7 ms·

BRICS gold-backed currency coming in August

29 points by sph 3y ago

Justsignedup 3y ago
We moved away from gold backed currency a long time ago for a reason. Going back to it seems like a terrible idea. It's a way for these countries to try to regain economic dominance without actually doing anything.
- taminka 3y ago
  > We moved away from gold backed currency a long time ago for a reason to be able to print more money to fund wars and all (which is actually how central banks emerged om the frist place btw) gåing back to gold standard is a great idea imo
  - throw0101c 3y ago
    > to be able to print more money to fund wars and all (which is actually how central banks emerged om the frist place btw) Like in the 1930s when the sooner a country abandoned the gold standard the sooner its economy started to recover from the Great Depression?
- ttoinou 3y ago
  What reason and why would you believe this reason was rightly justified ? This collective "we" hides individual people making decisions on behalf of others btw
  - sgt101 3y ago
    Constraining the economy based on one proxy item isn't sensible. The current system is backed by the USA's future likely ability to extract revenue from tax payers and anyone else that it gets the idea of extracting money from.
    - jongjong 3y ago
      How is it desirable that the USD is backed by the extraction/exploitation of future tax payers? Sounds like a pyramid scheme and highly unethical. I'd prefer my money to be backed by literally any proxy item rather than by the enslavement of our children. The current system artificially rewards centralization and in doing so, makes markets anti-competitive and monopolistic as it creates an asymmetric playing field whereby the participants who are closer to the money printer always have the upper hand over their competitors regardless of other factors. It's the Cantillon effect.
      - The_Colonel 3y ago
        But is the gold (bitcoin/whatever) standard truly better? It's necessarily deflationary (in the long term, assuming continuous economic growth) which rewards just holding it. Rich people get richer, poor get poorer.
        jongjong 3y ago
        To some extent, yes, but because the quantity of Bitcoin is limited, at least it cannot compound ad-infinitum into the hands of the rich as is the case with fiat. The other thing which is problematic about the current system is that because the currency is constantly losing value to inflation, governments are essentially forced to invest people's pensions into the stock market which distorts the markets in favour of certain large companies... If currency held its value, governments could just keep pensions in the form of currency and would not be compelled to interfere with the markets. Governments should not get to decide how to invest citizens' money. A deflationary currency is good. It rewards people a little bit for staying out of the market. If you get rich, congrats, you've made it, now you have an incentive to step aside, cash out and let someone else have a go. Today, the incentive is to keep reinvesting your money even if you don't feel particularly strongly about any investment. Today, many people invest simply because they don't want to hold cash which loses value over time. People who don't have a vision for how to improve things should not be involved in the markets at all. There should be an incentive for such people to stay out of the markets. That's what a deflationary currency would do. There needs to be a bench on the side where rich people can sit down and catch their breath before making their next investment.
  - sgt101 3y ago
    Btw, there it's nothing stopping anyone from using gold or proxy's for gold apart from the threat of extreme poverty.
    - ttoinou 3y ago
      You don't seem aware of how the US imposes its money on the rest of the world
      - sgt101 3y ago
        Do you mean "the use of military force"? That is my model.... BTW. this is not a judgement - there has been no political system that I know of that has had any sustained presence in history that hasn't used this mechanism to sustain itself.
- bluescrn 3y ago
  > Going back to it seems like a terrible idea. Does it?... After watching savings being decimated by inflation, with the seemingly unending money-printing (the solution to Covid, Ukraine, whatever the next crisis is), a lot of people are probably wishing they'd invested in gold.
  - unixhero 3y ago
    The only way to mitigating is to have a large mortgage
  - LatteLazy 3y ago
    em... You realise the exact same thing happens with gold when the price falls right? All time highs for gold prices and falling inflation might not be the best time to buy in...
  - neffo 3y ago
    And a personal investment in gold is in no way equivalent to fixing the exchange value of your currency to it. If you think gold standards prevent manipulation of currencies, well the 1920s would like to have a word with you please. And deflation is far more destructive than inflation.
  - throw0101c 3y ago
    Gold does not help deal with unexpected inflation: * https://www.nber.org/papers/w18706 https://www.nber.org/papers/w18706 * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 * https://www.pwlcapital.com/will-gold-save-the-day/ https://www.pwlcapital.com/will-gold-save-the-day/ See also The Golden Constant: The English and American Experience, 1560-1976 by Roy William Jastram: * https://www.goodreads.com/book/show/3267510-the-golden-constant https://www.goodreads.com/book/show/3267510-the-golden-const... * PDF: http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram-TheGoldenConstant.pdf http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram...
- jongjong 3y ago
