11 ms·

Ok, bear with me for a moment - what if the US would use actual physical gold coins instead of dollars? Then your argument of "gold would flow out" would not ho

by regnull 6mo ago

Ok, bear with me for a moment - what if the US would use actual physical gold coins instead of dollars? Then your argument of "gold would flow out" would not hold - so the only reason for it to flow out was that the gold standard was fake - the lax money policy of the US was the issue, not the gold standard itself.

cyberax 6mo ago
> Ok, bear with me for a moment - what if the US would use actual physical gold coins instead of dollars? You'll get a bear economy, leading to the eventual deflation and collapse. Fun fact: it was not hyperinflation in Weimar Germany that led Hitler to power but _deflation_ because of its insistence on sticking to the gold standard.
- kr1m 6mo ago
  > Fun fact: it was not hyperinflation in Weimar Germany that led Hitler to power but _deflation_ because of its insistence on sticking to the gold standard. Do you have a source for this? AFAIK https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R...
  - cyberax 6mo ago
    "Hyperinflation caused Hitler" is one of the common narratives that "everyone knows". But German economy was actually growing during the hyperinflation era and by the time of Hitler's ascension, the hyperinflation had long been in the past. I personally edited this very Wikipedia article several times, but my changes got reverted by goldbugs who want to memory-hole it. This article has a nice explanation: https://www.hertie-school.org/fileadmin/user_upload/20191101_Inflation_Redeker_neues_Layout.pdf https://www.hertie-school.org/fileadmin/user_upload/20191101... If you don't believe the numbers from it, they can be corroborated easily.
    - kr1m 5mo ago
      Thanks for sharing. I can corroborate some of the unemployment numbers in Lords of Finance and have no doubt there was some deflation. I do think the seeds of the Third Reich were sown well before this period mostly due to the insistence of France wanting full reparations and Germany borrowing in foreign currencies. https://en.wikipedia.org/wiki/Lords_of_Finance https://en.wikipedia.org/wiki/Lords_of_Finance
      - cyberax 5mo ago
        Hyperinflation undoubtedly left a huge psychological scar, especially because it happened right after the loss in WWI. But it did not cause a long protracted unemployment period that directly resulted in mass disgruntlement. And most importantly, the deflation was directly caused by Germany's insistence on staying on the gold standard. And this has been an almost ironclad law: large countries that insist on gold standard end up with stagnating economy. If you want another interesting tale from the opposite side of the spectrum: https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W%C3%B6rgl_Experiment https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W%C3%B6rgl_Expe... - it's a town that was issuing "decaying" money in 1930-s and this helped to revitalize its economy. Another example often cited by Paul Krugman was Washington's childcare coöp, but it's a bit too small-scale.
    - atoav 5mo ago
      I always thought it was the musical energy of Bertold Brechts "Die Dreigroschenoper" that lead Hitler to power. /s Just because two things are correlated in time, doesn't mean they are necessarily causally linked. Surely there are multiple factors at the same time behind the rise of a demagogue. In the case of Hitler the grievances of WWI played probably a much bigger role than economic problems.
      - dmoy 5mo ago
        Fair, but at the very least "hyperinflation caused Hitler" is a significantly weaker statement than "deflation caused Hitler", given that the former was replaced by the latter like 8+ years before Hitler's takeover. Economic problems was a big part though, the 1929-33 great depression. It features heavily in political literature pushed by the Nazi party leading up to takeover. You know, like "Arbeit und Brot", etc.
  - dmoy 5mo ago
    Hyperinflation in weimar Germany ended by what, 1924-ish with a return to gold standard? Hitler came to power 8+ years later
- CyberDildonics 5mo ago
  Fake economics to "stable money causes hitler" in two sentences. Countries used gold or metals either directly as currency or to back paper currency for hundreds of years. If their governments overspent they collapsed. Saying you need inflation or you get hitler is pretty wild.
  - cyberax 5mo ago
    > Saying you need inflation or you get hitler is pretty wild. Not really. You need inflation, or you end up with stagnation. https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W%C3%B6rgl_Experiment https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W%C3%B6rgl_Expe...
