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I personally would love to see the Federal Reserve make the USD a more attractive store of wealth by bringing back some sort of gold standard. Once I bring up t

I personally would love to see the Federal Reserve make the USD a more attractive store of wealth by bringing back some sort of gold standard. Once I bring up the gold standard people kinda react like I'm some nut. I really don't understand why people think having a gold standard is such a backwards idea. Bitcoin's rise is an example of what happens to an asset when there is a fixed supply.

DennisP 6y ago
Actually neither gold nor Bitcoin has a fixed supply. The gold supply increases by about 2.5% annually, and Bitcoin by 1.8%. Bitcoin's inflation will gradually decrease and it has an ultimate limit that will be reached in 2140, and gold will reach some limit if we don't start mining asteroids for it, but I don't think either limit is economically relevant today.
- matheusmoreira 6y ago
  > Actually neither gold nor Bitcoin has a fixed supply. It does. There's an upper limit to how many bitcoins can be mined. We haven't reached this limit yet but it will eventually happen.
  - SpicyLemonZest 6y ago
    Which was acknowledged, but it's not clear why that upper limit would be relevant to economic decisions today. Nobody's investing today based on predictions of exactly what the world will look like in 2140; they're making predictions over at most a couple decades, and over that period the Bitcoin supply will see a significant continual increase.
    - imhoguy 6y ago
      By that time we either break SHA256 or burn the entire planet to fuel the virtual greed.
    - bitxbitxbitcoin 6y ago
      How significant is it really? There will be less than 15% change in the total supply and the majority of that actually will happen in the next few decades.
      - SpicyLemonZest 6y ago
        If you ask me personally, I'm not convinced the number of base units in existence is an important metric for any currency. (In the US dollar for example, this is called the "monetary base", and neither fans nor detractors of American monetary policy point to it very often.) It's just an illustration of the fact that the value of Bitcoin can't come deterministically from its restricted supply - if it did, that 15% supply increase would equate to a 13% loss for all holders.
      - tromp 6y ago
        I try to answer that in https://john-tromp.medium.com/a-case-for-using-soft-total-supply-1169a188d153 https://john-tromp.medium.com/a-case-for-using-soft-total-su...
  - deleted 6y ago
    [deleted]
- fasteddie31003 6y ago
  Bitcoin's supply will be logarithmic where as gold will increase linearly. In the long run that makes a big difference. I'd take linear or logarithm supply over the exponential USD supply that we are currently seeing https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
  - SpicyLemonZest 6y ago
    As is noted under the graph, this big spike comes from a redefinition of the underlying metric, not an organic increase.
    - fasteddie31003 6y ago
      Just read that. This redefinition is so dumb. This metric is now worthless for statistic models.
      - SpicyLemonZest 6y ago
        Can't argue with you there.
sschueller 6y ago
The problem is that countries tend to lie about how much gold they actually have. In 1965 the French wanted their gold in exchange for the dollars they had and others followed but then in 1971 Nixon moved the US off the gold standard. It was supposed to be temporary but ended up permanent.
dkjaudyeqooe 6y ago
Having a gold standard is backward because you tie the value of your currency to an arbitrary asset that changes in value for reasons other than the attractiveness of your currency. It means for instance that the value of your currency goes down because people dig more gold bearing dirt out of the ground. Or maybe some better thing that replaces gold is discovered or made and your currency is suddenly worthless. The reason people think gold is a good idea is because they think money should have some sort of absolute or immutable value (your 'fixed supply'), because they do so much real work to earn it, but money, like any other asset, is worth what people will pay (or give) for it, or in other words, what you can buy with it. Like everything else money is subject to the laws of demand and supply. That's driven by the US economy (and others) and the Fed. You have to have faith that the Fed knows what they are doing, at least more so than a bunch of gold miners mostly in Australia and Canada.

DennisP 6y ago

Actually neither gold nor Bitcoin has a fixed supply. The gold supply increases by about 2.5% annually, and Bitcoin by 1.8%. Bitcoin's inflation will gradually decrease and it has an ultimate limit that will be reached in 2140, and gold will reach some limit if we don't start mining asteroids for it, but I don't think either limit is economically relevant today.

matheusmoreira 6y ago
> Actually neither gold nor Bitcoin has a fixed supply. It does. There's an upper limit to how many bitcoins can be mined. We haven't reached this limit yet but it will eventually happen.
- SpicyLemonZest 6y ago
  Which was acknowledged, but it's not clear why that upper limit would be relevant to economic decisions today. Nobody's investing today based on predictions of exactly what the world will look like in 2140; they're making predictions over at most a couple decades, and over that period the Bitcoin supply will see a significant continual increase.
  - imhoguy 6y ago
    By that time we either break SHA256 or burn the entire planet to fuel the virtual greed.
  - bitxbitxbitcoin 6y ago
    How significant is it really? There will be less than 15% change in the total supply and the majority of that actually will happen in the next few decades.
    - SpicyLemonZest 6y ago
      If you ask me personally, I'm not convinced the number of base units in existence is an important metric for any currency. (In the US dollar for example, this is called the "monetary base", and neither fans nor detractors of American monetary policy point to it very often.) It's just an illustration of the fact that the value of Bitcoin can't come deterministically from its restricted supply - if it did, that 15% supply increase would equate to a 13% loss for all holders.
    - tromp 6y ago
      I try to answer that in https://john-tromp.medium.com/a-case-for-using-soft-total-supply-1169a188d153 https://john-tromp.medium.com/a-case-for-using-soft-total-su...
- deleted 6y ago
  [deleted]
fasteddie31003 6y ago
Bitcoin's supply will be logarithmic where as gold will increase linearly. In the long run that makes a big difference. I'd take linear or logarithm supply over the exponential USD supply that we are currently seeing https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
- SpicyLemonZest 6y ago
  As is noted under the graph, this big spike comes from a redefinition of the underlying metric, not an organic increase.
  - fasteddie31003 6y ago
    Just read that. This redefinition is so dumb. This metric is now worthless for statistic models.
    - SpicyLemonZest 6y ago
      Can't argue with you there.

sschueller 6y ago

The problem is that countries tend to lie about how much gold they actually have. In 1965 the French wanted their gold in exchange for the dollars they had and others followed but then in 1971 Nixon moved the US off the gold standard. It was supposed to be temporary but ended up permanent.

dkjaudyeqooe 6y ago

Having a gold standard is backward because you tie the value of your currency to an arbitrary asset that changes in value for reasons other than the attractiveness of your currency. It means for instance that the value of your currency goes down because people dig more gold bearing dirt out of the ground. Or maybe some better thing that replaces gold is discovered or made and your currency is suddenly worthless. The reason people think gold is a good idea is because they think money should have some sort of absolute or immutable value (your 'fixed supply'), because they do so much real work to earn it, but money, like any other asset, is worth what people will pay (or give) for it, or in other words, what you can buy with it. Like everything else money is subject to the laws of demand and supply. That's driven by the US economy (and others) and the Fed. You have to have faith that the Fed knows what they are doing, at least more so than a bunch of gold miners mostly in Australia and Canada.