  Yes, there was a reason; unconstrained currency printing benefited politicians and a small number of well connected elites at the expense of essentially everyone else. So going back seems like an excellent idea.
  - nostrfanboi 3y ago
    Bitcoin is like gold, but without the heavy lifting. It's finite, secure, and not controlled by any elite. Why dig in the past when we can mine the future?
    - bluGill 3y ago
      Bitcoin needs too much power to run mining nodes.
      - hoseja 3y ago
        Yup, the PoW for gold was done in supernovae so now we don't have to bother with it.
        friend_and_foe 3y ago
        It takes enormous resources to dig gold out of the ground.
        defrost 3y ago
        Open pits 3.5 kilometres long x 1.5 kilometres wide x 600 metres deep don't dig themselves. And then all that material has to be graded, sorted, crushed, sieved, processed to extract fines. https://www.superpit.com.au/ https://www.superpit.com.au/ https://en.wikipedia.org/wiki/Super_Pit_gold_mine https://en.wikipedia.org/wiki/Super_Pit_gold_mine
        bluGill 3y ago
        Which is what keeps the value of gold fairly stable long term despite the natural inflation caused by digging more.
- resuresu 3y ago
  It worked just fine until the government confiscated the peoples gold and issued them pieces of paper with a lien attached to each note. You talk as if people will be carrying gold bars around for payment, it doesnt work that way. As long as joe nobody can go to the bank and redeem his gold then there will be trust in the financial institution securing it.
- friend_and_foe 3y ago
  It wasn't "a long time ago", it was in stages over the past 100 years. Given that the US dollar has lost 95% of it's purchasing power since 1970, and the whole host of other problems with nationally mandated currency (such as the coincidence of wants problem in international trade, a problem money was invented to solve) I'd say it looks to be a short lived experiment. Gold has been the standard for more than two thousand years until this little experiment. We moved away from gold in order to finance world war 1 and 2.
bondarchuk 3y ago
>This entire turn of events — introduction of a new gold-backed currency, rapid adoption as a payment currency and gradual use as a reserve asset currency — will begin on Aug. 22, 2023, after years of development. Is this just some goldbug talking out of his ass? I don't see any mention of an official announcement. Edit: a much more grounded version of this "story" can be read here: https://en.wikipedia.org/wiki/BRICS#Potential_common_currency https://en.wikipedia.org/wiki/BRICS#Potential_common_currenc...
- RajuVarghese 3y ago
  That Wikipedia article makes no mention of the new currency being gold-backed.
  - lesuorac 3y ago
    Yeah because the best sourced location of that is an embassy twitter account [1]. BRICS is meeting to discuss the potential of a currency. Even having a common (trade-only) currency isn't 100% going to happen never mind a specific implementation of it. [1]: https://twitter.com/russembkenya/status/1675727818888716288 https://twitter.com/russembkenya/status/1675727818888716288
- jareklupinski 3y ago
  I could almost _hear_ the author's breathlessness in their first few lines didn't know you could transmit respiration rate over TCP/IP
  - red-iron-pine 3y ago
    that'd make for a good April 01 RFC
coffeebeqn 3y ago
This seems like someone’s blog without any sources. Besides the US and Germany have the largest gold reserves (and London has the metal exchange) so the western powers could completely manipulate the new currency
- flagrant_taco 3y ago
  The has been a lot of speculation that China haa been mining large quantities of gold off-market and putting it into their reserves. That's just speculation so it may not have happened, but we would only know what gold they bought openly or disclosed when mining.
  - enkid 3y ago
    Aah yes, nothing is better for a gold backed currency then rapid deflation caused by a secret huge reserve of gold.
- Simorgh 3y ago
  The author bio at the bottom of the page mentions work with the US Fed, NYT, FT and Pentagon. He may be privy to privileged information and discussion.
  - enkid 3y ago
    There are a lot of idiots who work for all those organizations.
  - red-iron-pine 3y ago
    e.g. the same people who convinced us there were chemical and nuclear weapons in Iraq?
xvilka 3y ago
Gold is past. Energy-backed currency would be a better fit for modern world, especially in a situation of the global energy crunch.
- prepend 3y ago
  I think it would be interesting to get a currency that represented energy so you could trade 1 kWh and just use that to represent a real thing but could be used in transactions. Sort of like how Japan used to use representations of rice.
  - causality0 3y ago
    I remember a literal version of that being a plot element in a kid's sci-fi book series. The villain was so incredibly rich he could afford to keep his hideout right next to a black hole's event horizon where nobody could afford the energy to arrest him.
  - nostrfanboi 3y ago
    Bitcoin is like a digital kilowatt-hour that you can spend anywhere.
    - adgjlsfhk1 3y ago
      except it's a digital kilowatt hour that requires wasting a kilowatt hour of energy per transaction to solve imaginary problems
      - lesuorac 3y ago
        > solve imaginary problems Securing a ledger isn't an imaginary problem. Business love to adopt card payments because of how big a pain it is to secure cash. It is not a trivial problem to protect money.
    - detourdog 3y ago
      For the system to work it would require the correct incentives. If we could reconstitute the energy consumed to produce the bitcoin it might work.
clarionbell 3y ago
