Rise of Cryptocurrencies Can Be Traced To Nixon Abandoning Gold In 1971 (theguardian.com) 231
On August 15, 1971, Richard Nixon announced that the U.S. would no longer exchange dollars held by foreign governments for gold. "Shock waves from Washington's decision to break the link with gold have rippled down the decades," reports The Guardian. "The creation of the euro, the hollowing out of US manufacturing, the arrival of cryptocurrencies and the ability of central banks to print seemingly unlimited quantities of money can all be traced back to August 1971." From the report: In 2019, when he was the governor of the Bank of England, Mark Carney floated the idea of a global digital currency -- backed by a number of central banks -- as a replacement for the dollar. Carney said his plan would help stabilize financial markets unsettled by trade and currency disputes. Were Carney's plan ever to come to fruition it would mark the final stage in the shift from a system where currencies were backed by something tangible -- gold -- to one where they are virtual. It is not hard to see why there are those who feel uneasy about this.
Why? Well, for a start, events of half a century ago led to a rapid increase in currency trading. Foreign exchange markets can be wild and unpredictable places. Governments, as Carney pointed out, try to secure competitive advantage by manipulating their currencies and by protectionist trade policies. One way of doing this is through quantitative easing, the process by which central banks create money though the purchase of bonds. Trillions of dollars, euros, pounds and yen pumped into the global economy over the past decade.
Classical economic theory would suggest that an increase in the money supply of this magnitude should lead to a sharp rise in inflation but that has not happened. At least not yet. Before they became the ultimate speculative play for financial investors, the rationale for cryptocurrencies such as bitcoin was that they represented a hedge against the profligacy of central banks. Tricky Dicky didn't know it in 1971 but 50 years on his decision has led to a world of volatile financial markets, geopolitical tension, inflated asset prices underwritten by low interest rates and QE, and where trust in central banks is starting to wear a bit thin. In the circumstances, it is perhaps easy to understand why governments have decided to hold on to their remaining gold stocks.
Why? Well, for a start, events of half a century ago led to a rapid increase in currency trading. Foreign exchange markets can be wild and unpredictable places. Governments, as Carney pointed out, try to secure competitive advantage by manipulating their currencies and by protectionist trade policies. One way of doing this is through quantitative easing, the process by which central banks create money though the purchase of bonds. Trillions of dollars, euros, pounds and yen pumped into the global economy over the past decade.
Classical economic theory would suggest that an increase in the money supply of this magnitude should lead to a sharp rise in inflation but that has not happened. At least not yet. Before they became the ultimate speculative play for financial investors, the rationale for cryptocurrencies such as bitcoin was that they represented a hedge against the profligacy of central banks. Tricky Dicky didn't know it in 1971 but 50 years on his decision has led to a world of volatile financial markets, geopolitical tension, inflated asset prices underwritten by low interest rates and QE, and where trust in central banks is starting to wear a bit thin. In the circumstances, it is perhaps easy to understand why governments have decided to hold on to their remaining gold stocks.
We abandoned real value (Score:3, Funny)
Re:We abandoned real value (Score:5, Insightful)
Re:We abandoned real value (Score:4, Insightful)
Don't forget the part where they then change infrastructure so those with more stake in a currency end up deciding which transactions are valid. Profit!
Re: We abandoned real value (Score:2)
Not every cryptocurrency is 70% premined buddy. Buy bitcoin, that one isn't. Or Monero. Or a lot of them.
I had more typed out but webpage ate it.
Re: We abandoned real value (Score:5, Insightful)
70% is an exaggeration, but the point is solid: Ponzi/pyramid scams favour the early adopters at the expense of everyone else.
Cryptocurrency is a negative-sum game. By buying it as an investment (because it's no use as a currency), you are betting against anyone who comes in later, hence all the hype, advertising, and cult-like behaviour.
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Well that's the whole point, be an early adopter instead of ignoring or denouncing these new things that come around.
You could have bought a few bitcoins for an absolutely trivial amount when it was new, and then just sat on them for a few years. Had they never amounted to anything you'd have lost the price of a cup of coffee. Never gamble what you can't afford to lose.
