6 ms·

We gave up our ability to directly monetize wealth 2 or 3 generations ago ?

pjkundert 17y ago
Central bank money, created and debased at will, vs. Wealth-backed money, intrinsically valued by the wealth that backs it. Freedom to choose money that doesn't inflate allows multigenerational wealth transfer, etc.
- Xichekolas 17y ago
  I guess I'm curious what "wealth-backed money" is. All money is only a medium of exchange, and is only worth what people collectively agree it is worth. I'm going to take a guess and assume you mean gold, but if that isn't the case, I'm really curious to know. The fact that people collectively agreed that gold was a good form of money has nothing to do with any intrinsic (or god given) value of gold. It had everything to do with certain properties of gold that made it a good medium of exchange. Namely, it's durable, portable, hard to counterfeit, malleable, etc. Eventually, gold's cause was assisted by tradition. People have been using it to represent money for so long they mistakenly believe it has intrinsic value. (Granted, gold isn't a bad choice, if you are betting on the fact that others will irrationally value it.) So yes, it's harder for governments to manipulate a gold-backed currency... but it's not that hard. The US effectively did it twice, most recently after WWI with the Gold Reserve Act. Also, your money supply is now open to manipulation by private entities and even individuals. Gold mining companies, for instance, would have powerful sway over the amount and price of gold.
  - ironsam 17y ago
    There shouldn't be a central bank in the first place. The government should not be a "lender of last resort," nor should it be allowed create a fiat currency and require people to accept it.
  - moron4hire 17y ago
    "Hard to counterfeit" is the key point there. The difference between gold and dollars is that dollars are very, very easy to counterfeit. Just get Congress to order more from the Treasury!
    - sethg 17y ago
      Expansion of the money supply is not "counterfeit" money, although there are circumstances where it is a bad idea. Counterfeiting is when a private citizen decides to, as it were, expand the money supply with his or her own printing press.
      - moron4hire 17y ago
        Why should we treat the action of the government differently from the same actions of citizens? Wouldn't it be wrong for a government to murder people with no provocation? Wouldn't it be wrong for a government to kidnap people and hold them captive in a secret location? Why then is it fine for the government to debase the currency, and therefore destroy the value of any accounts held in that currency? This is the current global strategy to the debt crisis: inflate it away. If we (we being the government and central banks as a colluding entity) inflate the dollar 100:1, then the "toxic" debts are only 1% as bad as they were before. And we get to keep the houses we evicted everyone from, and sell it back for the new, inflated valuation.
        sethg 17y ago
        Why then is it fine for the government to debase the currency, and therefore destroy the value of any accounts held in that currency? The value of the currency depends on what I can exchange it for. If the US dollar's value relative to the things I buy and sell remains relatively stable over the next few years, and if my risk of losing my job remains low so that I can feel confident in my ability to keep earning those dollars, then as far as I'm concerned, the Fed is doing its job. If the US dollar's value relative to gold goes down, I couldn't care less. I can't eat gold.
        Xichekolas 17y ago

Central bank money, created and debased at will, vs. Wealth-backed money, intrinsically valued by the wealth that backs it. Freedom to choose money that doesn't inflate allows multigenerational wealth transfer, etc.

Xichekolas 17y ago
I guess I'm curious what "wealth-backed money" is. All money is only a medium of exchange, and is only worth what people collectively agree it is worth. I'm going to take a guess and assume you mean gold, but if that isn't the case, I'm really curious to know. The fact that people collectively agreed that gold was a good form of money has nothing to do with any intrinsic (or god given) value of gold. It had everything to do with certain properties of gold that made it a good medium of exchange. Namely, it's durable, portable, hard to counterfeit, malleable, etc. Eventually, gold's cause was assisted by tradition. People have been using it to represent money for so long they mistakenly believe it has intrinsic value. (Granted, gold isn't a bad choice, if you are betting on the fact that others will irrationally value it.) So yes, it's harder for governments to manipulate a gold-backed currency... but it's not that hard. The US effectively did it twice, most recently after WWI with the Gold Reserve Act. Also, your money supply is now open to manipulation by private entities and even individuals. Gold mining companies, for instance, would have powerful sway over the amount and price of gold.
- ironsam 17y ago
  There shouldn't be a central bank in the first place. The government should not be a "lender of last resort," nor should it be allowed create a fiat currency and require people to accept it.
- moron4hire 17y ago
  "Hard to counterfeit" is the key point there. The difference between gold and dollars is that dollars are very, very easy to counterfeit. Just get Congress to order more from the Treasury!
  - sethg 17y ago
    Expansion of the money supply is not "counterfeit" money, although there are circumstances where it is a bad idea. Counterfeiting is when a private citizen decides to, as it were, expand the money supply with his or her own printing press.
    - moron4hire 17y ago
      Why should we treat the action of the government differently from the same actions of citizens? Wouldn't it be wrong for a government to murder people with no provocation? Wouldn't it be wrong for a government to kidnap people and hold them captive in a secret location? Why then is it fine for the government to debase the currency, and therefore destroy the value of any accounts held in that currency? This is the current global strategy to the debt crisis: inflate it away. If we (we being the government and central banks as a colluding entity) inflate the dollar 100:1, then the "toxic" debts are only 1% as bad as they were before. And we get to keep the houses we evicted everyone from, and sell it back for the new, inflated valuation.
      - sethg 17y ago
        Why then is it fine for the government to debase the currency, and therefore destroy the value of any accounts held in that currency? The value of the currency depends on what I can exchange it for. If the US dollar's value relative to the things I buy and sell remains relatively stable over the next few years, and if my risk of losing my job remains low so that I can feel confident in my ability to keep earning those dollars, then as far as I'm concerned, the Fed is doing its job. If the US dollar's value relative to gold goes down, I couldn't care less. I can't eat gold.
      - Xichekolas 17y ago