This thread will surely be visited only by people with some knowledge economics, or at least the history of modern currency system. /s With that out of the way, let me tell you some harsh truths. Gold standard fell apart because it was a bad way to manage currency in a modern industrialized society. The Great Depression was effectively the final nail in it's coffin. Bretton Woods was essentially vehicle for US dollar dominance, and ended when in the 70s US government realized it wasn't worth the effort. But sure, let's go back to that. Given our, and by that I mean Tech community, track record of monetary decisions that can only work out great. Let's "do our own research" again.
- draw_down 3y ago
  [dead]
- sph 3y ago
  > Gold standard fell apart because it was a bad way to manage currency in a modern industrialized society Source? From what I understand, the gold standard felt apart in WW1. Some also indicate WW1 being the first worldwide conflict because the war machine was no longer restricted by what's in the government's coffers, so you can go all in and basically have future generations pay for it (with massive inflation if you lose, but if you win you have the spoils to repay the cost of the war, and then some) And leaving the gold standard is also viral: if your enemies can print money and pay for enormous amounts of soldiers and ammo in the short term, either you adopt it to stay apace or you get overwhelmed. AFAIR Germany was the first to abandon the gold standard, and all European nations followed immediately thereafter. Then losing the war explains all the events leading up to the rise of Hitler.
  - enkid 3y ago
    There were plenty of examples of countries devaluing their currency before World War I. No one was ever really on the gold standard, that was just what the governments were willing to exchange it for at times. The government could always alter the exchange rate or simply stop exchanging it for gold even if they were "on the gold standard." (Look at the Confederate dollar for an example). Also, the only reason World War I is the first World War is because we called it that. There were plenty of wars which involved multiple continents before that. For example, the Napoleonic Wars involved every continent but Antarctica.
throw0101c 3y ago
What could possibly go wrong: > Pretty straightforward really. You combine Brazil's history of monetary stability, with Russia's respect for property rights, India's domestic tranquility, China's financial transparency, and South Africa's investment opportunities - and hey presto, you've got a new global money * https://twitter.com/davidfrum/status/1665053372402081792 https://twitter.com/davidfrum/status/1665053372402081792 :)
TheLoafOfBread 3y ago
The reason why we are not using gold backed standard is that growing economy and limited amount of gold on Earth would cause growing of price of gold into ludicrously insane prices. We are using gold in industry, i.e. for gold plating of connectors, that would have to stop. Do you have golden jewllery? Better not wear them out, having a golden ring would be likely enough to get you killed.
kasey_junk 3y ago
The only sourcing I’ve seen for a gold backed BRICS currency was a weird announcement by the Russian Embassy in Kenya: https://m.investing.com/analysis/brics-countries-planning-new-goldbacked-currency-200639843 https://m.investing.com/analysis/brics-countries-planning-ne... I would take that with a grain of salt… What I’ve yet to see is an explanation of how a highly tradable, commodity based, international currency won’t crater the local currencies of the BRIC block. Those currencies are notable in that they have greater currency controls than USD (or other western currencies). A liberal highly traded currency will presumably be able to be arbitraged with other liberal currencies (especially if it’s backed by a commodity), if you are Chinese looking to have reserves and you are allowed to use that without restrictions why wouldn’t you? At that point the dramatic capital controls in China fall apart and that doesn’t seem like a good outcome for the Chinese government. If instead, which seems more likely, there are lots of currency controls in place then the BRIC currency is just a photo op…
enkid 3y ago
In this thread: lots of people without any historical economic knowledge. Even in the 19th century, probably the peak of gold backed currency as we would consider it today, the world's economy was wracked by a boom bust cycle every ten years or so. We like to remember the great depression, but we should not forget the major depressions from the 1870s into the 1890s, and the serious of depressions in the US from the 1830s to the 1850s.
mst 3y ago
Looking at the author's other articles on https://dailyreckoning.com/ https://dailyreckoning.com/ (the quantity of which suggests the site is primarily his show and the quality of which tend to leave something to be desired) I'm inclined to be skeptical.
36706292thrw 3y ago
BRICS alternative is a temporary bridge to a post-US imperium reserve currency. That will be just like the Dollar except it won't be under the control of USA and its stakeholders. All the talk about viability of a gold backed currency is missing this aspect of even the existence of BRICS, SCO, etc. The future reserve currency will be a CBDC and BIS has already a basket of currencies for this purpose. The transition period, as seen lately, also promises the incumbent RC issuer to weaponize its control of reserve currency. The dilemma for various contenders is how to navigate the financial waters until a new global regime is established. So agreeing to use a gold backed currency amongst themselves is a step up from direct barter. The fact that it may be capped is not significant unless that cap is lower than total trade they require. This currency is not supposed to last.

