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> Modern monetary theory is doing just fine, How's that gap between the rich and the poor going? Look, the US was on the gold standard between 1850 and early

> Modern monetary theory is doing just fine, How's that gap between the rich and the poor going? Look, the US was on the gold standard between 1850 and early 1900s, and not only recovered from a civil war, but ALSO freed all of its slaves AND went from a backwater country to a world superpower, and reduced inequality all at the same time. https://voxeu.org/article/american-growth-and-inequality-1700 https://voxeu.org/article/american-growth-and-inequality-170...

posix_me_less 5y ago
The gap is reported to be increasing, but is that actually regarded as a problem by the ruling class? They may actually prefer this, as it gives them greater chunk of power and secures their position. In other words, the gap may be increasing and we don't like it, but this may very well be the intended "how is it going". One case in point: in 1970's, instead of giving employees their share of profits from productivity increases, the system gave them an easy way to get into debt instead (the credit card).
- dnautics 5y ago
  I'm not in the ruling class, so I would not say "monetary theory (modern or otherwise) is doing just fine". Perhaps nicoffeine is in the ruling class?
AnimalMuppet 5y ago
> How's that gap between the rich and the poor going? It's quite high - as high as it was in 1850, when we were on the gold standard. So... what's your point?
nicoffeine 5y ago
The US was on the gold/silver standard from 1792-1850. Was that the reason it continued the genocide of millions of indigenous people, took their land, and then imported millions of slaves to farm that land? Maybe there are other possibilities for history other than the currency system during a given time period. I remembered there were a series of financial crises leading up to the Civil War, and sure enough, the first use of fiat currency in the US was to solve a financial crisis caused by the gold/silver standard: 'In 1853, the U.S. reduced the silver weight of coins to keep them in circulation and in 1857 removed legal tender status from foreign coinage. In 1857 the final crisis of the free banking era began as American banks suspended payment in silver, with ripples through the developing international financial system. Due to the inflationary finance measures undertaken to help pay for the U.S. Civil War, the government found it difficult to pay its obligations in gold or silver and suspended payments of obligations not legally specified in specie (gold bonds); this led banks to suspend the conversion of bank liabilities (bank notes and deposits) into specie. In 1862 paper money was made legal tender. It was a fiat money (not convertible on demand at a fixed rate into specie). These notes came to be called "greenbacks".' [1] Technically Continental Dollars were zero interest bearer bonds, but they were also issued to help finance the Revolutionary War[2]. So, your argument for the gold standard is not only logically incoherent, but even if it was, it's completely ignorant of the history of currencies in the United States. [1] https://en.wikipedia.org/wiki/Gold_standard https://en.wikipedia.org/wiki/Gold_standard [2] https://en.wikipedia.org/wiki/Early_American_currency#Continental_currency https://en.wikipedia.org/wiki/Early_American_currency#Contin...
- dnautics 5y ago
  > So, your argument for the gold standard is not only logically incoherent Wrong. The argument is a refutation of the idea that economic growth cannot happen while on a gold standard, that it will be disastrous. It is an existence statement, not a universality statement.
  - rsj_hn 5y ago
    > The argument is a refutation of the idea that economic growth cannot happen while on a gold standard, This is correct. Rapid economic growth happened on the gold standard. The issue is not about long term economic growth, but volatility. Hard money creates an environment with lots of rapid inflation and deflation and very strong boom/bust cycles. That volatility has costs (human costs of the pain of mass layoffs) but also benefits (weaker companies are more rapidly weeded out). After the Great Depression, it was decided that the costs outweigh the benefits, but it's a legit question that should not be so readily dismissed.
    - dnautics 5y ago
      You don't know that the rapid inflation and deflation relative to today isn't because of poorer coordination in the liquidity of markets, in the supply chain, because we didn't have airplanes we didn't have computers etc. It's like pointing out that people were starving in the streets during the depression. Well yeah. We didn't have modern agriculture, freezers were a luxury, Flintstones gummi vitamins weren't a thing for kids etc.
  - nicoffeine 5y ago
    Who said economic growth cannot happen on a gold standard? I said it's a useless technology for civilizations that have better ones. You responded with an incoherent argument and a claim that 1850-early 1900s is a time period that shows the value of representative currency. Instead of the straw man and the red herrings, please explain how abandoning the gold standard in order to survive the Civil War is evidence of how effective it is. Here's more context that might help: "The beginning of 1862 found the Union's expenses increasing, and the government was having trouble funding the escalating war. U.S. Demand Notes — which were used, among other things, to pay Union soldiers — were unredeemable, and the value of the notes began to deteriorate. Congressman and Buffalo banker Elbridge G. Spaulding prepared a bill, based on the Free Banking Law of New York, that eventually became the National Banking Act of 1863. Recognizing, however, that his proposal would take many months to pass Congress, during early February Spaulding introduced another bill to permit the U.S. Treasury to issue $150 million in notes as legal tender. This caused tremendous controversy in Congress, as hitherto the Constitution had been interpreted as not granting the government the power to issue a paper currency. "The bill before us is a war measure, a measure of necessity, and not of choice," Spaulding argued before the House, adding, "These are extraordinary times, and extraordinary measures must be resorted to in order to save our Government, and preserve our nationality." Spaulding justified the action as a "necessary means of carrying into execution the powers granted in the Constitution 'to raise and support armies', and 'to provide and maintain a navy'". https://en.wikipedia.org/wiki/United_States_Note#The_Legal_Tender_Acts https://en.wikipedia.org/wiki/United_States_Note#The_Legal_T...

