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Should the US return to the Gold Standard?
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Keef
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He's advocating inflation. He's done well to describe the Keynesian economic model which does not advocate a currency with a stable, confident value, and instead advocates a currency literally based on nothing besides what the reserve bank thinks it should be worth.
That's good and all, except that there are numerous examples of populations losing faith in fiat currencies, beginning to resort to other supplies as trading currency, and the fiat money system collapsing and being replaced by something else.
A complete collapse of the currency happened in Germany less than 100 years ago, and hyperinflation brought on by fiat currencies has occurred in Japan and Zimbabwe in recent times. Japan has a group of people called the "lost generation" who were victims of their economic crisis and have never been able to recover, while virtually all the wealth in Zimbabwe has been wiped off the map. Just the other day, Brazil, Russia, India, China, and South Africa agreed to promote trade of their own currencies and stop using the US Dollar as a reserve currency because they've lost faith in the value of our money. The day that many powerful economies in the world stop relying on the US Dollar as their reserve currency is the day when the US loses its position as the most powerful nation in the world. Without having the trust of other nations, the US becomes isolated.
And there you go, I just gave a basic explanation of how Keynesian economic policies are isolationist policies, unlike what various powerful politicians would lead you to believe. Abusing our currency will lead to nothing but distrust and hate.
That's good and all, except that there are numerous examples of populations losing faith in fiat currencies, beginning to resort to other supplies as trading currency, and the fiat money system collapsing and being replaced by something else.
A complete collapse of the currency happened in Germany less than 100 years ago, and hyperinflation brought on by fiat currencies has occurred in Japan and Zimbabwe in recent times. Japan has a group of people called the "lost generation" who were victims of their economic crisis and have never been able to recover, while virtually all the wealth in Zimbabwe has been wiped off the map. Just the other day, Brazil, Russia, India, China, and South Africa agreed to promote trade of their own currencies and stop using the US Dollar as a reserve currency because they've lost faith in the value of our money. The day that many powerful economies in the world stop relying on the US Dollar as their reserve currency is the day when the US loses its position as the most powerful nation in the world. Without having the trust of other nations, the US becomes isolated.
And there you go, I just gave a basic explanation of how Keynesian economic policies are isolationist policies, unlike what various powerful politicians would lead you to believe. Abusing our currency will lead to nothing but distrust and hate.
Dapper
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You obviously didn't listen.
The US Govt's value is based on things that are of real, actual use as was explicitly pointed out.
You advocate a currency based on nothing!
But for the government allowing banks to lower standards to buy houses, there would be no recession and no housing bubble. Any and all confidence that may have been lost in the US is directly related to the laissez faire approach of the banking industry.
Gold has NO REAL VALUE, only it's looks and anti corrosive properties.
The US Govt's value is based on things that are of real, actual use as was explicitly pointed out.
You advocate a currency based on nothing!
Find an example comparable to the US and it's true value and innovation potential. Like Watson, for instance.
Considering the US is the most innovative, valuable country on Earth, everything you say has no basis.
But for the government allowing banks to lower standards to buy houses, there would be no recession and no housing bubble. Any and all confidence that may have been lost in the US is directly related to the laissez faire approach of the banking industry.
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Dapper
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What legal tender did we use under the gold standard? 💡
ROAD_DOGG33J
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A piece of paper that could be traded in for gold
The paper by itself had almost no value.
The paper by itself had almost no value.
ROAD_DOGG33J
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The idea would be being able to trade that gold for something that you would value. The key term is trade. Just because it has no value to you doesn't mean it doesn't have value to somebody else.
Dapper
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...Gold has no value! Gold does nothing. I have no use for gold, in fact, no one I know has a use for gold. Everyone (should) values, and has a use for what the United States of America can do, like Watson, for instance.
Gold has no value, by that I mean capability or usefulness.
Because of people like you, it is monetarily worth something. Therefore, if no one valued gold it would have no value, worth, or whatever.
In the event everyone stopped valuing ability, innovation and resources then the US Govt. backed fiat money would be of no value, worth, etc.
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The point behind a gold standard was that you always had the right to get gold for your money, no ifs about it. The way it is, anyone can just refuse to give you some gold for your money. For example, because inflation devalued it to the point that you couldn't afford the gold anymore.
Why is that a good thing? Because gold is global. Take an ounce of gold and you can trade it in for whatever currency you like.
With the gold standard, your money could be devaluated to the point that you couldn't afford to buy, say, a new computer. But you still had the right to trade it in for gold - as it represented the value of said gold. Then, you could take your gold, trade it in for another currency and voila, you had a currency that wasn't useless.
That meant that the government couldn't just print out tons of money to devaluate your money to the point that you couldn't buy something of use for your paper. To the point where you couldn't buy anything with it. You obviously fail to understand that the gold standard guaranteed you that your money kept a certain worth - that of gold. Becauce gold is, as mentioned before, globally useful and can't be reproduced to decrease its value, the gold standard was nothing but a security that our money wasn't going to waste.
Thing is, that's not exactly what a government would want. Regulating the worth of money more freely is helpful in a lot of way. Especially if large parts of the modern economy are operating with money that doesn't even exist.
To understand why the gold standard was important and good, you have to realize that there is a difference between buying gold with your money and being guaranteed the right to trade it in for money. Because the latter guaranteed you a certain amount of gold for a certain amount of money, whereas outright buying gold means that the amount of gold you can get for your money may vary greatly.
