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Another option is "sound money" (historically, this was gold). If you had a sound money option available, people could save wealth without going further out on

by javert 7y ago

Another option is "sound money" (historically, this was gold). If you had a sound money option available, people could save wealth without going further out on the risk curve. At this point, even high-quality corporate bonds are going negative in Europe, so people who want to save have to take a big risk. In my opinion that is unnatural; it's a creation of central planners who forced everyone away from gold and into fiat currencies. Gold is pretty risky now because it's not actually used as a currency and thus has low liquidity. If we all used gold as a currency, it would have high liquidity and it would be very stable. (I don't want to go back to gold because digital currency is far more practical, but I'm just making a historical point.) > I think the only way forward is actually gov't spending sprees That is going further in the direction of central planning and also further inhibits regular people from saving and investing safely and wisely. How is the middle class going to save and invest under this paradigm? I think the most likely answer is that they won't/can't, and the middle class disappears (like what happens with hyperinflation, e.g. Weimar Germany). A recurring theme: I am really against central planning. The planners do not always get it right, and when they screw up big time, it makes the system collapse. When people are free to make their own choices the economy adjusts dynamically.

arcticbull 7y ago
I guess what I don't understand is why we need to force everyone onto sound money. People who receive what they perceive as unsound money can use it to buy whatever would back sound money anyways, can they not?
- javert 7y ago
  We don't need to force people onto sound money. People will adopt it naturally over time if it's better for them than fiat money. However, there is no sound money right now. Bitcoin was designed to be sound money in theory, but it has to get a lot more liquidity first. Gold once was sound money, but also would need a lot more liquidity to be sound money once again. So we just have to wait. I'm not suggesting that we force it. Fiat money seems destined to eventually collapse. There is a long road, but every time fiat money stumbles, it will be a little victory for alternatives. Investors have been fleeing into gold lately. Wealthy Chinese people have been fleeing into bitcoin to at least some small extent.
QuesnayJr 7y ago
Sound money is the surest route to destroying capitalism. The middle class didn't disappear because of Weimar. (It was a mixed bag, because the hyperinflation wiped out a lot of debts.) They disappeared because of the Great Depression. Sound money caused that.
- javert 7y ago
  > Sound money is the surest route to destroying capitalism. I don't agree at all. But let's wait and see. That is a risk I'm happy to take. Sound money is honest money. A system that can't survive sound money is an unsound system. Anyway, we probably disagree on the definition of 'capitalism.' We don't have capitalism now, we have a mixed economy with partial capitalism. > the Great Depression. Sound money caused that. I completely disagree. This is but one theory, and I don't think it's a good one. > It was a mixed bag, because the hyperinflation wiped out a lot of debts. Hyperinflation = no debts, but also no savings. So only the very wealthy with large portfolios in real estate or industry could survive financially. Everyone else reduced to poverty. (Granted, I'm no expert on Weimar history, so if that's not exactly accurate, I welcome corrections.)
  - QuesnayJr 7y ago
    Sound money destroys entrepreneurialism. Rather than investors taking risks to ensure a return for the future, they rely on the government to create risk-free investments for them. The German economy recovered from hyperinflation, and was booming by the end of the twenties, only to be taken down by the Great Depression. Under Hitler, they abandoned the gold standard, and their economy recovered.

by javert 7y ago

arcticbull 7y ago

I guess what I don't understand is why we need to force everyone onto sound money. People who receive what they perceive as unsound money can use it to buy whatever would back sound money anyways, can they not?

javert 7y ago
We don't need to force people onto sound money. People will adopt it naturally over time if it's better for them than fiat money. However, there is no sound money right now. Bitcoin was designed to be sound money in theory, but it has to get a lot more liquidity first. Gold once was sound money, but also would need a lot more liquidity to be sound money once again. So we just have to wait. I'm not suggesting that we force it. Fiat money seems destined to eventually collapse. There is a long road, but every time fiat money stumbles, it will be a little victory for alternatives. Investors have been fleeing into gold lately. Wealthy Chinese people have been fleeing into bitcoin to at least some small extent.

QuesnayJr 7y ago

Sound money is the surest route to destroying capitalism. The middle class didn't disappear because of Weimar. (It was a mixed bag, because the hyperinflation wiped out a lot of debts.) They disappeared because of the Great Depression. Sound money caused that.

javert 7y ago
> Sound money is the surest route to destroying capitalism. I don't agree at all. But let's wait and see. That is a risk I'm happy to take. Sound money is honest money. A system that can't survive sound money is an unsound system. Anyway, we probably disagree on the definition of 'capitalism.' We don't have capitalism now, we have a mixed economy with partial capitalism. > the Great Depression. Sound money caused that. I completely disagree. This is but one theory, and I don't think it's a good one. > It was a mixed bag, because the hyperinflation wiped out a lot of debts. Hyperinflation = no debts, but also no savings. So only the very wealthy with large portfolios in real estate or industry could survive financially. Everyone else reduced to poverty. (Granted, I'm no expert on Weimar history, so if that's not exactly accurate, I welcome corrections.)
- QuesnayJr 7y ago
  Sound money destroys entrepreneurialism. Rather than investors taking risks to ensure a return for the future, they rely on the government to create risk-free investments for them. The German economy recovered from hyperinflation, and was booming by the end of the twenties, only to be taken down by the Great Depression. Under Hitler, they abandoned the gold standard, and their economy recovered.