6 ms·

US Gold Reserve Act

15 points by aazaa 5y ago

david927 5y ago
I used to be Keynesian and thought that inflation was a free tax that was also good for investment and growth. Now I understand that it leads inexorably to ruin. It creates a situation where you have to invest in markets, which removes the link to value, e.g. "the market always goes up." Growth investing is an oxymoron and just a variation of a Ponzi Scheme. We're at a watershed moment in modern history. In the coming months and years, countries will have to return to a gold standard and when they do, they will have to either limit gold sales, deeply penalize it, or just like in 1934, confiscate it. This has all happened before.
- randomopining 5y ago
  Bitcoin. You think people want to deal with the transfer of physical gold etc in this modern age?
  - david927 5y ago
    The same rules would apply to any competing currency, such as Bitcoin.
    - kayamon 5y ago
      Bitcoin is not a competing fiat currency, but a competing gold standard.
      - david927 5y ago
        That's exactly what I'm saying. It would be seen as a competing currency, like gold, and prohibited. Michael Burry tweeted this earlier this year, "Prepare for inflation. Re-opening & stimulus on the way. Pre-COVID it took $3 debt to create $1 GDP, and it is worse now. In an inflationary crisis, governments will move to squash competitors in the currency arena. $BTC #gold."
        kayamon 5y ago
        Ah yes my mistake. The only question I guess is are we yet at the tipping point where Bitcoin reaches runaway adoption or not.
- AnimalMuppet 5y ago
  > In the coming months and years, countries will have to return to a gold standard... Care to put a number of years on that? I asked you for a concrete prediction, so I'll give you mine. On January 1, 2040, the number of countries that have adopted the gold standard since 2021 will be either 0 or 1.
  - keneda7 5y ago
    I agree. There is no way any major economy will switch back to the gold standard unless there is some highly unlikely earth shattering event.
    - david927 5y ago
      Like a major economy defaulting
      - AnimalMuppet 5y ago
        A major economy defaulting is possible (I put no limits on the ability of Congress to bungle things). But why do you think that the response would be going back to the gold standard? (Even if you think that's the answer, why do you think Congress will think it's the answer?)
        david927 5y ago
        Because the economies are interlinked and so a major economy defaulting starts a domino process where almost all debt goes into default. The currency of any country is legal note that says that country will pay that. What happens when the country can't? And other countries are in a similar situation? Let's say that you're wealthy and bought three houses for three families and they all owe you that money. You don't want a bunch of paper in return, you want to get the value back that you invested. How? If all currencies have lost their value, where will you turn? You'll want something that can't be printed. This essay talks about it in more detail: https://blankpoole.com https://blankpoole.com
- dragonwriter 5y ago
  > In the coming months and years, countries will have to return to a gold standard and when they do, they will have to either limit gold sales, deeply penalize it, or just like in 1934, confiscate it. All of those things happened as the gold standard was breaking down to and countries were trying to escape its constraints, as part of the process of getting to fiat and the control of money supply it allows. > This has all happened before. No, a return to the gold standard after its general global rejection has not happened before.
  - david927 5y ago
    > a return to the gold standard after its general global rejection has not happened before But only because a general global rejection didn't happen before. Remember that the "general global rejection" only started with the Nixon Shock in the US in 1971.
    - dragonwriter 5y ago
      > But only because a general global rejection didn't happen before. The “only” part is speculative, but even if that is entirely true, it is still sufficient to show that “this has all happened before” is false.
