4 ms·

>1. The moving off the gold standard As someone with an econ degree, people advocating for a return to the gold standard are so weird to me. I totally underst

by slg 3y ago

>1. The moving off the gold standard As someone with an econ degree, people advocating for a return to the gold standard are so weird to me. I totally understand people having objections to how central banks manage the money supply and the impacts that has on the economy, but that doesn't mean we should give up control of it completely. It reminds me of the 2008 housing crisis when people saw a regulation failure and their proposed response was to remove even more regulation. It would be like your home being broken into and deciding the solution is to stop locking your doors instead of trying to find a better lock. It is both defeatist and it does nothing to actually improve the situation. Advocate for better policy. Don't advocate for no policy. The gold standard is effectively no policy because it gives control of the money supply over to control of the gold supply and gold can be both lost and found which won't happen in ways that actually support the economy.

jovial_cavalier 3y ago
[flagged]
legitster 3y ago
> As someone with an econ degree, people advocating for a return to the gold standard are so weird to me I mean, I understand. People really like simple things they can understand. And people hate inflation. It's clearly a bad idea, but I understand the appeal if you were raised in a blue-collar household and think debt is evil.
tivert 3y ago
> As someone with an econ degree, people advocating for a return to the gold standard are so weird to me. I totally understand people having objections to how central banks manage the money supply and the impacts that has on the economy, but that doesn't mean we should give up control of it completely. I think you're probably thinking about it wrong. It's not a conventional policy proposal. I think the main factor is just naked mistrust of people like you (people with an econ degree, etc), leading people to seek out simple solutions you have no control over. Another factor is people just getting high on pure ideology, and losing interest in solving actual problems in the pursuit of that ideology.
josu 3y ago
To be honest, people are saying that we should have never abandoned the gold standard, which is a bit more nuanced. >The gold standard is effectively no policy because it gives control of the money supply over to control of the gold supply. Hayek (he too had an econ degree I believe) could argue that advocating for the gold standard isn't necessarily advocating for "no policy." It is advocating for a different kind of policy, one that places more trust in market mechanisms rather than central planning. >Advocate for better policy. No matter how good of a policy you have for predicting Roulette numbers, your policy will be just as good as choosing at random, and most likely worse. Hayek would argue that there was a "knowledge problem" and no amount of econ degrees can solve it.
- npongratz 3y ago
  > Hayek (he too had an econ degree I believe)... I don't think Hayek had an economics degree, but in 1974 he did earn the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel: https://www.nobelprize.org/prizes/economic-sciences/1974/hayek/facts/ https://www.nobelprize.org/prizes/economic-sciences/1974/hay...
  - tnecniv 3y ago
    I checked: his doctorates were in law and political science, with his undergraduate background consisting of a combination of philosophy, psychology, and economics.
- slg 3y ago
  >Hayek (he too had an econ degree I believe) could argue that advocating for the gold standard isn't necessarily advocating for "no policy." It is advocating for a different kind of policy, one that places more trust in market mechanisms rather than central planning. Yes, this was why I said "effectively no policy" and compared it to removing regulation in the wake of 2008. It isn't literally "no policy" in the same way that anarchy is still technically a governing philosophy. But it is still effectively the same as no policy by taking a laissez-faire approach. >No matter how good of a policy you have for predicting Roulette numbers, your policy will be just as good as choosing at random, and most likely worse. Hayek would argue that there was a "knowledge problem" and no amount of econ degrees can solve it. This is what I described as defeatist. The economy isn't roulette. In roulette, it is impossible to observe, react, and predict. I don't believe that is true of the economy. It seems borderline silly to suggest we can't observe an economic trend and react to it.
mikhailfranco 3y ago
Why does the Fed set interest rates (aka the price of money)? Because it can? Because it should? Why does the Fed not fix the price of bread?
mikhailfranco 3y ago
The gold standard does make prices depend on gold supply, but that is roughly 2% inflation (3kt mine supply over gold stock of ~150kt). That is roughly in line with BTC inflation at the moment, and also, as it happens, central bank inflation targets (expectations of anything more would lead people to buy gold, or BTC, or just warehouse cash). However, the real discipline of a gold standard is to restrict debt (credit). The market for lenders and borrowers (investors) sets the (Wicksellian) interest rate, as any market should. Governments cannot just print money to run indefinite deficits, to curry favor with the electorate. The democratic desire for low taxes and infinite subsidies cannot be consumated. There has to be fiscal discipline. That is the value of the gold standard.
- slg 3y ago
  You seem to be mixing inflation of the money supply with inflation of the value of money. There is strong causality there, but it isn't the only cause. Considering the money supply is the primary cause we have control over, going back to the gold standard creates greater risk of other causes like supply or demand shocks harming the economy as we would no longer be able to nudge inflation in the desired direction to counteract those other causes. And if the primary remaining benefit of the gold standard is to rein in government spending, I would simply argue there are other ways to do that. It seems like throwing the baby out with the bath water to give up control of monetary policy in order to better control fiscal policy.
pjfin123 3y ago
I probably wouldn't recommend switching to the gold standard but I don't think the idea is "weird" or "no policy". - People ran productive economies for hundreds (thousands?) of years on the Gold standard and it worked. - It's credibly neutral and no one gets the exorbitant privilege of printing money. - The supply expands randomly when new deposits are found but this actually works pretty well. As the economy grows we get better at finding gold so prices stay relatively flat in real terms. - On a gold standard people will waste real resources trying to extract gold to sit in a vault but people waste real resources trying to get printed money too.
- Nasrudith 3y ago
  Say what you will about fiat, people haven't started wars of conquest to expand the maximum size of their economy because of it. Defining that as "waste of resources" is a massive underestimate.
- throw0101b 3y ago
  > - People ran productive economies for hundreds (thousands?) of years on the Gold standard and it worked. The Gold Standard (paper currency backed up rocks) only started in 1870. While gold (and silver) coins were used for some monetary needs, most (local) economies actually ran on credit: * https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years > - The supply expands randomly when new deposits are found but this actually works pretty well. As the economy grows we get better at finding gold so prices stay relatively flat in real terms. No it does not: * https://en.wikipedia.org/wiki/Great_Bullion_Famine https://en.wikipedia.org/wiki/Great_Bullion_Famine Neither does it add to financial stability: * https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... * https://archive.ph/FWKcL https://archive.ph/FWKcL

