7 ms·

This would work on gold-backed currency too. Stop issuing green bills-redeemable-for-X-amount-of-gold and start issuing red ones. The only currency this would

This would work on gold-backed currency too. Stop issuing green bills-redeemable-for-X-amount-of-gold and start issuing red ones. The only currency this wouldn't work on is actual gold, silver, etc.

asciilifeform 17y ago
> Stop issuing green bills-redeemable-for-X-amount-of-gold and start issuing red ones The green ones are no longer gold backed, in that case. Gold-backing which can be revoked on a whim is not gold-backing in any interesting sense.
- mnemonicsloth 17y ago
  The green ones are no longer gold backed, in that case. In other words, gold-backed currency would be completely ineffective at restraining a meat-grinder like North Korea, which is what this thread was supposed to be about.
patio11 17y ago
It always amuses me that some people sneer at thinking paper can have value, and point to their security blanket: magic, shiny rocks. (There are magic rocks, and shiny rocks, but duh, only the magic, shiny rocks are useful as currency. Naturally.) You can have wild fluctuations in the supply of magic, shiny rocks -- it has happened before, and it will happen again. For example, when Spain discovered that they could kill people and take their rocks more efficiently than they could mine their own rocks. It also happens on the microeconomic level, a phenomenon known as a Magic Shiny Rock Rush. When the supply of magic, shiny rocks increases suddenly, the amount of magic, shiny rocks you need to buy things also increases.
- jeromec 17y ago
  That's a good point about the risk of supply fluctuations, but there is no denying it keeps govt's in check by removing the ability to (easily) manipulate currency. EDIT: In response to replies the above should read "govt's in check short of using force"
  - patio11 17y ago
    I'm going to go ahead and deny it, actually. North Korea can confiscate value pretty easily regardless of whether they use crispy paper or shiny magic rocks as currency. "Give me all your magic rocks, or I'll send men to beat you." (If that sounds far-fetched, I would note that the United States has banned private possession of gold before.) More subtle variations on this: "We require you to pay us in shiny magic rocks, but we will only pay you in crispy paper.", "Our coins are made out of shiny magic rocks... but, haha, there is less magic in them now! Too bad you're not an alchemist and will never notice!", "These paper entitle you to shiny magic rocks. We're lying, but you don't know that.", etc, etc, etc.
    - jeromec 17y ago
      I partially agree; that's why what I meant would be a total metal reliance, e.g. 1oz silver/gold eagles etc. where the amount of gold/silver is guaranteed and consistent. I'm not saying metal's an optimum solution, only pointing out its abilities.
      - sethg 17y ago
        Guaranteed by whom? If in 2009 the government guarantees that its mint's coins will be at least 99% gold, and then in 2010 it guarantees that they will be at least 90% gold, what are you going to do—assay each coin that comes into your hand before you put it in your wallet? (The Israel Museum once had an exhibit on money which included a series of ancient coins, struck from exactly the same mold over a number of years. The oldest one was something like 90% gold and the most recent was something like 1%.)
        jeromec 17y ago
        The metal is just the tool. Like the Constitution or anything else, it's up to the people to hold the govt. to the standard. Unlike non-backed currency, with metals any shaving of value can be detected obviously (more obviously than taxation via inflation) and quantified.
