D
DK 699
Guest
kiwifarms.net
Should we return to a gold/silver standard or is that just a meme that right libertarians through out there?
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It doesn't matter, because the fundamental problem is the same.
Currency on its own isn't valuable. It's just fancy paper and ink. What makes it valuable is the belief it's valuable. Why you hold that belief can vary, but what matters is you hold that belief. The same goes for gold. Its value doesn't come from what it can do for people; it provides no tangible nutritional or constructive benefit. Its value is because it's rare and shiny.
It used to be that the USA backed its currency with gold, until the debt spiraled out of control. Now it's backed with "Hey, we're America, and we'll never let you down!" Should the belief that America cannot pay its debts take hold, the value of the dollar will plummet. This happened in 1992, when George Soros broke the bank of England by devaluing the Pound.
Ultimately, the only way around this problem is a barter system, but even that has its issues (what's the exchange rate between rice and petroleum again?)
tl;dr- Don't engage in currency speculation! Remain calm! All is well!
Currency on its own isn't valuable. It's just fancy paper and ink. What makes it valuable is the belief it's valuable. Why you hold that belief can vary, but what matters is you hold that belief. The same goes for gold. Its value doesn't come from what it can do for people; it provides no tangible nutritional or constructive benefit. Its value is because it's rare and shiny.
It used to be that the USA backed its currency with gold, until the debt spiraled out of control. Now it's backed with "Hey, we're America, and we'll never let you down!" Should the belief that America cannot pay its debts take hold, the value of the dollar will plummet. This happened in 1992, when George Soros broke the bank of England by devaluing the Pound.
Ultimately, the only way around this problem is a barter system, but even that has its issues (what's the exchange rate between rice and petroleum again?)
tl;dr- Don't engage in currency speculation! Remain calm! All is well!
Libertarians like the GS because they hate stimulus spending and central banks that regulate the growth of the economy with interest rates and arbitrary printing.
I don't know about the benefits or negatives of the GS but I do dislike the largely unaccountable powers of central banking and the govt handing out money to corporations... thing is, these things existed with the GS so why bother? FDR was able to do massive stimulus, bailouts and central banking with the GS so I don't see the libertarian argument.
The US dollar is basically the GS now and the US has been relatively responsible with that power.
I don't know about the benefits or negatives of the GS but I do dislike the largely unaccountable powers of central banking and the govt handing out money to corporations... thing is, these things existed with the GS so why bother? FDR was able to do massive stimulus, bailouts and central banking with the GS so I don't see the libertarian argument.
The US dollar is basically the GS now and the US has been relatively responsible with that power.
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D
DK 699
Guest
kiwifarms.net
The Chinese, Dutch, and Arabs would like a word with you.
But, in all seriousness I get what you're saying.
I'm really counting on my investment in POGs and Tech Decks paying off.
The government can take your land without compensation so banking on your land is just retarded.
I feel like GS is just people feeling sehnsucht. It grounds your currency thus making it more "valuable", but things adjust overall so that even if $20 doesn't go as far as it used to $20 is way easier to get these days. As things inflate, prices will be adjusted accordingly so that the market does not turn away potential customers.
In terms of real cost and investment, it's always one of those things that is just out of reach for most normal people. Take away cars and suburban homes and I'm sure someone from the old world would have prized a horse or their own plot of land similarly, likewise to the guys interested in scale with renting that land out to others. You look up pioneering in the west or indentured servitude in the colonies, or go back even further and look at Romans serving in the army, our ancestors went through a lot to own, work and profit off of a piece of land that they may eventually pass on to their children. That hasn't really changed in the modern day, as even though a house lacks raw function, if it can be paid off and passed on, it becomes a potential six figure sale for that next generation to get involved in something bigger (potentially).
In terms of real cost and investment, it's always one of those things that is just out of reach for most normal people. Take away cars and suburban homes and I'm sure someone from the old world would have prized a horse or their own plot of land similarly, likewise to the guys interested in scale with renting that land out to others. You look up pioneering in the west or indentured servitude in the colonies, or go back even further and look at Romans serving in the army, our ancestors went through a lot to own, work and profit off of a piece of land that they may eventually pass on to their children. That hasn't really changed in the modern day, as even though a house lacks raw function, if it can be paid off and passed on, it becomes a potential six figure sale for that next generation to get involved in something bigger (potentially).
R
RG 448
Guest
kiwifarms.net
You know what they say fiat stands for, don’t ya? Stands for “found on road, dead”, heh heh heh.
A
AF 802
Guest
kiwifarms.net
You're thinking of Ford, Dale.
R
RG 448
Guest
kiwifarms.net
Found... on... road... :thunkful:
Hellbound Hellhound
kiwifarms.net
The major advantage of having a fiat currency is that it gives the central bank much more control over the money supply, whereas with a commodity currency (like the gold standard), money is tied to an inherently finite resource.
