Ok, bear with me for a moment - what if the US would use actual physical gold coins instead of dollars? Then your argument of "gold would flow out" would not hold - so the only reason for it to flow out was that the gold standard was fake - the lax money policy of the US was the issue, not the gold standard itself.
> what if the US would use actual physical gold coins instead of dollars?
The problem here is, what if the demand for dollars increases?
In principle the US would get more gold and mint more currency, but gold is a finite resource. "All the gold ever mined" is around 200,000 metric tons, ~32k troy ounces per metric ton is ~6.4B troy ounces.
In 2022 (just before the recent gold rally) the price was ~$2000 per troy ounce, i.e. "all the gold" was worth ~$13T. Meanwhile the M3 money supply in the same year was ~$20T. What happens if you try to buy $20T worth of gold to mint currency when only $13T worth has ever been mined, and not all of that is even on the market? The answer is that you can't, so instead the result is deflation, which is bad.
Or to put it a different way, what do you think the economic effect of the recent gold rally would be for a country whose currency was still pegged to gold? It just got way cheaper to import foreign products than buy domestic ones, and way more expensive for foreign countries to buy your exports, so how's the unemployment rate looking? The amount everyone owes on their mortgage hasn't changed but the nominal value of their houses just got cut in half so now they've lost their jobs and are underwater. What happens when they start to default and foreclosures don't allow the banks to recover the principal?
The primary function of money is its trade value, to "lubricate" the real economy to let goods and services flow. When the value is unstable, people are inclined to not spend or not accept that currency, which contradicts the free flow of it and in severe cases harms the economy.
Crypto'currencies' have the same problem. By nature, they are no currency but investment for which instability is required. No crypto bro would hype their 'currency' because there would be no pumping. Arbitrage trades are considered being for fools or insiders.
Gold is silly as a measure of value. It's just a piece of shiny metal. The amount of value in the world is increasing so you want to exchange medium to grow with it else you're pulling breaks on the actual economy.
Just because a social construct is silly when you think about it doesn't make it any less real or useful.
A national border is silly as a physical reality; it is just a cartographic whim. These invisible lines, drawn by long-dead men, pretend that the lithosphere is fundamentally different on one side of a coordinate than the other.
Fiat currency is silly as a store of value; it is just a digital ledger or a piece of cotton-linen blend. Its "worth" is derived entirely from the collective hallucination that a central bank’s promise is more substantial than the paper it is printed on.
Yes. And we should never forget that these ideas are just that: useful ideas. They may seem without alternative to most people, but that doesn't mean they necessarily are.
In effect, some of them are. Look how many decry the death Breton Woods. They don't want to necessarily have good coins on them, but they want them to be tethered as a proxy. Why?
No, not in effect, no one is talking about physically exchanging gold coins, so it doesn't make sense to say "there isn't enough".
but they want them to be tethered as a proxy. Why?
That's a completely separate issue. People want to not have to deal with inflation where they are on a treadmill of needing to get paid more to support the fact that companies can raise their prices easily.
> No, not in effect, no one is talking about physically exchanging gold coins, so it doesn't make sense to say "there isn't enough".
I think my point still stands. If you can't create more gold [1] and you say - I am pegging 35 dollars to an ounce of gold. Then you are limiting the amount of dollars to the mass of gold[2]. The money works as an IOU for gold. You aren't exchanging pieces of gold, but the idea that you have 35$ is as if you have 1 ounce of gold, _that is what people pine for_. It's effectively, an IOU for 1 ounce of gold that you keep in a safe. Yes. I think the point still stands that in effect, that's what people are asking for.
[1] - You can, but it's a much slower process, deff rate limited, it's actually what people really seem to like about gold.
[2] - Yes, I am aware about the concept of fractional reserve, but that's exactly the part that goldbugs want to avoid.
I think my point still stands.I think the point still stands
I'm not sure what point you are making, it seems like you're just describing a gold backed currency and repeating the same things multiple times.
