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> The world used gold/silver for its currency for most of human history until 1970 when we entered this period of worldwide fiat currencies. Our current situati
by foerbert 6y ago
> The world used gold/silver for its currency for most of human history until 1970 when we entered this period of worldwide fiat currencies. Our current situation is pretty remarkable.
This much is patently false, and probably even still false once you account for the accepted exaggeration in most appeals to the entirety of human history.
There was no unified monetary system for the vast majority of human history, never mind one based on gold and silver.
And for the smaller, more recent portion of human history it is again probably largely untrue. I'd point to Debt: The First 5000 Years by David Graeber [0]. I'm sure many people have many opinions on the work, particularly around these parts, but I believe it at least does a good job of refuting this particular statement.
[0]https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
- JohnJamesRambo 6y agohttps://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/ I realize some of these graphs may be coincidences but it makes a compelling case for me in understanding our current wealth inequality. When you can create money backed by nothing, those closest to the printer will know best how to funnel it into their pockets.
- api 6y agoWhen you have money backed by gold, those who have it benefit from its appreciation. Same is true of any deflationary currency. Wealth tends to flow uphill. Even in Communism the politically connected realized that wealth in that system was political capital and learned to position themselves to accumulate it. There is a reason the USSR collapsed and gave way to one of the most aristocratic states in the world. I don’t discount that site though. A lot more happened in or around the early 70s than just the collapse of Bretton Woods. I also don’t dismiss your comment as untrue. A fair inflationary currency would almost literally drop money from helicopters, not issue it to banks and governments. Still I imagine over time people would learn how to chase the helicopters. All systems will be gamed. No exceptions.
- jkhdigital 6y agoIndeed. There is a reason why the ancient Hebrew laws dictated that every 50 years all debts are wiped away and all assets returned to their hereditary owners.
- simonh 6y agoAll money is backed by nothing. The idea that the gold standard was pegged to some eternal constant of nature is a fantasy.
- hkt 6y agoActually, all money is backed by the available goods and services in an economy. It is a plate that spins itself.
- lotsofpulp 6y agoNo one is forced to give up their goods and services for any specific money. Money is “backed” by the trust that someone else will be willing to accept it at a later date for goods and services.
- hyko 6y agoWell, you’re forced to pay your taxes in specific money, so that’s one thing.
- symlinkk 6y agoIsn’t the point that gold is finite?
- UncleMeat 6y agoWe pull gold out of the ground all the time. It is finite only in theory.
- gher-shyu3i 6y agoIt's infinitely easier to print money at will, which is what keeps happening. Gold has intrinsic value for practically all of human existence.
- gruez 6y ago
- chii 6y agoThe alternative possible explanation, which is never mentioned, is the advent of electronic automation, and out-sourcing of labour.
- deleted 6y ago[deleted]
- BurningFrog 6y agoLabor has been constantly automated away since the start of the Industrial Revolution, ~250 years ago. It is how we all got immeasurably richer since then, while constantly fearing that all jobs will be automated away soon.
- judofyr 6y agoI don't get why people keep linking this page. How can you "understand" anything from a page which provides no analysis and presents numbers with no caveats? How can I trust that these charts aren't cherry picked?
- read_if_gay_ 6y agoThis criticism applies to anything that isn’t formal mathematical proof.
- judofyr 6y agoI asked for analysis and source assessment, none of which is part of a formal mathematical proof.
- read_if_gay_ 6y agoAnalysis can be misleading too.
- chmod775 6y agoI can understand being critical of this particular page, but more generally: > How can you "understand" anything from a page which provides no analysis and presents numbers with no caveats? Presumably because one is able to do one's own analysis and think for themselves. Everything starts out as raw numbers. > How can I trust that these charts aren't cherry picked? Can you ever?
- judofyr 6y ago> Can you ever? If we're talking "generally": Yes, we can trust that charts aren't cherry picked by reading the analysis. A proper analysis would include argumentation for why this metric is critical and why this chart is interesting.
- stevenwoo 6y agoWhat do you think of Capital and Ideology? Piketty posits some theories/hypothesis with caveats throughout and has a lot of data for certain countries and time periods, 75% of the book is history through the lens he is examining.
- refenestrator 6y agoThe New Deal political coalition was shattered in 1968 and we've had neoliberal politics since then which are indifferent to economic inequality. Inequality has unsurprisingly gone up. Blaming it on magic paper vs gold money to the exclusion of everything else seems like a red herring.
- donovanian 6y ago> The New Deal political coalition I have a hard time seeing the discontinuity between the New Deal people you're referencing and the 1960s Great Society ones that pretty much iterated on the same themes of the scientific management of society through monolithic institutions with expansive powers. It's pretty much relentless hubris with little to show and much to answer for.
- xxpor 6y agoGiven china's rise, it would seem the argument is that scientific management with expansive powers in the western world didn't actually go far enough.
- dnautics 6y agoSo if china suddenly collapses in the next couple of years will you retract your hypothesis?
- pessimizer 6y agoIf china suddenly grew legs and walked away, I'd rethink what I knew about animal life - but why deal in this particular counterfactual?
- dnautics 6y agoit's not. China is looking at a demographic collapse in the next few years that upends their running economic model and makes any future projections based on past history suspect. One of the ways out of demographic collapse is immigration, but somehow I don't see China's equivalent of US's Mexico/LatAM coming out of the global geopolitical woodwork. Immigration is simply not in China's DNA. Outside of immigration, no amount of "scientific management" or "good policy" will make 18-30 year-olds appear magically over the course of 5-10 years. Unless my understanding of biology is wrong and dolphins could sprout legs and walk on land, usually it takes 18-30 years. I'm willing to change my mind. What sort of an ace in its hole does china have to change this situation?
