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The Gold Standard and the Great Depression (1997)

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Re: The Gold Standard and the Great Depression (1997)

#71

Post by tastyfreeze »

slowhand09 wrote: post #64
nicoffeine wrote: post #37

Earlier quoted context omitted.

The gold standard was abandoned because it is a terrible idea for civilizations that have technologies like accounting systems and currencies that are difficult to counterfeit. Tying economic expansion to the ability to mine and store one type of element doesn't make any sense. There are countless asteroids out there with quadrillions of dollars of precious metals. Does that mean the first private company to create a…

I posted this yesterday. Food for thought. In 1964 you could take two silver dimes and purchase ~1 gallon of gas. Gas was ~20 cents per gallon. Dimes were 90% silver. Fast forward to 2021. You could take two silver dimes to a coin dealer, sell them for fiat currency, and purchase 1 gallon of gas. Gas is ~$3.50 per gallon, silver is ~$23 per oz, and 2 silver dimes from 1964 contain ~5grams of silver. But using 2021 di…

As I have said many times on HN, a gold standard protects the wealth of the people from government excess. That is also why the gold standard was ended by government.

Re: The Gold Standard and the Great Depression (1997)

#72

Post by rat87 »

ogogmad wrote: post #70

What do people think of the thesis expressed in The Bitcoin Standard that the replacement of the gold standard by fiat currency led to a short-termist mindset among people? In other words, we now have artificially high "time preference" as a result of our currency inflating and the resulting disincentive to save money. The book also argues that fiat currency encourages people to get into debt and risk bankruptcy as a…

Seems pretty off

Fiat currency encourages growth and stability

Re: The Gold Standard and the Great Depression (1997)

#73

Post by rat87 »

tastyfreeze wrote: post #71
slowhand09 wrote: post #64

Earlier quoted context omitted.

I posted this yesterday. Food for thought. In 1964 you could take two silver dimes and purchase ~1 gallon of gas. Gas was ~20 cents per gallon. Dimes were 90% silver. Fast forward to 2021. You could take two silver dimes to a coin dealer, sell them for fiat currency, and purchase 1 gallon of gas. Gas is ~$3.50 per gallon, silver is ~$23 per oz, and 2 silver dimes from 1964 contain ~5grams of silver. But using 2021 di…

As I have said many times on HN, a gold standard protects the wealth of the people from government excess. That is also why the gold standard was ended by government.

That seems like another way of saying that a gold standard is inflexible and impractical and can't represent the actual economy particularly well

Re: The Gold Standard and the Great Depression (1997)

#74

Post by louloulou »

VHRanger wrote: post #63
louloulou wrote: post #39

Earlier quoted context omitted.

Some things are better hedges than others. Bitcoin happens to have been the best over the past decade. Edit: I'd argue this is because it has better monetary properties than the alternatives.

Bitcoin doesnt have good monetary properties? Go back to your textbook: - Medium of exchange: bad. Caps out at a few transactions per second, transaction cost go up massively when actually used. - Unit of account: Terrible. Because of price volatility you denominate BTC in terms of USD - something priced in BTC has a different price depending on the minute you look at it - Store of value: Hilariously terrible. Storin…

So condescending. That's because Bitcoin is not widely used as money yet. Those things don't all happen at the same time, they happen sequentially.

- collectable -> It's cool, I want some.

- store of value -> it holds value better than any other money. (Bitcoin is here)

- medium of exchange -> People request it in exchange for goods and services because it holds its value over time.

- unit of account -> People denominate prices in it because it's a widely used medium of exchange.

Edit: My initial point was Bitcoin has properties that make it suitable for use as money: divisible, portable, easy to verify, doesn't degrade over time, etc.

Re: The Gold Standard and the Great Depression (1997)

#75

Post by throw0101a »

cletus wrote: post #26

I honestly don't understand the obsession some people have with the gold standard. Even when the US had the gold standard, the US never had gold reserves that matched the dollars in circulation. Not once. Ever. Also, the gold standard doesn't stop sovereign devaluation as happened by FDR in the 30s. Historically gold existed as a currency because it had some useful properties: 1. Unusual appearance; 2. Relatively sca…

> In a way, Germany was incentivized for hyperinflation. The importance of that cannot be overstated.

If you look at the major examples of hyperinflation, the majority fall into three buckets:

* Losing a war that results in money printing to fund the effort.

* Large foreign denominated debts that require domestic money printing.

* Regime changes generally coinciding with civil war or social upheaval.

See Roche (2011):

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1799102

Re: The Gold Standard and the Great Depression (1997)

#76

Post by lottin »

louloulou wrote: post #59
lottin wrote: post #49

Earlier quoted context omitted.

Do you even know what a hedge is? The perfect hedge against inflation is a large basket of consumer goods and services, because it correlates perfectly with inflation. Anything else correlates less perfectly with inflation and therefore is a worse hedge against inflation compared to a basket of goods and services.