      - david927 5y ago
        Someone cleverer than I answered you above. “This has all happened before” is true.
        dragonwriter 5y ago
        > This has all happened before” is true. No, it isn't. Individual countries or small groups temporarily suspending the gold standard for a particular emergency and returning to it thereafter has happened (particularly in the final century of the general dominance of the standard). Very much not the same thing.
- ChrisLomont 5y ago
  >countries will have to return to a gold standard and when they do Every single one of the 200+ countries left the gold standard since the evidence on how bad economies fared tied to the rate you can dig up gold became irrefutable. Hopefully no major countries get dumb enough to revisit that fiasco. For example, read the academic work showing that trying to stay on the gold gold standard during the great depression lengthened and deepened the depression with solid data across over 100 countries. There is no question now that tying your economy to digging up rocks is a bad idea.
  - perrygeo 5y ago
    Tying our economy to digging up fossil carbon is not working out much better.
    - ChrisLomont 5y ago
      Our currency is independent from oil, which is why oil prices fluctuate relative to the dollar.
  - david927 5y ago
    First, there are fewer than 200 countries. Second, they've only left it since the 1970's in the current era and that was because the US could use its dominant position to do so (the Petro-dollar). Third, it doesn't matter if it's a "rock" or not, as long as it's scarce. In this case, this rock has all of human history recognizing its use in this capacity. You have to remember that the monetization of a scarce material, such as precious metals, is a Nash equilibrium. It's the long-term answer, by definition. The markets don't actually always go up, but gold stays gold. > read the academic work showing that trying to stay on the gold standard Like Bernanke's PhD dissertation? Sure. Or I can just wait. Because since his tenure we went from $3 trillion to $28 trillion before the Federal Reserve stopped reporting money supply. Or just compare the US to Germany in the same time period with its hyperinflation. Which fared better?
    - ChrisLomont 5y ago
      >First, there are fewer than 200 countries. UN recognizes 251 countries and territories. Many territories have independent currencies. So for the sake of this discussion, there are over 200 places that left gold standards. Not a single country (or territory) remained on one. Not one. So by that metric, every currency that was not fiat has failed. If a gold standard resulted in a better economy, don't you think maybe one country would have kept on it and demonstrated this superiority? Or maybe if a gold standard is demonstrably inferior, would not every country eventually realize it and leave? Which does evidence demonstrate? >Second, they've only left it since the 1970's in That's false. Most left it in the 1930s [0] as it became clear the gold standard was bad for economic recovery. There's a good reason the world economic growth was so slow for centuries but really grew after countries stopped tying their growth to the rate they can mine. It's silly to limit the total value of transactions across goods to the rate one can dig up gold. It slows capital. >Because since his tenure we went from $3 trillion to $28 trillion before the Federal Reserve stopped reporting money supply If your claim is that lack of gold standards results in debt, then why is this not the case in all the countries? Oops. It's simply not. The US debt or lack of other country debt is simply political fiscal policy - nothing about a gold standard prevented past countries from getting into debt. So this is irrelevant. The US had public government debt longer under the gold standard than it did not being on the gold standard, since it started public debt in the 1700s. Public debt is simply borrowing, and can happen with or without a gold standard, and history shows. As to the Fed "stopped reporting money supply", here are at least M1 [1], M2 [2], and multiple flavors [3] of