is valuing gold less and less every day. Apparently that is causing you some frustration. The declining importance of gold doesn't have to explain shit to you. Feel free to buy all you want. Nobody cares. 
|
|
Originally Posted By Hesperus: Water can go stale. Also it’s a little difficult to carry it in your pocket. But the big reason is probably because it used to fall from the sky randomly. Can’t have a commodity based currency that any random poor can set up a collector for and become a millionaire overnight. Unless we're on Arakkis or Tattoine or course. https://www.ar15.com/media/mediaFiles/383325/3E8BD5B5-F9B8-45CC-96D9-757B018808E0_jpe-3830679.JPG You might not know this, but the water market is actually robust. Ask me how I know. Also, it doesn't "go stale". It's always H20 in its most basic form. Dinosaurs were pissing the same water you're drinking today. Think about that. |
|
The problem with bringing back the gold standard is the economy is so large now that with the finite supply of gold in the world the per ounce price would be astronomical if it was backing the currency. This would preclude industrial uses of gold which aren't trivial. I'd prefer the privatization of fiat currency that has incentives alligned to maintain or grow it's value. |
|
Originally Posted By governmentman: This. Effectively impossible to bring back. Not enough gold exists at current prices and money supply. The gold supply doesn't increase in parallel with desired economic growth, making the gold standard inherently deflationary. Doubly so when there is a trade deficit. Deflation sounds cool / desirable to the economically illiterate, but it's actually extremely damaging because of it's adverse incentives. Deflation was a component in the severity of the great depression (1930's), recession of 1920 & 21, the long depression (1873 to 1879), panic of 1893 (1893 to 1897), and depression of 1837 (1837 to 1843) Eliminates monetary levers to regulate the economy. Skimming it, I don't agree with that paper. The late 1800's deflation was tied to the advance of industrialization and railroads, dramatic positive economic factors coming into play. Even with that backdrop, you had some major and pronounced economic downturns correlating with deflation in that period. Originally Posted By governmentman: Originally Posted By KitBuilder: It was good, but it's impossible to go back. Switching to fiat currency worked out much better for the government than the citizens. The government holds all the power, citizens bear all the risk, and wealth held as cash is guaranteed to lose value. This. Effectively impossible to bring back. Not enough gold exists at current prices and money supply. The gold supply doesn't increase in parallel with desired economic growth, making the gold standard inherently deflationary. Doubly so when there is a trade deficit. Deflation sounds cool / desirable to the economically illiterate, but it's actually extremely damaging because of it's adverse incentives. Deflation was a component in the severity of the great depression (1930's), recession of 1920 & 21, the long depression (1873 to 1879), panic of 1893 (1893 to 1897), and depression of 1837 (1837 to 1843) Eliminates monetary levers to regulate the economy. Skimming it, I don't agree with that paper. The late 1800's deflation was tied to the advance of industrialization and railroads, dramatic positive economic factors coming into play. Even with that backdrop, you had some major and pronounced economic downturns correlating with deflation in that period. I would expect no less from governmentman |
per aspera ad astra
|
Gold became money because it had the highest utility as a means of exchange. It was rare, durable, divisible, and desirable. Markets chose it, over and over and everywhere. The Gold Standard was the first step along the road to fiat money. We used script, but it was backed by gold (and silver) until it wasn't. The creation of the Federal Reserve pretty much ended the gold standard, once you've got a lender of last resort injecting credit into the system a hard currency is always going to be seen as a drag on that process/deflationary. I don't think the gold standard is the solution, but I do think if we want a truly free society we have to go back to the very beginning and let the market decide what the means of exchange should be. In the modern world we can trade in anything, we've got the ability to keep 24/7 pricing markets for every kind of financial instrument in our pocket. Legal tender laws are where the problems begin, once government has the ability to force you to use their script for transactions they can tax whatever they want. I'm not sure we could run a successful nation-state without that power though, like somebody else said the advantage of fiat is you can crush your enemies over the short term by recruiting the entire economy to meet national needs. Of course that's also the problem. |
|
