Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Prison May Be the Next Stop on a Gold Currency Journey

nytimes.com

Post reply on HN
Print view View original

61–70 of 90 posts

Re: Prison May Be the Next Stop on a Gold Currency Journey

#61

Post by mseebach »

davvid wrote: post #46
mseebach wrote: post #15

Earlier quoted context omitted.

It's also wrong. Yes, the spot markets are priced in dollars, but for an example, almost the entire Saudi production is sold directly to large clients. I'm sure they'd be happy to negotiate settlement in whatever currency or commodity they can use.

Iraq converted its petro trading to the Euro back in 2000, but that didn't last too long and is one of the reasons the US invaded, or so the story goes. This is the gist of a theory called "petrodollar warfare"[1]. Saudi Arabia is an ally hence they trade in dollars; there was quite a stir the last time there was a rumor related to them dumping the dollar[2]. I don't think them switching to another currency is quite…

Those links doesn't address the fact that most Saudi oil isn't sold on the spot market. They can be fully committed to maintaining the dollar as the currency of the spot market, while negotiating their sales to long term clients in whatever medium they feel like.

Re: Prison May Be the Next Stop on a Gold Currency Journey

#62

Post by bitops »

mseebach wrote: post #50
bitops wrote: post #40

Earlier quoted context omitted.

> In many places around the world, several currencies exist and are used simultaneously. You need to back this argument up with a good reference. [EDIT: multiple currencies in the same country. Argentina is a beautiful country but it has had some severe issues over the years. You need to have one currency before you can do things like local currencies. URVs in Brazil were a genius way of pulling this off.]

So there's cause and effect: Are countries unstable because they have multiple currencies, or are people using multiple currencies because the country is unstable. You seem (correct me if I'm wrong) to be arguing for the former, "gold bugs" will generally argue the latter.

No, you're right, I am saying it is destabilizing for a country to have more than one currency. It does weird things to culture.

Look at why Europe is so messed up right now - they adopted a single currency without a real government to match. Much as I might not like her, Margaret Thatcher was right when she said that "single currency is a federal Europe through the back door". It's either that or big trouble down the line.

I see you're from Denmark, so think of Legoland (in Billund, I assume you've been - it's silly!). Yes, they take all kinds of currency there, but it's very isolated and localized. At a broader national level, there is just the (sic) kroner. I've never once paid with US dollars at a pølsevogn in Copenhagen. :)

The full argument is quite long, but at heart, yes - I believe that the gold standard was a bad idea and remains a bad idea. Going back to it will not solve any of our current economic problems, it's a waste of time.

Thanks for sticking with the conversation btw! It was fun. :)

Re: Prison May Be the Next Stop on a Gold Currency Journey

#63

Post by brc »

jonasvp wrote: post #58
brc wrote: post #33

Earlier quoted context omitted.

A very weak argument. In many places around the world, several currencies exist and are used simultaneously. It's only a problem for the weak currency, which according to Greshams Law, everyone tries to get rid of, while hoarding the stronger currency. The reason the government doesn't want competition in the currency business is because they like to weaken their currency. The government currency would be discarded q…

This is a misunderstanding of Gresham's law which only applies for multiple currencies that are nominally of the same value. Meaning, if there is a $1 silver coin and $1 gold coin, everybody would be hoarding the gold coin and "getting rid of" the silver coin. Also, a currency is not something you hoard, it's something you "get rid of" by giving it to someone else in return for goods and services. In your example, th…

No, Greshams law says nothing about things nominally of the same value. It just states that bad money drives out the good money - meaning that for anything that is falling in value, it will be discarded. For anything that is falling slower, or not falling, it will be hoarded.

Currency is definitely something you hoard. It's called savings, and plenty of people still do it.

Re: Prison May Be the Next Stop on a Gold Currency Journey

#64

Post by mseebach »

bitops wrote: post #56
iand wrote: post #51

Earlier quoted context omitted.

