6 ms·

China's Gold Army

25 points by tmlee 11y ago

IsaacL 11y ago
People interested in the theory of an impending return to the gold standard might enjoy http://keithweinereconomics.com/2013/12/28/the-theory-of-interest-and-prices-in-paper-currency/ http://keithweinereconomics.com/2013/12/28/the-theory-of-int.... The author is a proponent of "new Austrian economics", basically Austrian economics with an appreciation for bid/ask spreads.
edge17 11y ago
>>China’s domestic mining output grew by an incredible 2,964 % from 1976 until 2014 interesting reading
- mikeash 11y ago
  China's GDP grew by something like 20,000% over that same period, so that really doesn't seem very impressive.
  - gonvaled 11y ago
    GDP measured in an inflationary currency? I can also write big numbers; here you have one: 123456789. Not very impressive, is it? Mining output of a real world, scarce, extremely wanted commodity? Impressive!
    - mikeash 11y ago
      No, GDP measured/estimated in "real" value. China in 1976 was poor, with little productive capacity, and barely able to feed its people. China today is the manufacturing powerhouse of the world and more or less tied for largest economy on the planet. You can quibble over the exact number, but a couple of orders of magnitude increase in wealth in China is real.
      - gonvaled 11y ago
        https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_kd_zg&idim=country:CHN:IND:USA&hl=en&dl=en#!ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_pcap_kd&scale_y=lin&ind_y=false&rdim=region&idim=country:CHN&ifdim=region&hl=en_US&dl=en&ind=false https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&... China 1976: $166 China 2014: $3865 Growth: 23 times increase -> 2300% Exactly the same as gold production. So yes, increase in gold production is impressive (as is increase in GDP)
        mikeash 11y ago
        That's per-capita GDP. The population has also increased substantially. So the increase is more like 4-5000%. Put another way, the gold mining industry has shrunk by 50% relative to the overall economy.
GeorgeMatthews 11y ago
Please correct me if I didn't understand this correctly, I think I misunderstood China's move. So, are they setting up a unified gold account for entire Asia, then promised if China get to control 60% of it then rest of the countries will also somehow benefit? If so, why would any Asian country join? Giving China gold so it can become more powerful.
mark_l_watson 11y ago
Interesting article. It mentioned James Rickard's book "The Death of Money" which I would recommend. US economists openly mock using a gold standard for currency, simply because with our debt and need to generate fresh fiat currency, a gold standard is not a possibility for us. I believe that things will get 'interesting' with our economy but probably not until after the 2016 elections. That said, I think that a hybrid approach with currency backed by (for example) 20% gold reserves would have much of the stabalizing benefits of a gold standard.
- hga 11y ago
  While I'm not up on all or even much of the theory about this, it seems to me that the amount of gold reserves doesn't really matter. The utility of a gold standard is that the government has to redeem your paper dollars at, say, $20.67 to the troy ounce, until it doesn't, and, oh, confiscates all the nation's gold (https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102). So you have a great degree of stability until you don't, and you know exactly when the game is officially up and the economy is running under new rules, particularly political ones at that. History suggests this pretty much always happens, sooner or later when a government gets desperate enough. Maybe not as severe as our New Deal, but e.g. the Swiss franc underwent a series of devaluations until a referendum took the country entirely off the gold standard in 2000.

25 points by tmlee 11y ago

People interested in the theory of an impending return to the gold standard might enjoy http://keithweinereconomics.com/2013/12/28/the-theory-of-interest-and-prices-in-paper-currency/ http://keithweinereconomics.com/2013/12/28/the-theory-of-int.... The author is a proponent of "new Austrian economics", basically Austrian economics with an appreciation for bid/ask spreads.

edge17 11y ago

>>China’s domestic mining output grew by an incredible 2,964 % from 1976 until 2014 interesting reading

mikeash 11y ago
China's GDP grew by something like 20,000% over that same period, so that really doesn't seem very impressive.
- gonvaled 11y ago
  GDP measured in an inflationary currency? I can also write big numbers; here you have one: 123456789. Not very impressive, is it? Mining output of a real world, scarce, extremely wanted commodity? Impressive!
  - mikeash 11y ago
    No, GDP measured/estimated in "real" value. China in 1976 was poor, with little productive capacity, and barely able to feed its people. China today is the manufacturing powerhouse of the world and more or less tied for largest economy on the planet. You can quibble over the exact number, but a couple of orders of magnitude increase in wealth in China is real.
    - gonvaled 11y ago
      https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_kd_zg&idim=country:CHN:IND:USA&hl=en&dl=en#!ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_pcap_kd&scale_y=lin&ind_y=false&rdim=region&idim=country:CHN&ifdim=region&hl=en_US&dl=en&ind=false https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&... China 1976: $166 China 2014: $3865 Growth: 23 times increase -> 2300% Exactly the same as gold production. So yes, increase in gold production is impressive (as is increase in GDP)
      - mikeash 11y ago
        That's per-capita GDP. The population has also increased substantially. So the increase is more like 4-5000%. Put another way, the gold mining industry has shrunk by 50% relative to the overall economy.

GeorgeMatthews 11y ago

Please correct me if I didn't understand this correctly, I think I misunderstood China's move. So, are they setting up a unified gold account for entire Asia, then promised if China get to control 60% of it then rest of the countries will also somehow benefit? If so, why would any Asian country join? Giving China gold so it can become more powerful.

mark_l_watson 11y ago

Interesting article. It mentioned James Rickard's book "The Death of Money" which I would recommend. US economists openly mock using a gold standard for currency, simply because with our debt and need to generate fresh fiat currency, a gold standard is not a possibility for us. I believe that things will get 'interesting' with our economy but probably not until after the 2016 elections. That said, I think that a hybrid approach with currency backed by (for example) 20% gold reserves would have much of the stabalizing benefits of a gold standard.

hga 11y ago
While I'm not up on all or even much of the theory about this, it seems to me that the amount of gold reserves doesn't really matter. The utility of a gold standard is that the government has to redeem your paper dollars at, say, $20.67 to the troy ounce, until it doesn't, and, oh, confiscates all the nation's gold (https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102). So you have a great degree of stability until you don't, and you know exactly when the game is officially up and the economy is running under new rules, particularly political ones at that. History suggests this pretty much always happens, sooner or later when a government gets desperate enough. Maybe not as severe as our New Deal, but e.g. the Swiss franc underwent a series of devaluations until a referendum took the country entirely off the gold standard in 2000.