This is important, because when a recession hits, having an elastic money supply gives both the government and the central bank a lot more flexibility in attempting to stabilize the economy, and therefore helps to minimize both the impact and the duration of the downturn.
The advantages of this are clear if you just look at how inflation has been managed over time:
Changes in the yearly rate of inflation have been a lot more stable since the US made the switch to a fiat currency.
This is important, because when a recession hits, having an elastic money supply gives both the government and the central bank a lot more flexibility in attempting to stabilize the economy, and therefore helps to minimize both the impact and the duration of the downturn.
The advantages of this are clear if you just look at how inflation has been managed over time:
Changes in the yearly rate of inflation have been a lot more stable since the US made the switch to a fiat currency.
Paleololicon
kiwifarms.net
Lolbertarians want the GS because it would severely hamper a central bank's ability to drive inflation. Many think it's a preventative measure against inflation but those that think that have never heard of kingdoms minting impure coinage. A GS makes it harder but it's not impossible
I, for one, welcome the collapse of our economic system so that we can implement something better.
I, for one, welcome the collapse of our economic system so that we can implement something better.
E
ES 195
Guest
kiwifarms.net
A fiat system isn't inherently bad but how easily it is to control and manipulate has me believing it should be canned. I actually prefer the system of having goods traded in specific currencies like the petro dollar, even though that's what keeps bringing the USA back into the middle east.
With China starting to hoard all the gold and silver they'll probably start forcing all world-wide trade of said material to be done in Yuans or at least should.
With China starting to hoard all the gold and silver they'll probably start forcing all world-wide trade of said material to be done in Yuans or at least should.
A fiat currency is as robust as the armed forces that back it up. The U.S. dollar is the best currency in the world bar none.
The worst weakness of a fiat currency is the ability of a central authority to issue more at any time, thus immediately inflating the currency. This is an extremely insidious form of taxation. With most forms of taxation, enacted by legislatures or other authorities in a republic, those interested in the tax (anyone with money) can respond to upcoming taxation by lobbying the authorities not to enact the tax (or to put in loopholes to benefit themselves), after the tax is enacted, alter their behavior to avoid it.
The ability to issue more currency, though, immediately transfers value in every unit of currency from those who hold it to those with the power to issue and spend. This essentially occurs instantly. The only way to avoid this is to spend it before this occurs, so if this occurs frequently, there is an extreme incentive to spend money immediately as it is obtained.
It's worth less to the person accepting it than to the person receiving it, who then has an even stronger incentive to pass on the hot potato.
If this is taken to an extreme you end up with Zimbabwe style hyperinflation where the currency becomes essentially worthless.
This is very unlikely to happen with the dollar because the people in charge of such things have a very strong incentive not to destroy their greatest asset.
There are also things like Gresham's Law that note that bad money drives out good and, pretty much by definition in the Gresham's Law formulation, any form of fiat currency is bad and whenever you enact fiat currency, people almost immediately begin hoarding things like gold and other commodities that reliably store value, including cryptocurrencies.
However, they already did that before fiat currency any time governments issued any kind of coinage where the face value was higher than the commodity value. And coins almost have to be that way, because otherwise, you risk that any time the commodity value becomes higher than the face value, people immediately begin melting down the coins for their higher commodity value.
Fiat currency is essentially not just a good idea, but a necessity. However, alternate forms of currency should never be prohibited or even over-regulated.
The worst weakness of a fiat currency is the ability of a central authority to issue more at any time, thus immediately inflating the currency. This is an extremely insidious form of taxation. With most forms of taxation, enacted by legislatures or other authorities in a republic, those interested in the tax (anyone with money) can respond to upcoming taxation by lobbying the authorities not to enact the tax (or to put in loopholes to benefit themselves), after the tax is enacted, alter their behavior to avoid it.
The ability to issue more currency, though, immediately transfers value in every unit of currency from those who hold it to those with the power to issue and spend. This essentially occurs instantly. The only way to avoid this is to spend it before this occurs, so if this occurs frequently, there is an extreme incentive to spend money immediately as it is obtained.
It's worth less to the person accepting it than to the person receiving it, who then has an even stronger incentive to pass on the hot potato.
If this is taken to an extreme you end up with Zimbabwe style hyperinflation where the currency becomes essentially worthless.
This is very unlikely to happen with the dollar because the people in charge of such things have a very strong incentive not to destroy their greatest asset.
There are also things like Gresham's Law that note that bad money drives out good and, pretty much by definition in the Gresham's Law formulation, any form of fiat currency is bad and whenever you enact fiat currency, people almost immediately begin hoarding things like gold and other commodities that reliably store value, including cryptocurrencies.
However, they already did that before fiat currency any time governments issued any kind of coinage where the face value was higher than the commodity value. And coins almost have to be that way, because otherwise, you risk that any time the commodity value becomes higher than the face value, people immediately begin melting down the coins for their higher commodity value.
Fiat currency is essentially not just a good idea, but a necessity. However, alternate forms of currency should never be prohibited or even over-regulated.
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