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> Look at how the price of gold changed between 2000 and 2020. It's not at all constant (it's actually more volatile than the dollar) It's pretty rich for you

by pdonis 3y ago

> Look at how the price of gold changed between 2000 and 2020. It's not at all constant (it's actually more volatile than the dollar) It's pretty rich for you to be using the word "absurd" to describe what other people are posting, when you come out with this. Let me translate into actual plain English: the price of gold in dollars has gone up quite a lot between 2000 and 2020. (But note that it still hasn't reached the peak value it reached around 1980, after the huge inflation of the 1970s.) That is not because anything about gold has changed: it has the same industrial and other uses (such as jewelry) as before. The reason the price of gold in dollars has been so volatile is that dollars are volatile--because the government keeps monkeying with them. From 2000 to 2020, the government was printing dollars. In the early 1980s, by contrast, the government was destroying dollars (under Volcker), and the gold price in dollars dropped significantly. Not only that, but this observation isn't limited to gold. It's true of, well, basically everything that isn't money. For instance, houses, as npoc observed. And cars. And food. And clothes. And... The obvious conclusion from observations like this is that what is absurd is using dollars as any kind of measure of value, because the thing they are actually measuring has nothing to do with value to us, producers and consumers, and everything to do with how the government is messing with the money supply. Any commodity that has an actual use independent of government manipulation of the money supply--gold, wheat, whatever--is a better measure of value than money.

chowchowchow 3y ago
As was noted above. If your claims are true, then inflation was 800% in the 2000s and then 0% in the 2010s. There's clearly market supply/demand driving changes in gold price, not simply exchange rate fluctuation.
- pdonis 3y ago
  > There's clearly market supply/demand driving changes in gold price Of course. And in all other commodity prices. But in a world where the money supply was stable, those price changes, over time, would average out to zero. Or, if you factor in increased productivity over time, they would average out to a steady (if probably slow) decrease in the prices of goods and services. What you would not see is an average increase in the prices of goods and services over time. You would certainly not see such an increase normalized in everyone's expectations, so that everyone expects cost of living increases in their pay, everyone expects things to gradually get more expensive, etc. That requires monetary manipulation by the government.
  - chowchowchow 3y ago
    There’s no natural state of money is there? I feel like characterizing monetary policy that way, as manipulative, is normative and kinda begs the question that there’s a natural state of monetary policy. How could there be growth in the economy with a fixed pie of money? It is contradictory. There’d be a tremendously high bar for investment in any enterprise which could generate dollars if I could buy more tomorrow with the dollars I already have today. Think about how much bitcoin is being put to work in the productive economy versus hodled.
    - pdonis 3y ago
      > There’s no natural state of money is there? If you mean there is no specific quantity of money that is "natural", that's true. Any quantity of money can work. But that does not mean that changing the quantity of money as a routine, common operation is a good thing. > How could there be growth in the economy with a fixed pie of money? It is contradictory. No, it isn't. Economic growth means producing more goods and services. With a fixed quantity of money, that means either the velocity of money increases (money goes around in a circle faster in order to facilitate an increased number of transactions) or average prices decrease (so less money is required on average per transaction)--or more likely a combination of both. Both of those things are perfectly possible. (And even that leaves out increasing quality of goods and services, which results in more value created even if quantity stays the same, and with a fixed quantity of money means more value for the same money even if nothing else changes.) > There’d be a tremendously high bar for investment in any enterprise which could generate dollars if I could buy more tomorrow with the dollars I already have today. If the quantity of money is fixed, what does "enterprise which could generate dollars" mean? It can only mean a productive enterprise, which produces goods or services that people will pay money for. You want to encourage such enterprises, not discourage them. Indeed, it is only in an environment where the quantity of money is not fixed--where people can scheme to be given the privilege of printing more--that people end up squandering resources on activities which produce no useful goods or services, but do result in more money going into their pockets. Which is the situation we have now, where the government prints money as a way of stealthily transferring wealth to financial institutions without those institutions having to produce useful goods or services. > Think about how much bitcoin is being put to work in the productive economy versus hodled. But that is because the quantity of Bitcoin is not fixed. People can mint more. So Bitcoin is irrelevant to analyzing the case where the quantity of money is fixed.
qwytw 3y ago
> Let me translate into actual plain English Or "Let me leave out most of the details that matter".. > quite a lot between 2000 and 2020. > From 2000 to 2020, the government was So specifically between 2001 and 2011 governments have printed several times (~5x) more money than between 2011 and 2022? Because that's obviously not the case. In the first ten year period the price of gold increased fivefold during the second (despite growth in money supply only accelerating) it collapsed and didn't start recovering until 2019 (it's now worth only only slightly more than in 2011..). How does that fit in with the with whole printing hypothesis? > In the early 1980s, by contrast, the government was destroying dollars Just like after 2011? > that dollars are volatile It's not though. Generally the dollar depreciates at a fairly predictable rate. There is a spike here or there but it's nothing compared to the volatility of gold. > houses Yes. I certainly a agree that houses, food, cothers, cars etc. are much better units of measurement than gold (which is just commodity with a highly distorted/inflated price due to speculation..

