Morphic Tide
Well-known member
"The only reason people use this god-awful thing is because things have changed so the thing I want literally doesn't work" is... A hell of an opinion.
History What are some of your most contraversial takes on history?
- Thread starter Winston Bush
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Skallagrim
Well-known member
Your first sentence regarding "zero difference between metals" already reveals that you don't really know what you're on about. You compare gold and copper. Most estimates of the total amount of gold that's been mined in all of history arrive at a number c. 200.000 metric tons. Let's see how much copper we have... what's that? 700 million metric tons, you say?
I wonder if that has some kind of economic consequence.
...You go on to talk about fractional reserves being used (that is, a fiduciary system) and then try to blame the end of gold standards on that. Which is a ludicrous assertion, but then you take it a step further. You claim against all sanity, that "bussiness could not be done" because "there isn't enough gold for everyone in the world to do business with it".
Do you even understand what deflation is?
That sounds as if gold is being undervalued. If it's that rare, what you can get in exchange for an amount of it should be much more.
Morphic Tide
Well-known member
In the theoretical basis of what is and isn't fiat currency, there is no difference. Gold is valuable purely due to rarity and odd appearance, it is too rare for utility to have a serious factor.
The fiduciary system in question stemmed directly from the unsuitability of the gold standard to liquidity demands of modern economies. Europe stopped backing with gold far earlier due to the exact problem I'm getting at: They ended up paying the US the vast majority of their gold, and thus ended up with far too little to back the basic function of their own economies. It wasn't because they had bank notes, it was because there was not enough gold to pay for goods.
An endless spiral of deflation in any economy with net imports due to loss of money supply to foreign entities is a complete non-starter. If your own goods become ever cheaper in terms of gold, because you are shipping gold to other countries to pay them, then those other countries have ever-more advantageous economic positions over you. It's a death-spiral of illiquidity and export devaluation, even before getting into how it cripples profit margins and holding onto actual goods.
...There isn't enough of it for usable denominations (somewhere under 30 grams per person) unless you dilute it worse than the Romans ever considered and it would become even nastier as any export economy sucks up the world's supply. The basic resource distribution behind basic kinds of goods in modern life does not support it. How are you supposed to be getting raw materials from third-world countries for any meaningful duration if you have to pay in gold? Your own supply constantly goes down, and theirs goes up, so it constantly takes more gold that you have less of to have the same value to their economy.
Inflation and deflation affect "hard" currencies vastly worse because it's impossible to course-correct. The only way to restore a gold supply is to mine it or have goods some other country is willing to pay gold for. Which cannot support the massive supply chains behind what we need to merely sustain the current population, let alone the consumer goods, and as mentioned above means any trade imbalance continuously compounds on itself as the relative supplies of gold become ever more imbalanced.
This is why mercantilism happened. It was not geopolitical shitflinging, it was basic economics. If you were needing to pay for imports, you were giving the country of origin gold, and thus lasting economic leverage over you. So the major empires went and conquered the rest of the planet in pursuit of minimizing their imports. On the flip side, this caused Spain's economy to go pear-shaped from the then-ludicrous amount of bullion they were extracting from New World colonies.
Fundamentally, it's a bad state of affairs because it forces trade to be zero-sum. The entire modern economic system is built around the fact that this doesn't work with high technology. The petrodollar was pushed through in a desperate attempt to make a substitute that would work with the way resources flow.
Doomsought
Well-known member
It really isn't. Nearly ever problem facing humanity has at least one if not dozens of near ideal solutions that can't be used because of a single glaring flaw.
Skallagrim
Well-known member
In short, you haven't the faintest idea what we're actually talking about, and you can't even give a definition of inflation that isn't 100% garbled Keynesian bullshit.
Morphic Tide
Well-known member
Then why the obsession over gold instead of trying to find a material that actually has enough supply if it's "a single glaring flaw"?
Am I wrong in saying that gold is not special for the basic classification of a currency? Is my understanding of what caused Europe to abandon the gold standard and banks to push so hard for fractional reserve incorrect? How is my assumption that deflation leads to needing higher profit margins because you have to compete with doing nothing incorrect?
Edit: Seriously, explain how the absolute bloody fuck you'd finance industrialization, with its massive explosion in goods and population, with a strict hard currency like gold coinage. What do you think happens to the currency during enormous economic growth like that?
I'd expect the cost of goods to drop like a rock, causing illiquidity problems because the smallest unit has become a sizable sum, and many people would stick to bare means instead of taking on any risk because the purchasing power of savings is exponential.
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Skallagrim
Well-known member
See? Garbled Keynesian bullshit.
Yes, you're wrong. Completely, utterly, failure-to-think-about-how-real-life-works wrong.
Yes, deflation encourages savings. And that's healthy. Nothing wrong with that. The current constant inflation is a draconian tax on saving and responsibility. That is a problem. Deflation is good. We need a metric fuck-ton of deflation, to correct the insanity of decades upon decades of inflation. Which we have suffered due to psychopaths (and their idiotic stooges) imposing fiat currency.