If you aren't using gold directly how would there ever be "not enough" unless a penny became worth too much? People did this for hundreds of years, this isn't some theory or experiment, it's basically how the world worked for most of human history.
Mild inflation is a good thing, at least according to modern economists. In a deflationary environment, money is worth more when you don’t spend them. And when people don’t spend them, there’s no economic growth. It’s just like having very high interest rates but the central bank cannot act to lower them.
This thread was someone saying you can't peg a currency to something else because "there isn't enough of it" which is nonsense.
there’s no economic growth
Printing money doesn't create economic growth, it just inflates assets and depresses nominal wages.
money is worth more when you don’t spend them
People say this stuff like it's gospel, but if someone understands currency dynamics in the first place they would have their money in investments, which already should appreciate and act like a deflationary currency. People can already buy stocks and leave money there to get more valuable, so why does anyone spend money now?
You also have to figure out why it already worked for hundreds of years. People act like it would be an experiment. Floating currency is the experiment and it has lasted 50 years so far. Currency has lost almost all of it's value from before the 70s and minimum wage is a fraction of what it was nominally while asset prices are sky high, then people wonder why people can't afford a house or beef or gas or just to live alone.
Economic growth comes from spending. Households must be incentivized to spend either through inflation or low interest rates.
Buying stocks hoping that it would appreciate doesn’t work when there is no economic growth. So we are back to square one.
And for hundreds of years we didn’t have the same kind of international trade, or the same financial markets. One must wonder whether a new kind of currency must accompany a new era of economy and trade.
Currency losing almost all its value is by design. Modern economists target a 2% inflation rate. This means currency is supposed to lose value. It’s another mechanism to encourage spending to increase economic growth.
Says who? What about governments and companies? People are already incentivized to spend because they need things.
Buying stocks hoping that it would appreciate doesn’t work when there is no economic growth.
You're contradicting yourself and going around in circles. If there is "economic growth" according to you, then stocks will go up, which means they end up being a deflationary currency, which means people will put there money there and not spend it.
They already go up due to inflation, people do buy stocks and other liquid assets, people still spend money anyway.
Also, gold still exists. By your own logic, because anyone can still buy gold or gold futures they should park their money there and never spend it.
Currency losing almost all its value is by design.
It is by design by governments and for governments. No person wants an inflationary currency, governments want it because they can they can borrow and print money they don't have and hand it out to people who in turn help with political power.
People don't want their currency to inflate away unless they own a business that can raise prices while their employees make less nominally.
Gold is actually really good at transferring and measuring value. Think about what a "good" measure of value would be have. It needs to last over time, not corrode or dissolve to the forces. It needs to be distributable, Divisible.. to be ubiquitous. Hard to create/refine, hard to find, so supply can't easily be inflated.
It doesn't matter what the object that is being used for exchange of value or holding value, that's why you can trade and barter random objects. But if you condensate down the properties that make a GOOD money, then gold is more than just a shiny metal.
"The amount of value in the world is increasing so you want to exchange medium to grow with it.." we find more gold every day, so there is an easing already happening naturally. And even if there wasn't, imagine having an exchange currency that literally never inflated... that's GOOD. We have been hoodwinked into thinking that we need inflation to keep up with goods and services, literal stockholm syndrome taught by the FED.
Hold on - you say "we find more gold every day" and then go on to suggest that the money supply doesn't actually need to keep up with economic growth?
If we had the technology to maintain 0% inflation, we would do that. We can't, and rather than risk deflation we instead target low positive inflation. This is because deflation leads to nightmare spirals where people start stuffing money into their mattresses instead of investing in useful things because holding has risk-free guaranteed returns that the unpredictable real world can't match.
The amount of gold being mined is not sufficient to keep up with economic growth and gold is therefore inherently deflationary. It's not a good way to store value, because a coin that's going to double in value over two years or whatever is obviously not a stable store of value.
