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> Treasury Secretary John Connally to meet with these leaders in Rome. They asked, “What do we do? Now that you’re not on gold, you can just inflate this stuff,

> Treasury Secretary John Connally to meet with these leaders in Rome. They asked, “What do we do? Now that you’re not on gold, you can just inflate this stuff, and we’re stuck with it.” And Connally replied, “Well, it’s our dollar, but it’s your problem.” Unrelated but this is John Connaly who was governor of Texas during the JFK assassination. One of the bullets -- possibly the one that killed Kennedy -- went through Connaly's wrist & ribs

greenavocado 1y ago
Shortly after JFK: https://wtfhappenedin1971.com https://wtfhappenedin1971.com
- hayst4ck 1y ago
  https://en.wikipedia.org/wiki/Bretton_Woods_system https://en.wikipedia.org/wiki/Bretton_Woods_system It was the end of the bretton woods system/the gold backed US dollar. The major consequences are inflation, which devalues savings and transfers the buying power lost from devalued savings to those who own assets, and removing the consequences of poor policy, letting the market remain more irrational and letting corruption fester longer before reality asserts itself. Because the relationship between money and value are severed, it allows for wage stagnation and real economic production to stagnate while paper power and paper growth are allowed to metastasize because the supply of money can always be expanded rather than having to deal with the reality of potentially not being able to import things that fuel the engine of your economy. So 1971 is when we started to hang ourselves with our exorbitent privilege: https://en.wikipedia.org/wiki/Exorbitant_privilege https://en.wikipedia.org/wiki/Exorbitant_privilege
  - vkou 1y ago
    Instead of only listing the disadvantages, could you list the advantages of decoupling the money supply from how quickly we can dig yellow rocks out of the ground? There are quite a few of them, and you've conspicuously omitted them. It's a bit like issuing a scathing review of the automobile by listing all the disadvantages of diesel engines compared to horses.
    - hayst4ck 1y ago
      Yeah I could see why you would say that. I linked the article to exorbitant privilege which states some of those advantages. If you are responsible with your levels of corruption, then fiat currency is generally very beneficial. So it ends up being like a drug. Appropriate amounts can improve your life, but abuse, which the drug will promote, can destroy it. It's a form of power, and if you can use it responsibly it's good, and if you abuse it it's bad. Rampant shortermism promoted by shareholder supremacy especially when compounded by government funded bailouts really amplifies our ability to damage our future with our monetary system. If you can think in the long term then it's very net beneficial, but if you allow short term interests to dominate... the hangover will be devastating. Thinking about it more, lack of inflation makes savings valuable and potentially implies deflation where saving/not spending money gives you more buying power than investing it. This takes money out of the market and reduces "dollar velocity"/the sum total of market activity which can devastate your economy.
      - hayst4ck 1y ago
        The elephant in the room is that rich people need to be taxed and their wealth redistributed. If that happens, then there is a mechanism that prevents systems of compounding power, and the wages "stolen" by inflation are put back into the economy rather than becoming part of someone's hoard. If wealth is redistributed then that allows for monetary inflation without changing power relationships. If that does not happen, then power compounds and those with power will enact systems that benefit themselves since they will never have to experience the long term consequences of their looting of tomorrow for today. The poor will continue to get poorer and the rich will get richer, until the rich have so much power and poor have so little power, that law, the prevention of arbitrary exercises of power by the powerful, becomes meaningless and the rich will take what they wish unopposed. Some people will get so powerful that when a government says "you can't fish all the fish in the sea because we need to have fish next year" they pay enough money to replace that government's politicians with politicians that say you can, then next year there are no more fish left to fish. Money is a note that denotes buying power, but that note is meaningful because there is a law that says it is meaningful and people with guns enforce that it is meaningful. So if people get powerful enough to subordinate people with guns it means that power is more effective at acquiring resources than money since someone with power can just take what they want without consequence. So inflationary monetary policy is good because it means more money is active in the economy, but inflationary policy is bad because it also concentrates money/power and you must have a system to prevent the power concentration that inflation causes by default if you want the system to remain coherent.
  - y1426i 1y ago
    If I sell an apple for one gold coin, that gold coin will probably fetch me two apples in the future. Which happens for a resource whose need is growing while supply is limited. This also means my gold appreciated without me generating any value over time. It creates an incentive to save and not spend. Therein lies the problem with gold, which is why a decoupled currency was required. A natural resource such as gold or bitcoin, appreciates as the economy grows, which in turn slows the economy down. With a printable currency, a country can control inflation or depreciate past value to create agony for people who have to continuously work to create more value. That is what forces nation-building and what capitalism helps with. Dollar worked. And it won't be replaced with a fixed resource such as gold or bitcoins. But as the article mentions, it may not remain unique. That will be very interesting though, since the world has never experienced those dynamics before.
gscott 1y ago
If I am China I lend you money I would like get paid back in dollars because I can already print as many Yuan as a I want. Why should I lend to you in a currency I can turn the printing press on for. So it feels like the Dollar will be around for awhile as long as it is accepted, convertible, and the Government tries to slow down the printing press themselves.
- alfiedotwtf 1y ago
  You know… there are other alternatives to the Yuan, but your response makes it sound like USD is the only choice
  - gscott 1y ago
    The Euro may go for it https://www.bruegel.org/first-glance/more-eu-debt-issuance-would-be-best-response-trumps-tariffs https://www.bruegel.org/first-glance/more-eu-debt-issuance-w...
    - mcv 1y ago
      The Euro already is the second reserve currency of the world, and because it's already an international currency, no single country can just decide to print more. It's a far more attractive choice than the Yuan or arguably the Dollar.
      - alfiedotwtf 1y ago
        It will be interesting if countries eventually move to crypto stable coins that aren't tied to individual powers
- mitthrowaway2 1y ago
  Why would that be any better or worse than being paid back in paper that your counterpart can print with their own printing press?
  - 1y ago