Here's why I downvoted you: >This is one of the few times I'd ever say that government crackdown is a good thing. One country having multiple currencies at the same time could become a big logistical headache. You think governments should crackdown on and seek to imprison people because they engage in activities that cause logistical problems for the government? And you think this is one of the few times that a gover…

> You think governments should crackdown on and seek to imprison people because they engage in activities that cause logistical problems for the government? And you think this is one of the few times that a government should intervene? Seriously? Yes, 100%. > Every action has an implication. I would have upvoted you if you'd described what kind of implications rather than implying that having "implications" is someth…

Since you've deleted your other comment stating roughly the same thing, I'll repeat my question here:

Why should you lock people up for being "a big deal politically"? Rosa Parks and the movement she was a part of was a big deal politically who had huge social and political consequences.

It's all well that you know economic theory, but you might find it useful to share the bits of it that's relevant here.

Re: Prison May Be the Next Stop on a Gold Currency Journey

#65

Post by bitops »

iand wrote: post #45
bitops wrote: post #40

Earlier quoted context omitted.

> In many places around the world, several currencies exist and are used simultaneously. You need to back this argument up with a good reference. [EDIT: multiple currencies in the same country. Argentina is a beautiful country but it has had some severe issues over the years. You need to have one currency before you can do things like local currencies. URVs in Brazil were a genius way of pulling this off.]

30 seconds on google would have turned up this for you https://en.wikipedia.org/wiki/List_of_circulating_currencies...

Okay, yes - technically speaking, there are countries out there who have more than one official currency.

But with every single listing of a country that has more than one currency, there is a political reason why (see Ecuador) and it has real implications for the society to use a currency that you don't control.

Re: Prison May Be the Next Stop on a Gold Currency Journey

#66

Post by beagle3 »

wintersFright wrote: post #20
beagle3 wrote: post #18

Earlier quoted context omitted.

Funny! You think you can win the game! Well, first of all, gold can be confiscated from you. It happened in the 30s, it can happen again. Second, unless you are very well equipped and knowledgeable, it is not easy to buy gold - you may buy a bar, but it might be tungsten, with increasing probability as time passes (and I wouldn't be surprised if the probability is already non-negligible; most trade does not go to gre…

1) In the 30's more people owned gold. Now people are dishoarding gold (cash4gold). Going after gold hoarders won't yield much. Also no one in the 30's went to jail. 2) Coins from a reputable mint are pretty easy. The tungsten forgeries are only cost effective for the bigger bars 3) If you purchase coins then they can be redeemed for the currency of the day at under the radar levels. I don't see why I should pay tax…

> Going after gold hoarders won't yield much. Also no one in the 30's went to jail.

I agree with that premise - unless hoarding gold becomes a little more popular. It is in e.g. India; It might come to the US as well, especially if Ben & friends keep devaluing the dollar.

I don't remember reading about anyone going to jail, but I do remember reading about federal agents forcibly opening bank safes and such to look for gold. If you have a nontrivial amount, home storage might be problematic.

> Coins from a reputable mint are pretty easy. The tungsten forgeries are only cost effective for the bigger bars.

For now, true, as far as I know.

> If you purchase coins then they can be redeemed for the currency of the day at under the radar levels. I don't see why I should pay tax when trying to preserve purchasing power of my savings.

Well, I was restricting the discussion to a law-abiding regime. If you are willing to break the law, I would expect that there are more lucrative ways to do that, with lesser eventual punishment if caught.

Note that I completely agree with you that this kind of tax is unfair and unethical. Unfortunately, that IS the law. And even more unfortunately, the vast majority of the population in the world does not understand that they pay income taxes of (however much, 20-60% in the western world depending on your income) - and and additional of 2%-5% of their savings every year in currency devaluation.

It's funny, but the government works like a hedge fund: 20% of profit, plus 3% of capital. Except there's no watermarks. And you can't really take your money someplace else that offers better terms (at least not when you area US tax payer, and increasingly in other countries as well)

Re: Prison May Be the Next Stop on a Gold Currency Journey

#67

Post by brc »

iand wrote: post #51
bitops wrote: post #21

Earlier quoted context omitted.