You can argue about corrosion resistance or whatever other physical properties gold might have, but unless the civilization collapses you will find just as much luck storing your wealth in the database of a major bank. Needless to say, designing a civilization around the idea that it could collapse at any moment is unnecessary and expensive.
> If we had the technology to maintain 0% inflation, we would do that. We can't, and rather than risk deflation we instead target low positive inflation.
I don't think this is quite right. My understanding is that a low positive inflation would be targeted anyway, because it stimulates the velocity of money; i.e. there's a downside to hoarding, since you need to beat inflation to come out on top. So people will be willing to invest to at least some extent in risk assets, or to buy things now rather than later.
Which, yes, makes inflationary spirals possible, but they've proven less damaging. The inflation numbers seen in regimes that actually collapsed as a result are absolutely dizzying; whereas the deflation seen in the Great Depression was... significant, but not nearly comparable.
The main advantage to keeping inflation as low as possible but positive is also that it makes interest rates cheaper. Individuals are incentivized to spend when there's inflation, but banks have a harder time writing loans because the interest rate on the loan is the product of inflation and the bank's desired ROI.
Low interest rates are a good thing because they allow people to explore new ideas and new businesses - the entire modern tech industry would not exist without ZIRP because the scale of investments has only gone up as technology has advanced.
> Individuals are incentivized to spend when there's inflation
That's not what's happening currently. Inflation has driven up prices to the point where people can't afford to spend. They're forced to cut back on spending just to keep a roof over their head and food on the table. Inflation promises that things are cheaper now than they ever will be, but that just means that anything you can't afford you either have to go without or take an even bigger hit to your wallet after trying to save money at a rate faster than prices are increasing. That sort of thing leads to less spending.
Credit cards were the solution for many Americans for a very long time, but that was never sustainable and now the US has record amounts of household debt and homelessness.
Deflation makes things more affordable and so people buy more. Yes, they could horde all their wealth, but you can't eat money and it isn't much fun. When times are good why would anyone bother going without when they can easily get what they want today. Consumerism is strong enough to keep people buying things. Decreasing prices gives consumers confidence that they can make risky purchases and investments.
> And even if there wasn't, imagine having an exchange currency that literally never inflated... that's GOOD.
I fundamentally disagree. Value comes from building stuff not from hoarding. I maintain my intense dislike for gold. And I grant that it had the property of having most people on this earth consider it the peak of value. Sure common belief is a useful property. But I disagree that it's a positive outcome or that there couldn't be many many other variations except gold.
> that's why you can trade and barter random objects...imagine having an exchange currency that literally never inflated... that's GOOD. We have been hoodwinked into thinking that we need inflation to keep up with goods and services, literal stockholm syndrome
Gahhh. Stop taking your economics advice from bitcoin bros and goldbug weirdos. They don't know how anything works and don't want to learn. It's like taking legal advice from sovereign citizens. It's not even that difficult to understand why it's a terrible idea!
High inflation is bad, sure. Deflation is an economic nuke. You know those people who spent like a whole bitcoin buying pizza way back when? "If I'd just held onto it, I'd have $HUGE_NUMBER now".
Yeah. If your money goes up in value, you have a huge incentive to stockpile it and not buy pizza. It's not just Dominos that loses out. All of the people and suppliers that go into pizza do, too. You need people to spend and lend to have liquidity and money flow.
> we find more gold every day, so there is an easing already happening naturally
That's not how that works. You're tying your entire country's economic growth to the production output of a single mining industry. Gold is not distributed evenly across the globe, either.
And yeah, we did all that in the past, and it caused deflation, which caused numerous financial panics [0], broke the British economy [1] and after two world wars, the US ended up with like 70% of the world's gold [2].
TL;DR: Tying your entire country's economic growth to the production output of a single mining industry is stupid and we don't do it for very good reasons. Everything is a conspiracy if you don't know how anything works.