- marcosdumay 6y agoWhat is the arrow supposed to represent there? Nothing interesting seems to change at the arrow point, except for inflation.
- symlinkk 6y agoObviously it represents the point where productivity increased but real wages remained stagnant. I think you’re purposely pretending not to understand it though.
- colanderman 6y agoOn half those graphs the arrow points to an arbitrary "knee" on an exponential function. It's a graphical version of the Gish Gallop [1] and conspiracy-theory "it makes you think!" arguments. Explanation is definitely warranted. [1] https://rationalwiki.org/wiki/Gish_Gallop https://rationalwiki.org/wiki/Gish_Gallop
- marcosdumay 6y agoIt's some 2 to 4 years off the end of the correlation on that first graph.
- spiralx 6y agoExcept there are numerous flaws with the construction of that graph: https://economicsfromthetopdown.com/2020/01/17/debunking-the-productivity-pay-gap/ https://economicsfromthetopdown.com/2020/01/17/debunking-the...
- colanderman 6y agoOr... switching to a fiat system enabled the economy to expand faster than labor policy (minimum wage, maximum work week) has been able to keep up, enabling those at the top to exploit the gains. Ignoring that half those graphs are just arrows pointing to arbitrary knees in exponential functions, I couldn't find this one which, unlike most on that page, directly graphs an ongoing policy choice, minimum wage vs. productivity: https://i0.wp.com/chicagopolicyreview.org/wp-content/uploads/2020/08/MW-Productivity-copy-1.jpg https://i0.wp.com/chicagopolicyreview.org/wp-content/uploads...
- spiralx 6y agoIf you want a long debunking of that graph then read this: https://economicsfromthetopdown.com/2020/01/17/debunking-the-productivity-pay-gap/ https://economicsfromthetopdown.com/2020/01/17/debunking-the...
- Aunche 6y agoThe current wealth inequality is caused by the productivity gains being concentrated on a smaller population. One Amazon can provide goods far more efficiently than thousands small businesses.
- jkhdigital 6y agoI’d say this explains the 90/10 wealth gap. The 99.9/0.1 wealth gap stems from financialization and central bank-supported moral hazard.
- simo7 6y ago> When you can create money backed by nothing Isn't that what money really is about? Debt and money go together. When you take on debt your creditor can decide to sell his credit to somebody else, de facto using your promise to repay your debt as a currency. Isn't your promise...just a promise? Yet you can buy stuff with it?
- jkhdigital 6y agoFungible debt is a money substitute. The strictest definition of money would require that it has no counterparty.
- BEEdwards 6y agoKnow what happened earlier? Congress lost secret voting, https://www.congressionalresearch.org/Jumbotrons.html https://www.congressionalresearch.org/Jumbotrons.html I'm more of the opinion that our problem is hyper targeted lobbyist money...
- 127 6y agoRome had a money system based on silver and it was eventually debased. https://en.wikipedia.org/wiki/Denarius https://en.wikipedia.org/wiki/Denarius
- al3xandre 6y agoPlease. He obviously meant gold or gold-backed currencies. Which indeed ended in 1971 with Breton-Wood. Let’s be kind and “assume the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize.”
- jkhdigital 6y agoThe original article is itself an incredibly long-winded exercise in this kind of bad faith argument... also called a “straw man”. The final paragraphs make that clear, when they claim that the inflation fearmongering is just a front for anti-statists. So if that’s what this is all about, why not just write an article about the merits of a state-directed economy and dispense with the charade?
- gjm11 6y agoThat itself seems like a straw man. "Anti-statists" is your term -- neither "statist" nor "anti-statist" appears anywhere in the article. And it doesn't say anything at all about a "state-directed economy"; I'm not sure precisely what you mean by that but on the face of it it sounds like a Soviet-style command economy, which scarcely anyone wants (including, I think, Richard Murphy) and certainly isn't the only alternative to the sort of small-government right-libertarianism he seems to be complaining about. But let's suppose that what Murphy really wants is a "state-directed economy", and that he's concerned that opponents of that are making bad arguments about inflation to oppose it. In that case, why shouldn't he write an article explaining why he disagrees with the key premise of those arguments, namely that there's a real danger of problematically high inflation? It seems like the principle you're appealing to ("why not just ... and dispense with the charade?") is that if you want X, you should always just argue for X rather than addressing bad arguments against X. I think that principle is very wrong. People are often persuaded by bad arguments, and if someone has been persuaded by a bad argument against X then they will likely not listen willingly when you present your arguments for X. (Because they already know X is bad.) But if you write something about the specific argument they've been convinced by, they might pay attention, and you might convince them.
- mshron 6y ago
- BurningFrog 6y ago> There was no unified monetary system for the vast majority of human history, never mind one based on gold and silver. In case this is an honest misunderstanding: Pretty much every society in history used gold, silver, or some other rare natural resource. Of course there was never a global such system, but OP didn't mean to say that. https://en.wikipedia.org/wiki/History_of_money https://en.wikipedia.org/wiki/History_of_money
- foerbert 6y agoI'm not certain what you are referring to with that article. I don't see much that inherently and obviously supports your assertion. In fact it references the same book I mentioned earlier, which clearly talks about the lack of such systems in early societies. And of course, such societies dominate human history. If you want to talk about more modern well-recorded history, again I turn to the book mentioned. And there the simplest summation I can come up with is "yes, but no."
- luxuryballs 6y agoGold and silver have been money for thousands and thousands of years, that doesn’t mean it’s a unified monetary system, it was just a natural occurrence. Back when dimes were silver you could get a gallon of gas for about a dime. If you found a silver dime today and sold it for melt value you will get pretty close to being able to get a gallon of gas for that dime still!