NationStates Jolt Archive

It's a question that has fascinated me for a long time, and I can't quite decide. On the one hand, it would stabilize world currency forever, and all but eliminate inflation while making each national currency convertible. On the other, it would dampen liquidity. Discuss.

Doesn't liquid automatically make things damp?

*runs*

Wow, that is a difficult question, particularly with money becoming more and more electronic in nature. It would certainly help deal with inflation.

We haven't had a Great Depression since the end of the gold standard, so no. The economy at that time was a lot more volatile and unstable than it is now. We do need to maintain steady growth in the money supply in order to control inflation, but the benefits of fiat money are too great to ignore.

We should return the OP to where it belongs ~~> https://www.blogger.com/start

Nah, the gold standard had its time, but that's the past.

I think our currency should be chained to the price of milk, great northern beans, lentils or pork bellies. But not gold. ;)

How about eggs? :)

Nah, the gold standard had its time, but that's the past.

I think our currency should be chained to the price of milk, great northern beans, lentils or pork bellies. But not gold. ;)

Yes, absolutely. Although, silver would have to be used.

Doesn't liquid automatically make things damp?

*runs*

xDDD

How about eggs? :)

Sounds good. Maybe chain the nickel to the price of an egg at the gross rate. That way, whenever I saw a nickel lying in the gutter, I'd visualize a tasty egg and be more likely to pick it up. :p

Most definitely, though I personally don't care about the rest of the world, only that my country does so.

We should return the OP to where it belongs ~~> https://www.blogger.com/start

Yay Ides of July?

Sounds good. Maybe chain the nickel to the price of an egg at the gross rate. That way, whenever I saw a nickel lying in the gutter, I'd visualize a tasty egg and be more likely to pick it up.

Bring a whole new meaning to the price of eggs in China, no?

Bring a whole new meaning to the price of eggs in China, no?

Isn't it tea? :p I suppose a tea bag could be chained to the penny, since that's about the price at Wal-Mart for the bulk stuff, I noticed recently. :)

There isn't enough gold in the world to cover the economies of the world.

A better solution might be to require all nations to be in the black...no debt. If they have to use tax money which is based on production of something rather than just printing money a lot of the advantages of gold would occur.

We haven't had a Great Depression since the end of the gold standard, so no. The economy at that time was a lot more volatile and unstable than it is now. We do need to maintain steady growth in the money supply in order to control inflation, but the benefits of fiat money are too great to ignore.
I'm with Vetalia on this one. I'd add two more arguments to his:
1) I quite like the fact that so much liquidity is around right now.
2) There've been attempts to get back to the Gold Standard, and they've been pretty disastrous. And even if we somehow had a good method to do it, we'd need every major financial centre to agree to it, which isn't gonna happen.

How about an energy backed currency?

How about an energy backed currency?

Eh. Too easy to manipulate, I think.

you can't eat gold any more then you can paper. if you must have currency at all, itself a questionable propisition, why not set the standard unit of currency equal to the amount of one serving of something you can eat? say a bowl of rice for example. or macaroni and cheese. or, heavin forbid, a friggin hamburger?

of course you'd need refrigeration or some form of stasis field to stock pile it. maybe, although uncooked macarni and cheese ought to keep pretty well in a vacume.

i do understand the problem with paper being that it doesn't really represent anything other then a concept, that in principal is symbolic of value. and becomes thus hyperinflatable, meaning that while you can always print more of it, the more you print, the less any of it is worth.

but i think the real problem is with people mystaking symbol for substance, and conning each other into persuit of non-gratifying symbol for 'fun and (so called) profit'.

so how do you get people to create what they bitch about not having that takes cooperative effort to exist without the alure of greed or the threat of fear?

well its not quite like that at all, however much we are again, for 'fun and profit, coerced into immagining it to be.

people do things for many reasons. including simply to avoid boredom and because it is fun, or can be, to do them. so, why not, simply allow things to be fun to do?

i mean that's one part of it. yes i know if i immagined that to be the whole part of it, words like naieve come to mind, and that's not quite what i am suggesting. just one of several parts of it.

another is that people enjoy the good feeling that comes from creating something that expresses themselves, as an end in itself, not just to try and impress someone else. there is of course also the ego gratification of being appreaciated. and then there's the fun of using tecnology to do so. when you are free to be creative with it.

then of course comes balancing the safety and nature issue, but this is not so insurmountable as all that either. and there are precidents that have demonstatably worked, for not just centuries but millinea. one of the reasons the real history of the western hemisphere PRIOR to six centuries ago has been so obscured and hidden. because some people exploit the majority of us, not knowing, or even immagining such things are possible.

so i vote for the acorn standard.