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Cryptocurrency is a negative-sum game. By buying it as an investment (because it's no use as a currency), you are betting against anyone who comes in later, hence all the hype, advertising, and cult-like behaviour.
Yes, that's the typical point of view of people who don't understand the benefits of a decentralized ecosystem and everything that can be done with Crypto. Do you know that Crypto has the potential to displace Google, Amazon, banks... remove all these powerful entities who act as middlemen to various services, and thereby empower the individual? No, you probably don't, because you only heard about Bitcoin and how that is a ponzi-scheme.
Crypto is not just counters on the Internet that go up or down. There is
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https://www.vox.com/2018/4/24/... [vox.com]
1. currency whose value can swing 10 percent or more in a single day is useless as a means of payment.
2. Extreme price volatility also makes bitcoin undesirable as a store of value.
3. bitcoin has no intrinsic value. It only has value if people think other people will buy it for a higher price
https://www.yanisvaroufakis.eu... [yanisvaroufakis.eu]
"Bitcoin’s algorithm specifies that the number of Bitcoins in existence is essentially fixed. (To be more precise
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Any day now, Crypto will change the world.
Any.... day.... now....
The moon crashing into the earth also has the potential to replace banks, google, and facebook. Or unicorns overthrowing the united nations.
you have no idea how any of modern finance works, and it shows.
Nothing crypto does solves any problems any real people had. It's a decentralized SQL database that everyone has to waste trillions of megawatts on just to confirm it works right.
Re: We abandoned real value (Score:2)
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Sorry, but it's impractical to tie our money to precious metals. For one, it encourages mining precious metals above more useful endeavors like building hospitals. Second, countries with more gold, like Russia, would eat our lunch. Third, it would make Keynesian stimuluses harder because it would be harder to control the metal supply. (Anti-Keynesians will find this a good thing, but that's another argument. Either way, you have less control if and when you want it for whatever reason.)
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There's also simply not enough to go around. Precious metals are called "precious" for a reason.
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You're wrong on many levels (Score:2, Informative)
Everyone who puts this out goes "well, not enough gold guess we have to go to fiat" which completely ignores the fact that it was silver that was the main metal for currency metal for thousands of years. Copper and bronze have also been used and copper could absolutely be used to make $1 and smaller units.
We need silver for many medical and manufac
Re:You're wrong on many levels (Score:5, Informative)
The amount of money in the system really ought to be tied to a single factor -- the amount of stuff that needs to be bought and sold. If your economy doubles in size and you're on the silver standard, you'd better come up with 2x the silver or further growth will be hobbled.
There are all kinds of ways a central bank can increase or decrease the amount of money in circulation, but the way it creates actual new money is interesting. You can't create a dollar by *printing* one; if you just print a dollar you have no way to get it into circulation. What they do is *loan* virtual dollars to banks; if the bank wants currency it can then use those virtual dollars to buy printed dollars. What makes this interesting is that dollars created this way have in effect an expiration date: the loan maturity date. It's not an irrevocable act like handing someone a pile of dollars in exchange for a certain amount of gold.
This allows the Fed to expand or contract the money supply to match the needs of the economy over the long term. Ultimately it is the value created by the economy that really matters; currency is just tokens that make exchanging value easy.
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Wish I had mod points - this is the most concise and best explanation I have seen for why precious metals are no longer used for the basis of currency.
I would like to add to it that the reason why there is a target rate of inflation of about 2% is so that there is a disincentive to hoard money. This is done to keep it in circulation instead of stuffed under mattresses or in a hole. If your money was increasing in value - ie. deflating, because say, it was based on gold and the amount of gold wasn't increasi
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Inflation also encourages inefficient investments. It uses resources and damages environment for something not really needed. It makes bubbles more likely to happen. It is not all good on the inflation side. Though I agree that some small inflation is better than deflation. But 2% is not that small and governments & banks will likely keep it higher than that anyway since it is politically easier for them. And it is questionable whether they will actually decrease money supply when inflation overshoots (
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Everyone who puts this out goes "well, not enough gold guess we have to go to fiat" which completely ignores the fact that it was silver that was the main metal for currency metal for thousands of years. Copper and bronze have also been used and copper could absolutely be used to make $1 and smaller units.