    - CyberDildonics 5mo ago
      Your proof that the economic system that worked for hundreds of years doesn't actually work is a small town that issued their own currency, which allowed them to nominally pay people less and there were more jobs? That's what inflation does, everyone gets paid less, but they don't realize it because they just see the same number coming in and more going out. And then because of that, somehow noninflationary currency results in hitler in 8 years (even though it was used for hundreds of years). I think you should look at the other end, which is governments going broke and not being able to inflate their way out of it.
      - cyberax 5mo ago
        > Your proof that the economic system that worked for hundreds of years It did not. The economic system that was in place for hundreds of years kept the population in a permanent state of depression. Most people had barely enough money to buy necessities. The economic growth exploded, surpassing _millenia_ of innovation within mere _decades_ once we got rid of the golden chains. But I guess that you fancy yourself being landed gentry and not a landless serf?
        CyberDildonics 5mo ago
- killjoywashere 5mo ago
  Uh, yeah, I'm gonna need more of an explainer on that.
RealityVoid 6mo ago
Gold is silly as a measure of value. It's just a piece of shiny metal. The amount of value in the world is increasing so you want to exchange medium to grow with it else you're pulling breaks on the actual economy.
- butlike 6mo ago
  Well it's also soft, bacteriostatic, and conductive.
  - RealityVoid 6mo ago
    OMG, we should totally base our economic exchanges on copper instead!
- engineeringwoke 6mo ago
  Yes, it's just a shiny piece of metal. However, it is a pure element and there is a limited amount of it, unlike pretty much anything else except maybe silver. Otherwise this happens. https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL This is the origin of the entire white collar world and all of its odd bedfellows, and it will die in our lifetime. All of our jobs will go with it, unfortunately.
- newguy1000 6mo ago
  Gold is actually really good at transferring and measuring value. Think about what a "good" measure of value would be have. It needs to last over time, not corrode or dissolve to the forces. It needs to be distributable, Divisible.. to be ubiquitous. Hard to create/refine, hard to find, so supply can't easily be inflated. It doesn't matter what the object that is being used for exchange of value or holding value, that's why you can trade and barter random objects. But if you condensate down the properties that make a GOOD money, then gold is more than just a shiny metal. "The amount of value in the world is increasing so you want to exchange medium to grow with it.." we find more gold every day, so there is an easing already happening naturally. And even if there wasn't, imagine having an exchange currency that literally never inflated... that's GOOD. We have been hoodwinked into thinking that we need inflation to keep up with goods and services, literal stockholm syndrome taught by the FED.
ajross 6mo ago
That doesn't make any sense to me. Under Bretton Woods, a "dollar" was a contractual equivalent to a fixed amount of gold. There's no difference. When people are talking about "flow out" they're not talking about literally motion of currency[1], just who owns it. [1] Which is backwards in your reasoning anyway. If you're a foreign power wanting to hold dollars, and dollars are physical gold coins, then you quite literally need to move them physically out of the country, right?
AnthonyMouse 5mo ago
> what if the US would use actual physical gold coins instead of dollars? The problem here is, what if the demand for dollars increases? In principle the US would get more gold and mint more currency, but gold is a finite resource. "All the gold ever mined" is around 200,000 metric tons, ~32k troy ounces per metric ton is ~6.4B troy ounces. In 2022 (just before the recent gold rally) the price was ~$2000 per troy ounce, i.e. "all the gold" was worth ~$13T. Meanwhile the M3 money supply in the same year was ~$20T. What happens if you try to buy $20T worth of gold to mint currency when only $13T worth has ever been mined, and not all of that is even on the market? The answer is that you can't, so instead the result is deflation, which is bad. Or to put it a different way, what do you think the economic effect of the recent gold rally would be for a country whose currency was still pegged to gold? It just got way cheaper to import foreign products than buy domestic ones, and way more expensive for foreign countries to buy your exports, so how's the unemployment rate looking? The amount everyone owes on their mortgage hasn't changed but the nominal value of their houses just got cut in half so now they've lost their jobs and are underwater. What happens when they start to default and foreclosures don't allow the banks to recover the principal?
