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It's definitely less than the world's total GDP, considering that China and the USA are both at or above that. So, it would not be possible for every country to

It's definitely less than the world's total GDP, considering that China and the USA are both at or above that. So, it would not be possible for every country to have a gold-backed currency without a major decline in wealth. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal) https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi... (Disclaimer, I am in no way an economist :) )

machina_ex_deus 4y ago
This is circular reasoning, because if the currencies were backed by gold, its price would skyrocket to fit the GDP. You can't compare price of gold as a speculative investment to price of gold backing an entire financial system.
- yabones 4y ago
  That does make sense... Is there any estimation for how much gold _would_ be required to for every country on the planet to have a gold-backed currency?
- imtringued 4y ago
  What if gold creates needless friction that prevents a higher GDP? For example, in a global gold reserve system it is possible for individual countries to run out of gold, possibly reducing their GDP to nothing. This happened way more often than you think and for many wildly different reasons. For example, the famous Weimar Republic hyperinflation was caused by an outflow of gold due to forced reparation payments that go way beyond what a destroyed post war economy could bear. The moment there was no gold in the country, the currency became worthless. Soon after that, just six or seven years later the great depression happened. People argue that gold solved the inflation problem but all it did was swing violently from inflation to deflation and back. Only people who have too much money and don't need more money benefited from this, a bonafide market failure. One would expect a market economy to allocate money to those who need it most but instead our economy allocates money to those who don't need it. Nobody seems to be aware of this contradiction.
  - machina_ex_deus 4y ago
    My personal opinion is that the gold shenanigan is nothing compared to the shenanigans going on in banks. It all boils down to a monopoly of very few organisations over the entire money creation system, and the instabilities are a result of the fact that few managers at the top are given extremely crude tools to manage extremely delicate system. Every little error using those extremely crude tools has extreme consequences. There was always one redeeming quality of gold-backed currencies, and it's the restriction of those crude tools. As for Weimar republic, the gold was never the issue. They were given an impossible debt to pay as reparations, and they could have that debt denominated in whatever tangible way you can think of, it wouldn't be paid. The reason the common German was devastated by the inflation was that their local currency wasn't backed by gold, it was allowed to be printed indefinitely by a government trying to fulfill an impossible debt.
Scarblac 4y ago
I'm not sure there is such a direct relation between GDP and amount of money in circulation. The same $1 can be spent many times in a year and add to GDP each time. (I also wish we would stop thinking in terms of GDP, or that it's better to have a higher one)
- gffrd 4y ago
  Interesting! What would be a better way to think … or, what is harmful about GDP thinking?

machina_ex_deus 4y ago

This is circular reasoning, because if the currencies were backed by gold, its price would skyrocket to fit the GDP. You can't compare price of gold as a speculative investment to price of gold backing an entire financial system.

yabones 4y ago
That does make sense... Is there any estimation for how much gold _would_ be required to for every country on the planet to have a gold-backed currency?
imtringued 4y ago
What if gold creates needless friction that prevents a higher GDP? For example, in a global gold reserve system it is possible for individual countries to run out of gold, possibly reducing their GDP to nothing. This happened way more often than you think and for many wildly different reasons. For example, the famous Weimar Republic hyperinflation was caused by an outflow of gold due to forced reparation payments that go way beyond what a destroyed post war economy could bear. The moment there was no gold in the country, the currency became worthless. Soon after that, just six or seven years later the great depression happened. People argue that gold solved the inflation problem but all it did was swing violently from inflation to deflation and back. Only people who have too much money and don't need more money benefited from this, a bonafide market failure. One would expect a market economy to allocate money to those who need it most but instead our economy allocates money to those who don't need it. Nobody seems to be aware of this contradiction.
- machina_ex_deus 4y ago
  My personal opinion is that the gold shenanigan is nothing compared to the shenanigans going on in banks. It all boils down to a monopoly of very few organisations over the entire money creation system, and the instabilities are a result of the fact that few managers at the top are given extremely crude tools to manage extremely delicate system. Every little error using those extremely crude tools has extreme consequences. There was always one redeeming quality of gold-backed currencies, and it's the restriction of those crude tools. As for Weimar republic, the gold was never the issue. They were given an impossible debt to pay as reparations, and they could have that debt denominated in whatever tangible way you can think of, it wouldn't be paid. The reason the common German was devastated by the inflation was that their local currency wasn't backed by gold, it was allowed to be printed indefinitely by a government trying to fulfill an impossible debt.

Scarblac 4y ago

I'm not sure there is such a direct relation between GDP and amount of money in circulation. The same $1 can be spent many times in a year and add to GDP each time. (I also wish we would stop thinking in terms of GDP, or that it's better to have a higher one)

gffrd 4y ago
Interesting! What would be a better way to think … or, what is harmful about GDP thinking?