by slg 3y ago

jovial_cavalier 3y ago

[flagged]

legitster 3y ago

> As someone with an econ degree, people advocating for a return to the gold standard are so weird to me I mean, I understand. People really like simple things they can understand. And people hate inflation. It's clearly a bad idea, but I understand the appeal if you were raised in a blue-collar household and think debt is evil.

tivert 3y ago

> As someone with an econ degree, people advocating for a return to the gold standard are so weird to me. I totally understand people having objections to how central banks manage the money supply and the impacts that has on the economy, but that doesn't mean we should give up control of it completely. I think you're probably thinking about it wrong. It's not a conventional policy proposal. I think the main factor is just naked mistrust of people like you (people with an econ degree, etc), leading people to seek out simple solutions you have no control over. Another factor is people just getting high on pure ideology, and losing interest in solving actual problems in the pursuit of that ideology.

josu 3y ago

To be honest, people are saying that we should have never abandoned the gold standard, which is a bit more nuanced. >The gold standard is effectively no policy because it gives control of the money supply over to control of the gold supply. Hayek (he too had an econ degree I believe) could argue that advocating for the gold standard isn't necessarily advocating for "no policy." It is advocating for a different kind of policy, one that places more trust in market mechanisms rather than central planning. >Advocate for better policy. No matter how good of a policy you have for predicting Roulette numbers, your policy will be just as good as choosing at random, and most likely worse. Hayek would argue that there was a "knowledge problem" and no amount of econ degrees can solve it.