I do find it rather ironic that economists can pretty much universally agree on this concept. And yet when you point out the very existence of the billionaire class inherently causes the exact same issue you're suddenly a communits.
How is it good for an economy to have a small subset of individuals hoarding wealth through property, artwork, and offshore bank accounts - not spending it in the economy from which they extracted it? "Job creators" is a farse, the subset who you can point to who ACTUALLY create(d) jobs a-la Page and Brin have long since stepped away from that job creation and have joined the ranks of: number go up.
Yes, it's just a shiny piece of metal. However, it is a pure element and there is a limited amount of it, unlike pretty much anything else except maybe silver.
This is the origin of the entire white collar world and all of its odd bedfellows, and it will die in our lifetime. All of our jobs will go with it, unfortunately.
So as trade increases, and the need for dollars increases, gold and the dollar increase in value together.
That sounds benign until you realize that is: deflation. It incentivizes everyone to hold their dollars instead of spending them, and parasitically gain from gold's increasing utility use as currency by others.
This further decreases dollars available on the market to use in trade, further increasing their value. Which ... yes this can be an economic death spiral. Or at least, a strongly growth conflicted world.
A world in which you can make 5-10% a year by avoiding economic activity or investment is not a healthy world.
(And you can't increase gold supply to counteract this, because gold supply is also always balanced against the cost of extracting gold. Unless everyone else on the planet except the US government is prohibited from mining gold, there is no play there.)
Can you make the same arguments for holding land and activity that requires land? Or holding any other valuable, limited commodity vs activity that requires that commodity, copper for example?
Investors in those things haven't caused an economic death spiral. It's considered shrewd and good business to buy and hold things that are seeing increasing demand.
> This further decreases dollars available on the market to use in trade, further increasing their value.
... thereby reducing the amount of dollars required to trade a given amount of other things. Where does the spiral come from?
That doesn't make any sense to me. Under Bretton Woods, a "dollar" was a contractual equivalent to a fixed amount of gold. There's no difference. When people are talking about "flow out" they're not talking about literally motion of currency[1], just who owns it.
[1] Which is backwards in your reasoning anyway. If you're a foreign power wanting to hold dollars, and dollars are physical gold coins, then you quite literally need to move them physically out of the country, right?
> Ok, bear with me for a moment - what if the US would use actual physical gold coins instead of dollars?
You'll get a bear economy, leading to the eventual deflation and collapse.
Fun fact: it was not hyperinflation in Weimar Germany that led Hitler to power but _deflation_ because of its insistence on sticking to the gold standard.
> Fun fact: it was not hyperinflation in Weimar Germany that led Hitler to power but _deflation_ because of its insistence on sticking to the gold standard.
"Hyperinflation caused Hitler" is one of the common narratives that "everyone knows". But German economy was actually growing during the hyperinflation era and by the time of Hitler's ascension, the hyperinflation had long been in the past.
I personally edited this very Wikipedia article several times, but my changes got reverted by goldbugs who want to memory-hole it.
Thanks for sharing. I can corroborate some of the unemployment numbers in Lords of Finance and have no doubt there was some deflation. I do think the seeds of the Third Reich were sown well before this period mostly due to the insistence of France wanting full reparations and Germany borrowing in foreign currencies.
Hyperinflation undoubtedly left a huge psychological scar, especially because it happened right after the loss in WWI. But it did not cause a long protracted unemployment period that directly resulted in mass disgruntlement.
And most importantly, the deflation was directly caused by Germany's insistence on staying on the gold standard. And this has been an almost ironclad law: large countries that insist on gold standard end up with stagnating economy.
I always thought it was the musical energy of Bertold Brechts "Die Dreigroschenoper" that lead Hitler to power. /s
Just because two things are correlated in time, doesn't mean they are necessarily causally linked. Surely there are multiple factors at the same time behind the rise of a demagogue. In the case of Hitler the grievances of WWI played probably a much bigger role than economic problems.
