7 ms·

It was hardly "hard money" in 1922, as the Fed was created in 1913, and the dollar started plummeting. If you want to see what a hard money world looks like, lo

It was hardly "hard money" in 1922, as the Fed was created in 1913, and the dollar started plummeting. If you want to see what a hard money world looks like, look at the 40 years or so prior to 1913, when most civilized nations were on a gold standard.

DebtDeflation 4y ago
>look at the 40 years or so prior to 1913 Constant booms, busts, and panics. The period of the most financial instability in history occurred under the gold standard.
- throwawaymaths 4y ago
  We have constant booms and busts now, even though we have more liquidity, people who should know better, math to describe what's going on, 'tools' to try to prevent it...
- ekianjo 4y ago
  Lol then what do we have now?
  - alangibson 4y ago
    Booms and busts that we can manage, and prevent from tanking the world economy, largely due to not having hard money.
throwawaymaths 4y ago
You mean a half century of closing the wealth gap (while healing from the labor disruption of freeing the slaves), and somehow still managing to go from being a war torn country to world superpower?
- caf 4y ago
  The USA was not a superpower in 1913.
jsmith45 4y ago
But the gold standard has its own issues. The gold standard is effectively a system of pegging all participating currencies to one another. A dollar is X milli-ounces of gold, a Pound Stirling is Y milli-ounces. They are effectively pegged at an X:Y ratio. But currency pegging has issues in practice, with Governments only able to keep it stable within certain limits. Outside those limits bad things will happen if you don't update the peg ratio. But when using a gold standard, if you have to adjust how much gold your unit of currency is worth, it makes people upset. If you make a dollar worth less gold people with dollars get quite upset. Also if people expect such a redenomination will be occuring, it can cause on run on the gold reserves. Meanwhile, if you make a dollar worth more gold, you piss off anybody holding gold. The changing of the ratio is even worse if you are using precious metal coinage that have the specified amount of gold (or silver, for the silver-standard) in them. If the ratio needs to change, now you have all this money with a face value, precious metal content mismatch. And all this is on top of the fact by using the gold standard, the rate of gold mining can heavily impact the economy.
alangibson 4y ago
US left the gold standard in 1933. Whether you like the Fed or not, it was a hard money world until then.

DebtDeflation 4y ago

>look at the 40 years or so prior to 1913 Constant booms, busts, and panics. The period of the most financial instability in history occurred under the gold standard.

throwawaymaths 4y ago
We have constant booms and busts now, even though we have more liquidity, people who should know better, math to describe what's going on, 'tools' to try to prevent it...
ekianjo 4y ago
Lol then what do we have now?
- alangibson 4y ago
  Booms and busts that we can manage, and prevent from tanking the world economy, largely due to not having hard money.

throwawaymaths 4y ago

You mean a half century of closing the wealth gap (while healing from the labor disruption of freeing the slaves), and somehow still managing to go from being a war torn country to world superpower?

caf 4y ago
The USA was not a superpower in 1913.

jsmith45 4y ago

But the gold standard has its own issues. The gold standard is effectively a system of pegging all participating currencies to one another. A dollar is X milli-ounces of gold, a Pound Stirling is Y milli-ounces. They are effectively pegged at an X:Y ratio. But currency pegging has issues in practice, with Governments only able to keep it stable within certain limits. Outside those limits bad things will happen if you don't update the peg ratio. But when using a gold standard, if you have to adjust how much gold your unit of currency is worth, it makes people upset. If you make a dollar worth less gold people with dollars get quite upset. Also if people expect such a redenomination will be occuring, it can cause on run on the gold reserves. Meanwhile, if you make a dollar worth more gold, you piss off anybody holding gold. The changing of the ratio is even worse if you are using precious metal coinage that have the specified amount of gold (or silver, for the silver-standard) in them. If the ratio needs to change, now you have all this money with a face value, precious metal content mismatch. And all this is on top of the fact by using the gold standard, the rate of gold mining can heavily impact the economy.

alangibson 4y ago

US left the gold standard in 1933. Whether you like the Fed or not, it was a hard money world until then.