4 ms·

The boom and bust cycles are artificial and are created entirely by the central bank. We can have continuous stable development and did have it when the gold st

by sprash 4y ago

The boom and bust cycles are artificial and are created entirely by the central bank. We can have continuous stable development and did have it when the gold standard was still a thing.

benj111 4y ago
Booms and busts existed before central banks. They existed when the gold standard was a thing. Have you heard of the 'great depression'? That happen while on the gold standard. So unless your going to no true scotsman that fact...
mind-blight 4y ago
The great depression happened while we had the gold standard. With banks loaning money based on the value of their ledgers, you'll end up more currency in circulation than physically exists - even with a pegged dollar and no central bank. The booms and busts occur due to speculation, over-investment, and contraction when the bottom falls out. That occurs just fine with distributed banking and loans. Did 0 percent interest contribute to our current cycle? Absolutely. But these cycles exist in any economic system with capital markets
- sprash 4y ago
  By gold standard I actually mean no fractional reserve banking. The great depression was caused by the federal reserve. As soon as you have fractional reserve banking you allow over-leveraged debts which lead immediately to boom and bust cycles. If you want to avoid those cycles simply don't allow people to spend money they don't actually have and always settle payments as early as possible (also don't allow anybody to simply print money).
  - JumpCrisscross 4y ago
    > don't allow people to spend money they don't actually have and always settle payments as early as possible This is in practice impossible because value hand-off is not instantaneous. Someone is always at risk in a transaction, to a varying degree over time. (To say nothing of the productivity gained from the friction reduction of transaction credit.) In Malthusian terms, every child is born with future claims on unproduced food. Mandating that be settled up front requires dark decisions, ones starving cities and families have had to make.
  - dragonwriter 4y ago
    > By gold standard I actually mean no fractional reserve banking There was, AFAIK, no time in history in which a monometallic gold standard with no fractional reserve banking was the international norm, certainly no time overlapping with the capitalist econonic system and industrialization. The US before 1870 was primarily on a silver standard—and that’s true of most ofnthe West for quite some time before the US existed, and fractional reserve (or no-required-reserve) banking was the norm in the US before the gold standard, too. The gold standard was only 1870-1932, and none of that time was there no fractional reserve banking.
    - lordnacho 4y ago
      Is there any notable difference between silver, bimetallism, and gold? They're all a sort of fixed-amount-backed thing, right? I do think in general popular economics (aka LinkedIn blogs) tend to overstate the benefits of gold.
      - namaria 4y ago
        "Gold standard" is just shorthand for restrictive policies that favours creditors over debtors. One implementation is using gold as the reserve money. But this is not the only way to do it, see IMF austerity rules. In that case you're just treating foreign reserves as if they were metallic treasure.
        dragonwriter 4y ago
        > “Gold standard” is just shorthand for restrictive policies that favours creditors over debtors. No, that’s not what the phrase normally means when taling about finance. > But this is not the only way to do it, see IMF austerity rules. Lots of things have been said, by lots of people, about IMF austerity rules, but calling them an implementation of the gold standard is…a new one. > In that case you’re just treating foreign reserves as if they were metallic treasure. There is certainly a sense in which an externally controlled currency is similar to any other commodity bases for money that isn’t a domestically controlled currency from the perspective of the local government, and particularly in terms of the limits on its fiscal policy, but to the extent that central managers manipulating supply artificially creates business cycles that do not exist with a natural resource-based commodity currency like gold (a contention which, again, is false anyhow, but is the argument that was being made upthread about the gold standard) you’d expect that to be as true in foreign countries dependent on the currency as in the country that is managing it.
JumpCrisscross 4y ago
> boom and bust cycles are artificial and are created entirely by the central bank This is trivially, empirically, untrue, most notoriously in the free banking era [1]. These cycles are even the norm in ecologies, where they’re theorised to underpin diversity [2]. Republican Rome had endogenous boom-bust variations [3]; Malthus famously wrote about this generally [4]. [1] https://www.richmondfed.org/publications/research/econ_focus/2018/q1/economic_history https://www.richmondfed.org/publications/research/econ_focus... [2] https://www.nature.com/articles/s42003-021-02021-4 https://www.nature.com/articles/s42003-021-02021-4 [3] https://d1wqtxts1xzle7.cloudfront.net/40444914/In_Search_of_Roman_Economic_Growth20151127-3155-1idbj5b-libre.pdf https://d1wqtxts1xzle7.cloudfront.net/40444914/In_Search_of_... [4] https://en.m.wikipedia.org/wiki/Malthusianism https://en.m.wikipedia.org/wiki/Malthusianism
unmole 4y ago
> continuous stable development and did have it when the gold standard was still a thing My sides.
dragonwriter 4y ago
> We can have continuous stable development and did have it when the gold standard was still a thing. The gold standard in the US ran from 1870 to 1932; the Long Depression of 1873-1879, the Depression of 1882-1885, and the and the Great Depression of 1929-1933 all happened during it (overlapping its end, in the last case), as did some smaller recessions. (Prior to 1870, most of the time the US was on a silver standard, which also had plenty of downturns and some depressions, in case you wished to retreat to “metallic” from “gold”.)