29 points by sph 3y ago

We moved away from gold backed currency a long time ago for a reason. Going back to it seems like a terrible idea. It's a way for these countries to try to regain economic dominance without actually doing anything.

taminka 3y ago
> We moved away from gold backed currency a long time ago for a reason to be able to print more money to fund wars and all (which is actually how central banks emerged om the frist place btw) gåing back to gold standard is a great idea imo
- throw0101c 3y ago
  > to be able to print more money to fund wars and all (which is actually how central banks emerged om the frist place btw) Like in the 1930s when the sooner a country abandoned the gold standard the sooner its economy started to recover from the Great Depression?
ttoinou 3y ago
What reason and why would you believe this reason was rightly justified ? This collective "we" hides individual people making decisions on behalf of others btw
- sgt101 3y ago
  Constraining the economy based on one proxy item isn't sensible. The current system is backed by the USA's future likely ability to extract revenue from tax payers and anyone else that it gets the idea of extracting money from.
  - jongjong 3y ago
    How is it desirable that the USD is backed by the extraction/exploitation of future tax payers? Sounds like a pyramid scheme and highly unethical. I'd prefer my money to be backed by literally any proxy item rather than by the enslavement of our children. The current system artificially rewards centralization and in doing so, makes markets anti-competitive and monopolistic as it creates an asymmetric playing field whereby the participants who are closer to the money printer always have the upper hand over their competitors regardless of other factors. It's the Cantillon effect.
    - The_Colonel 3y ago
      But is the gold (bitcoin/whatever) standard truly better? It's necessarily deflationary (in the long term, assuming continuous economic growth) which rewards just holding it. Rich people get richer, poor get poorer.
      - jongjong 3y ago
        To some extent, yes, but because the quantity of Bitcoin is limited, at least it cannot compound ad-infinitum into the hands of the rich as is the case with fiat. The other thing which is problematic about the current system is that because the currency is constantly losing value to inflation, governments are essentially forced to invest people's pensions into the stock market which distorts the markets in favour of certain large companies... If currency held its value, governments could just keep pensions in the form of currency and would not be compelled to interfere with the markets. Governments should not get to decide how to invest citizens' money. A deflationary currency is good. It rewards people a little bit for staying out of the market. If you get rich, congrats, you've made it, now you have an incentive to step aside, cash out and let someone else have a go. Today, the incentive is to keep reinvesting your money even if you don't feel particularly strongly about any investment. Today, many people invest simply because they don't want to hold cash which loses value over time. People who don't have a vision for how to improve things should not be involved in the markets at all. There should be an incentive for such people to stay out of the markets. That's what a deflationary currency would do. There needs to be a bench on the side where rich people can sit down and catch their breath before making their next investment.
- sgt101 3y ago
  Btw, there it's nothing stopping anyone from using gold or proxy's for gold apart from the threat of extreme poverty.
  - ttoinou 3y ago
    You don't seem aware of how the US imposes its money on the rest of the world
    - sgt101 3y ago