=^^=
.../\...

so i vote for the acorn standard.

=^^=
.../\...

Not a bad idea. I tend to find maggots at the center of acorns, though. I still think the bean is better. They keep basically forever, like honey. :p

so i vote for the acorn standard.

=^^=
.../\...

But imagine how many times annoying people'd make jokes about it 'growing on trees'.

But imagine how many times annoying people'd make jokes about it 'growing on trees'.

Aha. Another good argument for the bean. :)

I suppose being called a 'beanpole' might then take on a new meaning! :p

No. It was rubbish.

I suggest beer (complying with the German purity laws), so that financiers are hilarious to watch on television, due to them staggering about and saying that they really, really wuv all of the female newscasters, instead of being extremely boring, and talking about interest rates etc.

In answer to the OP: hell (http://www.mises.org/rothbard/genuine.asp) fucking (http://www.mises.org/freemarket_detail.asp?control=149&sortorder=articledate) yes (http://www.mises.org/money.asp).

We should return the OP to where it belongs ~~> https://www.blogger.com/start

Sorry, but I just don't see how this is supposed to be a blog-post.

The idea of having some sort of standard for money is a good one. Why should it be gold though? Because gold is something rare, difficult to obtain and therefore valuable. It could just as easily be any other precious metal, like silver, platinum, iridium, rhodium, etc. But gold looks nicer than any of those, and unlike silver, tends not to tarnish.

There is one economy though that has come pretty close to a "gold standard" - Hong Kong. It pegged its currency to the US dollar, and backed it up 100% with dollar reserves. A nice idea in principle, but of course the flaw is relying on the stability of the US dollar.

However, Hong Kong's obsession with having sound money did result in a pretty stable economy, so it can't be such a bad idea after all.

There is one economy though that has come pretty close to a "gold standard" - Hong Kong. It pegged its currency to the US dollar, and backed it up 100% with dollar reserves. A nice idea in principle, but of course the flaw is relying on the stability of the US dollar.

However, Hong Kong's obsession with having sound money did result in a pretty stable economy, so it can't be such a bad idea after all.
It also had the advantage of being run by Britain, which is almost always A Good Thing, as far as the economy goes (see Rhodesia vs. Zimbabwe).

It also had the advantage of being run by Britain, which is almost always A Good Thing, as far as anything goes (see Rhodesia vs. Zimbabwe).
Corrected, huzzah.

It's a question that has fascinated me for a long time, and I can't quite decide. On the one hand, it would stabilize world currency forever, and all but eliminate inflation while making each national currency convertible. On the other, it would dampen liquidity. Discuss.

No, gold standard is stupid, and it would not eliminate inflation (see what happened to Spain after they got access to Southern American silver).

Currency (that is, the tender you use for trade) is just a symbol of your power of buying things. There is no intrinsical value of money or metals: if all currency were to vanish from existance tomorrow, human work would still be there, while, if humanity were to vanish tomorrow, currency would become totally useless.

Gold has no intrinsical value. Going back to gold standard would mean that -since there is a finite amount of gold on earth - if the global economy would grow, you'd have to give a greater commercial value to the same mass of gold, because you'd have exactly the same total mass of gold on earth, but more "work" (or "value") you'd need to represent with currency.
Here it is: deconstruction of the idea of money. Money is just a trick we use to make barter easier.

No, gold standard is stupid

Prove it.

We haven't had a Great Depression since the end of the gold standard, so no. The economy at that time was a lot more volatile and unstable than it is now. We do need to maintain steady growth in the money supply in order to control inflation, but the benefits of fiat money are too great to ignore.

Sorry, Vetalia, but you're quite wrong. The US (and most of the civilized world) went off the gold standard before the 1929 Depression.

Of course, that was small beans compared to the 1895 Depression, but it was still a major crash.

I think we should try a rain standard: Britain would lead the world again!

Sorry, but I just don't see how this is supposed to be a blog-post.
That doesn't really matter.

Eh. Too easy to manipulate, I think.

We could always convert it into matter.

We could always convert it into matter.
But going the other way is much more useful to use now.

Might not be such a bad idea. If the money supply is closely tied to a country's gold volume, then maybe that could be used to more easily undermine counterfeiting and money laundering.

But then, I'm not an economist.

Let's use leaves and tree bark...so that money will grow on trees...:D

that sounded better in my head...

Might not be such a bad idea. If the money supply is closely tied to a country's gold volume, then maybe that could be used to more easily undermine counterfeiting and money laundering.

