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That old problem has of course been addressed, e.g. by using things like gold certificates: https://en.wikipedia.org/wiki/Gold_certificate https://en.wikipedia.

by hga 11y ago

That old problem has of course been addressed, e.g. by using things like gold certificates: https://en.wikipedia.org/wiki/Gold_certificate https://en.wikipedia.org/wiki/Gold_certificate Which add their own set of problems, but at least you get a clear signal when they get repudiated. Or you use banks, letters of credit from them (https://en.wikipedia.org/wiki/Letter_of_credit https://en.wikipedia.org/wiki/Letter_of_credit), etc.

dragontamer 11y ago
Except Gold Certificates are fake money. Many crashes in the 1800s were about Banks issuing too many certificates for the amount of Gold that was actually stored in their vaults. Gold Certificates are no different than credit cards or fractional reserve banking. The bank makes a promise without proving anything, and people are expected to trust the banks for things to work out. And when the poop hits the fan, people look into the vaults and realize they've been fooled. Maybe the gold really was there, but has been loaned out to another bank (and the banks have gold certificates to another bank). And maybe _THAT_ other bank has been lying this whole time. Its your standard economic issues, too big to fail and all that. Besides, leaving the Gold Standard was how the world recovered from the Great Depression. https://en.wikipedia.org/wiki/Great_Depression#Gold_standard https://en.wikipedia.org/wiki/Great_Depression#Gold_standard
- hga 11y ago
  Except Gold Certificates are fake money. Which might be why I said: but at least you get a clear signal when they get repudiated. When, not if. I think this may be better than how fiat money "works", but obviously opinions vary.
  - dragontamer 11y ago
    http://news.gtp.gr/2015/07/28/greek-depositors-allowed-to-withdraw-weekly-e420-as-of-wednesday-july-29/ http://news.gtp.gr/2015/07/28/greek-depositors-allowed-to-wi... I don't see how a gold standard would change any of this. Should the banks have issues, they will legally prevent bank runs by making it impossible to withdraw money. Whether or not a bank is tied to the gold standard, this will occur. > When, not if. I think this may be better than how fiat money "works", but obviously opinions vary. No sarcastic "quotes" needed. We both know that both Gold Standard and Fiat Money works. The question is if anyone has actually studied the 1800s economy and honestly can tell me that it was better than the 1970s+ economy. Bank runs a plenty, private persons losing their entire savings as banks folded. Etc. etc...
    - hga 11y ago
      Bank runs a plenty, private persons losing their entire savings as banks folded. The fixes for those have only a limited bearing on a gold standard, which, BTW, I have no interest in debating, don't know much about them. It was institutions like the FDIC with its limited backstop of bank accounts, and during the recent crisis a backstop for non-interest bearing business transaction accounts (e.g. those used for payroll, accounts payable, etc.) that fixed those problems well enough. As far as I can see a gold standard would only be an issue if it would prevent the government from doing that, which is certainly possible, but would not be a direct or inevitable thing.

by hga 11y ago

dragontamer 11y ago

Except Gold Certificates are fake money. Many crashes in the 1800s were about Banks issuing too many certificates for the amount of Gold that was actually stored in their vaults. Gold Certificates are no different than credit cards or fractional reserve banking. The bank makes a promise without proving anything, and people are expected to trust the banks for things to work out. And when the poop hits the fan, people look into the vaults and realize they've been fooled. Maybe the gold really was there, but has been loaned out to another bank (and the banks have gold certificates to another bank). And maybe _THAT_ other bank has been lying this whole time. Its your standard economic issues, too big to fail and all that. Besides, leaving the Gold Standard was how the world recovered from the Great Depression. https://en.wikipedia.org/wiki/Great_Depression#Gold_standard https://en.wikipedia.org/wiki/Great_Depression#Gold_standard

hga 11y ago
Except Gold Certificates are fake money. Which might be why I said: but at least you get a clear signal when they get repudiated. When, not if. I think this may be better than how fiat money "works", but obviously opinions vary.
- dragontamer 11y ago
  http://news.gtp.gr/2015/07/28/greek-depositors-allowed-to-withdraw-weekly-e420-as-of-wednesday-july-29/ http://news.gtp.gr/2015/07/28/greek-depositors-allowed-to-wi... I don't see how a gold standard would change any of this. Should the banks have issues, they will legally prevent bank runs by making it impossible to withdraw money. Whether or not a bank is tied to the gold standard, this will occur. > When, not if. I think this may be better than how fiat money "works", but obviously opinions vary. No sarcastic "quotes" needed. We both know that both Gold Standard and Fiat Money works. The question is if anyone has actually studied the 1800s economy and honestly can tell me that it was better than the 1970s+ economy. Bank runs a plenty, private persons losing their entire savings as banks folded. Etc. etc...
  - hga 11y ago
    Bank runs a plenty, private persons losing their entire savings as banks folded. The fixes for those have only a limited bearing on a gold standard, which, BTW, I have no interest in debating, don't know much about them. It was institutions like the FDIC with its limited backstop of bank accounts, and during the recent crisis a backstop for non-interest bearing business transaction accounts (e.g. those used for payroll, accounts payable, etc.) that fixed those problems well enough. As far as I can see a gold standard would only be an issue if it would prevent the government from doing that, which is certainly possible, but would not be a direct or inevitable thing.