So, you are saying we should keep the penny but make it more valuable!
Somehow I doubt the wisdom of a plan to adopt a currency entirely of coins.
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Read this, then decide whether you're a Keynesian (Score:2)
For most of the past 60 years, we've had high deficit spending during periods of economic expansion, and even higher deficit spending during recessions.
People defended all of that reckless deficit spending as "Keynesian." I concluded that I must be an anti-Keynesian.
But then I learned that Keynes himself said deficit spending should only happen during recessions -- to be canceled out by budget surpluses during times of economic expansion, so as not to run up a giant national debt [usdebtclock.org].
Now that makes sense. I g
Re: Read this, then decide whether you're a Keynes (Score:2)
All politicians are Keynesians. . .they just have a habit of governing like we are in a perpetual recession. There are not enough honest Congress Critters to do things like raise taxes or cut spending when things go well to make these things happen. They all know this is how Keynesian economics actually works. Most have Ivy League educations. Most voters, on the other hand, do not understand this and Congress Critters give the people of their district what they want.
Most of our problems can be traced back t
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For most of the past 60 years, we've had high deficit spending during periods of economic expansion, and even higher deficit spending during recessions.
People defended all of that reckless deficit spending as "Keynesian." I concluded that I must be an anti-Keynesian.
But then I learned that Keynes himself said deficit spending should only happen during recessions -- to be canceled out by budget surpluses during times of economic expansion, so as not to run up a giant national debt [usdebtclock.org].
Now that makes sense. I guess I am a Keynesian after all.
Market failures happen for a number of reasons. One of them being externalities (for example that the company producing a good does not pay for the pollution caused by the production) while others are public goods, market control (e.g. monopolies) and information deficiencies. We normally try to correct these failures using legislation.
But another less know failure type is "government failures". The problem is that the political system will under no circumstances produce optimal legislation or governance be
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Re: We abandoned real value (Score:2)
âLess controlâ is a major feature, not a problem to be solved.
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Basically sticking to a gold, BTC, or similar, standard is regressionist. Such a standard entrenches the rich as a ruling class because it rewards doing absolutely nothing, while still giving excellent wealth increases. Any attempt to move up the socio-economic ladder to the 1% is hobbled by the lack of acce
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... Second, countries with more gold, like Russia, would eat our lunch...
For a while, but then things would settle down. Gold only has a few practical uses; it's mostly a medium of exchange. In that sense, is essentially like crypto or fiat currencies: valuable because everybody agrees it's valuable. Countries with real wealth, whether in natural resources or human capital, would still do better.
When Spain started bringing in massive amounts of gold from the Americas, they suffered massive inflation. England was disappointed that they weren't finding gold in North America, but i
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You can't eat gold, so it doesn't have real* value either. Gold's supply is restricted, thus any demand for it will spike the price.
Inflation of your current doesn't matter too much if you don't insist on keeping your primary assets liquid. If you are willing to move things around, you can focus on investing in assets that hold or increase in value. Or you can shuffle between multiple currencies or commodities in an attempt to surf the volatility. Ultimately you'll invest according to how you wish to manage
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You jest, but of course the thing about precious metals is that you can make useful* things out of them beyond merely being perceived as "precious". And just to head off any objections, I have a copy of Encyclopedia Britannica from the 1890s. It describes uranium as an element with no known industrial uses.
* for some definition of "useful".
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What a shitty Encyclopedia, Uranium has been added to decorative glass since the early 1800's.
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It's Britannica, what did you expect?
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You can't eat gold, so it doesn't have real* value either. Gold's supply is restricted, thus any demand for it will spike the price.
There's more to life than food. You wouldn't be reading Slashdot right now if it weren't for gold. You wouldn't be driving your car, and frankly society itself would be set back to the start of the industrial age if we had no gold. It's a critical component for many produces / processes you value in society, and if that society is to endure then gold is intrinsically valuable to it.