I'll just quote the most important information about the gold standard that you, Dapper, seem to fail to understand, from Wikipedia:
Now, if you want to continue to debate about the gold standard, please make sure that you actually understand how it works and don't confuse it with buying gold. Because that sort of half knowledge is why governments can screw us over like that without anyone noticing.
Why is that a good thing? Because gold is global. Take an ounce of gold and you can trade it in for whatever currency you like.
With the gold standard, your money could be devaluated to the point that you couldn't afford to buy, say, a new computer. But you still had the right to trade it in for gold - as it represented the value of said gold. Then, you could take your gold, trade it in for another currency and voila, you had a currency that wasn't useless.
That meant that the government couldn't just print out tons of money to devaluate your money to the point that you couldn't buy something of use for your paper. To the point where you couldn't buy anything with it. You obviously fail to understand that the gold standard guaranteed you that your money kept a certain worth - that of gold. Becauce gold is, as mentioned before, globally useful and can't be reproduced to decrease its value, the gold standard was nothing but a security that our money wasn't going to waste.
Thing is, that's not exactly what a government would want. Regulating the worth of money more freely is helpful in a lot of way. Especially if large parts of the modern economy are operating with money that doesn't even exist.
To understand why the gold standard was important and good, you have to realize that there is a difference between buying gold with your money and being guaranteed the right to trade it in for money. Because the latter guaranteed you a certain amount of gold for a certain amount of money, whereas outright buying gold means that the amount of gold you can get for your money may vary greatly.
I'll just quote the most important information about the gold standard that you, Dapper, seem to fail to understand, from Wikipedia:
Now, if you want to continue to debate about the gold standard, please make sure that you actually understand how it works and don't confuse it with buying gold. Because that sort of half knowledge is why governments can screw us over like that without anyone noticing.
To believe that, you must be truly delusional. It is rare and desired. High demand and low supply means it does have value. And lots of it. The dollar, though, only has value as long as its desirable. And it's losing that status rather rapidly recently. Gold, so far, doesn't. Because it isn't tied to the US. And, frankly, given that the US isn't exactly rolling around in cash at the moment, there isn't as much value to back the dollar up as you might think there is. You should start to think globally, you know.
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ROAD_DOGG33J
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Dapper
Sweeping statement... debunked.
If you're using any computer made since 1982, you have a use for gold. Even if you aren't, you're using the internet and they do. You have a use for gold. Gold has thousands of uses thanks to a number of unique properties and some properties it shares with other substances.
Assuming your "Watson" is the Jeopardy! computer, guess how it'd work if the 10g-or-so of gold it contains did nothing.
Really... the gold in electronic devices gives gold it's monetary worth?
I mentioned monetary worth... where?
However, the unique properties gold has makes it valuable through demand for those properties and a relatively finite supply - like, say, titanium. That demand can be quantified through money (though money is itself based in the value of gold, so it's a bit horse/cart) if you like. Since electronic devices - and it's reckoned that there's about 1bn computers in operation on the planet, containing around 200 tons of gold in their CPUs alone - are a source of demand through requiring those properties, you can quite easily come to the conclusion that the gold in electronic devices is part of what gives gold its monetary worth.
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Dapper
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What? "In the event..." indicates that is not the case now. What the US does is valuable... like Watson, for instance.
Anyone willing to invest in a ROCK, that has trivial, minute, negligible amounts of use, instead of a group of people capable of inventing Watson is off their rocker.
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You do realize that your argument flies in the face of reality right?
The price of gold has been stable or rising, that of the dollar declining. You can argue all you want, but those are facts. The dollar is trading worse and worse compared to other currencies. Gold isn't.
So, a ROCK > group of people capable of amassing vast amounts of debts and financial losses.
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It was points like these...
...which we addressed with this...
Gold is in most electrical circuits, in every mobile phone and many other places. It was used in the engine bay of the McLaren F1 due to its heat shielding properties*. Just because you don't think you use gold, or think that gold is useless, doesn't mean that it is true.
The American dollar is falling. The price of gold is reaching record highs.
*On a related note, there are vast amounts of platinum on the roads due to it being a by-product of catalytic conversion.
ROAD_DOGG33J
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What is being done with gold is also valuable. Gold is a resource. A quick google search tells you that besides jewelry it is used in aerospace, dentistry, surgery, computers, etc.
It doesn't matter if gold is used as mainly as a fashion accessory. As long as someone is there to buy it there is value and that's a better guarantee than US government backed bill.
Dapper
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Stability!
You people are now saying our monetary system should be based on minute computer parts and jewelry!
Instead of people who invented Watson!!!!!!
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That's pretty cool. I never knew it was used for so many things. Also interesting about the platinum. Is it also so useful?
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You do realise that taking only the dollar into account is missing the point, right? Because, well, the idea is that the dollar is being backed by gold which, and I'll mark the important point, has a global value and isn't devalued by the inflation of the dollar itself. In your example, the change in price can very well be attributed to the dollar, not just to the gold. You, again, fail to understand the difference between buying gold and being guaranteed to be bale to receive XXX gramms of gold for your 10 dollar bill, no matter what the economic situation looks like.
Also, you keep on ramblong on about Watson. Do you fail to realize that both the good and the bad go into the value of the dollar?
So, alongside Watson, you have, say, Lehman Brothers. Yeah, wouldn't you want to invest into that? Worked briliiantly in the past, I hear.
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