/politics/ - News & Politics

Also if you have an economics degree, say so.

>>10346

Gold itself only used to have worth because it's 1) shiny and people like it 2) it's rare and 3) it doesn't corrode and is great for storage. There are industrial applications of gold which give it practical value too but gold's value itself has historically been just as fictional as fiat currency. Gold has less substance than land or livestock. And you can hoard gold just like how you can hoard fiat currency. Well, at least you can't print gold. But it was just supply and demand; and there were situations like Mansa Musa taking his swag to Mecca from Mali who spend so much gold along the way that it allegedly devalued gold for 20 years.

I don't have an economics degree.

>>10346

The dilemma with gold-backed currency is that since gold has to be kept in a secure place (like a bank vault) its quite hard to maintain the transparency level to reassure people that their money is worth exactly X amount of gold.

It's a trust issue in quite a large part.

Personally I favor silver since it's also a precious metal but is more plentiful which will allow the currency to be less rigid but keep the advantages of a non-fiat currency.

>>10355

what if the currency is controlled by several countries? and the auditing is done by them and other impartial countries?

>>10349

so you are pro gold backed currency?

>>10346

>I would love to know if anyone has a decent counter-argument.

There's a number of problems with gold backed currency

First off, Gold is hilariously easy to manipulate, especially for foreign powers or wealthy individuals due to price instability

Gold also limits the amount of currency in circulation, which while seeming like a good thing at first, can cause some issues for growing economies, also the government would just change the rules, like in the 60s when we printed money with the 40% gold to currency ratio.

Thirdly, gold is already overwhelmingly owned by the big financial players around the world, it's use doesn't change who owns you

There also isn't nearly enough gold in the world to cover a transition back to a gold backed currency.

While debt based currency is shit, gold isn't a real solution.

>>10372

>There also isn't nearly enough gold in the world to cover a transition back to a gold backed currency.

the gold value would skyrocket if a coalition of countries decide to create gold backed currency.

>Thirdly, gold is already overwhelmingly owned by the big financial players around the world, it's use doesn't change who owns you

The countries that have the most gold control most of the world's economy. I don't see the down sides of them creating a unified gold back currency.

http://www.wealthdaily.com/articles/who-owns-worlds-gold/2491

>First off, Gold is hilariously easy to manipulate, especially for foreign powers or wealthy individuals due to price instability

Because there's no gold backed currency yet, also keep in mind Canada sold all of its gold reserves, that fucked up the market for a short while, another reason is that some countries needed cash, so they had to sell.

> also the government would just change the rules, like in the 60s when we printed money with the 40% gold to currency ratio.

if a coalition of countries do it and it become a world currency, this won't be a problem.

Can an economy with multiple official currencies as a "don't put all your eggs in one basket" attempt work out?

>>10434

>Fresh Water

kek'd

>>10436

IT could literally be anything of value, not to mention that many states are already having legal battles of dwindling supplies of freshwater and it will soon become a major issue

Terrible idea, your whole supply of money is limited by how much yellow rock you can find in the earth

and when times are tough, everyone will just hoard their money, and make the economy worse

>>10369

That's exactly how the gold standard works. Citizens use paper money, governments trade each other's paper money for gold.

>>11092

Not a problem.Prices adjust.

>>11093

That's the Keynesian "paradox of thrift", the central dogma of government monetary interventionism. I'm guessing OP has already decided in favor of the Austrian theory instead, otherwise this topic merits its own thread.

IIRC Sowell pointed out in Basic Economics that a gold based currency's main disadvantage is the cyclical and slow moving nature of the gold market. Other than that I have no other counter-argument against a gold backed currency.

I am very much in favor of a gold backed currency since the constraints it places on politicians and central banks is vital in keeping the currency market running smoothly.

As I see it the least flawed system for any nation would be a central bank that manages the gold reserves and prints money, but also a deregulated currency market where private banks can also print banknotes.

/leftypol/ had a priceless thread on Trotsky's loony arguments for a gold standard a while back, looks like it finally died sadly.

Gold sounds like an amazing idea.... but isn't.

The problem is that -to reiterate a Keynesian argument- currencies do eventually need to grow when populations and economies grow and this needs to be done at a steady rate. This allows for a healthy amount of inflation, an easier to manage economy, a growing economy.The problem with gold is money supply is more or less dependent on the amount of gold mined. This can lead to erratic changes in the money supply.

The low inflation was the reason for the People's and Populist Parties in America - farm workers couldn't easily pay off debt due to the low inflation almost guaranteed by a gold-backed currency.

>>10355

> gold has to be kept in a secure place (like a bank vault)

source?

the beauty of gold is that its super lightweight and incredibly valuable.

A pound of gold is worth a like 20 grand; very easy to keep all your money on your person at all times.

>>11411

>currencies do eventually need to grow when populations and economies grow and this needs to be done at a steady rate.

Gold supply has historically kept up with population growth.

>>11411

>to reiterate a Keynesian argument

No. You don't get to build your argument on theories that Milton Friedman disproved more than 40 years ago.

Keynesian economics is dead.