This is one of the few times I'd ever say that government crackdown is a good thing. One country having multiple currencies at the same time could become a big logistical headache. It would definitely have political and social implications. [EDIT: I welcome downvotes on comments that are not constructive. If you think this is totally off the wall, please give a good explanation why.]

Here's why I downvoted you: >This is one of the few times I'd ever say that government crackdown is a good thing. One country having multiple currencies at the same time could become a big logistical headache. You think governments should crackdown on and seek to imprison people because they engage in activities that cause logistical problems for the government? And you think this is one of the few times that a gover…

I think we can safely say that bitops is a product of 'all government is good, more government is better' thinking.

I agree with your statement - logistical headaches? Wow, just wow.

Anyone who has even a passing familiarity with John Law and the Mississippi bubble would never say such things like centrally controlled currencies are important for political and social reasons.

Re: Prison May Be the Next Stop on a Gold Currency Journey

#68

Post by mseebach »

bitops wrote: post #62
mseebach wrote: post #50

Earlier quoted context omitted.

So there's cause and effect: Are countries unstable because they have multiple currencies, or are people using multiple currencies because the country is unstable. You seem (correct me if I'm wrong) to be arguing for the former, "gold bugs" will generally argue the latter.

No, you're right, I am saying it is destabilizing for a country to have more than one currency. It does weird things to culture. Look at why Europe is so messed up right now - they adopted a single currency without a real government to match. Much as I might not like her, Margaret Thatcher was right when she said that "single currency is a federal Europe through the back door". It's either that or big trouble down th…

You can actually usually pay with euros in most establishments catering to tourists, including pølsevogne. Like most casual cash transactions in Denmark, it's unlikely to go on the books, though.

Also, I'm not arguing for (or against, for that matter) the gold standard, just that if people feel they're better off transacting in a different currency than the single, nationally sanctioned one, they should be able to do so without incurring a forceful response by the government. For the record, I don't think that freedom extends to producing coins that are easily mistaken for those belonging to a different currency.

> Thanks for sticking with the conversation btw! It was fun. :)

Likewise, although I would still appreciate a response to http://news.ycombinator.com/item?id=4697030

Re: Prison May Be the Next Stop on a Gold Currency Journey

#69

Post by fauigerzigerk »

brc wrote: post #33
bitops wrote: post #21

Earlier quoted context omitted.

This is one of the few times I'd ever say that government crackdown is a good thing. One country having multiple currencies at the same time could become a big logistical headache. It would definitely have political and social implications. [EDIT: I welcome downvotes on comments that are not constructive. If you think this is totally off the wall, please give a good explanation why.]

A very weak argument. In many places around the world, several currencies exist and are used simultaneously. It's only a problem for the weak currency, which according to Greshams Law, everyone tries to get rid of, while hoarding the stronger currency. The reason the government doesn't want competition in the currency business is because they like to weaken their currency. The government currency would be discarded q…

I think the logistics argument is better than it sounds. It's not just the logistics of payment. It's also about contracts, contract law, clearing processes, the cost of managing risk, hedging, fighting fraud, and ultimately the transparency of the entire system.

Even where there is complete freedom of choice like in commodities markets, one currency is usually chosen and then used by everyone. Otherwise things would simply get too complicated, too costly and too risky.

The argument that governments force a single legal currency onto everyone so they can more easily expropriate us through devaluation doesn't hold water at all. After all, everyone is free to use whatever they like as a store of value and trade it.

Re: Prison May Be the Next Stop on a Gold Currency Journey

#70

Post by iand »

bitops wrote: post #65
iand wrote: post #45

Earlier quoted context omitted.

30 seconds on google would have turned up this for you https://en.wikipedia.org/wiki/List_of_circulating_currencies...

Okay, yes - technically speaking, there are countries out there who have more than one official currency. But with every single listing of a country that has more than one currency, there is a political reason why (see Ecuador) and it has real implications for the society to use a currency that you don't control.

You use the phrase "technically speaking" pejoratively as though there is some special set of rules that make these countries multi-currency. There isn't. It's very plainly correct that many countries in the world use multiple currencies.

I assume one of the implications you refer to is that the people have a choice of currencies and hence protection against government sponsored inflation.

Post reply on HN