You're talking about consumer price inflation, I'm talking about monetary supply inflation. A basket of consumer goods and services is a nonsensical way to hedge monetary inflation under anything but the most extreme conditions, since those things should be getting cheaper as production processes/technology/understanding of the world improve.

Confirmed then, you have no clue what hedging is. A hedge is not an investment, you fool. A hedge is position that is intended to offset an exposure. A successful hedge can very well be a terrible investment.

Re: The Gold Standard and the Great Depression (1997)

#77

Post by throw0101a »

nums wrote: post #51
jihadjihad wrote: post #2

Ben Bernanke has studied and written [0] extensively about this topic; a copy of a speech he delivered at Washington and Lee University in 2004 can be found at [1] for those interested. 0: https://www.nber.org/system/files/chapters/c11482/c11482.pdf 1: https://www.bis.org/review/r040305e.pdf

"Helicopter" Ben famously said that the Great Depression could have been averted by throwing $100 bills from helicopters to pump liquidity into the economy. I believe the implementation of this concept via the Fed (bank of banks) is the real issue. Basically, liquidity goes to the banks. Anyone having a relationship with banks gets access to this liquidity and benefits. Of course, we plow these "gains" back into asse…

The Fed cannot do helicopter money. It is not connected to the "real" economy directly, only through the banks as middle-men. Helicopter money comes via fiscal policy.

As for so-called "asset inflation", I like Cullen Roche's take:

> In any case, I would argue that most of the asset price appreciation of the last 10+ years appears largely rational in the sense that it is supported by corporate fundamentals (record profits, record GDP, etc) and other robust economic data that is consistent with a growing economy. It isn’t just a fictitious boom as many “asset price inflation” narratives like to imply.

> As for inequality – asset price inflation would tend to exacerbate inequality since it will disproportionately benefit those who own assets. This makes sense. But as I like to always point out, inequality is a policy failure, not a market failure. After all, a capitalist economy will always veer towards monopolistic behavior if we allow it to. The extent to which we allow that to happen is not a failure of capitalism, it is a failure of policy makers to contain capitalism.

* https://www.pragcap.com/lets-talk-some-more-about-assflation...

Re: The Gold Standard and the Great Depression (1997)

#78

Post by 1-6 »

cletus wrote: post #26

I honestly don't understand the obsession some people have with the gold standard. Even when the US had the gold standard, the US never had gold reserves that matched the dollars in circulation. Not once. Ever. Also, the gold standard doesn't stop sovereign devaluation as happened by FDR in the 30s. Historically gold existed as a currency because it had some useful properties: 1. Unusual appearance; 2. Relatively sca…

Question: Has anyone ever been to or seen the gold at Fort Knox?

Re: The Gold Standard and the Great Depression (1997)

#79

Post by AnimalMuppet »

louloulou wrote: post #69
AnimalMuppet wrote: post #62

Earlier quoted context omitted.

But, unless you're a central bank or something, why do you care about monetary inflation instead of consumer price inflation? How is it going to affect you? Consumer price inflation is the one that affects you.

Uh, because they're stealing the purchasing power that I worked hard to obtain, and then using it to bail-out debtors without my consent. Also, I don't really care what the price of a "general basket of goods and services" is (whatever that means). I care about the prices of the specific things that I want now or will want in the future. Edit: And I would say my personal CPI seems to track money supply inflation pret…

> because they're stealing the purchasing power that I worked hard to obtain...

"Purchasing power" is exactly CPI inflation, not monetary inflation.

> And I would say my personal CPI seems to track money supply inflation pretty closely.

This I can buy. If the CPI figures are wrong, then we need to get ones that are right. But CPI inflation is still the one we actually care about.

Why should we not care about monetary inflation? Well, say the population doubles. Either the monetary supply has to double, or each dollar is worth twice as much. (In case you think "that sounds good": it stinks if, say, you owe a mortgage and each dollar you pay back is twice as valuable.)

Yes, I know that's not why the monetary supply inflated over the last 15 years. The point stands: CPI inflation is the one that actually affects us.

Re: The Gold Standard and the Great Depression (1997)

#80

Post by lottin »

louloulou wrote: post #69
AnimalMuppet wrote: post #62

Earlier quoted context omitted.

But, unless you're a central bank or something, why do you care about monetary inflation instead of consumer price inflation? How is it going to affect you? Consumer price inflation is the one that affects you.

Uh, because they're stealing the purchasing power that I worked hard to obtain, and then using it to bail-out debtors without my consent. Also, I don't really care what the price of a "general basket of goods and services" is (whatever that means). I care about the prices of the specific things that I want now or will want in the future. Edit: And I would say my personal CPI seems to track money supply inflation pret…

I'd argue that the only person stealing purchasing power from you is yourself. Read some books, get an education, have ambition, work hard, take care of yourself. If you did that, instead of blaming others for your failures, your purchasing power would be fine.
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