But a country could conceivably inflate their gold reserves; I could see, say, North Korea or Zimbabwe suddenly discovering huge gold deposits in their territory immediately after the gold standard was imposed.

I don't know about other nations, but the United States is required by constitutional law to have silver and gold backed currency. But our money is no longer ours, it was given to private banks in exchange for nothing.

I don't know about other nations, but the United States is required by constitutional law to have silver and gold backed currency. But our money is no longer ours, it was given to private banks in exchange for nothing.

Sorry, but that isn't true at all. For years the US had no national currency at all, and it stopped issuing gold-backed notes in the early 20th century.

These time warps are getting worse. I can understand a few minutes mistake messing up a posting order, but a whole thread from 1943?

well, Douglas Adams showed us what happens when we go with the leaf standard

These time warps are getting worse. I can understand a few minutes mistake messing up a posting order, but a whole thread from 1943?

Yeah, seriously, what the hell? Stalin is really riding my ass to get these reports sent out to Tehran before the conference.

Sorry, but that isn't true at all. For years the US had no national currency at all, and it stopped issuing gold-backed notes in the early 20th century.

Article I Section 10, US Constitution

"No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."

And the US was on the gold and silver standard as late as the 1970's

Not a bad idea. I tend to find maggots at the center of acorns, though. I still think the bean is better. They keep basically forever, like honey. :p

We should have a fruitcake standard. We wouldn't have to worry about it going bad. Ever.

We should have a fruitcake standard. We wouldn't have to worry about it going bad. Ever.

better than the egg standard

better than the egg standard

Quite. I mean, with a Fruitcake standard, it would last forever, you could adjust for increasing economies, and no one would EVER be tempted to eat their money. Ever.

There isn't enough gold in the world to cover the economies of the world.

A better solution might be to require all nations to be in the black...no debt. If they have to use tax money which is based on production of something rather than just printing money a lot of the advantages of gold would occur.

Isn't that a bit like bonds?

Quite. I mean, with a Fruitcake standard, it would last forever, you could adjust for increasing economies, and no one would EVER be tempted to eat their money. Ever.

Actually, I like fruitcake...

Actually, I like fruitcake...

You like fruitcake? that's gay. :p

(sorry, had to)

Article I Section 10, US Constitution

"No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."

And the US was on the gold and silver standard as late as the 1970's


Sounds to me that this deals with states only. Federal government is a different entity all together.

Sounds to me that this deals with states only. Federal government is a different entity all together.

If gold and silver are the only acceptable form of currency to pay for debts in all 50 states, then the only place where federal reserve notes can be used are in Washington D.C. and the commonwealth territories.

Isn't that a bit like bonds?

Bonds are a type of debt. The government should not be allowed debt except in times of emergency such as a major war. In order to go into debt the government should need a huge majority, maybe 75% approval.

Tax is based on labor or products so it isn't some number pulled out of the air. Today we print money because we want more money or we need it to pay on the debt which is the very cause of inflation.

When the economy was really good (50's-60's) all of the money was backed by gold or silver. The money said on it "silver certificate" and you could ask for the silver from the government if you wanted it. The coins were made with real metal (silver, nickel, copper). When they started "federal reserve note" they printed so many that it inflated the currency to the point where a coin was worth more in metal than face value. People started melting them down as fast as they could be produced. So instead of controlling inflation by limiting the money supply, they took the precious metal out of the coins. If I remember correctly, this was about the late 60's. Things went well for a while due to the inertia of the economy. But starting in the early 80's the government under "conservatives" started massive debt and paid for it with paper. An entire generation has grown up thinking this is a "good" economy.

The economy has never been as good for the common man since worthless paper and massive debt became the norm.

If gold and silver are the only acceptable form of currency to pay for debts in all 50 states, then the only place where federal reserve notes can be used are in Washington D.C. and the commonwealth territories.

In theory and according to the constitution. However the Fed's do mint silver and gold coins still. Very limited however.

How about we just go back to bartering?

If gold and silver are the only acceptable form of currency to pay for debts in all 50 states, then the only place where federal reserve notes can be used are in Washington D.C. and the commonwealth territories.

No, because Federal jurisdiction is not extinguished by state jurisdiction. In areas neither remanded to the Federal Government nor exclusive to state governments, dual jurisdiction is held.

Also, note that the clause does not prevent things other than Gold or Silver Coin from being USED to settle debts; it only prevents STATES from making anything else LEGAL TENDER. Since it was the FEDERAL government that created the Federal currency, the clause does not apply.

These time warps are getting worse. I can understand a few minutes mistake messing up a posting order, but a whole thread from 1943?