      Do you mean "the use of military force"? That is my model.... BTW. this is not a judgement - there has been no political system that I know of that has had any sustained presence in history that hasn't used this mechanism to sustain itself.
bluescrn 3y ago
> Going back to it seems like a terrible idea. Does it?... After watching savings being decimated by inflation, with the seemingly unending money-printing (the solution to Covid, Ukraine, whatever the next crisis is), a lot of people are probably wishing they'd invested in gold.
- unixhero 3y ago
  The only way to mitigating is to have a large mortgage
- LatteLazy 3y ago
  em... You realise the exact same thing happens with gold when the price falls right? All time highs for gold prices and falling inflation might not be the best time to buy in...
- neffo 3y ago
  And a personal investment in gold is in no way equivalent to fixing the exchange value of your currency to it. If you think gold standards prevent manipulation of currencies, well the 1920s would like to have a word with you please. And deflation is far more destructive than inflation.
- throw0101c 3y ago
  Gold does not help deal with unexpected inflation: * https://www.nber.org/papers/w18706 https://www.nber.org/papers/w18706 * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 * https://www.pwlcapital.com/will-gold-save-the-day/ https://www.pwlcapital.com/will-gold-save-the-day/ See also The Golden Constant: The English and American Experience, 1560-1976 by Roy William Jastram: * https://www.goodreads.com/book/show/3267510-the-golden-constant https://www.goodreads.com/book/show/3267510-the-golden-const... * PDF: http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram-TheGoldenConstant.pdf http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram...
jongjong 3y ago
Yes, there was a reason; unconstrained currency printing benefited politicians and a small number of well connected elites at the expense of essentially everyone else. So going back seems like an excellent idea.
- nostrfanboi 3y ago
  Bitcoin is like gold, but without the heavy lifting. It's finite, secure, and not controlled by any elite. Why dig in the past when we can mine the future?
  - bluGill 3y ago
    Bitcoin needs too much power to run mining nodes.
    - hoseja 3y ago
      Yup, the PoW for gold was done in supernovae so now we don't have to bother with it.
      - friend_and_foe 3y ago
        It takes enormous resources to dig gold out of the ground.
        defrost 3y ago
        Open pits 3.5 kilometres long x 1.5 kilometres wide x 600 metres deep don't dig themselves. And then all that material has to be graded, sorted, crushed, sieved, processed to extract fines. https://www.superpit.com.au/ https://www.superpit.com.au/ https://en.wikipedia.org/wiki/Super_Pit_gold_mine https://en.wikipedia.org/wiki/Super_Pit_gold_mine
        bluGill 3y ago
        Which is what keeps the value of gold fairly stable long term despite the natural inflation caused by digging more.
resuresu 3y ago
It worked just fine until the government confiscated the peoples gold and issued them pieces of paper with a lien attached to each note. You talk as if people will be carrying gold bars around for payment, it doesnt work that way. As long as joe nobody can go to the bank and redeem his gold then there will be trust in the financial institution securing it.
friend_and_foe 3y ago
It wasn't "a long time ago", it was in stages over the past 100 years. Given that the US dollar has lost 95% of it's purchasing power since 1970, and the whole host of other problems with nationally mandated currency (such as the coincidence of wants problem in international trade, a problem money was invented to solve) I'd say it looks to be a short lived experiment. Gold has been the standard for more than two thousand years until this little experiment. We moved away from gold in order to finance world war 1 and 2.