Fair, but at the very least "hyperinflation caused Hitler" is a significantly weaker statement than "deflation caused Hitler", given that the former was replaced by the latter like 8+ years before Hitler's takeover.
Economic problems was a big part though, the 1929-33 great depression. It features heavily in political literature pushed by the Nazi party leading up to takeover. You know, like "Arbeit und Brot", etc.
Fake economics to "stable money causes hitler" in two sentences.
Countries used gold or metals either directly as currency or to back paper currency for hundreds of years. If their governments overspent they collapsed.
Saying you need inflation or you get hitler is pretty wild.
Your proof that the economic system that worked for hundreds of years doesn't actually work is a small town that issued their own currency, which allowed them to nominally pay people less and there were more jobs?
That's what inflation does, everyone gets paid less, but they don't realize it because they just see the same number coming in and more going out.
And then because of that, somehow noninflationary currency results in hitler in 8 years (even though it was used for hundreds of years).
I think you should look at the other end, which is governments going broke and not being able to inflate their way out of it.
> Your proof that the economic system that worked for hundreds of years
It did not. The economic system that was in place for hundreds of years kept the population in a permanent state of depression. Most people had barely enough money to buy necessities.
The economic growth exploded, surpassing _millenia_ of innovation within mere _decades_ once we got rid of the golden chains.
But I guess that you fancy yourself being landed gentry and not a landless serf?
kept the population in a permanent state of depression.
Says who?
people had barely enough money to buy necessities.
Where are you getting that? I think you're confusing and conflating all sorts of things like human advancements with inflationary money. I'm sure what you're saying makes sense if you think every invention, discovery and gain of knowledge was from people having their money inflated, but there isn't any evidence of this, it's just you restating it.
The economic growth exploded, surpassing _millenia_ of innovation within mere _decades_ once we got rid of the golden chains.
That really only happened in the 70s, it wasn't exactly the dark ages before that.
From learning the basics of history? Before 1900-s famines were common, and most people were illiterate.
> That really only happened in the 70s, it wasn't exactly the dark ages before that.
Got it. You live in an imaginary world.
In reality, the first inflation happened when the European civilization established contact with South America. It rapidly expanded the monetary base and provided an impetus to economic development.
Then paper money (and equivalent debt-based mechanisms) were invented and became popular, and this turbocharged everything.
I just explained history to you, you realize being patronizing and repeating yourself isn't evidence right?
From learning the basics of history? Before 1900-s famines were common, and most people were illiterate.
Do you think the printing press, the engine and large scale agriculture might have more to do with food and literacy than inflation?
All those problems were solved before the US went off the gold standard anyway.
In reality, the first inflation happened when the European civilization established contact with South America. It rapidly expanded the monetary base and provided an impetus to economic development.
You realize this doesn't make sense right? This idea that printing money somehow leads to all human advancement is bizarre, even for someone who is ignoring all the things I said before. If two cultures crossed oceans do you think the advancement might come from international trade or do you think some tribe in the jungle could make up a currency, start printing it off, then go straight on to skyscrapers and video games?
All this is just a gish gallop anyway, you never bothered to explain how not having inflation "causes hitler in 8 years" even though it's only been the last 50 years that we have been off of backed currency.
You also didn't confront the fact that anyone can put their money in stocks, bond or gold and essentially have a deflationary currency but they still spend money anyway.
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estimated at approximately 5’8” to 6’0” tall. Their build is medium to heavy-set, with solid
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Guys, yesterday I spent some time convincing an LLM model from a leading provider that 2 cards plus 2 cards is 4 cards which is one short of a flush. I think we are not too close to a singularity, as it stands.
Why bring that up when you could bring up AI autonomously optimizing AI training and autonomously fixing bugs in AI training and inference code. Showing that AI already is accelerating self improvement would help establish the claim that we are getting closer to the singularity.
