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How did the gold standard work?

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Re: How did the gold standard work?

#31

Post by randomhodler84 »

imwillofficial wrote: post #24
anonporridge wrote: post #13

Earlier quoted context omitted.

Well, if you had to pick one to build a standard on in the modern world, I'd certainly pick bitcoin. Unlike gold, bitcoin is a network protocol available to anyone on the planet with an internet connection, can be programmed and improved, and you can secure in a way such that it's impossible to steal through simple violence. But obviously gold or bitcoin is a false dichotomy.

“Impossible” Meet “Beat him with this $5 hammer until he gives up the keys”

That is just the key access problem. You can’t beat a time locked multisig out of a guy. There are systems to protect key materials against violence. It’s kinda an old art in the military.

You can break into a multi-keyed vault of gold given enough time. You will not break multisig ECDSA with all the computers on earth.

Re: How did the gold standard work?

#32

Post by [deleted] »

anonporridge wrote: post #13
recuter wrote: post #11

Earlier quoted context omitted.

Pray tell why bitcoin is inevitable as opposed to the gold standard :)

Well, if you had to pick one to build a standard on in the modern world, I'd certainly pick bitcoin. Unlike gold, bitcoin is a network protocol available to anyone on the planet with an internet connection, can be programmed and improved, and you can secure in a way such that it's impossible to steal through simple violence. But obviously gold or bitcoin is a false dichotomy.

[deleted]

Re: How did the gold standard work?

#33

Post by gHosts »

In the Good Old Bad Old Days...

The South African Rand Note had the words, "I promise to pay the bearer, on demand at Pretoria, one Rand" and had the facsimile of the signature of the Governor of the Reserve Bank at the time.

I don't know of anybody who made the trip to exchange one. But by the time I could read that and understand it... you wouldn't of got much gold!

Re: How did the gold standard work?

#34

Post by jerf »

rr808 wrote: post #12

There 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.

The thought has crossed my mind that the answer is, it is impossible to have a long-term gold-backed system (or any other commodity), for all the various reasons that doesn't work, and it's impossible to have a long-term system not based on gold or some other set of commodities, because it is impossible for a government to be given the power to print arbitrarily without eventually using it, unto the death of that currency.

There is no guarantee that there is a long-term stable monetary system, after all. They may form a bistable pair together. Proponents of either state can easily read history as vindicating their claims that one or the other is superior, because look at how often the other failed, but I submit that if history vindicates anything at all it may actually be this position.

Re: How did the gold standard work?

#35

Post by khazhoux »

randomhodler84 wrote: post #28
doomroot wrote: post #17

Earlier quoted context omitted.

I'm really into bitcoin but comments like these make me cringe. Please add to the discussion or don't say anything at all. For example you could draw parallels between a gold standard and a bitcoin standard and highlight why a bitcoin standard makes more sense than a gold standard if fiat currencies collapse.

Please don’t tell me how to talk. Please don’t go round the internet telling people how to talk, it is unbecoming. A real Bitcoiner would never try to impose their rules around speech on others. It seems that having a controversial opinion is fuel for a good conversation.

You stated a claim without any trace of a supporting argument, let alone any evidence. You can choose to not believe this if you wish. However this is far beyond your wishes. ;-)

Re: How did the gold standard work?

#36

Post by randomhodler84 »

i67vw3 wrote: post #26
randomhodler84 wrote: post #10

Quoted post unavailable.

There are flaws in the current bitcoin/cryptocurrency mechanism that there 'probably' will never be a 'bitcoin standard'.

Could you elaborate on those flaws? Your info might not be current on the state of the art. It seems to work almost flawlessly in my opinion.

Re: How did the gold standard work?

#37

Post by shrike »

bugzz wrote: post #23
anonporridge wrote: post #9

Earlier quoted context omitted.

A little less than 10% in the US, https://www.federalreserve.gov/data/intlsumm/current.htm edit; wait no. This table is valuing gold at only $42 an ounce, not the open market value of $2000 an ounce. Based on actually market value, the US gold reserves is double the value than all other currency reserves.

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 price stays at $42.22, the Fed can lay claim to the full 261,498,927 ounces held by the Treasury. If the price is increased, the Fed gets only a sliver of that, the Treasury laying claim to the rest. And with fewer resources, the Fed’s has less control over the purchasing power of currency.”

Re: How did the gold standard work?

#38

Post by trinovantes »

randomhodler84 wrote: post #31
imwillofficial wrote: post #24

Earlier quoted context omitted.

“Impossible” Meet “Beat him with this $5 hammer until he gives up the keys”

That is just the key access problem. You can’t beat a time locked multisig out of a guy. There are systems to protect key materials against violence. It’s kinda an old art in the military. You can break into a multi-keyed vault of gold given enough time. You will not break multisig ECDSA with all the computers on earth.

If you have all the computers in the world, you can just create a dominate fork of the blockchain and own all the coins

Re: How did the gold standard work?

#39

Post by anonporridge »

bugzz wrote: post #23
anonporridge wrote: post #9

Earlier quoted context omitted.

A little less than 10% in the US, https://www.federalreserve.gov/data/intlsumm/current.htm edit; wait no. This table is valuing gold at only $42 an ounce, not the open market value of $2000 an ounce. Based on actually market value, the US gold reserves is double the value than all other currency reserves.

why are they not updating the value?

It looks like an archaic reason, https://www.bullionstar.com/blogs/jp-koning/golds-official-p...

tldr; the Fed owns gold certificates which give it a claim on a $11 billion worth of gold held by the US Treasury. They don't have a claim on a number of ounces of gold, so the US hasn't changed the convertibility value of gold certificates of $42.22 set in 1973 so that the Fed's claim on an absolute mass of gold remains unchanged.

It still doesn't quite make sense to me, because if the official value matched the market value, the Fed would still have the same claim to their book value of gold. It makes me think that something else is going on that's intentionally obscured.

Re: How did the gold standard work?

#40

Post by alexb_ »

jerf wrote: post #34
rr808 wrote: post #12

There 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.

The thought has crossed my mind that the answer is, it is impossible to have a long-term gold-backed system (or any other commodity), for all the various reasons that doesn't work, and it's impossible to have a long-term system not based on gold or some other set of commodities, because it is impossible for a government to be given the power to print arbitrarily without eventually using it, unto the death of that cur…

> it's impossible to have a long-term system not based on gold or some other set of commodities, because it is impossible for a government to be given the power to print arbitrarily without eventually using it, unto the death of that currency.

And this is why the US government isn't directly involved in the process, nor is it given the power to print money arbitrarily. Money is "printed" via a combination of loans and fractional reserve banking, and banks are incentivized to figure out the optimal interest rate to both produce the most amount of money for themselves while keeping a stable currency.

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