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> Gold standard fell apart As if it's only happened once in history... It's cyclical. Currencies start out pegged to gold to attract initial users. Then they b

> Gold standard fell apart As if it's only happened once in history... It's cyclical. Currencies start out pegged to gold to attract initial users. Then they become loosely defended with gold, and then they publicly decouple and become fiat. Those in power want to have more power and leverage, as usual. Nothing "wrong" so far. Then they overprint and lose credibility/stability. And the cycle repeats somewhere else. (I think that was from Dalio's debt series.) I'm curious how you'd start this new currency, if not backed by gold? BRICS don't want to depend on USD, and gold is commonly the denominator everyone can agree on.

orwin 3y ago
No, this isn't because 'it's cyclical', this is a simplistic explanation. The issue is that this currency will probably be manipulated. And while central banks issued currencies can be protected by central banks themselves (at a cost, when they are reactive enough), it's impossible to protect gold from manipulation. Especially if US and EU authorities don't care, or pretend not to. And now, some want to peg a currency to gold prices? It's like pegging a currency to the bitcoin, except with a bitcoin on a blockchain that non one can audit. Look into how France broke the gold standard (without really meaning to I heard from my grandfather, the goal was to pressure the US and protect the 'new franc')
red-iron-pine 3y ago
> I'm curious how you'd start this new currency, if not backed by gold? BRICS don't want to depend on USD, and gold is commonly the denominator everyone can agree on. Find a country and a currency that appears to be the most stable. In the BRICS that's really only China, or maybe India. Brazil is something of a basket case at times, India is catching up fast but has its own challenges, Russia is actively collapsing itself in Ukraine, and S. Africa is a borderline failed state. China is the only country of the group I'd truly call stable, and the other BRICS pegging a currency to the Yuan is about the only other option besides gold, or pegging to the Euro / USD / Yen. Never gonna happen either, since India has a direct, albeit low-key-ish rivalry with China, and Russia has no reason to play ball when their weaker currency translates to better resource exports.

orwin 3y ago

No, this isn't because 'it's cyclical', this is a simplistic explanation. The issue is that this currency will probably be manipulated. And while central banks issued currencies can be protected by central banks themselves (at a cost, when they are reactive enough), it's impossible to protect gold from manipulation. Especially if US and EU authorities don't care, or pretend not to. And now, some want to peg a currency to gold prices? It's like pegging a currency to the bitcoin, except with a bitcoin on a blockchain that non one can audit. Look into how France broke the gold standard (without really meaning to I heard from my grandfather, the goal was to pressure the US and protect the 'new franc')

red-iron-pine 3y ago

> I'm curious how you'd start this new currency, if not backed by gold? BRICS don't want to depend on USD, and gold is commonly the denominator everyone can agree on. Find a country and a currency that appears to be the most stable. In the BRICS that's really only China, or maybe India. Brazil is something of a basket case at times, India is catching up fast but has its own challenges, Russia is actively collapsing itself in Ukraine, and S. Africa is a borderline failed state. China is the only country of the group I'd truly call stable, and the other BRICS pegging a currency to the Yuan is about the only other option besides gold, or pegging to the Euro / USD / Yen. Never gonna happen either, since India has a direct, albeit low-key-ish rivalry with China, and Russia has no reason to play ball when their weaker currency translates to better resource exports.