by sprash 4y ago

The boom and bust cycles are artificial and are created entirely by the central bank. We can have continuous stable development and did have it when the gold standard was still a thing.

benj111 4y ago

Booms and busts existed before central banks. They existed when the gold standard was a thing. Have you heard of the 'great depression'? That happen while on the gold standard. So unless your going to no true scotsman that fact...

mind-blight 4y ago

The great depression happened while we had the gold standard. With banks loaning money based on the value of their ledgers, you'll end up more currency in circulation than physically exists - even with a pegged dollar and no central bank. The booms and busts occur due to speculation, over-investment, and contraction when the bottom falls out. That occurs just fine with distributed banking and loans. Did 0 percent interest contribute to our current cycle? Absolutely. But these cycles exist in any economic system with capital markets

sprash 4y ago
By gold standard I actually mean no fractional reserve banking. The great depression was caused by the federal reserve. As soon as you have fractional reserve banking you allow over-leveraged debts which lead immediately to boom and bust cycles. If you want to avoid those cycles simply don't allow people to spend money they don't actually have and always settle payments as early as possible (also don't allow anybody to simply print money).
- JumpCrisscross 4y ago
  > don't allow people to spend money they don't actually have and always settle payments as early as possible This is in practice impossible because value hand-off is not instantaneous. Someone is always at risk in a transaction, to a varying degree over time. (To say nothing of the productivity gained from the friction reduction of transaction credit.) In Malthusian terms, every child is born with future claims on unproduced food. Mandating that be settled up front requires dark decisions, ones starving cities and families have had to make.
- dragonwriter 4y ago
  > By gold standard I actually mean no fractional reserve banking There was, AFAIK, no time in history in which a monometallic gold standard with no fractional reserve banking was the international norm, certainly no time overlapping with the capitalist econonic system and industrialization. The US before 1870 was primarily on a silver standard—and that’s true of most ofnthe West for quite some time before the US existed, and fractional reserve (or no-required-reserve) banking was the norm in the US before the gold standard, too. The gold standard was only 1870-1932, and none of that time was there no fractional reserve banking.
  - lordnacho 4y ago
    Is there any notable difference between silver, bimetallism, and gold? They're all a sort of fixed-amount-backed thing, right? I do think in general popular economics (aka LinkedIn blogs) tend to overstate the benefits of gold.
    - namaria 4y ago
      "Gold standard" is just shorthand for restrictive policies that favours creditors over debtors. One implementation is using gold as the reserve money. But this is not the only way to do it, see IMF austerity rules. In that case you're just treating foreign reserves as if they were metallic treasure.
      - dragonwriter 4y ago
        > “Gold standard” is just shorthand for restrictive policies that favours creditors over debtors. No, that’s not what the phrase normally means when taling about finance. > But this is not the only way to do it, see IMF austerity rules. Lots of things have been said, by lots of people, about IMF austerity rules, but calling them an implementation of the gold standard is…a new one. > In that case you’re just treating foreign reserves as if they were metallic treasure. There is certainly a sense in which an externally controlled currency is similar to any other commodity bases for money that isn’t a domestically controlled currency from the perspective of the local government, and particularly in terms of the limits on its fiscal policy, but to the extent that central managers manipulating supply artificially creates business cycles that do not exist with a natural resource-based commodity currency like gold (a contention which, again, is false anyhow, but is the argument that was being made upthread about the gold standard) you’d expect that to be as true in foreign countries dependent on the currency as in the country that is managing it.

JumpCrisscross 4y ago

> boom and bust cycles are artificial and are created entirely by the central bank This is trivially, empirically, untrue, most notoriously in the free banking era [1]. These cycles are even the norm in ecologies, where they’re theorised to underpin diversity [2]. Republican Rome had endogenous boom-bust variations [3]; Malthus famously wrote about this generally [4]. [1] https://www.richmondfed.org/publications/research/econ_focus/2018/q1/economic_history https://www.richmondfed.org/publications/research/econ_focus... [2] https://www.nature.com/articles/s42003-021-02021-4 https://www.nature.com/articles/s42003-021-02021-4 [3] https://d1wqtxts1xzle7.cloudfront.net/40444914/In_Search_of_Roman_Economic_Growth20151127-3155-1idbj5b-libre.pdf https://d1wqtxts1xzle7.cloudfront.net/40444914/In_Search_of_... [4] https://en.m.wikipedia.org/wiki/Malthusianism https://en.m.wikipedia.org/wiki/Malthusianism

unmole 4y ago

> continuous stable development and did have it when the gold standard was still a thing My sides.

dragonwriter 4y ago

> We can have continuous stable development and did have it when the gold standard was still a thing. The gold standard in the US ran from 1870 to 1932; the Long Depression of 1873-1879, the Depression of 1882-1885, and the and the Great Depression of 1929-1933 all happened during it (overlapping its end, in the last case), as did some smaller recessions. (Prior to 1870, most of the time the US was on a silver standard, which also had plenty of downturns and some depressions, in case you wished to retreat to “metallic” from “gold”.)