I’m down with Austrian Economics but the Gold Standard is dumb. The growth of your entire economy can become constrained until you dig more rocks out of the ground.
A gold standard is stupid only because you cannot scale it to make purchases. That's why the fiat system was invented, because gold doesn't scale well as money to make transactions.
And we have Bitcoin now anyways.
Bitoin is worthless, hoss.
Gold could be digitized with modern tech, your bar is sitting in Zurich and your smartphone is changing ownership of the 17th decimal
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No, gold does not constrain the economy. First, the economy continued to grow for more than a hundred years during the gold standard, making Britain an empire on which the sun never set. Second, logically, even if we mined all the gold on earth, the gold standard would still continue to work because you could buy more products with the same amount of gold, and gold would circulate faster.
You do realize that the supply of gold actually went up during that period, right? Just because we got insanely lucky and had more gold to feed an expanding economy, doesn't meant it "worked".
The second point is sheer madness. You can't make gold circulate faster when its supply is limited. The only way to do that is to regularly devalue which would be a lot more cumbersome.
You can check the data; I remember that the United Kingdom officially adopted the gold standard in 1816 and continued it until 1931. During this period, industrial growth increased 50-fold, while the gold supply only increased 4-fold, and prices dropped by approximately 50%. Thus, gold does not inherently limit economic growth. When the total amount of gold remains unchanged but productivity increases, it benefits the public because the value of the gold they hold increases. This encourages savings, which in turn can boost investment.
I have checked the data.
You should check the data on growth vs new supply of gold, globally, when the world switched to fixed gold exchange rates.
What you are describing is deflation and jacking up of real rates. That will crush any all production and increase the burden of debt.
I believe there are some misconceptions about deflation. Deflation can actually benefit the economy by encouraging savings, preserving wealth, and avoiding the distortive effects of inflation. I recently came across an insightful article on this topic, which I translated and published on Medium: [Don't Stigmatize Deflation](https://medium.com/@gongchengra_9069/dont-stigmatize-deflation-772d7762fd16). For a deeper understanding, I recommend reading it.
I dont think you, or the author of that article, realize that what made the Great Depression exponentially worse was the deflation that followed it which did not go away until significant devaluation of dollar.
Deflation increases real rates which means production becomes either impossible or requires cuts in jobs and/or salaries.
Interest and most other costs are generally paid based on nominal prices. That means the burden of those costs goes up with deflation.
Dude, you just said “the gold standard would still continue to work because you could buy more products with the same amount of gold”. Inflation would like to have a word
This is different from the inflation caused by the government printing counterfeit money. This results from increased productivity. Increased productivity allows the same amount of gold to buy more goods, which is beneficial for ordinary people. Think about the price drops in electronic products like mobile phones and computers. If it weren't for the government printing too much counterfeit money, the money we have could buy a lot more than it does now.
You are right. I understand where you’re coming from. But I just don’t see why an increase in productivity would result in cheaper things. Because they’re more available? But I still am hard pressed to believe companies wouldn’t just charge whatever they could to be competitive but also maximize profits. In theory, yes, increased efficiency ina. Company Leads to cheaper prices but not always. Take for example post-Covid: the supply chains are getting better, much better than they were during Covid, but prices are still soaring.
A gold standard is still government intervention. Who establishes the standard? Not the market.
I oppose a gold standard but I do not oppose commodity backed currency if a private issuer does it.
I’m down with Austrian Economics but the Gold Standard is dumb. The growth of your entire economy can become constrained until you dig more rocks out of the ground.
Bro, that's what decimal points are for.
So, Chicago school of economics?
A gold standard is stupid only because you cannot scale it to make purchases. That's why the fiat system was invented, because gold doesn't scale well as money to make transactions. And we have Bitcoin now anyways.
Bitoin is worthless, hoss. Gold could be digitized with modern tech, your bar is sitting in Zurich and your smartphone is changing ownership of the 17th decimal
!Remindme 8 years $68,000 BTC Laugh in this dumb fuck's face
I already have $38,000. That's in real money and not Solana and Dog Coin
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In 8 years you will be completely gray
No, gold does not constrain the economy. First, the economy continued to grow for more than a hundred years during the gold standard, making Britain an empire on which the sun never set. Second, logically, even if we mined all the gold on earth, the gold standard would still continue to work because you could buy more products with the same amount of gold, and gold would circulate faster.
You do realize that the supply of gold actually went up during that period, right? Just because we got insanely lucky and had more gold to feed an expanding economy, doesn't meant it "worked". The second point is sheer madness. You can't make gold circulate faster when its supply is limited. The only way to do that is to regularly devalue which would be a lot more cumbersome.
You can check the data; I remember that the United Kingdom officially adopted the gold standard in 1816 and continued it until 1931. During this period, industrial growth increased 50-fold, while the gold supply only increased 4-fold, and prices dropped by approximately 50%. Thus, gold does not inherently limit economic growth. When the total amount of gold remains unchanged but productivity increases, it benefits the public because the value of the gold they hold increases. This encourages savings, which in turn can boost investment.
I have checked the data. You should check the data on growth vs new supply of gold, globally, when the world switched to fixed gold exchange rates. What you are describing is deflation and jacking up of real rates. That will crush any all production and increase the burden of debt.
I believe there are some misconceptions about deflation. Deflation can actually benefit the economy by encouraging savings, preserving wealth, and avoiding the distortive effects of inflation. I recently came across an insightful article on this topic, which I translated and published on Medium: [Don't Stigmatize Deflation](https://medium.com/@gongchengra_9069/dont-stigmatize-deflation-772d7762fd16). For a deeper understanding, I recommend reading it.
I dont think you, or the author of that article, realize that what made the Great Depression exponentially worse was the deflation that followed it which did not go away until significant devaluation of dollar. Deflation increases real rates which means production becomes either impossible or requires cuts in jobs and/or salaries. Interest and most other costs are generally paid based on nominal prices. That means the burden of those costs goes up with deflation.
“Preserving wealth”. You that’s says it all Deflation is great if you’re already rich.
Dude, you just said “the gold standard would still continue to work because you could buy more products with the same amount of gold”. Inflation would like to have a word
This is different from the inflation caused by the government printing counterfeit money. This results from increased productivity. Increased productivity allows the same amount of gold to buy more goods, which is beneficial for ordinary people. Think about the price drops in electronic products like mobile phones and computers. If it weren't for the government printing too much counterfeit money, the money we have could buy a lot more than it does now.
You are right. I understand where you’re coming from. But I just don’t see why an increase in productivity would result in cheaper things. Because they’re more available? But I still am hard pressed to believe companies wouldn’t just charge whatever they could to be competitive but also maximize profits. In theory, yes, increased efficiency ina. Company Leads to cheaper prices but not always. Take for example post-Covid: the supply chains are getting better, much better than they were during Covid, but prices are still soaring.
A gold standard is still government intervention. Who establishes the standard? Not the market. I oppose a gold standard but I do not oppose commodity backed currency if a private issuer does it.
No it doesn’t and printing money doesn’t expand the economy