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  1. #1

    Default Gold standards and consumption backed currencies

    The major push in libertarian capitalist thinking at the moment is for a return to the gold standard and turn away from the consumption and credit backed currencies of the present.

    I can understand why this would be popular in those circles, there's big problem with a consumption driven economy when what is trending is jobless growth and the wages of the biggest spending population are being repressed to make for greater profits. Credit has been a fix for that for a while but that is not working any longer either.

    However a gold standard is going to require massive cuts in welfare and some massive adjustments in popular expectations, basically a reversion to the kind of society of the great gatsby or something. For libertarians that's not really a problem. Its what they'd really like to happen actually. Into the bargain they've been hoarding gold for a long, long time.

    I dont see how this is any solution, for one all the surplus people who are unemployed and unable to claim entitlements, what does anyone suppose will happen to them? Practically its something on the scale of Stalin or Mao's engineered famines which is on the cards for the 99%

    While I dont believe the libertarian ideas are worth anything, credit and consumer driven economies, while keynesianism is impossible for a variety of reasons, mainly political, are going to experience problems. I'm not even sure that without more fundamental structural adjustments that keynesian fixes are going to work. What do you guys think?

    There are problems with the market systems besides the more fundamental contradictions which gold standards will not address too. Principally wage inflation in the private, banking, and public (managerial and boardroom) sectors.

  2. #2
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    The gold standard is arbitrary. It has no more intrinsic value than paper money. I would stand behind a productivity backed currency (one linked to the total productivity in a country, if someone could figure out how to measure that) or an energy linked one, but not some random commodity.

  3. #3

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    Quote Originally Posted by dala View Post
    The gold standard is arbitrary. It has no more intrinsic value than paper money. I would stand behind a productivity backed currency (one linked to the total productivity in a country, if someone could figure out how to measure that) or an energy linked one, but not some random commodity.
    Well the random commodity has basically been petro-dollars.

    Fun fact, prior to the last Iraq war and invasion Saddam was threatening to adopt euros as the petro currency for his oil trading and encouraging other neighbouring regimes to do likewise, would you believe that the new mandarins in Iraq and those in the countries effected by the Arab spring have no plans to do so?

    Its totally whack isnt it!?!

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    It's a good way to get the americans' panties in a bunch. I somehow think that the Euro idea is off the table at the moment, though.

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    Quote Originally Posted by dala View Post
    The gold standard is arbitrary. It has no more intrinsic value than paper money. I would stand behind a productivity backed currency (one linked to the total productivity in a country, if someone could figure out how to measure that) or an energy linked one, but not some random commodity.
    yes it does. it's used as a conductor, for jewelry, in various technologies and for a host of other purposes. you may argue it's over valued, but it does have tangible value that is based on something other than investor confidence
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    I didnt mean to imply that gold has no value at all, although I can see how you might interpret it that way (I should not have said intrinsic value). I meant that it acts as a store of value/unit of account/medium of exchange only because we all agree to it, just like paper.

  7. #7

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    Quote Originally Posted by dala View Post
    I didnt mean to imply that gold has no value at all, although I can see how you might interpret it that way (I should not have said intrinsic value). I meant that it acts as a store of value/unit of account/medium of exchange only because we all agree to it, just like paper.
    ^ This.

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    They should set the standard on something, even if it is arbitrary.

    If not gold, why not a consortium of goods and services? That is, with $x you should be able to buy a house, a car, food, clothes, gas, industrial utilities...etc etc...

    It's what the standard of money is already...or what the going assumption is. Just make it official and stabilize the value of the currency.

    It's either that or continue to defend the value by brute force...which works as well. It's just, people die in that process.

    So, yeah, return to a standard...but instead of gold, make it a practical and real world standard.

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    Quote Originally Posted by dala View Post
    The gold standard is arbitrary. It has no more intrinsic value than paper money. I would stand behind a productivity backed currency (one linked to the total productivity in a country, if someone could figure out how to measure that) or an energy linked one, but not some random commodity.
    I've heard about the energy backed currency...the problem is, energy can't be created or destroyed...and you can bet there are people out there who would love to both create and destroy money in various contexts.

    I say base it off of a basket of goods and services...

    Or internet data.

  10. #10

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    What I wonder about, if we return to a gold standard, is how we would deal with counterfeiting... hollowing out and filling with a bit of more common, higher density metal with similar properties (for instance).

    Paper currency is designed to be pretty close to worthless if nobody believes in its worth, and can therefore have most of the expense go to making countermeasures for counterfeiting.

    Also, if any of you figure out the intrinsic value thing, let me know. I would love to see how you can establish somethings as having intrinsic value, because all I would have to ask is "then why is ____ valuable?"

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