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rofl stack sats. really . there is zero likelihood of bitcoin ever replacing any of the fiat system. Bitcoin is so heavily regulated and tracked now anyway.
How did the gold standard work?
61–70 of 144 posts
Re: How did the gold standard work?
#62Earlier quoted context omitted.
why are they not updating the value?
I found this - https://www.bullionstar.com/blogs/jp-koning/golds-official-p... . The whole article is worth a read, this is the important bit - “And that is probably why the U.S.’s statutory price of gold stays fixed at a decades-old level of $42.22. The consensus that independent central banking is a good thing (because it keeps a lid on inflation) dictates that the Fed have plenty of ammo. If the official gold pric…
It's not so much about 'ammunition': for that it doesn't matter how the central bank accounts for their gold.
The archaic official value of gold is just a political left-over from when the US was part of the Bretton Woods system, and no politician has found it advantageous to change that relict.
Just like we are still labouring under lots of other old regulations. Like taking our shoes off at the airport.
Re: How did the gold standard work?
#63There are real practical problems with gold and changing economies. What happens when your population goes up - you need more gold. Or economic growth. Similarly if gold is discovered like Spain's Latin American winnings it causes inflation.
When I first read up on economics, I had similar doubts about the gold standards. It doesn't help that most modern day advocators of a gold standard have but a dim understanding of history and economics. So, first: if the population in one country goes up, they can import more gold from elsewhere. It's a commodity after all. Similar for one country digging up a lot of gold. (The global economy wasn't quite as integra…
The worlds population has quadrupled in 100 years, you can't say that "they can import from elsewhere" or each country can just dig it up. What happens if you live in a country where you can't just dig it up and people are poor.
Re: How did the gold standard work?
#64Earlier quoted context omitted.
“ because securing tons of gold isn't easy” Why not?
It's too dense. It will literally sink into the soft London bedrock. New York is lucky to have granite bedrock so they can stack the gold higher.
then spread it out? this does not seem like that hard of an engineering problem. store it in the desert or mountains where land is cheap and abundant.
Re: How did the gold standard work?
#65Well, let's start with commodities. They have value, see, and that value contains both the exchange value (what it's worth in exchange for another commodity) and the use value (the value it provides as a commodity, like a coat keeping you warm.) But exchange value of commodity to commodity is a pain, so inevitably people tend to turn to a commodity that can be the "money commodity". A universal store of value, in thi…
Even in a world where the only model is commodity -> gold/money -> commodity, there will be people who will hoard a commodity to sell it when the demand is high. So, hoarding and making profits is a human nature, that just cannot be avoided.
Re: How did the gold standard work?
#66Why some arguments for 'Gold money standard wouldn't work' do not make a lot of sense
1. 'Co-operation under anarchy is impossible to achieve'
The whole point of money is to get people with different motives to co-operate. It is a technology that allows people to produce, store and exchange value. This system does not require perfect coordination, it only has to be good enough and humans have built good enough systems of coordination based on gold many times over the course of history. Is there any good reason to think humans have lost this ability?
2. 'The specie-flow numbers are not perfect'
Neither are most financial models including discounted cash flow, interest rate models etc. They do bake in many assumptions and conditionals but that does not mean it cannot be used to build a system.
However, there is a point to be made about the fact that gold is not that useful in the modern world because of the invention of new alloys like stainless steel, improved metalworking technologies etc. Also, economic activity would be correlated with gold extraction if we move into a gold standard.
However, we already have economic activity correlated to commodity extraction when it comes to oil. Oil (and other forms of cheap energy) consumption are a direct predictor of the economic output of a nation and so far there are no substitutes for oil.
Technically speaking the world might be better served by an oil standard. Ideally, there could be a central bank that exchanges (standardized) oil for paper currency. The system could be kept honest as new currency is only issued when people supply oil to the reserves and currency is destroyed when it is redeemed from the reserves. This would mean that currency circulation and economic activity is proportional to oil extraction which is already roughly how modern economies work.
However, this will never happen since western countries have deadly militaries and they are not going to let middle east economies set their own agenda on the global stage.
Long term however, if we can get hydrogen as currency that might be best. I am not a chemist, but it might be possible to develop good electrolysis technology to store energy by splitting water into hydrogen and oxygen. Then burn hydrogen to generate power and release harmless water vapor. We could have a decentralized monetary system that could potentially benefit everyone.
Re: How did the gold standard work?
#67The fact that gold reserves are still a very common feature in almost every country indicates to me that our governments aren't completely committed or secure in this grand experiment of unbacked fiat currency that's been going on for 50 years. https://tradingeconomics.com/country-list/gold-reserves And since the 2008 financial crisis and recent events with Russia, it seems like that uncertainty might be justified.
The total value of all currency right now is far higher than the value of all the gold - if there was some sort of rush back to gold the price increase would be tremendous
Not necessarily. Fractional reserve banking works and worked just fine; now and back on a gold standard.
No need to have one unit of gold for each unit of currency. You just need to redeem them on demand.
Re: How did the gold standard work?
#68Earlier quoted context omitted.
You control future transactions with majority computing power i.e. double spend coins
Double spend your coins only. And even then, you wouldn't because doing this kind of attack would destroy the value of the network and all your investment in mining ASICs would be destroyed. Here's how it goes, https://www.youtube.com/watch?v=CjyJhKpLUBU
This discussion is originally about comparing bitcoin to gold. OP is saying bitcoin's security is equivalent to the underlying crypto protocols which is clearly false as there is a finite amount of computers on Earth to render it worthless.
Nation states don't bother attacking bitcoin because there's little payoff relative to the cost. However, if we suppose there's a hostile country that held their central bank reserves in bitcoin, wouldn't that make a compelling case for the US government to invest in such infrastructure so that they can cripple them like they did with Russia?
Re: How did the gold standard work?
#69Re: How did the gold standard work?
#70Earlier quoted context omitted.
“ because securing tons of gold isn't easy” Why not?
People are surprisingly motivated to try to steal generalized stores of value that are untraceable? Especially when it’s worth a lot in even small quantities. So everyone from guards to govts would love to get their hands on it. 6000 tons of gold is worth around 384 billion dollars.
u cannot get your hand on enough gold to make it worth the criminal penalties. that stuff is heavy