- 1718627440 5mo ago
  > The problem here is, what if the demand for dollars increases? The price for gold and dollar would rise, until the worth of dollars is as high as the demand is?
  - AnthonyMouse 5mo ago
    > The price for gold and dollar would rise, until the worth of dollars is as high as the demand is? The name for that is deflation.
    - throwawayqqq11 5mo ago
      To explain why de/inflation is bad: The primary function of money is its trade value, to "lubricate" the real economy to let goods and services flow. When the value is unstable, people are inclined to not spend or not accept that currency, which contradicts the free flow of it and in severe cases harms the economy. Crypto'currencies' have the same problem. By nature, they are no currency but investment for which instability is required. No crypto bro would hype their 'currency' because there would be no pumping. Arbitrage trades are considered being for fools or insiders.
Nevermark 5mo ago
So as trade increases, and the need for dollars increases, gold and the dollar increase in value together. That sounds benign until you realize that is: deflation. It incentivizes everyone to hold their dollars instead of spending them, and parasitically gain from gold's increasing utility use as currency by others. This further decreases dollars available on the market to use in trade, further increasing their value. Which ... yes this can be an economic death spiral. Or at least, a strongly growth conflicted world. A world in which you can make 5-10% a year by avoiding economic activity or investment is not a healthy world. (And you can't increase gold supply to counteract this, because gold supply is also always balanced against the cost of extracting gold. Unless everyone else on the planet except the US government is prohibited from mining gold, there is no play there.)
- stinkbeetle 5mo ago
  Can you make the same arguments for holding land and activity that requires land? Or holding any other valuable, limited commodity vs activity that requires that commodity, copper for example? Investors in those things haven't caused an economic death spiral. It's considered shrewd and good business to buy and hold things that are seeing increasing demand. > This further decreases dollars available on the market to use in trade, further increasing their value. ... thereby reducing the amount of dollars required to trade a given amount of other things. Where does the spiral come from?
  - Nevermark 5mo ago
    Holding land isn't as straightforward as you describe it. Every parcel of land is different. It takes a lot of knowledge of many kinds to be the one who makes money from real estate, instead of losing outright for overpaying, underselling, or simply being whittled down by taxes and other expense. And its lack of liquidity creates high situation risk, for anyone who doesn't have a large enough csh buffer to weather life's turns, unscathed by any immediate needs. But yes, sophisticated investors do make money on under utilized land. Parasitically. And it is an economy damper. Under utilized land is poor economic optimization by definition. Not to mention the undertow it creates, in terms of unproductive scarcity, for people who actually need to utilize land - whether that is for homes or businesses. The solution, as economist Henry George pointed out, is to tax land, but not the property on it. Tax the exlcusionalry holding of a limited resource, don't tax productive value created by people. Taxing land and not property isn't as simple as taxing both, but it isn't rocket science either. There are lots of standards and practices, because distinguishing between the two is important for many reasons. The irony of taxing property, the stuff that makes land productive, is that it is a wealth tax that hurts rich and poor alike. A poor person, unemployed, who spends their time bereft of reliable income improving their own home will now be taxed on the value added - every year for the rest of their lives or until they sell or lose their home. That is a very perverse situation. So yes, the taxation situation that subsidizes under utilized property, which is also parasitically rewarded by gains in value far exceeding the lower taxes they pay (for having no development to tax), is continually damaging the economy.