1944, I think, with the Bretton Woods conference. And you're like John Maynard Keynes, who detested the gold standard.

There isn't enough gold in the world to cover the economies of the world.

A better solution might be to require all nations to be in the black...no debt. If they have to use tax money which is based on production of something rather than just printing money a lot of the advantages of gold would occur.

Well, that has two problemms. First of all, a state of no debt is impossible and unenforcible. Secondly, this doesn't address monetary policy. Already, the US Federal Reserve acts independently of the government, so they can print money as they see fit.

Here it is: deconstruction of the idea of money. Money is just a trick we use to make barter easier.

If you stop to think about it, you realize that nothing has intrinsic value. Perhaps you can make a case for biological necessities, but when it comes to houses, computers, oil, or anything else that can be bought or sold, they have no intrinsic value. They only have value based on how desparately a person wants them. Money would fall under this definition. It's only functional use may be to wipe one's ass with, but people have accepted it as valuable, and thus, it is.

Well, that has two problemms. First of all, a state of no debt is impossible and unenforcible. Secondly, this doesn't address monetary policy. Already, the US Federal Reserve acts independently of the government, so they can print money as they see fit.

Actually the US was in the black over most of it's history. In theory it is still required that there be a "debt ceiling". The problem is is takes way too few votes and no political consequences to raise it. The only way would be constitutionally.

If federal spending was linked to something rather than nothing it would help stabilize the money. The biggest problem right now is monetary policy is set by elections. No one wants an election during a downturn. So every two years there's an excuse to spend massive amounts to stimulate the economy. And the average American voter is too stupid to realize they are spending the future in order to feel good today. The solution is to pay the bills at the end of the month based on income. If an emergency happens, let overwhelming agreement bring out the credit cards.

Actually the US was in the black over most of it's history. In theory it is still required that there be a "debt ceiling". The problem is is takes way too few votes and no political consequences to raise it. The only way would be constitutionally.
1.) The US is always under its debt ceiling, or else the government would shut down by law. Congress just raises it a trillion dollars or so once every few years.
2.) The US government had a balanced budget partly because of a gold standard. With a finite supply of money, the government couldn't afford to be in debt for too long.
If federal spending was linked to something rather than nothing it would help stabilize the money.
True.
The biggest problem right now is monetary policy is set by elections. No one wants an election during a downturn. So every two years there's an excuse to spend massive amounts to stimulate the economy. And the average American voter is too stupid to realize they are spending the future in order to feel good today. The solution is to pay the bills at the end of the month based on income. If an emergency happens, let overwhelming agreement bring out the credit cards.
First of all, you are confusing fiscal policy with monetary policy. Fiscal policy is what can be controlled by Congress, appropriations and the like. That has an undeniable affect on the economy, and can definitely influence monetary policy. The beauty is that neither Congress nor the electorate directly controls monetary policy. The Federal Reserve does, able to make monetary decisions based almost solely on the health of the economy, and not political will. Very few countries have central banks independent of their governments, like we do. It's not perfect, but it keeps our economy much more stabler and resilient than those of other nations.
I agree that fiscal policy needs to be independent of politics, but let's remember the philosophical difference between the two. Monetary policy deals solely with the money supply, but fiscal policy, no matter how it's used, ultimately deals with how the government of the American people spends its money.
The Federal government earns $2.5 bn/year in tax revenue. Many people far poorer get advice on how to raise and spend that money. Why not we? We should send up an independent agency similar to the Federal Reserve, one to rewrite and suggest new tax laws as needed. Congress will implement them, but should vote only "yes" or "no", and not ammend the bill. Yet politcs will prevent this from ever happening.

How about we just go back to bartering?

Nah. I don't really want to pay the gas bill with sacks of flour. :p

And you're like John Maynard Keynes, who detested the gold standard.

There are far worse men to be like.

I think there are rather a few more problems to be sorted out even assuming a successful implementation of the gold standard... And using a rather more structured reply than an essay...

">" stands for "implies"

Assumptions:
The world on a gold standard is similiar to our world.
Money's value is pegged to gold at a fixed stable ratio.

Steps:
1.
Nearly fixed quantity of gold > similarly fixed supply of money
2.
Quality of labour/factors of production increase due to technology/education etc. > increasing volume of production for same cost
1 + 2 = 3.
Fixed supply of money + increasing volume of production > increasing value of money measured in amount of goods buyable
4.
Increasing value of money > Continuous drop in prices (slowly though)
5.
Continuous drop in prices > Population has expectation of prices dropping

I think most people can see where this is going by now...

Anyone see any problems, please point them out.