- patrickgzill 17y ago
  Gold and silver are insurance against the government's behavior. Paper issued by the government cannot serve that purpose.
  - eru 17y ago
    Then take paper issued either by a foreign government or by a non-government.
    - patrickgzill 17y ago
      Quis custodiet ipsos custodes?
      - eru 17y ago
        Don't you trust the Swiss?
        patrickgzill 17y ago
        The Swiss Franc used to be 100% backed by gold. No longer, they removed backing and convertibility in 1999. http://en.wikipedia.org/wiki/Gold_standard#Gold_as_a_reserve_today http://en.wikipedia.org/wiki/Gold_standard#Gold_as_a_reserve...
        eru 17y ago
        Interesting. Though I don't care about gold. Just that they don't inflate their currency too much.
  - anigbrowl 17y ago
    Don't be naive. Sure, if you have a small sum of gold buried in the yard, it can hold its value through times of political uncertainty. But to exercise any meaningful opposition to a despotic government, you need to be rich ( in order to pay people to do your will) or well-organized (in order to urge them via the media). In the former case, you can be taxed - governments levying taxes on the very wealthy usually goes down well with the much poorer majority - and in the latter, you can be declared a subversive and censored. You might find it instructive to examine the history of ancient Rome around the time of Nero and Caligula. If you find history books dry reading, get a copy of 'I, Claudius' which presents the history of that period in narrative form and is both educational and entertaining. This is not to say that opposition to a tyrannical government is hopeless - indeed, history with littered with examples of such leading to revolution. But currency alone is a weak check on a determined oppressor. And (as we are sadly reminded by news from Africa on a regular basis) revolutions often result only in a change of players, but the game remains the same.
- dpatru 17y ago
  While it's possible for gold to fluctuate in value, it's not as easy or common to change the value of gold as it is to manipulate the value of fiat currency. The whole point of a gold-standard is to make money a more durable store of value. The argument that gold is not perfect is irrelevant. It's like responding to an argument that you should stop smoking by saying that even non-smokers suffer health problems and die.
- asciilifeform 17y ago
  > You can have wild fluctuations in the supply of magic, shiny rocks -- it has happened before, and it will happen again. This is not unlike eschewing seat belts because asteroids have been known to smash into the Earth.
- raintrees 17y ago
  Especially if certain conspiracy theories are true that some gold ingots are being discovered as gold-covered tungsten and not solid gold...
jbellis 17y ago
http://en.wikipedia.org/wiki/Executive_Order_6102 http://en.wikipedia.org/wiki/Executive_Order_6102
- jrockway 17y ago
  Yeah, but that's the US and this is North Korea. Don't you see the difference?
dpatru 17y ago
The point of gold-backed currency is to prevent the government from devaluing currency without the people's knowledge. When government does devalue currency by refusing to redeem, at least the people know it. There is a continuum of choices of money in terms of preservation of value with the safest being the dealing directly in gold, next, dealing with private guarantees (the market "guarantees" value), government guaranteed (the guarantee is political action), and finally, government-issued fiat. The further down the continuum, the harder it's to determine devaluation and stop it.

