Should the US return to the Gold Standard?

[Danoff]

http://www.measuringworth.com/usgdp/

Real GDP from 1790 to present is exponential.

Check 1973 to 1982. Averages less than 1% growth per year (real GDP per capital). Also happens to be one of the highest inflationary periods we have. Also by 2010 we had slumped back to below 2005 levels. Inflation is not being reported properly these days either as the fed has been selectively removing products that are inflating.

Can you explain this further?

I thought that main point of having the Gold standard is that it would limit the Government's ability to print money, because the Government could only print money up to the amount of gold it has on hand. And therefore, if no more gold was mined and sold to the Federal Reserve, the Federal Reserve couldn't print any additional money (and the economy would stagnate).

How does the economy grow if the money supply stays exactly the same from year to year?

Respectfully,
GTsail

The same amount of money (gold) buys more productivity (deflation). Imagine you're on an island with three other people. You each product one unit of productivity and you each have 1 unit of currency. 4 units of currency (total) buy 4 units of productivity. Now let's say that a year later you each have doubled your output. You still have 4 units of currency but they now buy 8 units of productivity. This is deflation of currency (increased value of gold) with a fixed amount of currency in a growing economy.

 

[Dapper]

@BobK, Sorry for my terrible English.

Check 1973 to 1982. Averages less than 1% growth per year (real GDP per capital). Also happens to be one of the highest inflationary periods we have. Also by 2010 we had slumped back to below 2005 levels. Inflation is not being reported properly these days either as the fed has been selectively removing products that are inflating.

The GDP is growing exponentially. Give it up already.

The same amount of money (gold) buys more productivity (deflation). Imagine you're on an island with three other people. You each product one unit of productivity and you each have 1 unit of currency. 4 units of currency (total) buy 4 units of productivity. Now let's say that a year later you each have doubled your output. You still have 4 units of currency but they now buy 8 units of productivity. This is deflation of currency (increased value of gold) with a fixed amount of currency in a growing economy.

But in reality, each unit of currency would keep getting cut into smaller pieces. In your scenario, 8 1/2's would buy 8 units.

To be clear, that is essentially what the US currently does, and everyone else for that matter. But as long as more things get produced and sold(output/GDP), each unit keeps it's value. The data from 1790-present says it has worked almost flawlessly and as predicted.

 

[Liquid]

But in reality, each unit of currency would keep getting cut into smaller pieces. In your scenario, 8 1/2's would buy 8 units.

As opposed to a fiat scenario, where the Government thinks, "Oh crap! Print more money!" and all those paper notes/digital numbers you have become worthless.

 

[Dapper]

As opposed to a fiat scenario, where the Government thinks, "Oh crap! Print more money!" and all those paper notes/digital numbers you have become worthless.

You missed 90% of the conversation. And my untimely edit, I suppose.

But why do I keep bringing up and posting new technologies? Do you ask yourself that?


Imagine how many NEW dollars this will produce
Printing dollars to produce that, or research for it even, does NOT hurt the dollar in my pocket... It insures it, backs it even.

 

[Danoff]

@BobK, Sorry for my terrible English.

The GDP is growing exponentially. Give it up already.

This point <------------------------------------------------------> You

Imagine how many NEW dollars this will produce
Printing dollars to produce that, or research for it even, does NOT hurt the dollar in my pocket... It insures it, backs it even.

Printing new dollars does not produce that, is not required to produce that, and actually hinders that development. And printing dollars MATHEMATICALLY hurts every dollar in your pocket.

 

[ROAD_DOGG33J]

But why do I keep bringing up and posting new technologies? Do you ask yourself that?

Yes, because it seems irrelevant.

 

[Dapper]

This point <------------------------------------------------------> You

Quit showing your 🤬

Printing new dollars does not produce that, is not required to produce that, and actually hinders that development. And printing dollars MATHEMATICALLY hurts every dollar in your pocket.

You are not making any sense.

 

[Liquid]

You are not making any sense.

The more currency X you print, the weaker currency X becomes. That's how our markets work.

Quantitative easing, better known as printing more money, didn't work in the UK. But we had no alternatives after all that gold we threw away...

 

[Dapper]

The more currency X you print, the weaker currency X becomes. That's how our markets work.

Quantitative easing, better known as printing more money, didn't work in the UK. But we had no alternatives after all that gold we threw away...

You forgot the plethora of new products!

10 products requires $10
20 products requires $20

Same ratio=Not quantitative easing.
If the GDP goes up 3% and the fed prints 4% more money, that is quantitative easing.
If the GDP goes up 3% and the fed prints 3% more money, the dollar lost no value.

