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>the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the in

by 1gor 18y ago

>the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”. Gold exists already.

Retric 18y ago
Gold is highly unstable which is bad. It's value fluctuates even faster than the USD.
- 1gor 18y ago
  I would argue that USD and the rest of currncs are unstable vs. gold. Supply of gold is fixed. Supply of paper money is at the whim of greenspans.
  - Retric 18y ago
    If you compare it with a basket of goods it's still highly unstable. It's not a true random walk, but day to day gold fluctuations can be extreme and it's still in the middle of a bubble so expect a sudden crash some time soon.
    - 1gor 18y ago
      If basket of goods was priced in gold rather than dollars - then its price would also be more stable. There have been centuries when gold was legal tender and nobody complained (apart from some emperors who found debasing gold coins by adding copper was a bit difficult; but printing press has not been invented yet).
      - Retric 18y ago
        Think about this for a second, if you value a basket of goods in terms of oil and oil's value is fluctuating rapidly then the value of those goods also seems to fluctuate rapidly. So when you compare 2 things one of whose value is stable like USD or a basket of goods, and something else that is unstable like Gold. Then the unstable item makes the value of the other things seem to fluctuate. However, by making several comparisons you can determine that the ratio of USD to basket of goods is stable but gold vs USD or Basket is unstable so it's Gold that is unstable.
    - bokonist 18y ago
      Gold flucuates enormously because it is currently not the official currency of any country. If it ever became a major currency, it's price would sky rocket as it would have to absorb a huge amount of new monetary demand. Thus gold's current price fluctuations are basically a bet on the demise of Bretton Woods II. But if gold ever became an official currency, it's price would shoot up and then stabilize. After stabilizing its price would be more stable than any other form of currency. Gold has the lowest flow to stock ratio of any good, so its a perfect nash equilibrium as a currency. And empirically, the classical gold standard from 1865-1913 had much greater price stability than we have now.
      - marvin 18y ago
        This is pretty interesting. How much would the price of gold skyrocket if it were adopted as the international currency peg/medium of exchange/etc? Divide all the money in the world on the amount of gold available. That's the new price per ounce of gold. It would be a massive increase. With a gold price that high, it might become profitable to just synthesize gold in a nuclear reactor. Which would destroy the point of imposing a gold standard in the first place. Even if it wouldn't be profitable with today's technology, it would become a very lucrative field. Which you would have to outlaw. Etc. etc. etc. What all the gold nerds are really clamoring for is an international agreement saying that no one will ever increase the money supply. This won't happen. A system of fixed currencies is as unrealistic as every nation suddenly deciding to adopt communism.
        cousin_it 18y ago
        You could tie the currency to energy, then individual people synthesizing it would be a good thing.
        asmithmd1 18y ago
        would it? Say you invented infinite, free, clean energy. You would wind up heating the earth as all the energy would have to dissipate somewhere. What does everyone really want? Happiness - if you generate happiness then your Wuffie account should be credited.
- savantguy 18y ago
  haha.... in 1971 when the US Gov. defaulted on gold, they stopped other countries from redeeming dollars for gold. Thus removing the FIXED exchange rate with a commodity that has been used for centurys as MONEY. Ever since 1971 all currencies are just floating and thus are NOT stable. Imagine being a saver and thinking "what will my cash savings be worth in the future? What about inflation?" The US Dollar is FIAT, which means its only money because the government says so. Gold has been chosen BY the people for THOUSANDS OF YEARS! The US Gov. AND the Fed have screwed this country for decades and all the crap is finally coming out in the open. I could go on and on about about these problems but would rather you just goto mises.org and learn some real economics. The standard of living here in the US will be going down HUGE so prepare yourself. Oh, btw, why don't you check the "value" of gold against ALL currencies and see what it tells you. Hint... Gold measured in ALL currencies has passed its all time highs, the only currency that hasn't (minus the 1980's high) is the USD, but that is because the USD is the reserve currency. This article is just another indicator of how our currency is going to crap...
  - Retric 18y ago
    Only governments and idiots keep their long term investments in USD, Gold, or anything that does not actively increase in value. Anyway, compare the cost of gold and salt over the last 20 years and we might want to go back to the roman's currency because as I said Gold is highly volatile as is anything once you start treating it as a currency.

by 1gor 18y ago

Retric 18y ago

Gold is highly unstable which is bad. It's value fluctuates even faster than the USD.