Sure the current trading price doesn't reflect this value, but that doesn't mean it has no value.
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"There's more to life than food. "
Indeed, and there is no life without it.
Re: We abandoned real value (Score:2)
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Historic gold prices don't seem to agree with you, specially when contrasted with how the US dollar M1 supply increased over the same period.
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Gold costs nothing to store once it is stored. Cryptocurrencies are expensive to store, even if it's not you technically paying the cost of storage.
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How easy is to spend/trade when the power and/or internet are down? Especially if they're down long term.
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Gold also needs a functional society in order to be usable for trade. Otherwise the only things of real value are food and weapons.
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You don't need much tech to verify that a chunk of gold is gold and its weight. If the gold is standardized as coins, something as simple as this does it, https://en.wikipedia.org/wiki/... [wikipedia.org]
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Now here's the question. Does gold buy more steel or wheat or has the dollar's inflation over the decades made gold appear to be gaining. (I know the answer, which is why I do own some gold. but it's not that exciting of an investment)
Gold standard has some problems, bi-metal standard has less of those problems and isn't really all that more complicated to run as a system. Capital is easier in a system where you can let fiat currency run wild, but it's ripe for abuse. It's very easy to steal from the saving
Re:We abandoned real value (Score:4, Interesting)
I'm looking forward to all those opinion pieces, mystified as of why no one will want to spend a currency which is deflationary by design.
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Gold stopped being the real value of currency the moment fractional banking took over.
Debt has been the real value of currencies for centuries, the piddling little gold supply determining the value would be the tail wagging the dog.
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Debt has been the real value of currencies for centuries
Interestingly insightful way of putting it.
I've been looking for a way to articulate that to the "The Gubmint is borrowing money from the China!" crowd.
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Another way to state it is that currency units are tokens of debt, and are used to satisfy debts.
Money has existed in the form of ledger entries recording debts in international trade since the early Middle Ages (actually this was true even in the Bronze Age Mediterranean - we have the clay documents. They didn't need to ship bags of money between port cities for most trade.
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and created fiat money, then inflated the hell out of it to favor the rich and powerful. Yeah, I can see why some pissed off programmers would want to build inflation-proof currencies.
Tying the value of what a country produces to the amount of a precious metal you have [theguardian.com] taken out of one place and is now protecting in another makes no sense.
A gold standard means that monetary policy and interest rates are set to defend the value of a currency against a metal rather than to reflect economic conditions in the country.
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Why is gold "real value" any more than bitcoin? Both have no to nominal use for anything but hoarding/speculating. I suppose gold is at least useful in electronics manufacturing and bitcoin sparked more blockchain development and related software/hardware projects.
For that matter, why does gold have "real value" and fiat doesn't. The value of anything is determined what a willing seller will sell for, and a willing buyer will pay for. Buyers/sellers accept fiat has value, so it does. Same with gold. People
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Fiat. All currency, all money, has value because we
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Unfortunately, Cryptocoins have been nothing but speculation tools.
Ultimately the problem comes back to "can I trust this", a bit fat "NO". All the same speculators who manipulate the currency markets of course wanted "in" on the cryptocoins, and surprise surprise, nobody wants the cryptocoins when it has solved exactly nothing.
Can be traced to Tulip craze of 1600's (Score:5, Interesting)
Re:Can be traced to Tulip craze of 1600's (Score:5, Insightful)
Yeah. I've seen some dumb takes before, but criminal ponzi schemes being "traced" to the end of the metallic standard is one of the dumber things I've ever heard, even by Larry "incompetent" Elliott standards.
Volatile markets? They were WORSE on the metallic standards. Full-blown economic depressions and the boom-and-bust cycle were the literal norm long before the metallic standard was killed.
Geopolitical tension? Look at the economic insanity that happened when countries flip-flopped their standards, and started looting other countries for the more 'valuable' metals. [youtube.com]
Cryptocurrencies have risen because (a) they're not as regulated as penny stocks, but just as easy to pump-and-dump and rip off the gullible with, and (b) they're an easy way for crooks to launder money.