Here's what Keynes missed, and what you missed: people like to have things. People like to live. To enjoy life.
So what do you imagine? If there's deflation, nobody will buy food, because they'll have more purchasing power tomorrow? Everybody will elect to starve, because in some hypothetical tomorrow, they could buy two breads for the same coin? Of course not!
But let's consider luxury goods. Will nobody ever buy a new fancy television again, because next week it'll always be cheaper? No! That's something only an idiot who thinks in pure theory could believe! In short: Keynes, and psychos like him. In reality, people will buy a new television. Why? Because they want to enjoy having it! Theoretically, if you delay to the last possible minute of your life to buy that new television, you'll get it at its absolute cheapest... but you'll only have it for one minute!
Time, my economically illiterate friend, is also a scarce commodity. So if there is deflation, people will apply (consciously or unconsciously) economic calculation. They'll weigh the potential advantage of waiting (more purchasing power in the future) against the potential disadvantages (having to wait to enjoy the thing in question, potentially longer than they may want to wait).
If what you said was true, nobody would ever buy clothes except in the off-season when they can get a discount. And there are people who do! But hardly everybody. Many people want those nice, trendy new clothes now. So they'll pay the full price for the pleasure of wearing this season's hot stuff... this season. Many people also buy the new iPhone, even though waiting six months might be a financially smart move. (But what about the gratification, the "coolness" of having the blitzy new thing now?)
These are matters you have not considered. You have made the mistake of stopping to think of humans as humans. This is the great Keynesian error, and it has led to an economic catastrophe. The current inflationary nightmare destroys your savings, melts your pensions, kills your purchasing power, and distorts all economic relations.
Returning to a 100% gold standard will solve this. And it will not cause the purely imaginary problems that you have conjured up in your lack of understanding. It will not stop people from spending; it will only discourage people from spending needlessly. And that's great. We live in a debt-ridden society full of irresponsible spending. It would be fine -- highly desirable, even -- to have a little more balance. To reward responsible frugality a little more.
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Lord Sovereign
The resident Britbong
I'd also add that the modern economy and all its debt is built on a model of unending growth. I believe one of the fundamental ideas of Keynesianism is you have to stop people saving and keep them spending to maintain the growth.
Nothing, however, grows forever. So this is ultimately a futile endeavour.
The gold standard and its like is a system more built upon "the economy as it is." It's why I think you could have a worse idea than slowly inching back towards that and escaping the debt based mess of today. Yes, the sacred GDP line might go down for a while but it would spare us a tremendous amount of grief in the long run.
Nothing, however, grows forever. So this is ultimately a futile endeavour.
The gold standard and its like is a system more built upon "the economy as it is." It's why I think you could have a worse idea than slowly inching back towards that and escaping the debt based mess of today. Yes, the sacred GDP line might go down for a while but it would spare us a tremendous amount of grief in the long run.
Bassoe
Well-known member
Modern economics are indeed dependent on the continual transfer of money. This leaves them with the following options:
- Neofeudalism with a caste system where the rich own all assets and everyone else labors for them in exchange for a paycheck that just covers rent of said assets.
- Get infinite resources and an infinite frontier so growth can continue infinitely. Which doesn't work because it'd inevitably mean people could escape and make their own societies outside of your control.
- Change to an alternative economic system which isn't an enormous pyramid scheme.
Doomsought
Well-known member
4: Periodic economic crashes followed by renewed growth.
Bassoe
Well-known member
Those are just a roundabout way to my proposed first option of neofeudalism. The poor lose assets in banker-caused crashes, the bankers get bailouts either from the money printer devaluing the savings of the poor or straight from the poors' taxes. Repeat until nobody but the bankers has any money and the bankers run everything.
Morphic Tide
Well-known member
My point is that people won't be investing to build up infrastructure for anything to be better because their personal needs are met in large part by the increase in purchasing power from doing nothing. How many fewer people do you think would be willing to start a small business if their savings rose in purchasing power by 2% per year?
This is also ignoring the particular mechanism I'm worried about. If goods are falling in price because of exporting the money supply, that means the cost of the imports so vital they cause a net loss will increase as the product of the economy's relative changes. If you "lose" a trade deal, you are unironically losing a trade deal.
The two problems I have are that I find investment required for the basic functions of the raw resource transfers due to the amount of capitol needed to get anything serious going, and the fact that inelastic hard currency causes international trade to become zero sum. Which leads right back to Mercantilism.
What I'm hearing from one side of this seems to boil down to: "I want to keep buying stuff despite not having an income to match my expenditure, so I'm going make everyone accept payment in funny-money that I can print more of anytime I want."
With a side-order of: "That guy had stuff I wanted, and refused to sell it to me, so of course I had to go and kill him to take it!"
