4 ms·

It doesn't really need much of a counterpoint, given how silly it is. Regarding the USD, the same doom cults say the same things during every major global prob

It doesn't really need much of a counterpoint, given how silly it is. Regarding the USD, the same doom cults say the same things during every major global problem / event / disaster going back generations. The dollar was supposed to go away with the great recession; the dollar was supposed to go away with the intense inflatation of the 1970s; the dollar was supposed to go away with Nixon's abandonment of what was left of the gold standard; the dollar was supposed to be doomed with FDR's various moves. There is zero evidence the dollar is under meaningful risk here. It's fine to utilize gold as a store of value, there is absolutely nothing wrong with that. And that's an entirely different matter than whether governments will abandon their fiat currencies. The US, Eurozone, China, Japan, Russia, India and so on have absolutely no interest or willingness to give up control of their present fiat + central bank systems. They dictate whether fiat money is doomed or not, via their enforcenment capabilities. Take one blatant example. Russia has de-dollarized itself heavily, has accumulated a lot of gold lately (relatively speaking), and still has zero interest in giving up the power, flexibility and convenience that controlling the national fiat currency provides. For Russia, gold is just a diversification opportunity that backstops some of their national financial condition. The same is true for China, another accumulator of gold reserves.

roenxi 7y ago
> the dollar was supposed to go away with Nixon's abandonment of what was left of the gold standard; the dollar was supposed to be doomed with FDR's various moves. The value of the dollar in 1968 was - roughly - (1/40)th of an ounce of gold. The dollar today is roughly (1/1660)th of an ounce of gold. That is a >95% reduction in value over less than a lifetime. The people who argued the dollar was going to undergo intense inflation would probably be confused about why people argue they were wrong. Some of the young ones (~30 in the 1970s) are probably still alive to argue that point although not on HN. Anyone who stuck with gold rather than dollars when Nixon closed the gold window has been making ~7.7% per annum nominal investment return from holding on to a rock.
- AnimalMuppet 7y ago
  Yes, but wasn't gold still pegged to the dollar in 1968? That means that the comparison is artificial, because none of the inflation from 1935 (or whenever the price was set to $35/oz) to 1968 has been allowed to show up in the gold price.
  - roenxi 7y ago
    People were saying that moving off the gold standard would destroy the value of the dollar. They were not incorrect. After moving off the peg the dollar has effectively lost all its value. The major thing they got wrong was thinking that people would stop using it after it lost whatever % of its value it did. 97% or somesuch so far. Turns out not.
    - AnimalMuppet 7y ago
      I would say that the dollar had already lost a bunch of its value by 1968. It's just that the gold peg hid that when you measure the value of the dollar in gold. But if you look at inflation during the 1950s, the dollar was losing value then as well. Now, sure, the dollar lost a lot of value between 1968 and now. I don't deny it. But it also lost value between 1935 and 1968. Measuring the value of the dollar in terms of gold makes it look like all that happened after 1968, which makes the rate look higher than it actually was.
      - Rury 7y ago
        You have to fairly compare time frames. If you're going to compare 1935 to now for dollars, then you need to also do so for gold. But regardless, when people say "collapse of the dollar", they're not necessarily saying the dollar is going to vanish. They're saying it's going to lose its value. Whichever part of history you look at, history shows it's a poor store of value as we just print more of it than goods. Nearly any asset is going to look good next to it if we continue the status quo...
      - roenxi 7y ago
        It was about ~$20/oz when it started around 1900 and the government claimed ~$35/oz at the end. That is about 50% value loss, maybe a bit worse, in the 70 years of the gold standard. $35 to $1,650 looks a lot more like a collapse in value. And that is after the demand for gold presumably plummeted because it wasn't official money any more, and mining got a lot more efficient through the 70s to the 90s. Maybe the Asians made up for that with new wealth and demand or something. If I'd been alive in 1970s, arguing that the dollar would collapse in value, I wouldn't feel like I'd lost the argument looking at how history played out. I'd probably have gotten the timeframe wrong, but the mechanisms are playing out as expected. The thing that really stuns me is that countries are willing to hold US dollars as a reserve currency. It is a terrible move for value preservation. They aren't aiming to maximise their savings. [0] https://en.wikipedia.org/wiki/History_of_the_United_States_dollar#Gold_standard https://en.wikipedia.org/wiki/History_of_the_United_States_d...
- hydraxis 7y ago
  Except that the dollar typically paid an interest rate in the interval while the gold did not: https://www.macrotrends.net/2015/fed-funds-rate-historical-chart https://www.macrotrends.net/2015/fed-funds-rate-historical-c...
  - roenxi 7y ago
    It gets a bit awkward there because the interest return is afaik taxed as it is earned through income taxes while the gold return is capital and taxed at sale. I know in Australia if you are looking for wealth preservation it is a hands-down win for gold but I don't know enough about the US tax system to comment on what would happen. I suspect the returns are a lot less rosy and it turns out most of the real wealth ends up being transferred to the government.