money supply as reported by the Fed. They all track from at latest 1960 through (checks date) Aug 2021. There's plenty more places to see the Fed reports on the money supply. What do you mean when you claim they don't report any more? The only places making this claim (as usual) are places like shadow stats and zerohedge. If you want to do a neat experiment (I have), take claimed historical inflation from zerohedge, integrate it to get compound for say the past 20 years, then look at BLS claimed inflation for the past 20 years, then get ads from then and now, and see which places are closer to reality. I've used this simple, do-it-yourself demonstration many times to show people that those sites are crap. The Fed (and Census, and BLS, and every agency) from time to time changes things to better reflect current needs. I suppose the Fed changing how it reports is what you're referring to, an action that every time flips out the zerohedge crowd. Here's a decent explanation [4]. >Or just compare the US to Germany in the same time period with its hyperinflation. Which fared better? We're nothing like Germany hyperinflation. Panic and doom nonsense. Germany entered a gold standard, and tried to hold onto it after WWI, but reparations made them lose enough gold, that they imploded fiscally trying to maintain it. Had they not wanted to limit themselves to gold (which they ultimately didn't since it proved impossible economically - again an example that tying one's economy to the amount of gold one owns is stupid), they would have had a smoother transition after WWI and leading to their hyperinflation. This also clearly demonstrates that having a gold standard does not prevent a country going into hyperinflation - Germany had one, it imploded due to debts, and they hyperinflated. Of course you can claim "they stopped the gold standard!" Of course they did, as did every country that claimed to be on one until fiscal irresponsibility or external hazard caused it to implode. A gold standard is no insurance against hyperinflation - and history (and academic literature) has plenty of examples. The evidence now is that gold standards harm economies. [0] https://www.thebalance.com/what-is-the-history-of-the-gold-standard-3306136 https://www.thebalance.com/what-is-the-history-of-the-gold-s... [1] https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL [2] https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL [3] https://www.federalreserve.gov/releases/h6/current/default.htm https://www.federalreserve.gov/releases/h6/current/default.h... [4] https://rationalreasoning.substack.com/p/on-the-feds-discontinuation-of-the https://rationalreasoning.substack.com/p/on-the-feds-discont...
- jesussaves 5y ago
  Funny how in a post about government action taken because of problems with the gold standard you confidently say the gold standard will return. This hasn't all happened before and quite frankly your confidence is totally wild compared to the ignorant things you are saying.
- deleted 5y ago
  [deleted]
1cvmask 5y ago
Anyone have any details on what the exceptions were: A year earlier, in 1933, Executive Order 6102 had made it a criminal offense for U.S. citizens to own or trade gold anywhere in the world, with exceptions for some jewelry and collector's coins. -- Like how much jewelry?
- david927 5y ago
  Any amount. The idea was that owning wasn't really the problem, they just didn't want you easily trading it. So you could have a huge statue of solid gold and it wouldn't be a problem but a handful of 'junk' Krugerrands -- yeah, that would be a big problem. The former is an asset, the latter is currency.
mywittyname 5y ago
I'd be interested to read what op-eds in contemporary news papers said about this subject. My initial thought is that this move would be seen as deeply unpopular, but clearly it wasn't. This seems to be the first step in moving from gold-backed currency, and that process took about 40 years. Which means that this policy was not only popular, but broadly seen as necessary by five subsequent presidential administrations. I cannot imagine any sort of project taking 40 years of bipartisan collaboration succeeding in today's climate.

