6 ms·

Well, in a gold-backed world, we had frequent but small bubbles that corrected inefficient economic activity relatively quickly. In a post-gold-backed world, we

Well, in a gold-backed world, we had frequent but small bubbles that corrected inefficient economic activity relatively quickly. In a post-gold-backed world, we have less frequent but much much larger bubbles that result in devastating economic crises. Is that really the stability you want? With modern economic knowledge, technology, and techniques, a gold-backed dollar could be quite a bit more stable than it was in the 1800s, don't you agree? But we don't have to go back to gold to fix this problem. The problem is not gold or not gold. The problem is massive monetary inflation. That can be solved without going back to gold backing. What gold-backing did was create a culture that believed in a limited money supply. When we destroyed that culture, we created the problem.

notahacker 5y ago
Has it not occurred to you that it's precisely the modern economic knowledge, technology and techniques that have driven us away from gold backed dollars or trying to fix the money supply (and float the interest rate or crash the banks)? I mean, macroeconomists have spent the majority of the last century proposing and carrying out natural experiments on different monetary policies: if they've moved from being almost universally in favour of the Gold Standard to almost universally against it, that's not evidence that what we've actually learned is how to make a Gold Standard work. And no, our post-gold standard economic crises have not been proportionally more devastating than the Great Depression, or taken as long to rectify as the Long Depression, and I don't long for that kind of "stability"
- billytetrud 5y ago
  > Has it not occurred to you that it's precisely the modern economic knowledge, technology and techniques that have driven us away from gold backed dollars It hasn't because its patently false. Both the gold confiscation in 1931 and cutting the cord of gold-backing in 1971 were both done as desparately rushed moves to reneg on the governments promise to uphold the value of the dollar. These weren't thoughtful reasoned well discussed actions. It had nothing to do with technology or best practices. It was a purely a politically expedient way to prevent collapse of an insolvent dollar. > macroeconomists have spent the majority of the last century proposing and carrying out natural experiments You don't run experiments in macroeconomics. Controls are impossible. And studies have so many confounding variables that any conclusions we come to are many orders of magnitude less certain than anything in the hard sciences. > our post-gold standard economic crises have not been proportionally more devastating than the Great Depression You must have misunderstood me. I never said any such thing.
  - dnautics 5y ago
    Iirc our post gold standard crises have been nominally at least near as bad as the great depression. Of course we have much,much better infrastructure, healthcare, communication, etc, which economists tend not to take into account for how there aren't a starving people dying in the streets. None of that matters, it's all the stewardship of the fed.
    - billytetrud 5y ago
      I'd love to see that analysis if you can find the source.
  - notahacker 5y ago
    > It hasn't because its patently false. Both the gold confiscation in 1931 and cutting the cord of gold-backing in 1971 were both done as desparately rushed moves to reneg on the governments promise to uphold the value of the dollar. These weren't thoughtful reasoned well discussed actions. It had nothing to do with technology or best practices. It was a purely a politically expedient way to prevent collapse of an insolvent dollar. I take it you haven't read any mainstream macroeconomic analysis written over the course of the past century, the theory, analytical techniques and predictions which informs modern central banking practices. I have. It is certainly not patently false to suggest that there has been plenty of discussion and implementation of newer ideas, an enormous amount of focus on the dynamic of inflation, and the result is very few economists seeing any sense in the notion that the optimum quantity of money to support the growth of the United States happens to coincide with fluctuations in world gold output. But even aside from the actual theory and techniques, part of the knowledge base is simply concluding that if it was necessary break a system to prevent the collapse of an insolvent dollar, it is probably best not to attempt to recreate that state of economic affairs. > You don't run experiments in macroeconomics. Controls are impossible. And studies have so many confounding variables that any conclusions we come to are many orders of magnitude less certain than anything in the hard sciences. We agree it's not a hard science, and that natural experiments are very difficult (they are especially difficult when a proposal like "maybe we should try to ensure a particular USD aggregate stays at a certain level, and raise interest rates as high as necessary to keep it at that level" results in mass unemployment. When "maybe we should fix the interest rates instead" turns out to result in inflation remaining within predictable ranges for the next three decades, it is even harder to recommend the former policy). Similarly, if the Gold Standard fails to deliver the stability it promises, and then its vociferous minority of advocates promise hyperinflation is around the corner every year for decades without ever being right, new theories which accurately predict inflation take over. > I never said any such thing. I may have misunderstood you. If we agree that the Great Depression and Long Depression were examples of significant economic crises in addition to periodic smaller financial panics and forced devaluations, we agree. I see that as a pretty good indication our current financial crises are less worse, especially given our current policy framework gives us tools other than "wait it out" to ameliorate the suffering.