I'm working on a project where you can run your own experiment (or use it for real trading): https://portfoliogenius.ai. Still a bit rough, but most of the main functionality works.
These product might be great, but seriously, who's choosing those names? Trainium, Inferentia? It's like let's just take the words from what they do, and put a little Latin twist on them? I know naming things is one of the great problems in computer science, but really they could come up with something a little better.
Just to be fair, they compare every congressperson who becomes a leader with a “regular” (non-leader) congressperson who entered Congress in the same year and is from the same political party. Alternative view: people who becomes leaders are just more capable and better at selecting stocks?
> we find that lawmakers who later ascend to leadership positions perform similarly to matched peers beforehand but outperform them by 47 percentage points annually after ascension
If what you’re positing were true wouldn’t they have outperformed their peers before ascension as well
The very first sentence of the linked article contradicts your alternative theory. These leaders performed similarly to their peers before ascending to leadership.
I wish there was an index where not all countries are weighted equally, but according to their desirability. Multiply each country by some factor which is defined by how many people would list it as their desirable destination. The index where France and Tuvalu are both counted equally makes no sense to me, with all due respect to the latter.
I mean, a major reason the US fell in the ranks is because Brazil has stopped giving the US, Canada, and Australia visa-free access, Vietnam didn't include the US in the list of countries it chose to extend visa-free access to, Venezuela has extended visa-free access to a number of EU and EFTA members, and Papua New Guinea extended visa-free access to a number of nations recently. Also, the UK has begun enforcing the Electronic Travel Authorisation (ETA) on all countries excluding Ireland, which means the UK is no longer visa free.
The UK's ranking fell for similar reasons as well.
If not having visa-free access to PNG or Venezuela is a metric, it's not a fairly relevant metric, or at least a very lossy metric.
Why should Americans, Canadians, or Europeans get visa free access to China, Brazil, or Vietnam when Chinese, Brazilian, and Vietnamese nationals need to get visas to visit America, Canada, or Europe?
Didn't realize Brazil has Schengen access! That's wild (in a good way)!
Out of curiosity, why don't we see the same degree of Brazilian immigration to the EU then versus the US?
Is it solely economic (ie. a Brazilian accountant is more likely to demand a salary significantly higher that that back in Brazil by moving to the US versus an EU state)?
> Out of curiosity, why don't we see the same degree of Brazilian immigration to the EU then versus the US?
There are a lot of Brazilians in the EU, most have legal residency through heritage (Spanish, Portuguese, Italian are quite common 2nd passports) or through work visas.
You can't discount the huge influence the USA has over Latin America, and specially over Brazil, people look up to the USA as a benchmark/role model, many Brazilians dream of "making it" by moving to the USA; Brazilians also suffer a huge influence from the consumerist aspect of the USA, they want to have nice cars (which are cheaper relative to salaries than in Brazil), they want to buy electronics that are expensive in Brazil: consoles, computers, phones, they want to buy clothing that is considered expensive in Brazil, there's a quite markedly status-chasing aspect of Brazilian society that mimics the American one. Brazil was somewhat molded according to the USA: car-dependent, consumerist, etc. so a lot of Brazilians believe that the USA is what Brazil "could be" if it was richer.
There are many support groups from past immigrants to help out settling in the USA, it's also much easier to live in the USA undocumented than in most of the EU: in the USA there's no centralised identification at the federal level, in the EU most countries require you to have a tax ID to do most of the basic bureaucracies you need to settle.
It's a confluence of factors that make Brazilian immigration into the USA very different than into the EU. From my experience most Brazilians in the EU are high-skilled immigrants or have a second citizenship or are spouses of natives/citizens.
For the full context, it looks like Henley & Partners is providing services like obtaining second citizenship, so it's in their best interest to highlight the US passport "decline". Further down they say "Americans Lead Global Rush for Second Citizenships", which just happens to be the thing they are selling.
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