That's it, that's literally all that cryptocurrencies are good for. They're a drag on society and ought to be abolished.
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You can look at the shit going on today with a floating dollar and think, "man, this sucks."
But that's only if you know abso-fucking-lutely nothing about the earlier 2/3rds of the 20th century.
Money supply meddling sure can be inflationary (Score:2)
Classical economic theory would suggest that an increase in the money supply of this magnitude should lead to a sharp rise in inflation but that has not happened.
Wrong.
Classical economic theory says that a sufficiently large increase in the money supply will cause inflation, or even hyperinflation -- and that is exactly what we have seen in Venezuela, Zimbabwe, etc.
Any increase in the money supply that does not cause inflation is, by definition, not sufficiently large to do so.
Do as I do. (Score:2)
Whew! Good thing the rest of the world didn't. ;-)
Misunderstanding (Score:4, Informative)
Fiat currency has helped to STABILIZE the world. We would be FAR worse off if we had stayed on the gold standard. WW3 would definitely have happened by now.
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This. The article is, quite honestly, a mess.
There's three back-to-back paragraphs where the author identifies QE as the real problem to be solved, wonders why monetary supply increase alone isn't causing a sharp rise in inflation, and then acknowledges how Bitcoin are nothing but "the ultimate speculative play for financial investors."
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The gold currency was inflexible. Unforgiving. It CAUSED more problems than it solved. If we were still on the gold standard, the 08-09 crisis would have been the second great depression, and the covid lockdowns would have been the third.
Fiat currency has helped to STABILIZE the world. We would be FAR worse off if we had stayed on the gold standard. WW3 would definitely have happened by now.
Gold wasn't just inflexible, it was also random since the supply changed based on the success of gold mines.
If anything, a universe where we were still on the gold standard would have a better argument for cryptocurrency.
The economic theory of cryptocurrency seems to be "I don't understand the effects of the money supply, therefore central banks can't understand the money supply, therefore a simple rule is superior".
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It's a conspiracy style of thinking. Too many see leaving the gold standard as a major flaw in modern economies, when actually it was necessary. But the originators of cryptocurrencies often tended to have these sorts of views, armchair ideas of how economics should work.
2008 was caused by fiat (Score:3)
If we were still on the gold standard, the housing market would have never been run the way it was by the banking sector. Thus the 2008 crisis in the mortgage market wouldn't have happened. You also wouldn't have had Blackrock front-running the Fed and buying up hundreds of billions of dollars worth of real estate at inflated prices in 2020 and even right now to keep propping up the values. The stock market was
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OTOH, when on the gold standard, depressions and panics were a regular occurrence.
There were some pretty big wars too.
Re: 2008 was caused by fiat (Score:2)
That's a pretty asinine statement. You don't need fiat currency for any of its benefits when you ration, centrally plan production, and limit price and wage changes.
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I like to think about it this way. Imagine there were only 12 gold bars in the entire world and we were on the gold standard. The imagine the inflation from that. If you just had a minuscule sliver of gold when born in 1955, you could retire at age 65 in 2020 using only the inflation value from that sliver.
Then imagine that maybe 100 people combined own the vast majority of all gold in those 12 bars. Those 100 people are thinking "wow, what an amazing investment!", while the people having to share the re
The Guardian writes a lot of silly things... (Score:3)
See what TM has to say:
Tom McClellan
@McClellanOsc
19h
Um, the 50 years before 1971 included the Great Depression, WWII, regime collapse in China, 1946 hyperinflation, payroll withholding (thanks Milton Friedman!) and all manner of other economic maladies. So attribution analysis like this is problematic.
Cryptocurrency are not a hedge against inflation (Score:2)
Cryptocurrencies are a bet on mooning, that's all they ever are.
No one is buying cryptocurrencies just to keep pace with inflation, not a single person.
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You'd be buying cryptocurrency regardless for the moon shot, regardless of inflation.
Printing Money Not Inflationary (Score:5, Interesting)
If you print money (figuratively, meaning massive increase in the money supply), you would think this would be inflationary, but that hasn't proven to be the case. The "Quantitative Easing" that the Federal Reserve did was simply buying government bonds with money they just made up, which in the short term is effectively the same as paying for government spending with new money. This hasn't produced significant inflation.