greenavocado 1y ago

Shortly after JFK: https://wtfhappenedin1971.com https://wtfhappenedin1971.com

hayst4ck 1y ago
https://en.wikipedia.org/wiki/Bretton_Woods_system https://en.wikipedia.org/wiki/Bretton_Woods_system It was the end of the bretton woods system/the gold backed US dollar. The major consequences are inflation, which devalues savings and transfers the buying power lost from devalued savings to those who own assets, and removing the consequences of poor policy, letting the market remain more irrational and letting corruption fester longer before reality asserts itself. Because the relationship between money and value are severed, it allows for wage stagnation and real economic production to stagnate while paper power and paper growth are allowed to metastasize because the supply of money can always be expanded rather than having to deal with the reality of potentially not being able to import things that fuel the engine of your economy. So 1971 is when we started to hang ourselves with our exorbitent privilege: https://en.wikipedia.org/wiki/Exorbitant_privilege https://en.wikipedia.org/wiki/Exorbitant_privilege
- vkou 1y ago
  Instead of only listing the disadvantages, could you list the advantages of decoupling the money supply from how quickly we can dig yellow rocks out of the ground? There are quite a few of them, and you've conspicuously omitted them. It's a bit like issuing a scathing review of the automobile by listing all the disadvantages of diesel engines compared to horses.
  - hayst4ck 1y ago
    Yeah I could see why you would say that. I linked the article to exorbitant privilege which states some of those advantages. If you are responsible with your levels of corruption, then fiat currency is generally very beneficial. So it ends up being like a drug. Appropriate amounts can improve your life, but abuse, which the drug will promote, can destroy it. It's a form of power, and if you can use it responsibly it's good, and if you abuse it it's bad. Rampant shortermism promoted by shareholder supremacy especially when compounded by government funded bailouts really amplifies our ability to damage our future with our monetary system. If you can think in the long term then it's very net beneficial, but if you allow short term interests to dominate... the hangover will be devastating. Thinking about it more, lack of inflation makes savings valuable and potentially implies deflation where saving/not spending money gives you more buying power than investing it. This takes money out of the market and reduces "dollar velocity"/the sum total of market activity which can devastate your economy.
    - hayst4ck 1y ago
      The elephant in the room is that rich people need to be taxed and their wealth redistributed. If that happens, then there is a mechanism that prevents systems of compounding power, and the wages "stolen" by inflation are put back into the economy rather than becoming part of someone's hoard. If wealth is redistributed then that allows for monetary inflation without changing power relationships. If that does not happen, then power compounds and those with power will enact systems that benefit themselves since they will never have to experience the long term consequences of their looting of tomorrow for today. The poor will continue to get poorer and the rich will get richer, until the rich have so much power and poor have so little power, that law, the prevention of arbitrary exercises of power by the powerful, becomes meaningless and the rich will take what they wish unopposed. Some people will get so powerful that when a government says "you can't fish all the fish in the sea because we need to have fish next year" they pay enough money to replace that government's politicians with politicians that say you can, then next year there are no more fish left to fish. Money is a note that denotes buying power, but that note is meaningful because there is a law that says it is meaningful and people with guns enforce that it is meaningful. So if people get powerful enough to subordinate people with guns it means that power is more effective at acquiring resources than money since someone with power can just take what they want without consequence. So inflationary monetary policy is good because it means more money is active in the economy, but inflationary policy is bad because it also concentrates money/power and you must have a system to prevent the power concentration that inflation causes by default if you want the system to remain coherent.
- y1426i 1y ago
  If I sell an apple for one gold coin, that gold coin will probably fetch me two apples in the future. Which happens for a resource whose need is growing while supply is limited. This also means my gold appreciated without me generating any value over time. It creates an incentive to save and not spend. Therein lies the problem with gold, which is why a decoupled currency was required. A natural resource such as gold or bitcoin, appreciates as the economy grows, which in turn slows the economy down. With a printable currency, a country can control inflation or depreciate past value to create agony for people who have to continuously work to create more value. That is what forces nation-building and what capitalism helps with. Dollar worked. And it won't be replaced with a fixed resource such as gold or bitcoins. But as the article mentions, it may not remain unique. That will be very interesting though, since the world has never experienced those dynamics before.

gscott 1y ago

If I am China I lend you money I would like get paid back in dollars because I can already print as many Yuan as a I want. Why should I lend to you in a currency I can turn the printing press on for. So it feels like the Dollar will be around for awhile as long as it is accepted, convertible, and the Government tries to slow down the printing press themselves.

alfiedotwtf 1y ago
You know… there are other alternatives to the Yuan, but your response makes it sound like USD is the only choice
- gscott 1y ago
  The Euro may go for it https://www.bruegel.org/first-glance/more-eu-debt-issuance-would-be-best-response-trumps-tariffs https://www.bruegel.org/first-glance/more-eu-debt-issuance-w...
  - mcv 1y ago
    The Euro already is the second reserve currency of the world, and because it's already an international currency, no single country can just decide to print more. It's a far more attractive choice than the Yuan or arguably the Dollar.
    - alfiedotwtf 1y ago
      It will be interesting if countries eventually move to crypto stable coins that aren't tied to individual powers
mitthrowaway2 1y ago
Why would that be any better or worse than being paid back in paper that your counterpart can print with their own printing press?
- 1y ago