Originally Posted By nightstalker: There is an interesting graph that shows a marked correlation between going off the gold standard in the 70's and a big divergence in wages leading to the opposite of "trickle down" for lower wage earners. I'll see if I can find it.https://www.ar15.com/media/mediaFiles/1818/IMG_1698_png-3830661.JPGhttps://www.ar15.com/media/mediaFiles/1818/IMG_1697_jpeg-3830662.JPG Originally Posted By nightstalker: There is an interesting graph that shows a marked correlation between going off the gold standard in the 70's and a big divergence in wages leading to the opposite of "trickle down" for lower wage earners. I'll see if I can find it.https://www.ar15.com/media/mediaFiles/1818/IMG_1698_png-3830661.JPGhttps://www.ar15.com/media/mediaFiles/1818/IMG_1697_jpeg-3830662.JPG Yep. Monetary Inflation is the same as stealing. What Is The Cantillon Effect? In our current monetary system, the primary beneficiaries of money printing are governments, financial institutions, and wealthy individuals, while the wider population is left to bear the cost of inflation. As the money supply increases, we observe an expansion of government influence, greater financialization of economies, and a widening wealth gap. In other words, the wealthiest sectors and individuals see significant gains in their net worth, while ordinary people struggle to keep pace with the rising cost of living. This trend is evident today, with governments larger than ever before, economies deeply financialized, and wealth inequality reaching levels not seen since the Gilded Age. Bitcoin establishes a more equitable and transparent monetary system accessible to all participants, regardless of their institutional affiliations. In doing so, Bitcoin rids the world of the unfair accumulation of wealth enabled by the fiat system that has led to some of the highest levels of wealth concentration in history. Why The Cantillon Effect Creates Communism For people who are already wealthy: assets increase in “value” because they are being measured in more units For everybody else: food, shelter and essentials get more expensive, same reason. John Maynard Keynes: There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. |
per aspera ad astra
|
The founders chose silver as their pm of choice because it worked best for daily transactions. It's easier to make smaller coins that are a fraction of the dollar from silver than from gold. We used to see it with silver dollars, halfs, quarters, and dimes. If you needed smaller, copper was the choice. Try doing that with gold and you end up with tiny coins that are very expensive and easy to lose. At the time, the value of silver to gold was roughly 1:16 but it could fluctuate without changing the silver content of the dollar. At times, it could take 16oz of silver to buy 1oz of gold, and other time it might be 25oz of silver per oz of gold. The 2 weren't tied together. Today it would be 65oz of silver per oz of gold. |
|
The topic is way more complicated than most people here are willing to try and understand. The Gold standard was a mixed bag at best. It most certainly was not the economic utopia many here think it was. In order to go back, which is impossible, we would have to allow the US government control over the price and trade of physical gold. I would rather have the freedom to own gold and buy and sell at prices set by the free market. |
How do you do?
|
Originally Posted By Sigifrith: Even if we went on the grain of sand standard the Gubamint would spend us broke in no time. Attached File |
|
Epstein made money from financialization: Attached File The future is an end to QE: 'Princes Of The Dollar': Why QE Is Over Instead of growth, for decades, we've implemented policies that promote fewer and fewer entities in industry and banking. The exact steps that choke off growth and kill economic systems. It also leads, as we've seen, to a vicious cycle of bad policy design that encourages less competition. All of which only exacerbate the problem. Eventually, you end up right where we are. In an unproductive and overly financialized economy without the ability to provide because you've outsourced everything for the sake of profits, quarterly numbers, and inflated margins for analysts to bicker over. At some point, you wake up and realize the amount of power you've given away to others by centralizing your resources and profits into fewer and fewer hands. That's when you realize those providing to you have decentralized their resources, profits, and state-directed capital into real economic power that eventually unseats you from number one. The only move to sustain is to provide credit to those who have capacity (Main Street) and guide it into productive use cases (21st-century infrastructure). |
per aspera ad astra
|
Originally Posted By Deuskid: Tying currency to a physical asset limits it by the limit of the physical asset. It is simple: grow the amount of currency by the amount our GDP grows. In years of contraction, withdraw some currency. There: now you have a stable currency. In fact, make this a law so that politicians and the FED cannot manipulate it. Hence attempts at world domination to obtain ALL THE GOLD!!! |
For your pleasure or your pain, society is a game.