Same ratio=Not quantitative easing.
If the GDP goes up 3% and the fed prints 4% more money, that is quantitative easing.
If the GDP goes up 3% and the fed prints 3% more money, the dollar lost no value.

I'm going to keep reposting this until it sinks in.

 

[Danoff]

Aha! I think we finally found Dapper's confusion.

If the GDP goes up 3% and the fed prints 3% more money, the dollar lost no value.

That's not inflation. Inflation is not defined as simply "printing money" it's defined as a loss of value of the dollar.

In economics, inflation is a rise in the general level of prices of goods and services in an economy related to an increase in the volume of currency and resulting in the loss of purchasing power.

If the GDP goes up 3% and the fed prints 2% more money the dollar gains value. This is deflation.

Now all of the sudden every post I made in this thread should make sense to you and you should realize why nothing you said was correct. Glad I could straighten this out.

Shall we get on with the thread?

 

[GTsail]

....The same amount of money (gold) buys more productivity (deflation). Imagine you're on an island with three other people. You each product one unit of productivity and you each have 1 unit of currency. 4 units of currency (total) buy 4 units of productivity. Now let's say that a year later you each have doubled your output. You still have 4 units of currency but they now buy 8 units of productivity. This is deflation of currency (increased value of gold) with a fixed amount of currency in a growing economy.

So the economy grows irrespective of the amount of gold at the Federal Reserve?

If that's the case, how does it matter what amount of gold is at the Federal Reserve?

Respectfully,
GTsail

 

[Danoff]

So the economy grows irrespective of the amount of gold at the Federal Reserve?

If that's the case, how does it matter what amount of gold is at the Federal Reserve?

Respectfully,
GTsail

To be on a gold standard the government has to have enough gold to exchange it for the paper that they promise the gold is exchangeable for. Otherwise it becomes simply a piece of paper, like it is now.

Now economic growth is not limited by gold at the federal reserve. If we were on a gold standard and $1 was always guaranteed to be x amount of gold, as the economy grows, the $1 buys more other stuff (same amount of gold), and the gold buys more.

 

[Dapper]

Aha! I think we finally found Dapper's confusion.



That's not inflation. Inflation is not defined as simply "printing money" it's defined as a loss of value of the dollar.



If the GDP goes up 3% and the fed prints 2% more money the dollar gains value. This is deflation.

Now all of the sudden every post I made in this thread should make sense to you and you should realize why nothing you said was correct. Glad I could straighten this out.

Shall we get on with the thread?

This post is beyond redundant and serves 0 purpose.

Gold can not sufficiently back the US dollar because we grow faster than gold is mined.

To be on a gold standard the government has to have enough gold to exchange it for the paper that they promise the gold is exchangeable for. Otherwise it becomes simply a piece of paper, like it is now.

We blew passed that number a long time ago. The world value of gold is less than the US real GDP.

Same ratio=Not quantitative easing.
If the GDP goes up 3% and the fed prints 4% more money, that is quantitative easing.
If the GDP goes up 3% and the fed prints 3% more money, the dollar lost no value.

Now economic growth is not limited by gold at the federal reserve.

Economic growth is limited by supply/demand of new innovations and inventions.

 

[Danoff]

This post is beyond redundant and serves 0 purpose.

Gold can not sufficiently back the US dollar because we grow faster than gold is mined.

Deflation, yes this is a real issue. I'd still like to see you acknowledge inflation as a real issue in the same way that deflation is.

We blew passed that number a long time ago. The world value of gold is less than the US real GDP.

That's not a real issue. The value would be much higher if we'd stayed on the gold standard, or we could combine gold with other metals.

 

[GTsail]

To be on a gold standard the government has to have enough gold to exchange it for the paper that they promise the gold is exchangeable for. Otherwise it becomes simply a piece of paper, like it is now.

.... If we were on a gold standard and $1 was always guaranteed to be x amount of gold, as the economy grows, the $1 buys more other stuff (same amount of gold), and the gold buys more.

My understanding (admittedly incomplete) of the Gold standard, is that it would limit economic growth to the amount of gold on reserve. This, I thought, is the very essence of the standard.

If the gold on hand doesn't limit economic growth, then we're back to my question above: How does it matter what amount of gold is at the Federal Reserve if it doesn't limit growth?

Respectfully,
GTsail

 

[Dapper]

Deflation, yes this is a real issue. I'd still like to see you acknowledge inflation as a real issue in the same way that deflation is.

Your views are linear. The fed is restrictive if anything; it attempts to smooth out the 'S' curves going up the exponential curve. This is clearly evident looking at the data.

