3 ms·

Or we could get rid of the fed and go back to free market money (gold). http://www.mises.org/story/2623 http://www.mises.org/story/2623

rms 19y ago
But then economic growth revolves around new gold discoveries. It would make much more sense to have a currency directly fixed to oil.
- lupin_sansei 19y ago
  You've made the mistake of assuming that more wealth (economic growth) requires a greater quantity of money. It doesn't. Money is just the exchange mechanism. If the amount of gold in the world stays static, but we improve our economies it would just result in prices falling. If we could not find more gold we could still have economic growth, it's just that the value of gold would rise relative to the goods it could buy. (ie prices would fall) You can read more here: http://www.mises.org/mmmp/mmmp5.asp http://www.mises.org/mmmp/mmmp5.asp
  - davidw 19y ago
    I'm by no means an expert, but a lot of mainstream economists don't seem to abide by this view. They could be wrong, of course, because mainstream doesn't always mean correct, but the burden of proof is on the 'gold bugs'.
- dood 19y ago
  Why not cut to the chase and define the joule as standard unit of currency.
  - rms 19y ago
    That would also work, in theory. It would also future proof the currency against developments that could make oil worthless, though I don't see that happening anytime soon. At least right now, it makes a lot more sense to trade in an energy containing commodity than pure energy because it's easier and more familiar to people.
  - eru 19y ago
    Joules are not equal. The sea is full of them. You have to look at entropy, too. A Joule of electricity would be a more practical measure.
  - lupin_sansei 19y ago
    Because it wouldn't be portable. Imagine paying for a restaurant dinner with 2 barrels of oil you had to haul over there.
- lupin_sansei 19y ago
  > It would make much more sense to have a currency directly fixed to oil. The price of oil goes up and down too much. People wouldn't want to loan or save a currency that changes value so much. The beauty with gold is the price would be stable, as to date no one's come up with a way of getting lots of it quickly and easily.
  - euccastro 19y ago
    I know! Have a currency directly fixed to integers. Say, integers below X, where X is some reasonable granularity for the foreseeable future. There are exactly so many of them, and bank notes already have serial numbers, so it's technically possible! :> People still keep searching for and mining gold. That was silly two thousand years ago, but they have the excuse that they didn't know better. I read that current methods used for mining gold in some countries (e.g. Argentina) are especially hazardous for public health and the environment of local populations.
    - mdemare 19y ago
      You'd have to trust governments to not ever raise X. Because they will, and then you're in exactly the same situation as we're in now.
      - euccastro 19y ago
        They can just as well 'unlink' from gold.
motoko 19y ago
Why gold? Why not uranium, or moon rocks, or platinum, or round heavy rocks with markings that resemble the Virgin Mary?
- lupin_sansei 19y ago
  ... because historically that's what people have chosen when they were free too. Gold has a lot of properties that make it ideal for money. Doesn't tarnish, separate parts can be rejoined, scarce, hard to get more of it etc. But any object that satisfies all those goals would suffice as money,
  - rms 19y ago
    >Doesn't tarnish, separate parts can be rejoined, scarce, hard to get more of it This was important before the Information Age, but now there is no reason to have a lot of physical currency when you can just have ones and zeros. It's easier to use pure energy, the item that embodies scarcity, than something like gold that is much less useful. So it would make much more sense to use oil as the backing currency, or even pure electrical power.
    - mdemare 19y ago
      And because it is the information age, it is now very easy to structure your finances so that your wealth rises and falls with the oil price, instead of the dollar. Or gold, or euros, or uranium. Whatever you want. Financial freedom is here (for a fee).
sethg 19y ago
Paul Krugman once pointed out that since the US went off the gold standard, the Consumer Price Index has risen more quickly than the price of gold. In other words, the gold-denominated prices for things that Americans actually buy and sell have been subject to deflation. "I know we paid you 25 grams an hour for your last six-month consulting contract, but if you want us to renew it, we just can't afford to pay more than 23..."

rms 19y ago

But then economic growth revolves around new gold discoveries. It would make much more sense to have a currency directly fixed to oil.

lupin_sansei 19y ago
You've made the mistake of assuming that more wealth (economic growth) requires a greater quantity of money. It doesn't. Money is just the exchange mechanism. If the amount of gold in the world stays static, but we improve our economies it would just result in prices falling. If we could not find more gold we could still have economic growth, it's just that the value of gold would rise relative to the goods it could buy. (ie prices would fall) You can read more here: http://www.mises.org/mmmp/mmmp5.asp http://www.mises.org/mmmp/mmmp5.asp
- davidw 19y ago
  I'm by no means an expert, but a lot of mainstream economists don't seem to abide by this view. They could be wrong, of course, because mainstream doesn't always mean correct, but the burden of proof is on the 'gold bugs'.
dood 19y ago
Why not cut to the chase and define the joule as standard unit of currency.
- rms 19y ago
  That would also work, in theory. It would also future proof the currency against developments that could make oil worthless, though I don't see that happening anytime soon. At least right now, it makes a lot more sense to trade in an energy containing commodity than pure energy because it's easier and more familiar to people.
- eru 19y ago
  Joules are not equal. The sea is full of them. You have to look at entropy, too. A Joule of electricity would be a more practical measure.
- lupin_sansei 19y ago
  Because it wouldn't be portable. Imagine paying for a restaurant dinner with 2 barrels of oil you had to haul over there.
lupin_sansei 19y ago
> It would make much more sense to have a currency directly fixed to oil. The price of oil goes up and down too much. People wouldn't want to loan or save a currency that changes value so much. The beauty with gold is the price would be stable, as to date no one's come up with a way of getting lots of it quickly and easily.
- euccastro 19y ago
  I know! Have a currency directly fixed to integers. Say, integers below X, where X is some reasonable granularity for the foreseeable future. There are exactly so many of them, and bank notes already have serial numbers, so it's technically possible! :> People still keep searching for and mining gold. That was silly two thousand years ago, but they have the excuse that they didn't know better. I read that current methods used for mining gold in some countries (e.g. Argentina) are especially hazardous for public health and the environment of local populations.
  - mdemare 19y ago
    You'd have to trust governments to not ever raise X. Because they will, and then you're in exactly the same situation as we're in now.
    - euccastro 19y ago
      They can just as well 'unlink' from gold.

motoko 19y ago

Why gold? Why not uranium, or moon rocks, or platinum, or round heavy rocks with markings that resemble the Virgin Mary?

lupin_sansei 19y ago
... because historically that's what people have chosen when they were free too. Gold has a lot of properties that make it ideal for money. Doesn't tarnish, separate parts can be rejoined, scarce, hard to get more of it etc. But any object that satisfies all those goals would suffice as money,
- rms 19y ago
  >Doesn't tarnish, separate parts can be rejoined, scarce, hard to get more of it This was important before the Information Age, but now there is no reason to have a lot of physical currency when you can just have ones and zeros. It's easier to use pure energy, the item that embodies scarcity, than something like gold that is much less useful. So it would make much more sense to use oil as the backing currency, or even pure electrical power.
  - mdemare 19y ago
    And because it is the information age, it is now very easy to structure your finances so that your wealth rises and falls with the oil price, instead of the dollar. Or gold, or euros, or uranium. Whatever you want. Financial freedom is here (for a fee).

sethg 19y ago

Paul Krugman once pointed out that since the US went off the gold standard, the Consumer Price Index has risen more quickly than the price of gold. In other words, the gold-denominated prices for things that Americans actually buy and sell have been subject to deflation. "I know we paid you 25 grams an hour for your last six-month consulting contract, but if you want us to renew it, we just can't afford to pay more than 23..."