|
Originally Posted By Lou_Daks: Water doesn't rot. Originally Posted By Lou_Daks: Originally Posted By M855Bukkake: I don't know why I have to explain why valuable things that don't rot are better than valuable things that do. And if your argument is "it doesn't have intrinsic material value", well, neither do fiat dollars, or people, if slavery isn't allowed. It's an argument against the realness of market value, actually. The market doesn't have to explain shit to you. The market has valued gold before we could write down how valuable it was. Water doesn't rot. It is easily contaminated, requiring constant upkeep in storage. It literally evaporates. You don't really understand what "store" means. Data doesn't rot. It literally does, there is a giant assed industry dedicated to recovering data, and they often fail on aged systems. Air doesn't rot. Air also isn't rare enough to have meaningful value. Taco Bell sauce packets don't rot. In long term storage it certainly does. The market is valuing gold less and less every day. Are you smoking crack? Maybe if you have the attention span of a gnat. It has consistently stored value with excellent reliablity.  Apparently that is causing you some frustration. The declining importance of gold doesn't have to explain shit to you. Feel free to buy all you want. Nobody cares. You accuse me of being emotional? You sound like gold keyed your car or something. Gold is a poor investment. I am not telling anyone to buy it. I am also sure as shit not telling anyone to hold the shitcoin known as the US dollar. The currency of the future will be blood and iron. |
|
Originally Posted By Lou_Daks: Overall bad. I remember when gold was $35/oz. It was set by the govt. Why should the govt. set commodity prices? Gold is a semi-volatile commodity with some industrial uses. The govt. should not be involved in setting the price. Why not a "milk standard"? Or a "copper standard"? Or a "microchip standard"? They can set the price all they want but when foreign governments wanted the gold more than the paper they started cashing out usd for gold and ultimately the market set the price. That highlights a couple problems with gold. You can’t just make more of it. And if you set your currency to it then it becomes subject to global currency manipulation. |
|
Originally Posted By M855Bukkake: It is easily contaminated, requiring constant upkeep in storage. It literally evaporates. You don't really understand what "store" means. It literally does, there is a giant assed industry dedicated to recovering data, and they often fail on aged systems. Air also isn't rare enough to have meaningful value. In long term storage it certainly does. Are you smoking crack? Maybe if you have the attention span of a gnat. It has consistently stored value with excellent reliablity. https://i.imgur.com/FEawdVJ.jpeg You accuse me of being emotional? You sound like gold keyed your car or something. Gold is a poor investment. I am not telling anyone to buy it. I am also sure as shit not telling anyone to hold the shitcoin known as the US dollar. The currency of the future will be blood and iron. You seem very emotional From 1967 to 2007 - a 40 year span - gold was flat. It LOST value due to inflation. LOST MASSIVE VALUE. What part of that don't you understand? "Storehouse of value"? LOLOLOLOL Look at the chart. Look at it. https://metalcharts.org/gold-price-history If you bought gold in 1967 and sold it 40 years later as a "storehouse of value"- the average investment life of most people - you were THE BIGGEST LOSER. Very few things underperformed gold. |
|
Pros: It makes the type of insane mass counterfeiting currently done by the fed nearly impossible. Cons: gold itself has intrinsic value and useful properties especially in high-end and specialized electronics. Using it as currency impedes technological progress. |
"Dum spiro spero"
|
Originally Posted By TheAmaazingCarl: Pros: It makes the type of insane mass counterfeiting currently done by the fed nearly impossible. Cons: gold itself has intrinsic value and useful properties especially in high-end and specialized electronics. Using it as currency impedes technological progress. Yes, it has some industrial uses. So does every element to some degree. Also, chicks dig it. It's a shiny yellow metal. It makes nice jewelry. Other than that it has no "intrinsic" value. |
|
Originally Posted By Lou_Daks: Yes, it has some industrial uses. So does every element to some degree. Also, chicks dig it. It's a shiny yellow metal. It makes nice jewelry. Other than that it has no "intrinsic" value. |