15 points by aazaa 5y ago

I used to be Keynesian and thought that inflation was a free tax that was also good for investment and growth. Now I understand that it leads inexorably to ruin. It creates a situation where you have to invest in markets, which removes the link to value, e.g. "the market always goes up." Growth investing is an oxymoron and just a variation of a Ponzi Scheme. We're at a watershed moment in modern history. In the coming months and years, countries will have to return to a gold standard and when they do, they will have to either limit gold sales, deeply penalize it, or just like in 1934, confiscate it. This has all happened before.

randomopining 5y ago
Bitcoin. You think people want to deal with the transfer of physical gold etc in this modern age?
- david927 5y ago
  The same rules would apply to any competing currency, such as Bitcoin.
  - kayamon 5y ago
    Bitcoin is not a competing fiat currency, but a competing gold standard.
    - david927 5y ago
      That's exactly what I'm saying. It would be seen as a competing currency, like gold, and prohibited. Michael Burry tweeted this earlier this year, "Prepare for inflation. Re-opening & stimulus on the way. Pre-COVID it took $3 debt to create $1 GDP, and it is worse now. In an inflationary crisis, governments will move to squash competitors in the currency arena. $BTC #gold."
      - kayamon 5y ago
        Ah yes my mistake. The only question I guess is are we yet at the tipping point where Bitcoin reaches runaway adoption or not.
AnimalMuppet 5y ago
> In the coming months and years, countries will have to return to a gold standard... Care to put a number of years on that? I asked you for a concrete prediction, so I'll give you mine. On January 1, 2040, the number of countries that have adopted the gold standard since 2021 will be either 0 or 1.
- keneda7 5y ago
  I agree. There is no way any major economy will switch back to the gold standard unless there is some highly unlikely earth shattering event.
  - david927 5y ago
    Like a major economy defaulting
    - AnimalMuppet 5y ago
      A major economy defaulting is possible (I put no limits on the ability of Congress to bungle things). But why do you think that the response would be going back to the gold standard? (Even if you think that's the answer, why do you think Congress will think it's the answer?)
      - david927 5y ago
        Because the economies are interlinked and so a major economy defaulting starts a domino process where almost all debt goes into default. The currency of any country is legal note that says that country will pay that. What happens when the country can't? And other countries are in a similar situation? Let's say that you're wealthy and bought three houses for three families and they all owe you that money. You don't want a bunch of paper in return, you want to get the value back that you invested. How? If all currencies have lost their value, where will you turn? You'll want something that can't be printed. This essay talks about it in more detail: https://blankpoole.com https://blankpoole.com
dragonwriter 5y ago
> In the coming months and years, countries will have to return to a gold standard and when they do, they will have to either limit gold sales, deeply penalize it, or just like in 1934, confiscate it. All of those things happened as the gold standard was breaking down to and countries were trying to escape its constraints, as part of the process of getting to fiat and the control of money supply it allows. > This has all happened before. No, a return to the gold standard after its general global rejection has not happened before.
- david927 5y ago
  > a return to the gold standard after its general global rejection has not happened before But only because a general global rejection didn't happen before. Remember that the "general global rejection" only started with the Nixon Shock in the US in 1971.
  - dragonwriter 5y ago
    > But only because a general global rejection didn't happen before. The “only” part is speculative, but even if that is entirely true, it is still sufficient to show that “this has all happened before” is false.
    - david927 5y ago
      Someone cleverer than I answered you above. “This has all happened before” is true.
      - dragonwriter 5y ago
        > This has all happened before” is true. No, it isn't. Individual countries or small groups temporarily suspending the gold standard for a particular emergency and returning to it thereafter has happened (particularly in the final century of the general dominance of the standard). Very much not the same thing.
ChrisLomont 5y ago
>countries will have to return to a gold standard and when they do Every single one of the 200+ countries left the gold standard since the evidence on how bad economies fared tied to the rate you can dig up gold became irrefutable. Hopefully no major countries get dumb enough to revisit that fiasco. For example, read the academic work showing that trying to stay on the gold gold standard during the great depression lengthened and deepened the depression with solid data across over 100 countries. There is no question now that tying your economy to digging up rocks is a bad idea.
- perrygeo 5y ago
  Tying our economy to digging up fossil carbon is not working out much better.
  - ChrisLomont 5y ago
    Our currency is independent from oil, which is why oil prices fluctuate relative to the dollar.
- david927 5y ago
  First, there are fewer than 200 countries. Second, they've only left it since the 1970's in the current era and that was because the US could use its dominant position to do so (the Petro-dollar). Third, it doesn't matter if it's a "rock" or not, as long as it's scarce. In this case, this rock has all of human history recognizing its use in this capacity. You have to remember that the monetization of a scarce material, such as precious metals, is a Nash equilibrium. It's the long-term answer, by definition. The markets don't actually always go up, but gold stays gold. > read the academic work showing that trying to stay on the gold standard Like Bernanke's PhD dissertation? Sure. Or I can just wait. Because since his tenure we went from $3 trillion to $28 trillion before the Federal Reserve stopped reporting money supply. Or just compare the US to Germany in the same time period with its hyperinflation. Which fared better?