bondarchuk 3y ago

>This entire turn of events — introduction of a new gold-backed currency, rapid adoption as a payment currency and gradual use as a reserve asset currency — will begin on Aug. 22, 2023, after years of development. Is this just some goldbug talking out of his ass? I don't see any mention of an official announcement. Edit: a much more grounded version of this "story" can be read here: https://en.wikipedia.org/wiki/BRICS#Potential_common_currency https://en.wikipedia.org/wiki/BRICS#Potential_common_currenc...

RajuVarghese 3y ago
That Wikipedia article makes no mention of the new currency being gold-backed.
- lesuorac 3y ago
  Yeah because the best sourced location of that is an embassy twitter account [1]. BRICS is meeting to discuss the potential of a currency. Even having a common (trade-only) currency isn't 100% going to happen never mind a specific implementation of it. [1]: https://twitter.com/russembkenya/status/1675727818888716288 https://twitter.com/russembkenya/status/1675727818888716288
jareklupinski 3y ago
I could almost _hear_ the author's breathlessness in their first few lines didn't know you could transmit respiration rate over TCP/IP
- red-iron-pine 3y ago
  that'd make for a good April 01 RFC

coffeebeqn 3y ago

This seems like someone’s blog without any sources. Besides the US and Germany have the largest gold reserves (and London has the metal exchange) so the western powers could completely manipulate the new currency

flagrant_taco 3y ago
The has been a lot of speculation that China haa been mining large quantities of gold off-market and putting it into their reserves. That's just speculation so it may not have happened, but we would only know what gold they bought openly or disclosed when mining.
- enkid 3y ago
  Aah yes, nothing is better for a gold backed currency then rapid deflation caused by a secret huge reserve of gold.
Simorgh 3y ago
The author bio at the bottom of the page mentions work with the US Fed, NYT, FT and Pentagon. He may be privy to privileged information and discussion.
- enkid 3y ago
  There are a lot of idiots who work for all those organizations.
- red-iron-pine 3y ago
  e.g. the same people who convinced us there were chemical and nuclear weapons in Iraq?

xvilka 3y ago

Gold is past. Energy-backed currency would be a better fit for modern world, especially in a situation of the global energy crunch.

prepend 3y ago
I think it would be interesting to get a currency that represented energy so you could trade 1 kWh and just use that to represent a real thing but could be used in transactions. Sort of like how Japan used to use representations of rice.
- causality0 3y ago
  I remember a literal version of that being a plot element in a kid's sci-fi book series. The villain was so incredibly rich he could afford to keep his hideout right next to a black hole's event horizon where nobody could afford the energy to arrest him.
- nostrfanboi 3y ago
  Bitcoin is like a digital kilowatt-hour that you can spend anywhere.
  - adgjlsfhk1 3y ago
    except it's a digital kilowatt hour that requires wasting a kilowatt hour of energy per transaction to solve imaginary problems
    - lesuorac 3y ago
      > solve imaginary problems Securing a ledger isn't an imaginary problem. Business love to adopt card payments because of how big a pain it is to secure cash. It is not a trivial problem to protect money.
  - detourdog 3y ago
    For the system to work it would require the correct incentives. If we could reconstitute the energy consumed to produce the bitcoin it might work.

clarionbell 3y ago

This thread will surely be visited only by people with some knowledge economics, or at least the history of modern currency system. /s With that out of the way, let me tell you some harsh truths. Gold standard fell apart because it was a bad way to manage currency in a modern industrialized society. The Great Depression was effectively the final nail in it's coffin. Bretton Woods was essentially vehicle for US dollar dominance, and ended when in the 70s US government realized it wasn't worth the effort. But sure, let's go back to that. Given our, and by that I mean Tech community, track record of monetary decisions that can only work out great. Let's "do our own research" again.

