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> gold-pegged Between Sep 2012 and Jul 2013 gold went from $1780 to $1210 (-32%). Between Feb 2024 and today gold went from $2040 to $2950 (+45%). That's a c

> gold-pegged Between Sep 2012 and Jul 2013 gold went from $1780 to $1210 (-32%). Between Feb 2024 and today gold went from $2040 to $2950 (+45%). That's a crazy amount of volatility you would never want as a currency. Can you imagine signing multi-year contracts denominated in that? Even monthly contracts! It would be madness.

Xen9 2y ago
Did it ever fluctuate like that when it was pegged?
- kasey_junk 2y ago
  How could it, it was pegged? That’s begging the question. But you can see that inflation (and worse deflation) had volatility when the us was on the gold standard: https://www.investopedia.com/inflation-rate-by-year-7253832 https://www.investopedia.com/inflation-rate-by-year-7253832 If you dig into the 1800s the volatility was even worse.
  - Xen9 2y ago
    It's a bidirectional relationship. The value of gold actually remained stable when the U.S. dollar was pegged to it. I view that as evidence for pegging stabilizing the value of the commodity it is pegged to. However is an simplification, because share of the dollar relative to other currencies policies has changed. I also only believe the system I depicted would work, if the exports of the commodity were restricted so that no one or only the central bank could sell it abroad.
    - kasey_junk 2y ago
      Saying something is “pegged” is saying that the price is fixed. There doesn’t exist any volatility between pegged instruments because that’s what a peg means. So you have to compare them to other things, which is what inflation (or deflation) measures. And gold pegged usd has volatility to other items in the economy greater than modern fiat usd.
      - Xen9 2y ago
        Then I certainly feel confused & may be wrong. --- Edit: You're near-certainly right that pegging in dollars would means some rate, let's for simplicity presume a constant ratio, between dollars and what it's begged to. I think crux is what happens if we model two different currencies, one of which is begged, and the price of te commodity in each. If after the conversion rate you can get cheap gold, that keeps golds value low and pegged currency's value high, I would guess. Again I think restricting impots in the commodity is necessary to maintain supply.

Xen9 2y ago

Did it ever fluctuate like that when it was pegged?

kasey_junk 2y ago
How could it, it was pegged? That’s begging the question. But you can see that inflation (and worse deflation) had volatility when the us was on the gold standard: https://www.investopedia.com/inflation-rate-by-year-7253832 https://www.investopedia.com/inflation-rate-by-year-7253832 If you dig into the 1800s the volatility was even worse.
- Xen9 2y ago
  It's a bidirectional relationship. The value of gold actually remained stable when the U.S. dollar was pegged to it. I view that as evidence for pegging stabilizing the value of the commodity it is pegged to. However is an simplification, because share of the dollar relative to other currencies policies has changed. I also only believe the system I depicted would work, if the exports of the commodity were restricted so that no one or only the central bank could sell it abroad.
  - kasey_junk 2y ago
    Saying something is “pegged” is saying that the price is fixed. There doesn’t exist any volatility between pegged instruments because that’s what a peg means. So you have to compare them to other things, which is what inflation (or deflation) measures. And gold pegged usd has volatility to other items in the economy greater than modern fiat usd.
    - Xen9 2y ago
      Then I certainly feel confused & may be wrong. --- Edit: You're near-certainly right that pegging in dollars would means some rate, let's for simplicity presume a constant ratio, between dollars and what it's begged to. I think crux is what happens if we model two different currencies, one of which is begged, and the price of te commodity in each. If after the conversion rate you can get cheap gold, that keeps golds value low and pegged currency's value high, I would guess. Again I think restricting impots in the commodity is necessary to maintain supply.