posix_me_less 5y ago

The gap is reported to be increasing, but is that actually regarded as a problem by the ruling class? They may actually prefer this, as it gives them greater chunk of power and secures their position. In other words, the gap may be increasing and we don't like it, but this may very well be the intended "how is it going". One case in point: in 1970's, instead of giving employees their share of profits from productivity increases, the system gave them an easy way to get into debt instead (the credit card).

dnautics 5y ago
I'm not in the ruling class, so I would not say "monetary theory (modern or otherwise) is doing just fine". Perhaps nicoffeine is in the ruling class?

AnimalMuppet 5y ago

> How's that gap between the rich and the poor going? It's quite high - as high as it was in 1850, when we were on the gold standard. So... what's your point?

nicoffeine 5y ago

The US was on the gold/silver standard from 1792-1850. Was that the reason it continued the genocide of millions of indigenous people, took their land, and then imported millions of slaves to farm that land? Maybe there are other possibilities for history other than the currency system during a given time period. I remembered there were a series of financial crises leading up to the Civil War, and sure enough, the first use of fiat currency in the US was to solve a financial crisis caused by the gold/silver standard: 'In 1853, the U.S. reduced the silver weight of coins to keep them in circulation and in 1857 removed legal tender status from foreign coinage. In 1857 the final crisis of the free banking era began as American banks suspended payment in silver, with ripples through the developing international financial system. Due to the inflationary finance measures undertaken to help pay for the U.S. Civil War, the government found it difficult to pay its obligations in gold or silver and suspended payments of obligations not legally specified in specie (gold bonds); this led banks to suspend the conversion of bank liabilities (bank notes and deposits) into specie. In 1862 paper money was made legal tender. It was a fiat money (not convertible on demand at a fixed rate into specie). These notes came to be called "greenbacks".' [1] Technically Continental Dollars were zero interest bearer bonds, but they were also issued to help finance the Revolutionary War[2]. So, your argument for the gold standard is not only logically incoherent, but even if it was, it's completely ignorant of the history of currencies in the United States. [1] https://en.wikipedia.org/wiki/Gold_standard https://en.wikipedia.org/wiki/Gold_standard [2] https://en.wikipedia.org/wiki/Early_American_currency#Continental_currency https://en.wikipedia.org/wiki/Early_American_currency#Contin...

dnautics 5y ago
> So, your argument for the gold standard is not only logically incoherent Wrong. The argument is a refutation of the idea that economic growth cannot happen while on a gold standard, that it will be disastrous. It is an existence statement, not a universality statement.
- rsj_hn 5y ago
  > The argument is a refutation of the idea that economic growth cannot happen while on a gold standard, This is correct. Rapid economic growth happened on the gold standard. The issue is not about long term economic growth, but volatility. Hard money creates an environment with lots of rapid inflation and deflation and very strong boom/bust cycles. That volatility has costs (human costs of the pain of mass layoffs) but also benefits (weaker companies are more rapidly weeded out). After the Great Depression, it was decided that the costs outweigh the benefits, but it's a legit question that should not be so readily dismissed.
  - dnautics 5y ago
    You don't know that the rapid inflation and deflation relative to today isn't because of poorer coordination in the liquidity of markets, in the supply chain, because we didn't have airplanes we didn't have computers etc. It's like pointing out that people were starving in the streets during the depression. Well yeah. We didn't have modern agriculture, freezers were a luxury, Flintstones gummi vitamins weren't a thing for kids etc.
- nicoffeine 5y ago
  Who said economic growth cannot happen on a gold standard? I said it's a useless technology for civilizations that have better ones. You responded with an incoherent argument and a claim that 1850-early 1900s is a time period that shows the value of representative currency. Instead of the straw man and the red herrings, please explain how abandoning the gold standard in order to survive the Civil War is evidence of how effective it is. Here's more context that might help: "The beginning of 1862 found the Union's expenses increasing, and the government was having trouble funding the escalating war. U.S. Demand Notes — which were used, among other things, to pay Union soldiers — were unredeemable, and the value of the notes began to deteriorate. Congressman and Buffalo banker Elbridge G. Spaulding prepared a bill, based on the Free Banking Law of New York, that eventually became the National Banking Act of 1863. Recognizing, however, that his proposal would take many months to pass Congress, during early February Spaulding introduced another bill to permit the U.S. Treasury to issue $150 million in notes as legal tender. This caused tremendous controversy in Congress, as hitherto the Constitution had been interpreted as not granting the government the power to issue a paper currency. "The bill before us is a war measure, a measure of necessity, and not of choice," Spaulding argued before the House, adding, "These are extraordinary times, and extraordinary measures must be resorted to in order to save our Government, and preserve our nationality." Spaulding justified the action as a "necessary means of carrying into execution the powers granted in the Constitution 'to raise and support armies', and 'to provide and maintain a navy'". https://en.wikipedia.org/wiki/United_States_Note#The_Legal_Tender_Acts https://en.wikipedia.org/wiki/United_States_Note#The_Legal_T...