by pdonis 3y ago

chowchowchow 3y ago

As was noted above. If your claims are true, then inflation was 800% in the 2000s and then 0% in the 2010s. There's clearly market supply/demand driving changes in gold price, not simply exchange rate fluctuation.

pdonis 3y ago
> There's clearly market supply/demand driving changes in gold price Of course. And in all other commodity prices. But in a world where the money supply was stable, those price changes, over time, would average out to zero. Or, if you factor in increased productivity over time, they would average out to a steady (if probably slow) decrease in the prices of goods and services. What you would not see is an average increase in the prices of goods and services over time. You would certainly not see such an increase normalized in everyone's expectations, so that everyone expects cost of living increases in their pay, everyone expects things to gradually get more expensive, etc. That requires monetary manipulation by the government.
- chowchowchow 3y ago
  There’s no natural state of money is there? I feel like characterizing monetary policy that way, as manipulative, is normative and kinda begs the question that there’s a natural state of monetary policy. How could there be growth in the economy with a fixed pie of money? It is contradictory. There’d be a tremendously high bar for investment in any enterprise which could generate dollars if I could buy more tomorrow with the dollars I already have today. Think about how much bitcoin is being put to work in the productive economy versus hodled.
  - pdonis 3y ago
    > There’s no natural state of money is there? If you mean there is no specific quantity of money that is "natural", that's true. Any quantity of money can work. But that does not mean that changing the quantity of money as a routine, common operation is a good thing. > How could there be growth in the economy with a fixed pie of money? It is contradictory. No, it isn't. Economic growth means producing more goods and services. With a fixed quantity of money, that means either the velocity of money increases (money goes around in a circle faster in order to facilitate an increased number of transactions) or average prices decrease (so less money is required on average per transaction)--or more likely a combination of both. Both of those things are perfectly possible. (And even that leaves out increasing quality of goods and services, which results in more value created even if quantity stays the same, and with a fixed quantity of money means more value for the same money even if nothing else changes.) > There’d be a tremendously high bar for investment in any enterprise which could generate dollars if I could buy more tomorrow with the dollars I already have today. If the quantity of money is fixed, what does "enterprise which could generate dollars" mean? It can only mean a productive enterprise, which produces goods or services that people will pay money for. You want to encourage such enterprises, not discourage them. Indeed, it is only in an environment where the quantity of money is not fixed--where people can scheme to be given the privilege of printing more--that people end up squandering resources on activities which produce no useful goods or services, but do result in more money going into their pockets. Which is the situation we have now, where the government prints money as a way of stealthily transferring wealth to financial institutions without those institutions having to produce useful goods or services. > Think about how much bitcoin is being put to work in the productive economy versus hodled. But that is because the quantity of Bitcoin is not fixed. People can mint more. So Bitcoin is irrelevant to analyzing the case where the quantity of money is fixed.

qwytw 3y ago

> Let me translate into actual plain English Or "Let me leave out most of the details that matter".. > quite a lot between 2000 and 2020. > From 2000 to 2020, the government was So specifically between 2001 and 2011 governments have printed several times (~5x) more money than between 2011 and 2022? Because that's obviously not the case. In the first ten year period the price of gold increased fivefold during the second (despite growth in money supply only accelerating) it collapsed and didn't start recovering until 2019 (it's now worth only only slightly more than in 2011..). How does that fit in with the with whole printing hypothesis? > In the early 1980s, by contrast, the government was destroying dollars Just like after 2011? > that dollars are volatile It's not though. Generally the dollar depreciates at a fairly predictable rate. There is a spike here or there but it's nothing compared to the volatility of gold. > houses Yes. I certainly a agree that houses, food, cothers, cars etc. are much better units of measurement than gold (which is just commodity with a highly distorted/inflated price due to speculation..