This would work on gold-backed currency too. Stop issuing green bills-redeemable-for-X-amount-of-gold and start issuing red ones. The only currency this wouldn't work on is actual gold, silver, etc.

asciilifeform 17y ago

> Stop issuing green bills-redeemable-for-X-amount-of-gold and start issuing red ones The green ones are no longer gold backed, in that case. Gold-backing which can be revoked on a whim is not gold-backing in any interesting sense.

mnemonicsloth 17y ago
The green ones are no longer gold backed, in that case. In other words, gold-backed currency would be completely ineffective at restraining a meat-grinder like North Korea, which is what this thread was supposed to be about.

patio11 17y ago

It always amuses me that some people sneer at thinking paper can have value, and point to their security blanket: magic, shiny rocks. (There are magic rocks, and shiny rocks, but duh, only the magic, shiny rocks are useful as currency. Naturally.) You can have wild fluctuations in the supply of magic, shiny rocks -- it has happened before, and it will happen again. For example, when Spain discovered that they could kill people and take their rocks more efficiently than they could mine their own rocks. It also happens on the microeconomic level, a phenomenon known as a Magic Shiny Rock Rush. When the supply of magic, shiny rocks increases suddenly, the amount of magic, shiny rocks you need to buy things also increases.

jeromec 17y ago
That's a good point about the risk of supply fluctuations, but there is no denying it keeps govt's in check by removing the ability to (easily) manipulate currency. EDIT: In response to replies the above should read "govt's in check short of using force"
- patio11 17y ago
  I'm going to go ahead and deny it, actually. North Korea can confiscate value pretty easily regardless of whether they use crispy paper or shiny magic rocks as currency. "Give me all your magic rocks, or I'll send men to beat you." (If that sounds far-fetched, I would note that the United States has banned private possession of gold before.) More subtle variations on this: "We require you to pay us in shiny magic rocks, but we will only pay you in crispy paper.", "Our coins are made out of shiny magic rocks... but, haha, there is less magic in them now! Too bad you're not an alchemist and will never notice!", "These paper entitle you to shiny magic rocks. We're lying, but you don't know that.", etc, etc, etc.
  - jeromec 17y ago
    I partially agree; that's why what I meant would be a total metal reliance, e.g. 1oz silver/gold eagles etc. where the amount of gold/silver is guaranteed and consistent. I'm not saying metal's an optimum solution, only pointing out its abilities.
    - sethg 17y ago
      Guaranteed by whom? If in 2009 the government guarantees that its mint's coins will be at least 99% gold, and then in 2010 it guarantees that they will be at least 90% gold, what are you going to do—assay each coin that comes into your hand before you put it in your wallet? (The Israel Museum once had an exhibit on money which included a series of ancient coins, struck from exactly the same mold over a number of years. The oldest one was something like 90% gold and the most recent was something like 1%.)
      - jeromec 17y ago
        The metal is just the tool. Like the Constitution or anything else, it's up to the people to hold the govt. to the standard. Unlike non-backed currency, with metals any shaving of value can be detected obviously (more obviously than taxation via inflation) and quantified.
patrickgzill 17y ago
Gold and silver are insurance against the government's behavior. Paper issued by the government cannot serve that purpose.
- eru 17y ago
  Then take paper issued either by a foreign government or by a non-government.
  - patrickgzill 17y ago
    Quis custodiet ipsos custodes?
    - eru 17y ago
      Don't you trust the Swiss?
      - patrickgzill 17y ago
        The Swiss Franc used to be 100% backed by gold. No longer, they removed backing and convertibility in 1999. http://en.wikipedia.org/wiki/Gold_standard#Gold_as_a_reserve_today http://en.wikipedia.org/wiki/Gold_standard#Gold_as_a_reserve...
        eru 17y ago
        Interesting. Though I don't care about gold. Just that they don't inflate their currency too much.
- anigbrowl 17y ago
  Don't be naive. Sure, if you have a small sum of gold buried in the yard, it can hold its value through times of political uncertainty. But to exercise any meaningful opposition to a despotic government, you need to be rich ( in order to pay people to do your will) or well-organized (in order to urge them via the media). In the former case, you can be taxed - governments levying taxes on the very wealthy usually goes down well with the much poorer majority - and in the latter, you can be declared a subversive and censored. You might find it instructive to examine the history of ancient Rome around the time of Nero and Caligula. If you find history books dry reading, get a copy of 'I, Claudius' which presents the history of that period in narrative form and is both educational and entertaining. This is not to say that opposition to a tyrannical government is hopeless - indeed, history with littered with examples of such leading to revolution. But currency alone is a weak check on a determined oppressor. And (as we are sadly reminded by news from Africa on a regular basis) revolutions often result only in a change of players, but the game remains the same.
dpatru 17y ago
While it's possible for gold to fluctuate in value, it's not as easy or common to change the value of gold as it is to manipulate the value of fiat currency. The whole point of a gold-standard is to make money a more durable store of value. The argument that gold is not perfect is irrelevant. It's like responding to an argument that you should stop smoking by saying that even non-smokers suffer health problems and die.
asciilifeform 17y ago
> You can have wild fluctuations in the supply of magic, shiny rocks -- it has happened before, and it will happen again. This is not unlike eschewing seat belts because asteroids have been known to smash into the Earth.
raintrees 17y ago
Especially if certain conspiracy theories are true that some gold ingots are being discovered as gold-covered tungsten and not solid gold...

jbellis 17y ago

http://en.wikipedia.org/wiki/Executive_Order_6102 http://en.wikipedia.org/wiki/Executive_Order_6102

jrockway 17y ago
Yeah, but that's the US and this is North Korea. Don't you see the difference?

dpatru 17y ago

The point of gold-backed currency is to prevent the government from devaluing currency without the people's knowledge. When government does devalue currency by refusing to redeem, at least the people know it. There is a continuum of choices of money in terms of preservation of value with the safest being the dealing directly in gold, next, dealing with private guarantees (the market "guarantees" value), government guaranteed (the guarantee is political action), and finally, government-issued fiat. The further down the continuum, the harder it's to determine devaluation and stop it.