Why?
The increase in money supply has not resulted in an increase in demand for products at their existing prices. Now you would think with more money in the economy, more people would want to buy, well, pretty much everything, but there's one fatal flaw in that assumption. It only works that way if the increase in money supply is uniform across the population. But instead, the increase in the money supply is almost entirely absorbed by those who already have the most money. And those people were already consuming all they wanted, so there's no increased demand for goods, and hence, no inflation.
Or is there?
What do the people at the top of the economy do with extra money? They invest it. Hence, the increase in the money supply has lead to inflation of investment prices, but those aren't consumer goods, so they're not tracked in the normal Consumer Price Index which is what people normally think of as inflation. Instead, we see stocks shooting up.
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It balooned debt out of control though. On 2020 alone the US's debt/GDP ratio increased as much as it did on the entire decade before: the US is now part of a short list of countries where this ratio exceeds 100%.
The problem with the US though, is that both its debt and GDP are, in absolute numbers, massive. Meaning you're one recession away from any of the two sliding, throwing the ratio to shit, and leaving the country with a serious debt crisis to tackle.
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Body: Investment prices are inflated.
So... printing money... does create inflation?
I'm not sure what the point of your post is, but let's make this super simple:
1. Printing excess amounts of money creates inflation. Obviously. That's why the Fed prints excess money; they're explicitly trying to hit an inflation target. It's absurd to say printing money doesn't create inflation.
2. Inflation is bad for the poor and lower classes. The wealthy who alrea
Re: Printing Money Not Inflationary (Score:2)
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If you print money (figuratively, meaning massive increase in the money supply), you would think this would be inflationary, but that hasn't proven to be the case. The "Quantitative Easing" that the Federal Reserve did was simply buying government bonds with money they just made up, which in the short term is effectively the same as paying for government spending with new money. This hasn't produced significant inflation.
Wrong. QE is printing "slow" money which takes time - years - to leak out into the real economy, but it is doing so right now because QE has not proven to be "short-term" at all.
It has created a asset price bubble which is significant and is a problem. Every central bank in the world is trying, and failing, to find a cure for this before it's too late. Low and negative interest rates were supposed to buy us time and have now become the only way to stop it all imploding but there's no exist strategy and the
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The increase in money supply has not resulted in an increase in demand for products at their existing prices. ... It only works that way if the increase in money supply is uniform across the population.
I couldn't agree more. And to prove your point, we now see indeed inflation picking up as consumers spend the pandemic relief money that was dished out so generously in the US. That is aggravated by lower production which has lead to a shortage of goods in some sectors. But this will not lead to pronounced, long-term inflation because both causes will end quickly.
Printing Money Is Inflationary (Score:2)
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That's a good point. How much of the boom in real estate prices is caused by investors buying up homes instead of families? With something with a relatively fixed supply, it wouldn't take much of an increase in demand from investors to cause a large spike in prices. Is that part of what's happening?
The Vulcans have a saying (Score:2)
Only Nixon could abandon the Gold Standard.
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OFFS (Score:3)
"Classical economic theory would suggest that an increase in the money supply of this magnitude should lead to a sharp rise in inflation but that has not happened"
Gebus what complete BS! Inflation *immediately* began climbing with the end of the gold standard, rising linearly before peaking at over 12%. Energy costs flattened that, but it started climbing again in 1977 to reach over 14% in 1980.
The highest inflation rates in the last 50 years are all immediately after the ending of the gold standard. What is this person talking about?!
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Well, Larry Elliott is more like Larry Idiot. He has been writing mind blowingly stupid articles for years. No idea why the Guardian pays him for his crap.
The best thing ... (Score:3)
the money never gets to the economy... (Score:5, Insightful)
"Classical economic theory would suggest that an increase in the money supply of this magnitude should lead to a sharp rise in inflation but that has not happened. At least not yet."
All of that assumes that the money put into the system stays in the system as liquid cash, moving around under a healthy economy.