by regnull 6mo ago

cyberax 6mo ago

> Ok, bear with me for a moment - what if the US would use actual physical gold coins instead of dollars? You'll get a bear economy, leading to the eventual deflation and collapse. Fun fact: it was not hyperinflation in Weimar Germany that led Hitler to power but _deflation_ because of its insistence on sticking to the gold standard.

kr1m 6mo ago
> Fun fact: it was not hyperinflation in Weimar Germany that led Hitler to power but _deflation_ because of its insistence on sticking to the gold standard. Do you have a source for this? AFAIK https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R...
- cyberax 6mo ago
  "Hyperinflation caused Hitler" is one of the common narratives that "everyone knows". But German economy was actually growing during the hyperinflation era and by the time of Hitler's ascension, the hyperinflation had long been in the past. I personally edited this very Wikipedia article several times, but my changes got reverted by goldbugs who want to memory-hole it. This article has a nice explanation: https://www.hertie-school.org/fileadmin/user_upload/20191101_Inflation_Redeker_neues_Layout.pdf https://www.hertie-school.org/fileadmin/user_upload/20191101... If you don't believe the numbers from it, they can be corroborated easily.
  - kr1m 5mo ago
    Thanks for sharing. I can corroborate some of the unemployment numbers in Lords of Finance and have no doubt there was some deflation. I do think the seeds of the Third Reich were sown well before this period mostly due to the insistence of France wanting full reparations and Germany borrowing in foreign currencies. https://en.wikipedia.org/wiki/Lords_of_Finance https://en.wikipedia.org/wiki/Lords_of_Finance
    - cyberax 5mo ago
      Hyperinflation undoubtedly left a huge psychological scar, especially because it happened right after the loss in WWI. But it did not cause a long protracted unemployment period that directly resulted in mass disgruntlement. And most importantly, the deflation was directly caused by Germany's insistence on staying on the gold standard. And this has been an almost ironclad law: large countries that insist on gold standard end up with stagnating economy. If you want another interesting tale from the opposite side of the spectrum: https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W%C3%B6rgl_Experiment https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W%C3%B6rgl_Expe... - it's a town that was issuing "decaying" money in 1930-s and this helped to revitalize its economy. Another example often cited by Paul Krugman was Washington's childcare coöp, but it's a bit too small-scale.
  - atoav 5mo ago
    I always thought it was the musical energy of Bertold Brechts "Die Dreigroschenoper" that lead Hitler to power. /s Just because two things are correlated in time, doesn't mean they are necessarily causally linked. Surely there are multiple factors at the same time behind the rise of a demagogue. In the case of Hitler the grievances of WWI played probably a much bigger role than economic problems.
    - dmoy 5mo ago
      Fair, but at the very least "hyperinflation caused Hitler" is a significantly weaker statement than "deflation caused Hitler", given that the former was replaced by the latter like 8+ years before Hitler's takeover. Economic problems was a big part though, the 1929-33 great depression. It features heavily in political literature pushed by the Nazi party leading up to takeover. You know, like "Arbeit und Brot", etc.
- dmoy 5mo ago
  Hyperinflation in weimar Germany ended by what, 1924-ish with a return to gold standard? Hitler came to power 8+ years later
CyberDildonics 5mo ago
Fake economics to "stable money causes hitler" in two sentences. Countries used gold or metals either directly as currency or to back paper currency for hundreds of years. If their governments overspent they collapsed. Saying you need inflation or you get hitler is pretty wild.
- cyberax 5mo ago
  > Saying you need inflation or you get hitler is pretty wild. Not really. You need inflation, or you end up with stagnation. https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W%C3%B6rgl_Experiment https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W%C3%B6rgl_Expe...
  - CyberDildonics 5mo ago
    Your proof that the economic system that worked for hundreds of years doesn't actually work is a small town that issued their own currency, which allowed them to nominally pay people less and there were more jobs? That's what inflation does, everyone gets paid less, but they don't realize it because they just see the same number coming in and more going out. And then because of that, somehow noninflationary currency results in hitler in 8 years (even though it was used for hundreds of years). I think you should look at the other end, which is governments going broke and not being able to inflate their way out of it.
    - cyberax 5mo ago
      > Your proof that the economic system that worked for hundreds of years It did not. The economic system that was in place for hundreds of years kept the population in a permanent state of depression. Most people had barely enough money to buy necessities. The economic growth exploded, surpassing _millenia_ of innovation within mere _decades_ once we got rid of the golden chains. But I guess that you fancy yourself being landed gentry and not a landless serf?
      - CyberDildonics 5mo ago
killjoywashere 5mo ago
Uh, yeah, I'm gonna need more of an explainer on that.

RealityVoid 6mo ago

Gold is silly as a measure of value. It's just a piece of shiny metal. The amount of value in the world is increasing so you want to exchange medium to grow with it else you're pulling breaks on the actual economy.

butlike 6mo ago
Well it's also soft, bacteriostatic, and conductive.
- RealityVoid 6mo ago
  OMG, we should totally base our economic exchanges on copper instead!
engineeringwoke 6mo ago
Yes, it's just a shiny piece of metal. However, it is a pure element and there is a limited amount of it, unlike pretty much anything else except maybe silver. Otherwise this happens. https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL This is the origin of the entire white collar world and all of its odd bedfellows, and it will die in our lifetime. All of our jobs will go with it, unfortunately.
newguy1000 6mo ago
Gold is actually really good at transferring and measuring value. Think about what a "good" measure of value would be have. It needs to last over time, not corrode or dissolve to the forces. It needs to be distributable, Divisible.. to be ubiquitous. Hard to create/refine, hard to find, so supply can't easily be inflated. It doesn't matter what the object that is being used for exchange of value or holding value, that's why you can trade and barter random objects. But if you condensate down the properties that make a GOOD money, then gold is more than just a shiny metal. "The amount of value in the world is increasing so you want to exchange medium to grow with it.." we find more gold every day, so there is an easing already happening naturally. And even if there wasn't, imagine having an exchange currency that literally never inflated... that's GOOD. We have been hoodwinked into thinking that we need inflation to keep up with goods and services, literal stockholm syndrome taught by the FED.

ajross 6mo ago

That doesn't make any sense to me. Under Bretton Woods, a "dollar" was a contractual equivalent to a fixed amount of gold. There's no difference. When people are talking about "flow out" they're not talking about literally motion of currency[1], just who owns it. [1] Which is backwards in your reasoning anyway. If you're a foreign power wanting to hold dollars, and dollars are physical gold coins, then you quite literally need to move them physically out of the country, right?

