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>I'm not really sure how that's the case when inflation expectations are baked into any sort of fixed income products. The poorest people in the US, lower and

>I'm not really sure how that's the case when inflation expectations are baked into any sort of fixed income products. The poorest people in the US, lower and lower-middle class, aren't holding many fixed-income products, and they're the ones hit hardest by inflation. But that aside, even if your fixed-income product covers inflation, you're still taxed on the capital gains as if it was real profit, because capital gains taxes (at least in the US) don't account for inflation. I.e. they tax the nominal gain, not the real gain.

gruez 3y ago
This presumes that inflation wouldn't happen with gold, which isn't straightforwardly true. Technological advances could make gold easier to extract which would increase their supply, which in effect is printing money. Also, going back to your point about how benefit accrues to "elites in the financial system" because of the Cantillon effect, it's unclear why that wouldn't occur with gold backed currency. After all, gold would still be mined. The only difference is that it would go to miners rather than "elites in the financial system".
- Geisterde 3y ago
  Historically the profit from gold mining was the least common denominator of society. The cost of gold mining closely tracks the revenue, meaning almost any other profitable investment would be preferable.
- logicchains 3y ago
  >This presumes that inflation wouldn't happen with gold, which isn't straightforwardly true. Technological advances could make gold easier to extract which would increase their supply, which in effect is printing money. Yes, but it's unlikely there'd be such advances made consistently year after year, given that's not what we've seen historically. The US had a gold-backed currency for the entire 1800s and there wasn't any significant inflation: https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1800- https://www.minneapolisfed.org/about-us/monetary-policy/infl... . >The only difference is that it would go to miners rather than "elites in the financial system". Yes you're right. Based on historical data though I'd expect them to receive overall much less than the financial industry currently does, given how much less inflation there was in the period prior to Bretton Woods ending. As per that link I shared earlier, the CPI was 51 in 1800, 25 in 1900, 116.7 in 1970, and 900 in 2023.
  - gruez 3y ago
    >The US had a gold-backed currency for the entire 1800s and there wasn't any significant inflation: https://www.minneapolisfed.org/about-us/monetary-policy/infl https://www.minneapolisfed.org/about-us/monetary-policy/infl... . The same source also shows that between 1800 and 1850 prices halved. I guess that's technically not inflation, but 50% deflation isn't great either and causes other economic problems.
    - logicchains 3y ago
      >I guess that's technically not inflation, but 50% deflation isn't great either and causes other economic problems Yes, there was a lot of deflation in the 1800s, and although it caused hardship, GDP per capita continued to grow at around 4% throughout the century, without huge dips like we saw in the Great Depression or the GFC.
- airbreather 3y ago
  Gold mining is effectively a black box that takes diesel in and produces gold out

gruez 3y ago

This presumes that inflation wouldn't happen with gold, which isn't straightforwardly true. Technological advances could make gold easier to extract which would increase their supply, which in effect is printing money. Also, going back to your point about how benefit accrues to "elites in the financial system" because of the Cantillon effect, it's unclear why that wouldn't occur with gold backed currency. After all, gold would still be mined. The only difference is that it would go to miners rather than "elites in the financial system".

Geisterde 3y ago
Historically the profit from gold mining was the least common denominator of society. The cost of gold mining closely tracks the revenue, meaning almost any other profitable investment would be preferable.
logicchains 3y ago
>This presumes that inflation wouldn't happen with gold, which isn't straightforwardly true. Technological advances could make gold easier to extract which would increase their supply, which in effect is printing money. Yes, but it's unlikely there'd be such advances made consistently year after year, given that's not what we've seen historically. The US had a gold-backed currency for the entire 1800s and there wasn't any significant inflation: https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1800- https://www.minneapolisfed.org/about-us/monetary-policy/infl... . >The only difference is that it would go to miners rather than "elites in the financial system". Yes you're right. Based on historical data though I'd expect them to receive overall much less than the financial industry currently does, given how much less inflation there was in the period prior to Bretton Woods ending. As per that link I shared earlier, the CPI was 51 in 1800, 25 in 1900, 116.7 in 1970, and 900 in 2023.
- gruez 3y ago
  >The US had a gold-backed currency for the entire 1800s and there wasn't any significant inflation: https://www.minneapolisfed.org/about-us/monetary-policy/infl https://www.minneapolisfed.org/about-us/monetary-policy/infl... . The same source also shows that between 1800 and 1850 prices halved. I guess that's technically not inflation, but 50% deflation isn't great either and causes other economic problems.
  - logicchains 3y ago
    >I guess that's technically not inflation, but 50% deflation isn't great either and causes other economic problems Yes, there was a lot of deflation in the 1800s, and although it caused hardship, GDP per capita continued to grow at around 4% throughout the century, without huge dips like we saw in the Great Depression or the GFC.
airbreather 3y ago
Gold mining is effectively a black box that takes diesel in and produces gold out