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>since a smaller percentage would still prevent a country from printing new currency out of thin air. When people argue against bitcoin, they say that limiting

>since a smaller percentage would still prevent a country from printing new currency out of thin air. When people argue against bitcoin, they say that limiting the supply is a source of deflation and that deflation is risky for a currency. Money can be used to store value but first of all, it is meant to exchange value. Don't you kill your economy with such a supply-limited currency since your economy cannot grow beyond your ability of acquiring gold?

mark_l_watson 7y ago
New gold is being mined constantly. I never liked the idea of a 100% gold backed currency, but 20% sounds OK. If new money is not printed out of thin air, it seems like prices for things would adjust. Slowly increasing money supply, faster growing productivity/goods/services would mean that prices would go up to keep things balanced. I am not an expert in this subject but it interests me.
- AnimalMuppet 7y ago
  Per Wikipedia, there are 187,000 tons of gold above ground, and about 2000 tons are mined a year. That's about 1%. If all the gold was used to support currencies, mining would only let you increase the currency supply by 1% a year. If the economy is growing by more than 1% a year, then the currency has to be deflating. But all the gold isn't being used to support currencies. So here's a different scenario: A currency is 20% supported by gold. We need, because reasons, to increase the currency supply. 2000 tons of gold is 4 million pounds, which is 48 million (troy) ounces. Gold is $1500/ounce at the moment, which gives us $72 billion of gold mined in a year. That lets one country use the whole world's mining to create $360 billion of currency in a year. Well, in 2008, the US created $4 trillion to keep the economy from collapsing. So mining isn't going to let you prevent deflationary collapse when you need to.
  - mark_l_watson 7y ago
    Thanks, I understand your point. Without a doubt short term, it is good to be able to inflate the currency when there is a 2007/2008 event. But the counter argument is that making many ‘best for the short term decisions’ can cause more damage in the long run. Do we want the best world for our lifetime, or plan for something that is sustainable so our grandchildren’s children will have a great life. Native American Indians believe that major decisions should be made for what is best for the seventh generation after them.

mark_l_watson 7y ago

New gold is being mined constantly. I never liked the idea of a 100% gold backed currency, but 20% sounds OK. If new money is not printed out of thin air, it seems like prices for things would adjust. Slowly increasing money supply, faster growing productivity/goods/services would mean that prices would go up to keep things balanced. I am not an expert in this subject but it interests me.

AnimalMuppet 7y ago
Per Wikipedia, there are 187,000 tons of gold above ground, and about 2000 tons are mined a year. That's about 1%. If all the gold was used to support currencies, mining would only let you increase the currency supply by 1% a year. If the economy is growing by more than 1% a year, then the currency has to be deflating. But all the gold isn't being used to support currencies. So here's a different scenario: A currency is 20% supported by gold. We need, because reasons, to increase the currency supply. 2000 tons of gold is 4 million pounds, which is 48 million (troy) ounces. Gold is $1500/ounce at the moment, which gives us $72 billion of gold mined in a year. That lets one country use the whole world's mining to create $360 billion of currency in a year. Well, in 2008, the US created $4 trillion to keep the economy from collapsing. So mining isn't going to let you prevent deflationary collapse when you need to.
- mark_l_watson 7y ago
  Thanks, I understand your point. Without a doubt short term, it is good to be able to inflate the currency when there is a 2007/2008 event. But the counter argument is that making many ‘best for the short term decisions’ can cause more damage in the long run. Do we want the best world for our lifetime, or plan for something that is sustainable so our grandchildren’s children will have a great life. Native American Indians believe that major decisions should be made for what is best for the seventh generation after them.