6 ms·

Depends on what he means by business issues. A very good argument can be easily made that a fiat currency is a necessary but not sufficient element in modern w

Depends on what he means by business issues. A very good argument can be easily made that a fiat currency is a necessary but not sufficient element in modern well-being. Prior to fiat currencies there was a fixed amount of gold, and every coin in your pocket was a coin out of someone else's pocket. Imagine a fixed number of software copies, a gold based currency is a lot like DRM for money. Further more you can easily argue that making health care part of employer compensation (as is common in the US) leads to less well-being then making it a separate (in Europe often nationalized) good. Those are two business issues with a direct impact on general well-being, and that's just off the top of my head.

hendler 18y ago
Good point - business issues and quality of life are not mutually exclusive. But for me, I interpreted the statement as "When business issues and quality of life issues are in conflict and you have to choose one over the other, I choose quality of life issues". Maybe I misread.
jacoblyles 18y ago
You're wrong on the fiat-money/gold standard point. You're forgetting about the price level. Any given economy can be run on any given supply of money, the prices and currency denominations just need to adjust. A gold standard doesn't transform an economy into a zero-sum game. Pure fiat money has been functioning in the West since only 1971 when Nixon suspended the dollar's conversion to gold as a prelude to a rather shitty decade in terms of economic performance. Fiat currency has been tried plenty of times over the last few centuries; it was never a stable monetary regime. Our experiment with fiat is new and bold, and as yet unproven. If it turns out to be successful, it would be the first time.
- biohacker42 18y ago
  What happens if new value is added to the economy? Perhaps I've just discovered a cure for the common cold. The same amount of money is now chasing a bigger pot. Suppose lots of people pay me for my cure, and I just save all the money, what happens to the restaurant down the road? Also fiat currencies predate Nixon, the paper contracts between members of the Hanseatic League can be thought of as a form of fiat currency.
  - jacoblyles 18y ago
    The same amount of money chasing fewer goods leads to deflation - each unit of currency can buy more goods. When this occurs due to an increase in productivity, such as in the example you describe, deflation can accompany economic growth. Deflation was paired with economic growth in the United States under the gold standard for about 30 years at the end of the 19th century. This was a good recent article on a related topic. Selgin is a well-known monetary economist: http://www.amconmag.com/article/2009/feb/09/00014/ http://www.amconmag.com/article/2009/feb/09/00014/
    - biohacker42 18y ago
      From the article: After all, technology was improving, so goods cost less to produce. Why shouldn’t prices reflect that reality? When it's cheaper and easier to pull MORE gold out of the ground, that's not strictly speaking a fixed money supply. When Rome (the empire) dumped a whole bunch of new found (stolen) gold on Rome (the city) that caused inflation too. If your money supply is growing - it's growing. Now if you have far too lose a monetary policy and you're inflating the money supply way too much and way too fast, that can be disastrous. But if Alan Greenspan had found a way to convert led into gold, we would have gotten the real estate bubble even with a gold standard.
      - corentin 18y ago
        Except he hasn't. Under the gold standard, there is a feedback loop allowing the market to control inflation (that is, people can invest more or less in mining technologies/companies). To some extent, this feedback loop also exists in a central banking system; it's far from being as efficient.
        gravitycop 18y ago
        Under the gold standard, there is a feedback loop allowing the market to control inflation Why would one want to control inflation? Inflation does not have anything to do with economic health, does it? http://www.globalpolicy.org/socecon/bwi-wto/jubi2000.htm http://www.globalpolicy.org/socecon/bwi-wto/jubi2000.htm below 40% inflation per year, 'there is no evidence that inflation is costly'. Furthermore, there is no evidence of a 'slippery slope' there is no evidence that one increase in inflation causes further increases. Thus 'the focus on inflation ... has led to macroeconomic policies which may not be the most conducive for long-term economic growth.'

hendler 18y ago

Good point - business issues and quality of life are not mutually exclusive. But for me, I interpreted the statement as "When business issues and quality of life issues are in conflict and you have to choose one over the other, I choose quality of life issues". Maybe I misread.

jacoblyles 18y ago

You're wrong on the fiat-money/gold standard point. You're forgetting about the price level. Any given economy can be run on any given supply of money, the prices and currency denominations just need to adjust. A gold standard doesn't transform an economy into a zero-sum game. Pure fiat money has been functioning in the West since only 1971 when Nixon suspended the dollar's conversion to gold as a prelude to a rather shitty decade in terms of economic performance. Fiat currency has been tried plenty of times over the last few centuries; it was never a stable monetary regime. Our experiment with fiat is new and bold, and as yet unproven. If it turns out to be successful, it would be the first time.

biohacker42 18y ago
What happens if new value is added to the economy? Perhaps I've just discovered a cure for the common cold. The same amount of money is now chasing a bigger pot. Suppose lots of people pay me for my cure, and I just save all the money, what happens to the restaurant down the road? Also fiat currencies predate Nixon, the paper contracts between members of the Hanseatic League can be thought of as a form of fiat currency.
- jacoblyles 18y ago
  The same amount of money chasing fewer goods leads to deflation - each unit of currency can buy more goods. When this occurs due to an increase in productivity, such as in the example you describe, deflation can accompany economic growth. Deflation was paired with economic growth in the United States under the gold standard for about 30 years at the end of the 19th century. This was a good recent article on a related topic. Selgin is a well-known monetary economist: http://www.amconmag.com/article/2009/feb/09/00014/ http://www.amconmag.com/article/2009/feb/09/00014/
  - biohacker42 18y ago
    From the article: After all, technology was improving, so goods cost less to produce. Why shouldn’t prices reflect that reality? When it's cheaper and easier to pull MORE gold out of the ground, that's not strictly speaking a fixed money supply. When Rome (the empire) dumped a whole bunch of new found (stolen) gold on Rome (the city) that caused inflation too. If your money supply is growing - it's growing. Now if you have far too lose a monetary policy and you're inflating the money supply way too much and way too fast, that can be disastrous. But if Alan Greenspan had found a way to convert led into gold, we would have gotten the real estate bubble even with a gold standard.
    - corentin 18y ago
      Except he hasn't. Under the gold standard, there is a feedback loop allowing the market to control inflation (that is, people can invest more or less in mining technologies/companies). To some extent, this feedback loop also exists in a central banking system; it's far from being as efficient.
      - gravitycop 18y ago
        Under the gold standard, there is a feedback loop allowing the market to control inflation Why would one want to control inflation? Inflation does not have anything to do with economic health, does it? http://www.globalpolicy.org/socecon/bwi-wto/jubi2000.htm http://www.globalpolicy.org/socecon/bwi-wto/jubi2000.htm below 40% inflation per year, 'there is no evidence that inflation is costly'. Furthermore, there is no evidence of a 'slippery slope' there is no evidence that one increase in inflation causes further increases. Thus 'the focus on inflation ... has led to macroeconomic policies which may not be the most conducive for long-term economic growth.'