4 ms·
Which gold standard? Bretton woods wasn’t it (only state actors could redeem). Literally the history of boom and busts are from the excesses of money printing.
by jonkho 5y ago
Which gold standard? Bretton woods wasn’t it (only state actors could redeem). Literally the history of boom and busts are from the excesses of money printing.
- pjc50 5y agoYou have your causality backwards, check the dates: https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102 The US went off the gold standard in 1933 because of the crash of 1929, which (obviously) happened under the gold standard. It was part of an extreme but ultimately successful project to re-mobilize the economy. Although the dramatic federally-directed transformation seems to have left a lot of scars on US politics.
- jonkho 5y ago1929 was caused by excess credit issuance. True, that the gold standard was in place, but the spirit to keep credit in check was not. The federal reserve already existed, so this excess was made possible by their control of credit.
- WanderPanda 5y agoWhich makes me think that a gold standard has to always come with proper education about IoUs etc. Bubbles are only bad if people are deceived, because the proper way of riding a bust out by doing nothing (creative destruction) is too painful and may lead to political extremism.
- imtringued 5y agoWith a reserve currency like the USD the bust only happens in the USA while the boom happens outside of it.
- spiralx 5y agoWhich is why the US has been trying to discourage the use of the dollar as a reserve currency for well over a decade now. There are no real upsides to being a reserve currency (i.e. the strength of the dollar is because of the size and strength of the US economy, not because it is a reserve currency), and a big downside: financial problems around the world lead to the buying of dollars, causing the price to go up which makes imports more expensive and costs for American businesses and consumers to go up. https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-dollars-international-role-an-exorbitant-privilege-2/ https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-d...
- pyuser583 5y agoI’m sorry could expound on the idea that the whole history of book and bust isn’t because of excess money printing? That doesn’t sound right.
- jonkho 5y agoI’m saying the history of boom and bust is from excessive money printing, and later on from the contraction of the money supply.
- pjc50 5y agoIf you can actually prove this among all the competing explanations you can collect your Sveriges Riksbank Prize in Economic Sciences forthwith. It's not as simple as that. https://en.wikipedia.org/wiki/Business_cycle#Proposed_explanations https://en.wikipedia.org/wiki/Business_cycle#Proposed_explan...
- jonkho 5y agoThat’s appealing to authority. “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”
- sudosysgen 5y agoYou can at least try. My salary doesn't depend on it. So far no one has been able to provide real proof or empirical evidence, only theories from assumptions we know are not accurate.
- imtringued 5y agoBoom and bust is just a product of collective optimism and pessimism. It's purely man made. Of course our money system is designed to appeal to human irrationality so it's part of the problem. A gold standard just makes human nature worse for no real reason. Money is just paper. It holds no intrinsic value. The value exists in the economy of the US. Holding onto USD does not contribute to the economy of the US. So what's wrong with devaluing it? If money were to appreciate you would get value out of nothing. People would start competing for the value out of nothing until there is no real economy anymore.