Gold Standard

[nuj]

Are advocates of a return to the gold standard generally of the tinned-food-and-shotgun-Ayn Rand libertarian survivalist tendency, or do some of them make sense?

In what way, if any, are they ideologically related to the "with one bound our hero was free" devaluationist tendency?

[ballot stuffer]

Yes in my experience. But if you held gold im sure you would advocate substancilly increasing its value too.

[20000miles]

Why is this relevant, nuj? Why not concentrate on the economic arguments for gold instead of calling proponents "tinned-food-and-shotgun-Ayn Rand libertarian survivalists".

[Mr.De-Regulation]

Lets debate this! I want to listen. Even better if you have any videos to back up your arguments. Serious.

I was listening to the radio about looking for a new golden standard currency to replace gold. I was like all, why not gold?

[nuj]

(response to ballot stuffer)

That's called talking your own book, though. Just like bankers did.
Why gold, and not some other commodity, if we're to chain ourselves to some random commodity with extremely uneven distribution of both mined and unmined quantities?

The question is not whether or not gold will increase in value (whether that value is measured against some or all fiat currencies or bushels of wheat - the favoured long-run measure of goldbugs) but whether a return to the gold standard makes any sense at all as a remedy to current ills.

[nuj]

Why not concentrate on the economic arguments for gold instead of calling proponents "tinned-food-and-shotgun-Ayn Rand libertarian survivalists".

One doesn't preclude the other.

[goosebump]

The Gold Standard system involves the establishment of a reserve currency that is directly convertible into gold.

What country is going to offer to have its currency designated the reserve currency?

[ibis]

I vote for cowrie shells.

[20000miles]

For you Mr. Deregulation:

Here are the common objections:

1. There's not enough gold in the world

The overall quantity of money doesn't matter, prices will simply adjust to fit the new money supply.

2. If the economy grows at 3% (for instance) while the money supply grows at only 1-2% then the overall price level will fall.

Falling prices for goods are a good thing! Are you crazy!

3. But doesn't that mean an end to economic growth, since entrepreneurs will prefer to put their money under a matress rather than take the risk of investing?


No. While it is certainly "risk-free" to keep your money under the bed, it comes with a very real opportunity cost. Investors have a peculiar trait: they prefer goods in the future to goods in the present. In other words they forego consumption today and prefer a larger return later.

So a deflationary economy a nominal return (i.e., $1) becomes $1.10 when repaid compounds the real return (i.e., the purchasing power of $1.10 is now $1.21)

The desire for future goods may increase the desire for investment.

4. Can you show me a period of time where a gold standard and deflation have led to prosperity?

Why thank you for asking. The period between 1870 and 1896 in the United States and Germany were deflationary. Annualised prices fell 1.6% in the US, while output rose 3.6% per annum. Investment was wide-spread - this was the era of huge advances in manufacturing, railroads and chemistry.

Here are the measuringwoth.com figures for the period:




5. Are you a member of the tinfoil hat brigade?

No, I just want a sound monetary policy

6. Will this mean the end of the boom-bust cycle?

No, you will have to tackle the expansion of bank credit as well, ie. fractional reserve banking.

So that's it!

[Mr.De-Regulation]

Why not liters of water? There is a water crisis. It would make people conserve water better.