roenxi 7y ago

> the dollar was supposed to go away with Nixon's abandonment of what was left of the gold standard; the dollar was supposed to be doomed with FDR's various moves. The value of the dollar in 1968 was - roughly - (1/40)th of an ounce of gold. The dollar today is roughly (1/1660)th of an ounce of gold. That is a >95% reduction in value over less than a lifetime. The people who argued the dollar was going to undergo intense inflation would probably be confused about why people argue they were wrong. Some of the young ones (~30 in the 1970s) are probably still alive to argue that point although not on HN. Anyone who stuck with gold rather than dollars when Nixon closed the gold window has been making ~7.7% per annum nominal investment return from holding on to a rock.

AnimalMuppet 7y ago
Yes, but wasn't gold still pegged to the dollar in 1968? That means that the comparison is artificial, because none of the inflation from 1935 (or whenever the price was set to $35/oz) to 1968 has been allowed to show up in the gold price.
- roenxi 7y ago
  People were saying that moving off the gold standard would destroy the value of the dollar. They were not incorrect. After moving off the peg the dollar has effectively lost all its value. The major thing they got wrong was thinking that people would stop using it after it lost whatever % of its value it did. 97% or somesuch so far. Turns out not.
  - AnimalMuppet 7y ago
    I would say that the dollar had already lost a bunch of its value by 1968. It's just that the gold peg hid that when you measure the value of the dollar in gold. But if you look at inflation during the 1950s, the dollar was losing value then as well. Now, sure, the dollar lost a lot of value between 1968 and now. I don't deny it. But it also lost value between 1935 and 1968. Measuring the value of the dollar in terms of gold makes it look like all that happened after 1968, which makes the rate look higher than it actually was.
    - Rury 7y ago
      You have to fairly compare time frames. If you're going to compare 1935 to now for dollars, then you need to also do so for gold. But regardless, when people say "collapse of the dollar", they're not necessarily saying the dollar is going to vanish. They're saying it's going to lose its value. Whichever part of history you look at, history shows it's a poor store of value as we just print more of it than goods. Nearly any asset is going to look good next to it if we continue the status quo...
    - roenxi 7y ago
      It was about ~$20/oz when it started around 1900 and the government claimed ~$35/oz at the end. That is about 50% value loss, maybe a bit worse, in the 70 years of the gold standard. $35 to $1,650 looks a lot more like a collapse in value. And that is after the demand for gold presumably plummeted because it wasn't official money any more, and mining got a lot more efficient through the 70s to the 90s. Maybe the Asians made up for that with new wealth and demand or something. If I'd been alive in 1970s, arguing that the dollar would collapse in value, I wouldn't feel like I'd lost the argument looking at how history played out. I'd probably have gotten the timeframe wrong, but the mechanisms are playing out as expected. The thing that really stuns me is that countries are willing to hold US dollars as a reserve currency. It is a terrible move for value preservation. They aren't aiming to maximise their savings. [0] https://en.wikipedia.org/wiki/History_of_the_United_States_dollar#Gold_standard https://en.wikipedia.org/wiki/History_of_the_United_States_d...
hydraxis 7y ago
Except that the dollar typically paid an interest rate in the interval while the gold did not: https://www.macrotrends.net/2015/fed-funds-rate-historical-chart https://www.macrotrends.net/2015/fed-funds-rate-historical-c...
- roenxi 7y ago
  It gets a bit awkward there because the interest return is afaik taxed as it is earned through income taxes while the gold return is capital and taxed at sale. I know in Australia if you are looking for wealth preservation it is a hands-down win for gold but I don't know enough about the US tax system to comment on what would happen. I suspect the returns are a lot less rosy and it turns out most of the real wealth ends up being transferred to the government.