draw_down 3y ago
[dead]
sph 3y ago
> Gold standard fell apart because it was a bad way to manage currency in a modern industrialized society Source? From what I understand, the gold standard felt apart in WW1. Some also indicate WW1 being the first worldwide conflict because the war machine was no longer restricted by what's in the government's coffers, so you can go all in and basically have future generations pay for it (with massive inflation if you lose, but if you win you have the spoils to repay the cost of the war, and then some) And leaving the gold standard is also viral: if your enemies can print money and pay for enormous amounts of soldiers and ammo in the short term, either you adopt it to stay apace or you get overwhelmed. AFAIR Germany was the first to abandon the gold standard, and all European nations followed immediately thereafter. Then losing the war explains all the events leading up to the rise of Hitler.
- enkid 3y ago
  There were plenty of examples of countries devaluing their currency before World War I. No one was ever really on the gold standard, that was just what the governments were willing to exchange it for at times. The government could always alter the exchange rate or simply stop exchanging it for gold even if they were "on the gold standard." (Look at the Confederate dollar for an example). Also, the only reason World War I is the first World War is because we called it that. There were plenty of wars which involved multiple continents before that. For example, the Napoleonic Wars involved every continent but Antarctica.

throw0101c 3y ago

What could possibly go wrong: > Pretty straightforward really. You combine Brazil's history of monetary stability, with Russia's respect for property rights, India's domestic tranquility, China's financial transparency, and South Africa's investment opportunities - and hey presto, you've got a new global money * https://twitter.com/davidfrum/status/1665053372402081792 https://twitter.com/davidfrum/status/1665053372402081792 :)

TheLoafOfBread 3y ago

The reason why we are not using gold backed standard is that growing economy and limited amount of gold on Earth would cause growing of price of gold into ludicrously insane prices. We are using gold in industry, i.e. for gold plating of connectors, that would have to stop. Do you have golden jewllery? Better not wear them out, having a golden ring would be likely enough to get you killed.

kasey_junk 3y ago

The only sourcing I’ve seen for a gold backed BRICS currency was a weird announcement by the Russian Embassy in Kenya: https://m.investing.com/analysis/brics-countries-planning-new-goldbacked-currency-200639843 https://m.investing.com/analysis/brics-countries-planning-ne... I would take that with a grain of salt… What I’ve yet to see is an explanation of how a highly tradable, commodity based, international currency won’t crater the local currencies of the BRIC block. Those currencies are notable in that they have greater currency controls than USD (or other western currencies). A liberal highly traded currency will presumably be able to be arbitraged with other liberal currencies (especially if it’s backed by a commodity), if you are Chinese looking to have reserves and you are allowed to use that without restrictions why wouldn’t you? At that point the dramatic capital controls in China fall apart and that doesn’t seem like a good outcome for the Chinese government. If instead, which seems more likely, there are lots of currency controls in place then the BRIC currency is just a photo op…

enkid 3y ago

In this thread: lots of people without any historical economic knowledge. Even in the 19th century, probably the peak of gold backed currency as we would consider it today, the world's economy was wracked by a boom bust cycle every ten years or so. We like to remember the great depression, but we should not forget the major depressions from the 1870s into the 1890s, and the serious of depressions in the US from the 1830s to the 1850s.

mst 3y ago

Looking at the author's other articles on https://dailyreckoning.com/ https://dailyreckoning.com/ (the quantity of which suggests the site is primarily his show and the quality of which tend to leave something to be desired) I'm inclined to be skeptical.

36706292thrw 3y ago

BRICS alternative is a temporary bridge to a post-US imperium reserve currency. That will be just like the Dollar except it won't be under the control of USA and its stakeholders. All the talk about viability of a gold backed currency is missing this aspect of even the existence of BRICS, SCO, etc. The future reserve currency will be a CBDC and BIS has already a basket of currencies for this purpose. The transition period, as seen lately, also promises the incumbent RC issuer to weaponize its control of reserve currency. The dilemma for various contenders is how to navigate the financial waters until a new global regime is established. So agreeing to use a gold backed currency amongst themselves is a step up from direct barter. The fact that it may be capped is not significant unless that cap is lower than total trade they require. This currency is not supposed to last.