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Was Dropping The Gold Standard A Mistake?

Is returning to the gold standard something that could fix the economic issues we are facing today?

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#Economics #GoldStandard #Inflation

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  1. Um, the gold standard existed before 1944. Indeed, Bretton Woods was the last stage of the gold standard, not the beginning. The classical gold standard came to an end at the beginning of WW1. Governments abandoned gold so they could deficit spend during the war. A full reserve gold standard prevents governments from spending their countries into oblivion. Only gold and silver are honest money, fiat currency is simple theft. Those in power transfer wealth to themselves from the people.

  2. I disagree as to why the "Great Depression" was so severe in the US. I believe that it is was so severe due to the government spending that occurred in attempts to restart the economy, much like recently during the COVID epidemic. Compare what happened in Great Britain during the Great Depression as opposed to the US. In Britain, government spending was reduced to match the available tax receipts. While the so called economic pain was considered to be greater, the British economy recovered much more rapidly than the US economy did. The US economy did not really recover until the advent of the conversion of the economy to war production where significant investments were made that resulted in the creation of wealth. One of the problems during WWII was that consumers were able to accumulate significant wealth but unfortunately were not able to purchase anything. I believe that the main purpose of consumer rationing in America during WWII was more to control inflation than anything else. If you were limited by law as to what you could buy then demand was kept in check and there was no means for demand to cause price increases on a limited supply.

    I think that this is the main reason why we have seen such price increases recently. All of the currency printed over the past two years has resulted in demand driven inflation. There really isn't a supply chain problem if 25 odd container ships are at anchor at the Port of Los Angeles and Long Beach waiting to unload. Rather the Port was not able to meet demand.

    Another thing to keep in mind is the difference between money and currency. Money has an intrinsic value, currency does not. Currency relies on the "full faith and credit" thing.

  3. I just don’t feel the people that are supposed to be steering our economy correctly are actively trying to crash it into the rocks. MMT is the call of the day and I only see us circling the toilet before the whole thing flushes down the pipes. At what point do you stop borrowing and printing.

  4. Money is becoming worthless but I dont think its because of Gold more than its because of the lack of productivity in the system. All systems exist, grow, start falling if you do not do something to the system and than die. Its in the “something must be done” stage.

  5. The real value of gold is not primarily that it is used in some industrial applications or that it's pretty, not even that it's backed with our belief that it has value. Gold's real value is in how hard it is to produce and dump an amount into the market relative to the already existing amount, this ratio is pretty much linear as opposed to fiat money which is inflationary.

  6. Saying that "depression is a necesary evil" is like saying colonialism was a necesity for third world countries. To me, is just a fast way of advancing with out caring for others. As long as I'm not the one starving I would keep saying that the current economic System is ok….

  7. What would your thoughts be on backing a currency with something else, is it possible to link a currency to a more inherrently valuable resource such as a GW hour of energy?

  8. The actual exchange system is rubbish but going back to gold would be an even worse decision because it will effectively polarize even more the sociopolitical stratification which is already at its limits (to say the least). There's already way too much money tied up to static investments, from titles, to bonds up to housing and utilities all of which are between mildly and wildly overrated (overpriced between 50% and 500%) This is already a bankrupt model in which "growth" is in most cases just recovery from loss. Ninety-nine percent of all nation's economies around the world are in debt, some 60% of them will never be able to pay more than half the interest of that debt. Any simple model can show you how this will not end well. This a very different scenario from the one we had back at the beginning of the seventies. This system has to change although I doubt it will do so willingly, going back to a gold standard will only accelerate a demise in which hundreds of millions will suffer; but hey I am not an economist, I am looking at this from an architect's point of view. I can see the cracks widening up and hearing people proposing to use scotch tape to fix it.

  9. Having a system where there is enough gold to redeem every single last dollar still seems like the best economical system to me… It just means that wage adjustments favor the worker, and not the businesses, and governments would be forced to actually react in meaningful non-destructive ways to changes in the economy. It also means that as our productivity increases as a species over the years, it will be reflected by lower prices a crossed the board (also it means pay cuts, however in a deflationary economy pay cuts would lend themselves to putting more buying power in your hand for less, while also simultaneously generating class solidarity)
    Money is way more incentivized to be spent in a deflationary economy, and I don't understand why anyone would fight against it unless you had more money than you know what to do with.
    And as a reserve true gold standard currency, it would enjoy increased benefits which would accelerate globalization and bring humanity as a whole more on equal footing. Having the standard in place would also force humanity to put more assets into causes that matter, like climate change, since it would be literally insane to continue putting all of our resources into needless, unsustainable growth.
    The reason I hear people say deflation is bad is because, "Economists fear deflation because falling prices lead to lower consumer spending". However my counter-point to that is lower prices mean that consumers have a greater total purchasing power and can increase their overall consumption. The only negatives result from those affected by the predatory debt system that should never have been there to begin with, and the crediting system should be abolished. The gold standard is the only way to ensure that everything has true value, and that people don't get priced out of essential needs. Everything now is just monopoly money and survival…

  10. a bit offtopic … at 14:39 a guy handles a wallet. I like that wallet! Does any one know what brand it is?

    on topic. value is a abstract concept, especially in the context of money. money have totally imaginary value regardless of what the form of money is. its not important if its a metal coin or colorful paper or few bits on the net … if you try to bind currency value into something (like gold), you are only limiting that currency usefulness.

  11. You are wrong in that gold has very narrow usability….it is actually probably one of the most useful metals but it is often substituted for cheaper alternatives, ie it is cost prohibitive. For example….there is no better material to fill a tooth with. It's unreactive, not toxic, etc etc however it much cheaper to use a resin filling which cost a few dollars Vs a gold filling which might cost $100-$200. If gold was $500/ounce you would see it used much more often

  12. Using fraction reserve to show that the gold standard doesn't stabilise prices is dishonest AF. Youve got to use examples from before WW1 (excluding green back era), which is when governments started being shifty with gold money (to pay for WW1).

  13. IMO, gold became obsolete in the 1930's when the US made mortgage buying of homes standard.
    You see, when a mortgage is created – it creates money, that is backed up by the value of the collateral, not by gold.
    The money used to buy a house via a mortgage did NOT exist until the mortgage is issued.
    When the mortgage is issued — a pile of money appears on one side of the ledger, and a home appears on the other.
    That home backs up the money that was created.
    THAT is how money is "printed" — not on a printing press. Very little money actually exists as currency.
    The vast majority of money exists as ledger entries on bank books.
    Think of it — don't you have more money sitting in your checking and savings accounts than as currency in your pocket??

  14. My gut feeling is the gold standard is going to win. Cash-gold + fractional reserve is a possibility.
    Why? Ideally fiat would have 0% inflation, or even have total supply pegged to the population (every baby + immigrant gets more money printed). The problem with fiat is that the same ppl who support inflation, would rather support a gold standard, and buy up all the gold. They must have a Ponzi! Pure fiat is just not going to happen. Keynes would rather gold than zero inflation.

  15. You do realise economics is dumb by itself? Nothing you do can be perfect, everything has it's drawbacks and will leave someone hurt or dissatisfied. Basic and main principle is you gain money = someone loses money.

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