npongratz 3y ago
> Hayek (he too had an econ degree I believe)... I don't think Hayek had an economics degree, but in 1974 he did earn the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel: https://www.nobelprize.org/prizes/economic-sciences/1974/hayek/facts/ https://www.nobelprize.org/prizes/economic-sciences/1974/hay...
- tnecniv 3y ago
  I checked: his doctorates were in law and political science, with his undergraduate background consisting of a combination of philosophy, psychology, and economics.
slg 3y ago
>Hayek (he too had an econ degree I believe) could argue that advocating for the gold standard isn't necessarily advocating for "no policy." It is advocating for a different kind of policy, one that places more trust in market mechanisms rather than central planning. Yes, this was why I said "effectively no policy" and compared it to removing regulation in the wake of 2008. It isn't literally "no policy" in the same way that anarchy is still technically a governing philosophy. But it is still effectively the same as no policy by taking a laissez-faire approach. >No matter how good of a policy you have for predicting Roulette numbers, your policy will be just as good as choosing at random, and most likely worse. Hayek would argue that there was a "knowledge problem" and no amount of econ degrees can solve it. This is what I described as defeatist. The economy isn't roulette. In roulette, it is impossible to observe, react, and predict. I don't believe that is true of the economy. It seems borderline silly to suggest we can't observe an economic trend and react to it.

mikhailfranco 3y ago

Why does the Fed set interest rates (aka the price of money)? Because it can? Because it should? Why does the Fed not fix the price of bread?

mikhailfranco 3y ago

The gold standard does make prices depend on gold supply, but that is roughly 2% inflation (3kt mine supply over gold stock of ~150kt). That is roughly in line with BTC inflation at the moment, and also, as it happens, central bank inflation targets (expectations of anything more would lead people to buy gold, or BTC, or just warehouse cash). However, the real discipline of a gold standard is to restrict debt (credit). The market for lenders and borrowers (investors) sets the (Wicksellian) interest rate, as any market should. Governments cannot just print money to run indefinite deficits, to curry favor with the electorate. The democratic desire for low taxes and infinite subsidies cannot be consumated. There has to be fiscal discipline. That is the value of the gold standard.

slg 3y ago
You seem to be mixing inflation of the money supply with inflation of the value of money. There is strong causality there, but it isn't the only cause. Considering the money supply is the primary cause we have control over, going back to the gold standard creates greater risk of other causes like supply or demand shocks harming the economy as we would no longer be able to nudge inflation in the desired direction to counteract those other causes. And if the primary remaining benefit of the gold standard is to rein in government spending, I would simply argue there are other ways to do that. It seems like throwing the baby out with the bath water to give up control of monetary policy in order to better control fiscal policy.

pjfin123 3y ago

I probably wouldn't recommend switching to the gold standard but I don't think the idea is "weird" or "no policy". - People ran productive economies for hundreds (thousands?) of years on the Gold standard and it worked. - It's credibly neutral and no one gets the exorbitant privilege of printing money. - The supply expands randomly when new deposits are found but this actually works pretty well. As the economy grows we get better at finding gold so prices stay relatively flat in real terms. - On a gold standard people will waste real resources trying to extract gold to sit in a vault but people waste real resources trying to get printed money too.

Nasrudith 3y ago
Say what you will about fiat, people haven't started wars of conquest to expand the maximum size of their economy because of it. Defining that as "waste of resources" is a massive underestimate.
throw0101b 3y ago
> - People ran productive economies for hundreds (thousands?) of years on the Gold standard and it worked. The Gold Standard (paper currency backed up rocks) only started in 1870. While gold (and silver) coins were used for some monetary needs, most (local) economies actually ran on credit: * https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years > - The supply expands randomly when new deposits are found but this actually works pretty well. As the economy grows we get better at finding gold so prices stay relatively flat in real terms. No it does not: * https://en.wikipedia.org/wiki/Great_Bullion_Famine https://en.wikipedia.org/wiki/Great_Bullion_Famine Neither does it add to financial stability: * https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... * https://archive.ph/FWKcL https://archive.ph/FWKcL