  - ChrisLomont 5y ago
    >First, there are fewer than 200 countries. UN recognizes 251 countries and territories. Many territories have independent currencies. So for the sake of this discussion, there are over 200 places that left gold standards. Not a single country (or territory) remained on one. Not one. So by that metric, every currency that was not fiat has failed. If a gold standard resulted in a better economy, don't you think maybe one country would have kept on it and demonstrated this superiority? Or maybe if a gold standard is demonstrably inferior, would not every country eventually realize it and leave? Which does evidence demonstrate? >Second, they've only left it since the 1970's in That's false. Most left it in the 1930s [0] as it became clear the gold standard was bad for economic recovery. There's a good reason the world economic growth was so slow for centuries but really grew after countries stopped tying their growth to the rate they can mine. It's silly to limit the total value of transactions across goods to the rate one can dig up gold. It slows capital. >Because since his tenure we went from $3 trillion to $28 trillion before the Federal Reserve stopped reporting money supply If your claim is that lack of gold standards results in debt, then why is this not the case in all the countries? Oops. It's simply not. The US debt or lack of other country debt is simply political fiscal policy - nothing about a gold standard prevented past countries from getting into debt. So this is irrelevant. The US had public government debt longer under the gold standard than it did not being on the gold standard, since it started public debt in the 1700s. Public debt is simply borrowing, and can happen with or without a gold standard, and history shows. As to the Fed "stopped reporting money supply", here are at least M1 [1], M2 [2], and multiple flavors [3] of money supply as reported by the Fed. They all track from at latest 1960 through (checks date) Aug 2021. There's plenty more places to see the Fed reports on the money supply. What do you mean when you claim they don't report any more? The only places making this claim (as usual) are places like shadow stats and zerohedge. If you want to do a neat experiment (I have), take claimed historical inflation from zerohedge, integrate it to get compound for say the past 20 years, then look at BLS claimed inflation for the past 20 years, then get ads from then and now, and see which places are closer to reality. I've used this simple, do-it-yourself demonstration many times to show people that those sites are crap. The Fed (and Census, and BLS, and every agency) from time to time changes things to better reflect current needs. I suppose the Fed changing how it reports is what you're referring to, an action that every time flips out the zerohedge crowd. Here's a decent explanation [4]. >Or just compare the US to Germany in the same time period with its hyperinflation. Which fared better? We're nothing like Germany hyperinflation. Panic and doom nonsense. Germany entered a gold standard, and tried to hold onto it after WWI, but reparations made them lose enough gold, that they imploded fiscally trying to maintain it. Had they not wanted to limit themselves to gold (which they ultimately didn't since it proved impossible economically - again an example that tying one's economy to the amount of gold one owns is stupid), they would have had a smoother transition after WWI and leading to their hyperinflation. This also clearly demonstrates that having a gold standard does not prevent a country going into hyperinflation - Germany had one, it imploded due to debts, and they hyperinflated. Of course you can claim "they stopped the gold standard!" Of course they did, as did every country that claimed to be on one until fiscal irresponsibility or external hazard caused it to implode. A gold standard is no insurance against hyperinflation - and history (and academic literature) has plenty of examples. The evidence now is that gold standards harm economies. [0] https://www.thebalance.com/what-is-the-history-of-the-gold-standard-3306136 https://www.thebalance.com/what-is-the-history-of-the-gold-s... [1] https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL [2] https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL [3] https://www.federalreserve.gov/releases/h6/current/default.htm https://www.federalreserve.gov/releases/h6/current/default.h... [4] https://rationalreasoning.substack.com/p/on-the-feds-discontinuation-of-the https://rationalreasoning.substack.com/p/on-the-feds-discont...
jesussaves 5y ago
Funny how in a post about government action taken because of problems with the gold standard you confidently say the gold standard will return. This hasn't all happened before and quite frankly your confidence is totally wild compared to the ignorant things you are saying.
deleted 5y ago
[deleted]

1cvmask 5y ago

Anyone have any details on what the exceptions were: A year earlier, in 1933, Executive Order 6102 had made it a criminal offense for U.S. citizens to own or trade gold anywhere in the world, with exceptions for some jewelry and collector's coins. -- Like how much jewelry?

david927 5y ago
Any amount. The idea was that owning wasn't really the problem, they just didn't want you easily trading it. So you could have a huge statue of solid gold and it wouldn't be a problem but a handful of 'junk' Krugerrands -- yeah, that would be a big problem. The former is an asset, the latter is currency.

mywittyname 5y ago

I'd be interested to read what op-eds in contemporary news papers said about this subject. My initial thought is that this move would be seen as deeply unpopular, but clearly it wasn't. This seems to be the first step in moving from gold-backed currency, and that process took about 40 years. Which means that this policy was not only popular, but broadly seen as necessary by five subsequent presidential administrations. I cannot imagine any sort of project taking 40 years of bipartisan collaboration succeeding in today's climate.