AnthonyMouse 5mo ago

> what if the US would use actual physical gold coins instead of dollars? The problem here is, what if the demand for dollars increases? In principle the US would get more gold and mint more currency, but gold is a finite resource. "All the gold ever mined" is around 200,000 metric tons, ~32k troy ounces per metric ton is ~6.4B troy ounces. In 2022 (just before the recent gold rally) the price was ~$2000 per troy ounce, i.e. "all the gold" was worth ~$13T. Meanwhile the M3 money supply in the same year was ~$20T. What happens if you try to buy $20T worth of gold to mint currency when only $13T worth has ever been mined, and not all of that is even on the market? The answer is that you can't, so instead the result is deflation, which is bad. Or to put it a different way, what do you think the economic effect of the recent gold rally would be for a country whose currency was still pegged to gold? It just got way cheaper to import foreign products than buy domestic ones, and way more expensive for foreign countries to buy your exports, so how's the unemployment rate looking? The amount everyone owes on their mortgage hasn't changed but the nominal value of their houses just got cut in half so now they've lost their jobs and are underwater. What happens when they start to default and foreclosures don't allow the banks to recover the principal?

1718627440 5mo ago
> The problem here is, what if the demand for dollars increases? The price for gold and dollar would rise, until the worth of dollars is as high as the demand is?
- AnthonyMouse 5mo ago
  > The price for gold and dollar would rise, until the worth of dollars is as high as the demand is? The name for that is deflation.
  - throwawayqqq11 5mo ago
    To explain why de/inflation is bad: The primary function of money is its trade value, to "lubricate" the real economy to let goods and services flow. When the value is unstable, people are inclined to not spend or not accept that currency, which contradicts the free flow of it and in severe cases harms the economy. Crypto'currencies' have the same problem. By nature, they are no currency but investment for which instability is required. No crypto bro would hype their 'currency' because there would be no pumping. Arbitrage trades are considered being for fools or insiders.

Nevermark 5mo ago

So as trade increases, and the need for dollars increases, gold and the dollar increase in value together. That sounds benign until you realize that is: deflation. It incentivizes everyone to hold their dollars instead of spending them, and parasitically gain from gold's increasing utility use as currency by others. This further decreases dollars available on the market to use in trade, further increasing their value. Which ... yes this can be an economic death spiral. Or at least, a strongly growth conflicted world. A world in which you can make 5-10% a year by avoiding economic activity or investment is not a healthy world. (And you can't increase gold supply to counteract this, because gold supply is also always balanced against the cost of extracting gold. Unless everyone else on the planet except the US government is prohibited from mining gold, there is no play there.)

stinkbeetle 5mo ago
Can you make the same arguments for holding land and activity that requires land? Or holding any other valuable, limited commodity vs activity that requires that commodity, copper for example? Investors in those things haven't caused an economic death spiral. It's considered shrewd and good business to buy and hold things that are seeing increasing demand. > This further decreases dollars available on the market to use in trade, further increasing their value. ... thereby reducing the amount of dollars required to trade a given amount of other things. Where does the spiral come from?
- Nevermark 5mo ago
  Holding land isn't as straightforward as you describe it. Every parcel of land is different. It takes a lot of knowledge of many kinds to be the one who makes money from real estate, instead of losing outright for overpaying, underselling, or simply being whittled down by taxes and other expense. And its lack of liquidity creates high situation risk, for anyone who doesn't have a large enough csh buffer to weather life's turns, unscathed by any immediate needs. But yes, sophisticated investors do make money on under utilized land. Parasitically. And it is an economy damper. Under utilized land is poor economic optimization by definition. Not to mention the undertow it creates, in terms of unproductive scarcity, for people who actually need to utilize land - whether that is for homes or businesses. The solution, as economist Henry George pointed out, is to tax land, but not the property on it. Tax the exlcusionalry holding of a limited resource, don't tax productive value created by people. Taxing land and not property isn't as simple as taxing both, but it isn't rocket science either. There are lots of standards and practices, because distinguishing between the two is important for many reasons. The irony of taxing property, the stuff that makes land productive, is that it is a wealth tax that hurts rich and poor alike. A poor person, unemployed, who spends their time bereft of reliable income improving their own home will now be taxed on the value added - every year for the rest of their lives or until they sell or lose their home. That is a very perverse situation. So yes, the taxation situation that subsidizes under utilized property, which is also parasitically rewarded by gains in value far exceeding the lower taxes they pay (for having no development to tax), is continually damaging the economy.