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Interesting to see the periods of deflation in the 1800’s. I believe the US was on a mixed gold and silver standard at the time and they periodically ran into

Interesting to see the periods of deflation in the 1800’s. I believe the US was on a mixed gold and silver standard at the time and they periodically ran into silver production issues.

jcadam 5y ago
We should move to a lumber-backed currency.
- airhead969 5y ago
  Increasing forest fires would boost the value, but then watch-out for those damn illegal tree farms printing their own money.
- FredPret 5y ago
  You mean like… a greenback?
- mywittyname 5y ago
  I think this is a joke, but Virginia had Tobacco-based currency in colonial times. It was just as terrible as one would think. In surplus years, a family could spend their life savings on essentials to get them through the next season, to be left with nothing when prices spiked the next year.
cronix 5y ago
We were on the gold standard (Bretton Woods system) that was established after WWII until Nixon ended it in 1971 when countries started to demand gold as payment from the Federal Reserve Banks instead of US Dollars because they didn't believe America could pay its debt due to spending more than it collected in taxes, and they were correct. We've been deficit spending ever since to pay for all of our toys. We owe more now than at any other time in our history. No country that has gone to a fiat currency system at any time in world history has lasted. It was probably the worst thing that Nixon did to this country, but we only talk about the other bad thing he did. https://www.federalreservehistory.org/essays/gold-convertibility-ends https://www.federalreservehistory.org/essays/gold-convertibi...
- FredPret 5y ago
  I think the price of silver was fixed in terms of gold as well. However, today, we have more economic activity than we have gold. If we went back to gold standard, we’d either literally not have enough money, or the price of gold would be artificially inflated far above its current free market valuation. Not to say that the deficit isn’t a ticking time bomb, but we need another solution for politically expedient overspending.
  - insert_coin 5y ago
    In a gold standard the price of gold would not be 'above its free market valuation' but it would be the market valuation, taking into account its rediscovered monetary role. In a gold standard the currency used would still be the dollar, just backed by gold, so the FED would be able to print it into the dust just the same. The money supply could still expand just as it does now to accommodate for growth, but the main difference is the rest of the world wouldn't be subsidizing the US any longer.
  - cronix 5y ago
    But what happens to the price of a finite resource when demand rises? That's not an artificial increase...that is the free market valuation. It's not really different than the price of the finite pool of bitcoin. Demand soars and so does the price and the opposite happens when demand is reduced.
    - FredPret 5y ago
      Yes but this newfound demand for gold will be based entirely on a government regulation, making it artificial. If the market naturally desired enough gold to back every transaction, the price would skyrocket right now
      - ClumsyPilot 5y ago
        The lack of demand for gold is based on artificial trust in artificial dollar. We still had private currencies in 1900's, where the issing bank would go bust and the paper woupd become worthless.

Interesting to see the periods of deflation in the 1800’s. I believe the US was on a mixed gold and silver standard at the time and they periodically ran into silver production issues.

jcadam 5y ago

We should move to a lumber-backed currency.

airhead969 5y ago
Increasing forest fires would boost the value, but then watch-out for those damn illegal tree farms printing their own money.
FredPret 5y ago
You mean like… a greenback?
mywittyname 5y ago
I think this is a joke, but Virginia had Tobacco-based currency in colonial times. It was just as terrible as one would think. In surplus years, a family could spend their life savings on essentials to get them through the next season, to be left with nothing when prices spiked the next year.

cronix 5y ago

We were on the gold standard (Bretton Woods system) that was established after WWII until Nixon ended it in 1971 when countries started to demand gold as payment from the Federal Reserve Banks instead of US Dollars because they didn't believe America could pay its debt due to spending more than it collected in taxes, and they were correct. We've been deficit spending ever since to pay for all of our toys. We owe more now than at any other time in our history. No country that has gone to a fiat currency system at any time in world history has lasted. It was probably the worst thing that Nixon did to this country, but we only talk about the other bad thing he did. https://www.federalreservehistory.org/essays/gold-convertibility-ends https://www.federalreservehistory.org/essays/gold-convertibi...

FredPret 5y ago
I think the price of silver was fixed in terms of gold as well. However, today, we have more economic activity than we have gold. If we went back to gold standard, we’d either literally not have enough money, or the price of gold would be artificially inflated far above its current free market valuation. Not to say that the deficit isn’t a ticking time bomb, but we need another solution for politically expedient overspending.
- insert_coin 5y ago
  In a gold standard the price of gold would not be 'above its free market valuation' but it would be the market valuation, taking into account its rediscovered monetary role. In a gold standard the currency used would still be the dollar, just backed by gold, so the FED would be able to print it into the dust just the same. The money supply could still expand just as it does now to accommodate for growth, but the main difference is the rest of the world wouldn't be subsidizing the US any longer.
- cronix 5y ago
  But what happens to the price of a finite resource when demand rises? That's not an artificial increase...that is the free market valuation. It's not really different than the price of the finite pool of bitcoin. Demand soars and so does the price and the opposite happens when demand is reduced.
  - FredPret 5y ago
    Yes but this newfound demand for gold will be based entirely on a government regulation, making it artificial. If the market naturally desired enough gold to back every transaction, the price would skyrocket right now
    - ClumsyPilot 5y ago
      The lack of demand for gold is based on artificial trust in artificial dollar. We still had private currencies in 1900's, where the issing bank would go bust and the paper woupd become worthless.