notahacker 5y ago

Has it not occurred to you that it's precisely the modern economic knowledge, technology and techniques that have driven us away from gold backed dollars or trying to fix the money supply (and float the interest rate or crash the banks)? I mean, macroeconomists have spent the majority of the last century proposing and carrying out natural experiments on different monetary policies: if they've moved from being almost universally in favour of the Gold Standard to almost universally against it, that's not evidence that what we've actually learned is how to make a Gold Standard work. And no, our post-gold standard economic crises have not been proportionally more devastating than the Great Depression, or taken as long to rectify as the Long Depression, and I don't long for that kind of "stability"

billytetrud 5y ago
> Has it not occurred to you that it's precisely the modern economic knowledge, technology and techniques that have driven us away from gold backed dollars It hasn't because its patently false. Both the gold confiscation in 1931 and cutting the cord of gold-backing in 1971 were both done as desparately rushed moves to reneg on the governments promise to uphold the value of the dollar. These weren't thoughtful reasoned well discussed actions. It had nothing to do with technology or best practices. It was a purely a politically expedient way to prevent collapse of an insolvent dollar. > macroeconomists have spent the majority of the last century proposing and carrying out natural experiments You don't run experiments in macroeconomics. Controls are impossible. And studies have so many confounding variables that any conclusions we come to are many orders of magnitude less certain than anything in the hard sciences. > our post-gold standard economic crises have not been proportionally more devastating than the Great Depression You must have misunderstood me. I never said any such thing.
- dnautics 5y ago
  Iirc our post gold standard crises have been nominally at least near as bad as the great depression. Of course we have much,much better infrastructure, healthcare, communication, etc, which economists tend not to take into account for how there aren't a starving people dying in the streets. None of that matters, it's all the stewardship of the fed.
  - billytetrud 5y ago
    I'd love to see that analysis if you can find the source.
- notahacker 5y ago
  > It hasn't because its patently false. Both the gold confiscation in 1931 and cutting the cord of gold-backing in 1971 were both done as desparately rushed moves to reneg on the governments promise to uphold the value of the dollar. These weren't thoughtful reasoned well discussed actions. It had nothing to do with technology or best practices. It was a purely a politically expedient way to prevent collapse of an insolvent dollar. I take it you haven't read any mainstream macroeconomic analysis written over the course of the past century, the theory, analytical techniques and predictions which informs modern central banking practices. I have. It is certainly not patently false to suggest that there has been plenty of discussion and implementation of newer ideas, an enormous amount of focus on the dynamic of inflation, and the result is very few economists seeing any sense in the notion that the optimum quantity of money to support the growth of the United States happens to coincide with fluctuations in world gold output. But even aside from the actual theory and techniques, part of the knowledge base is simply concluding that if it was necessary break a system to prevent the collapse of an insolvent dollar, it is probably best not to attempt to recreate that state of economic affairs. > You don't run experiments in macroeconomics. Controls are impossible. And studies have so many confounding variables that any conclusions we come to are many orders of magnitude less certain than anything in the hard sciences. We agree it's not a hard science, and that natural experiments are very difficult (they are especially difficult when a proposal like "maybe we should try to ensure a particular USD aggregate stays at a certain level, and raise interest rates as high as necessary to keep it at that level" results in mass unemployment. When "maybe we should fix the interest rates instead" turns out to result in inflation remaining within predictable ranges for the next three decades, it is even harder to recommend the former policy). Similarly, if the Gold Standard fails to deliver the stability it promises, and then its vociferous minority of advocates promise hyperinflation is around the corner every year for decades without ever being right, new theories which accurately predict inflation take over. > I never said any such thing. I may have misunderstood you. If we agree that the Great Depression and Long Depression were examples of significant economic crises in addition to periodic smaller financial panics and forced devaluations, we agree. I see that as a pretty good indication our current financial crises are less worse, especially given our current policy framework gives us tools other than "wait it out" to ameliorate the suffering.