Originally posted by Shakyamunison
That would be gold. 😉
Originally posted by Newjak
So this is the topic of the thread. Why are we off the gold standard?
A gold backed currency would keep spending and inflation in check, this isn't news! Why do I have to feel like I'm the odd man out here when this is basic economics we are talking about..I know you will disagree but whatever.
Originally posted by Time-Immemorial
A gold backed currency would keep spending and inflation in check, this isn't news! Why do I have to feel like I'm the odd man out here when this is basic economics we are talking about..I know you will disagree but whatever.
You two are arguing completely different things.
Partially because you keep moving the goalpost.
Gold is, interestingly enough, mostly valuable by fiat, 'because people think it's expensive.' Some people are convinced it has inherent value, other realize it just looks good, but if an apocalypse happened tomorrow, it's value would drop like a rock because people have continued to mine it and bring out more for a long time, and there'd be more than people would have use for.
It's actual material value in useful things is a fraction of the price it goes for. Heck, the reason it was once used for money? Twofold. One, it didn't rust or go bad. Two, there was nothing better to use it for. Like, you couldn't turn it into a knife, or a machine. You could turn it into jewelry, decoration, or trade it, and that was it. Nowadays you can use it for electronics, but that doesn't need very much.
The only way to make gold valuable enough to be used as a currency to everyone is, ironically, turn it into fiat currency.
Plus, it's a commodity. If more gets added to the market, it loses value. Kingdoms did go into major downturns because someone brought in big shipments of gold, which, effectively, made money itself less valuable there, even though it was purely from adding something to the market. That doesn't happen with fiat currency backed by an organization.
The more gold you have, the less valuable an ounce of gold is. And it means if your rivals have significant amounts of gold- which they do- then they can make you less rich any time they want by dumping their gold onto the market in quantity.
As commodities go, Steel is far more useful. A nation with a million tons of steel vs a nation with a million tons of gold, the former is massively more powerful. Having more steel than you need is no problem, it means you have reserves, because the steel itself has a practical value.
Gold does not. Outside of electronics, it's value is in the image, which is changeable, not the practicality, which is stable.
And that said, you don't want to use steel, aluminum, or similar as currency, because you want to actually use the stuff. If you insist on only using things with practical value as currency, then that means you're keeping useful things off the market.
There's a reason no government uses the gold standard or silver standard any more: It's less stable, opens you up for easy currency manipulation, and doesn't have the inherent value that goldhounds think it has anyway.
Originally posted by Q99
Gold is, interestingly enough, mostly valuable by fiat, 'because people think it's expensive.' Some people are convinced it has inherent value, other realize it just looks good, but if an apocalypse happened tomorrow, it's value would drop like a rock because people have continued to mine it and bring out more for a long time, and there'd be more than people would have use for.It's actual material value in useful things is a fraction of the price it goes for. Heck, the reason it was once used for money? Twofold. One, it didn't rust or go bad. Two, there was nothing better to use it for. Like, you couldn't turn it into a knife, or a machine. You could turn it into jewelry, decoration, or trade it, and that was it. Nowadays you can use it for electronics, but that doesn't need very much.
The only way to make gold valuable enough to be used as a currency to everyone is, ironically, turn it into fiat currency.
Plus, it's a commodity. If more gets added to the market, it loses value. Kingdoms did go into major downturns because someone brought in big shipments of gold, which, effectively, made money itself less valuable there, even though it was purely from adding something to the market. That doesn't happen with fiat currency backed by an organization.
The more gold you have, the less valuable an ounce of gold is. And it means if your rivals have significant amounts of gold- which they do- then they can make you less rich any time they want by dumping their gold onto the market in quantity.
As commodities go, Steel is far more useful. A nation with a million tons of steel vs a nation with a million tons of gold, the former is massively more powerful. Having more steel than you need is no problem, it means you have reserves, because the steel itself has a practical value.
Gold does not. Outside of electronics, it's value is in the image, which is changeable, not the practicality, which is stable.
And that said, you don't want to use steel, aluminum, or similar as currency, because you want to actually use the stuff. If you insist on only using things with practical value as currency, then that means you're keeping useful things off the market.
There's a reason no government uses the gold standard or silver standard any more: It's less stable, opens you up for easy currency manipulation, and doesn't have the inherent value that goldhounds think it has anyway.
You can manipulate virtual stock prices a lot easier then you can gold. This isn't hard to grasp.
Originally posted by Time-Immemorial
A gold backed currency would keep spending and inflation in check, this isn't news! Why do I have to feel like I'm the odd man out here when this is basic economics we are talking about..I know you will disagree but whatever.
Why do you think either of these are good things?
Spending should be based on what you need and can afford, not how much of a metal you have. A nation of 10 million and a nation of a 100 million, if both have the same amount of gold, would be limited to the same amount of spending, even though the latter has both 10x the need and 10x the capacity for spending. Plus if you have a very big need of something, like a major war, you have less ability to get that need.
It creates an artificial cap that has nothing to do with one's actual economic level.
Inflation, ideally, you want slight inflation at all times. Too much inflation is bad, but deflation of currency is pretty much a guaranteed economic downturn, because it means not-investing money in stocks and companies becomes more profitable than investing it, people become encouraged to invest in money rather than stuff. So economic activity always slows down when there's deflation, until the deflation ends. And gold, or other material, is going to deflate a good percentage of the time.
You are the odd man out because you do not have a good idea of what is good for basic economics. There are things that you think are good (deflation, capping spending), which are problematic in most situations.
Originally posted by Time-Immemorial
You can manipulate virtual stock prices a lot easier then you can gold. This isn't hard to grasp.
Currency manipulation of modern fiat currency is fairly difficult in comparison to gold.
All you need to do to manipulate gold, is have gold. There's nothing that the government can do if someone decides to dump their gold in the market.
With printed money, if someone who has a lot of dollars holed up decides to dump them, they can literally just decide to print less to counteract the effect.
You assume that virtual manipulation is easier, but it's often the opposite that is the case, because there's less you can do about a material object.
Originally posted by Time-Immemorial
The old "We have to spend our way outa debt"Worked really well.
The ironic thing is, long-term, it does. Spending is how we got out of the Great Depression. Once we were out of the Great Depression, our healthy economy outgrew our debt.
Austerity in a crisis, on the other hand, increases debt without increasing wealth, because if you are decreasing your spending when your economy is not healthy, then you are removing money from the economy, which reduces the economy, which reduces your tax income, which increases your debt.
Japan had a 'Lost Decade' economically because when they had an economic crash, they followed your advice. Whenever they started to recover, they cut spending. Their economy would slow down again, debt would go up, they'd spend a little to do something about it, they'd start to look healthy, they'd taper off on the spending again, and stall out again.
Now their Debt-to-GDP ratio is twice ours. Because they did not spend enough fast enough.
And in the UK just recently, they were hit much less bad than the US was, but every time they started to improve, they did another round of austerity, so they have a triple-dip recession, so our recovery caught up to and passed theirs, even though they had less to recover from to begin with.
The irony thing is some people think 'spend your way out of debt' is a bad move, when they're literally advocating the alternatives that increase debt more.
Spending your way out of debt is akin to a delivery person fixing their car so they can do more deliveries, or a business doing more advertising to get more customers. Yes, it costs more now, but it's not about the immediate, it's about the long term, and it sure as heck beats the slow decay of not spending.