With a side-order of: "That guy had stuff I wanted, and refused to sell it to me, so of course I had to go and kill him to take it!"
It’s actually based on a real tribe but its actually the opposite of what the Spanish thought it was. They had so much of it, it wasn’t more than “let’s pretty something up abit”, sometimes just throwing it into a Lake. Then the Spanish arrived, destroyed the tribe and still were not satisfied and kept on looking for El Dorado. Lesson of the story: Understand nuances and maybe just maybe, don’t stick your head in the sand looking for gold.
Yes,they lived in current Venezuella if i remember correctly,and their king really each year wash himself in lake from gold dust which covered him.
And there is "Lost cities X and Z" in Amazonia and Honduras,which really existed,but was destroyed by plagues before spaniards come.
On another hand,lost cities in current Mexico and USA was ,at best,big pueblos and nothing more.
Skallagrim
Well-known member
You're still not thinking about human beings, @Morphic Tide. I understand that Keynesianism (whether absorbed directly or through cultural osmosis) is a hell of brain-rot drug, but set its assumptions aside and think about what you're actually saying.
You have not refuted my analysis, you have only posited certain objections. As far as this objection right here is concerned, it is not a valid one. Even if what you say is true, then it is still not worse than what we have now. When we then take into account the stated advanates of a gold standard, we must conclude that adopting it would easily be a net positive.
However... what you say is not accurate. You see, if we have deflation, then your savings and your pension will consistently increase in value. This means that the very people you think won't spend money anymore (e.g. on investments of business ventures) will be in a better and more secure position. This makes it less risky for them to undertake such ventures, since their future isn't necessarily on the line if they do. The measure of financial security and comfort that people will enjoy will more than compensate for the lack of (unhealthy) pressure that you seem to fear.
Put another way: I'm describing a world where the current neurotic mad-house of debt slavery and neo-serfdom has come to an end. Where simple financial security returns, within reach of the common man.
You seem to think that's a bad thing.
Now consider a gold standard. And suppose we have this same issue with China. What's the solution? Well, it's obvious: put legal costraints on the export of gold to China. Make that an instrument of policy. This is fairly easy to enforce, it's hilariously non-complex, and it's highly effective.
"Worst" case scenario: the fuckers won't trade with you anymore. Boo-hoo, Western jobs returning by the ten-thousands as we are "forced" to do our own manufacturing again. Oh no how horrible I'm crying all the way to the bank.
Consider the current situation. Inflation eats your savings, kills your future, makes you a debt slave. Your purchasing power goes down all the time. Is this a good basis for starting a small business? Of course not. So, to start with, even if you were right -- which you're not -- the "drawback" you decribe is no worse than the drawbacks of the current situation. Therefore, it cannot be a serious objection. Because as I have pointed out, the alternative I suggest has many advantages.
You have not refuted my analysis, you have only posited certain objections. As far as this objection right here is concerned, it is not a valid one. Even if what you say is true, then it is still not worse than what we have now. When we then take into account the stated advanates of a gold standard, we must conclude that adopting it would easily be a net positive.
However... what you say is not accurate. You see, if we have deflation, then your savings and your pension will consistently increase in value. This means that the very people you think won't spend money anymore (e.g. on investments of business ventures) will be in a better and more secure position. This makes it less risky for them to undertake such ventures, since their future isn't necessarily on the line if they do. The measure of financial security and comfort that people will enjoy will more than compensate for the lack of (unhealthy) pressure that you seem to fear.
Put another way: I'm describing a world where the current neurotic mad-house of debt slavery and neo-serfdom has come to an end. Where simple financial security returns, within reach of the common man.
You seem to think that's a bad thing.
Once more, you fail to consider that the current system is in no way better than the situation you fear. In fact, the current system is much worse. Again, the debt economy of worthless money has left us utterly vulnerable to the predatory policies of China. (In fact, we have been so foolish as to fund their economic campaign against us!) And what can we do about it? Precious little!
Now consider a gold standard. And suppose we have this same issue with China. What's the solution? Well, it's obvious: put legal costraints on the export of gold to China. Make that an instrument of policy. This is fairly easy to enforce, it's hilariously non-complex, and it's highly effective.
"Worst" case scenario: the fuckers won't trade with you anymore. Boo-hoo, Western jobs returning by the ten-thousands as we are "forced" to do our own manufacturing again. Oh no how horrible I'm crying all the way to the bank.
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Bear Ribs
Well-known member
Note that the 200,000 tons figure is extremely vague and towards the low end. Estimates on the total amount of gold in the world vary from 160,000 tons all the way up to the Gold Standard Institute estimating it at 2.5 million tons.
We frankly don't have a clue due to how much secrecy there is in gold mining, nobody advertises exactly how much they have and China has been hoarding and hiding how much gold they have for a long time, either way they must have some staggering gold reserves at this point as they wait for the petrodollar to collapse.