But you are right in thinking if the US printed $60,000,000,000,000 next year we would suffer from inflation.

But it won't. It will print about 3-4% more than this year, and we'll have 3-4% more cool stuff... Like I've pointed out a hundred times, and my contemporaries still don't understand.

 

[Danoff]

My understanding (admittedly incomplete) of the Gold standard, is that it would limit economic growth to the amount of gold on reserve. This, I thought, is the very essence of the standard.

Nope. It simply ties dollars to being exchangeable for something physical. It means a dollar represents some amount of metal. That's really all it is. It doesn't limit growth at all (I don't even know how that's possible). With a fixed supply of dollars (or gold) and a growing economy, deflation is the natural product.

If the gold on hand doesn't limit economic growth, then we're back to my question above: How does it matter what amount of gold is at the Federal Reserve if it doesn't limit growth?

Because people may demand gold in exchange for their dollars.

But you are right in thinking if the US printed $60,000,000,000,000 next year we would suffer from inflation.

But it won't. It will print about 3-4% more than this year, and we'll have 3-4% more cool stuff... Like I've pointed out a hundred times, and my contemporaries still don't understand.

You're promising me 0% inflation this year (3-4% printed money, 3-4% economic growth). There is no possible way that will occur. The fed has been inflating the money supply so much that they stopped reporting the M3 money supply recently in order to hide it. Right now a lot of the money they're printing is blowing up a bubble, and that bubble is going to pop at some point. You can't just release a trillion dollars into a worldwide pool of something on the order of $15 trillion dollars and expect it to not have an effect on inflation.

You need to pay attention to this stuff, it will affect you.

 

[Dapper]

You're promising me 0% inflation this year (3-4% printed money, 3-4% economic growth). There is no possible way that will occur. The fed has been inflating the money supply so much that they stopped reporting the M3 money supply recently in order to hide it. Right now a lot of the money they're printing is blowing up a bubble, and that bubble is going to pop at some point. You can't just release a trillion dollars into a worldwide pool of something on the order of $15 trillion dollars and expect it to not have an effect on inflation.

You need to pay attention to this stuff, it will affect you.

Prove it.

 

[Azuremen]

Prove it.

He has provided a series of numbers and data to support his claims.

All you've done is dismissed it as meaningless or asked him to prove it, without providing any actual evidence to support your insistence that inflation is counteracted. Nor provided evidence that inflation doesn't slow the economy.

 

[Dapper]

I've been shown 0 info from anyone. All he did was look at a 10 year period on 220 year graph. That means nothing.

 

[Azuremen]

I've been shown 0 info from anyone. All he did was look at a 10 year period on 220 year graph. That means nothing.

Actually, that was you looking at the limited time span on the 220 year graph...

Can you honestly not keep track of your own posts and points to this extent?

 

[Dapper]

The data went from 1790 to 2011 and that's all I considered.

 

[Azuremen]

The data went from 1790 to 2011 and that's all I considered.

Um, no, you didn't...

Housing prices almost doubled from 1998 to 2006, mortgage loan requirements drastically changed, and a ton of people who use to not qualify for a mortgage bought houses in that time. Many people with $0 debt went to $300,000 in debt. Those folks are skewing the numbers.

 

[Dapper]

That was 1/2 the answer to the increase of household debt.
And in response to a different member.

 

[Danoff]

I've been shown 0 info from anyone. All he did was look at a 10 year period on 220 year graph. That means nothing.

Happens to correspond with our biggest inflation indiscretions. Oh and math.

 

[Dapper]

Happens to correspond with our biggest inflation indiscretions. Oh and math.

I see no indiscretions! Have you seen all the awesome things I've posted?

Exponential Lily pads will keep you busy all night.

 

[Keef]

Exponential Lily pads will keep you busy all night.

Stupid analogy. Lily pads can't fill a pond, they can only cover it. Fluids fill ponds. To fill implies occupying a volume, volume being something lily pads mostly lack, besides the fact that they are not fluids and therefore do not conform to the shape of their containers.

 

[Dapper]

Stupid analogy. Lily pads can't fill a pond, they can only cover it. Fluids fill ponds. To fill implies occupying a volume, volume being something lily pads mostly lack, besides the fact that they are not fluids and therefore do not conform to the shape of their containers.

Are you 🤬 serious? Told ya so.
Covering yields the same answer as filling.

 

[Keef]

Totally off topic but I had to nitpick, sorry.

 

[Danoff]

I see no indiscretions! Have you seen all the awesome things I've posted?

You're just ignoring the discussion. Again, I have to ask:

Do you even know you're doing something obnoxious and intellectually dishonest or is it an accident?