1gor 18y ago
I would argue that USD and the rest of currncs are unstable vs. gold. Supply of gold is fixed. Supply of paper money is at the whim of greenspans.
- Retric 18y ago
  If you compare it with a basket of goods it's still highly unstable. It's not a true random walk, but day to day gold fluctuations can be extreme and it's still in the middle of a bubble so expect a sudden crash some time soon.
  - 1gor 18y ago
    If basket of goods was priced in gold rather than dollars - then its price would also be more stable. There have been centuries when gold was legal tender and nobody complained (apart from some emperors who found debasing gold coins by adding copper was a bit difficult; but printing press has not been invented yet).
    - Retric 18y ago
      Think about this for a second, if you value a basket of goods in terms of oil and oil's value is fluctuating rapidly then the value of those goods also seems to fluctuate rapidly. So when you compare 2 things one of whose value is stable like USD or a basket of goods, and something else that is unstable like Gold. Then the unstable item makes the value of the other things seem to fluctuate. However, by making several comparisons you can determine that the ratio of USD to basket of goods is stable but gold vs USD or Basket is unstable so it's Gold that is unstable.
  - bokonist 18y ago
    Gold flucuates enormously because it is currently not the official currency of any country. If it ever became a major currency, it's price would sky rocket as it would have to absorb a huge amount of new monetary demand. Thus gold's current price fluctuations are basically a bet on the demise of Bretton Woods II. But if gold ever became an official currency, it's price would shoot up and then stabilize. After stabilizing its price would be more stable than any other form of currency. Gold has the lowest flow to stock ratio of any good, so its a perfect nash equilibrium as a currency. And empirically, the classical gold standard from 1865-1913 had much greater price stability than we have now.
    - marvin 18y ago
      This is pretty interesting. How much would the price of gold skyrocket if it were adopted as the international currency peg/medium of exchange/etc? Divide all the money in the world on the amount of gold available. That's the new price per ounce of gold. It would be a massive increase. With a gold price that high, it might become profitable to just synthesize gold in a nuclear reactor. Which would destroy the point of imposing a gold standard in the first place. Even if it wouldn't be profitable with today's technology, it would become a very lucrative field. Which you would have to outlaw. Etc. etc. etc. What all the gold nerds are really clamoring for is an international agreement saying that no one will ever increase the money supply. This won't happen. A system of fixed currencies is as unrealistic as every nation suddenly deciding to adopt communism.
      - cousin_it 18y ago
        You could tie the currency to energy, then individual people synthesizing it would be a good thing.
        asmithmd1 18y ago
        would it? Say you invented infinite, free, clean energy. You would wind up heating the earth as all the energy would have to dissipate somewhere. What does everyone really want? Happiness - if you generate happiness then your Wuffie account should be credited.
savantguy 18y ago
haha.... in 1971 when the US Gov. defaulted on gold, they stopped other countries from redeeming dollars for gold. Thus removing the FIXED exchange rate with a commodity that has been used for centurys as MONEY. Ever since 1971 all currencies are just floating and thus are NOT stable. Imagine being a saver and thinking "what will my cash savings be worth in the future? What about inflation?" The US Dollar is FIAT, which means its only money because the government says so. Gold has been chosen BY the people for THOUSANDS OF YEARS! The US Gov. AND the Fed have screwed this country for decades and all the crap is finally coming out in the open. I could go on and on about about these problems but would rather you just goto mises.org and learn some real economics. The standard of living here in the US will be going down HUGE so prepare yourself. Oh, btw, why don't you check the "value" of gold against ALL currencies and see what it tells you. Hint... Gold measured in ALL currencies has passed its all time highs, the only currency that hasn't (minus the 1980's high) is the USD, but that is because the USD is the reserve currency. This article is just another indicator of how our currency is going to crap...
- Retric 18y ago
  Only governments and idiots keep their long term investments in USD, Gold, or anything that does not actively increase in value. Anyway, compare the cost of gold and salt over the last 20 years and we might want to go back to the roman's currency because as I said Gold is highly volatile as is anything once you start treating it as a currency.