That's not what happens now. Instead, most of it is going to Wall Street, being converted into stock value, and inflating stock prices rather than inflating real product prices (or inflating wages, which was the intent of releasing the money in the first place). It supports to the point of suspension the stock market, and the rest of us continue to meager along with the same income we made 15-20 years ago.
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"Classical economic theory would suggest that an increase in the money supply of this magnitude should lead to a sharp rise in inflation but that has not happened. At least not yet."
All of that assumes that the money put into the system stays in the system as liquid cash, moving around under a healthy economy.
That's not what happens now. Instead, most of it is going to Wall Street, being converted into stock value, and inflating stock prices rather than inflating real product prices (or inflating wages, which was the intent of releasing the money in the first place). It supports to the point of suspension the stock market, and the rest of us continue to meager along with the same income we made 15-20 years ago.
Why would you suspend the stock market?? You just said economic stimulus isn't causing inflation, everyone is apparently flush with cash but it's not being saved under mattresses or in bank accounts because it's going to the markets, the biggest problem according to conservatives is a labor shortage because people have enough money to stay home, job creators are doing so fine even _they'd_ rather invest their extra money in the market than raise wages, the economy is expanding, and the stock market is infl
Obligatory Link: (Score:2)
Yeah, the gold standard was also a mess that carried it's own problems. But clearly there are significant problems with fiat currencies as well. Especially with the tendency of politicians to deficit spend without any real limits, and inflate the currency to match.
Sniffing glue (Score:2)
Too much of a good thing (Score:2)
Gold has never been the "only real" currency. Yes, all through history we had "notes" that can be converted to gold pieces, but actual trade was done on credit, and local shops ran tabs on books. Hard currency rarely changed hands. I am not talking about recent two or three hundred years. This includes middle eastern Muslim traders in the middle ages, or even more ancient civilizations.
(For that I could recommend the excellent book: Debt: The First 5000 Years)
The problem arose when the government decided to
Currency has a particular purpose (Score:2)
To be a stable store of value / medium of exchange without hoarding directly useful commodities. Trying to conflate that with different goals like economic stimulus or gaining advantage in trade degrades these important primary functions. People should be able to save for retirement without taking unwanted risks on stock market or buying more real estate then they need. If you must do these other things, create another channel and still give people an option of hard currencies. So far gold may even be bette
No, It's Know Your Customer Laws (Score:2)
No, at least not beyond the sense in which all of our modern financial system can so be traced.
The reason for the rise of cryptocurrencies like bitcoin (both legit and illegit purposes) as well as the interest in creating approved cryptocurrencies like facebook is trying can all be blamed on the passage of overly intrusive know your customer laws for financial services.
These laws are designed to prevent money laundering, terrorist funding and other bad things. And yes, all those things are bad but the net
then someone goes and mines an asteroid (Score:2)
Really, tying your economic stability to any 'rare' mineral is 'great' until someone comes up with enough to crash the market.
Either by mining asteroids, or figuring how to get the gold out of sea water (about one gram of gold for every 100 million metric tons of ocean water), there will be a chase as it's scarcity drives the price of it up and up and the more exotic methods of collecting it become financial sound.
Sounds a lot like Bitcoins, eh?
MMT theory makes this gold bug derp (Score:2)
You don't have to like Modern Monetary Theory to admit that it works in practice, as the US has been proving for decades. Speaking of gold buggery, the US never left the gold standard - just moved it to black gold. If the oil market collapses or it stops being mostly traded in USD, then the US might be up a creek. But not because of blockchain, crypto or Bitcoin.
You guys seriously need to read this book.. (Score:5, Interesting)
No, actually... (Score:2)
No, actually the creation of cryptocurrencies can be traced to the first use of shells as wampum...
fallacies (Score:2)
Crypto coin are just gaming token, nothing to do with issues of currency and money. False premise, fallacious conclusion reached. With a false premise you can prove anything.
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Last I checked, you can still buy and sell gold. Granted the laws may have changed in the last 5 minutes.
You can still buy and sell it, but it is no longer the basis for the value of the currency--a dollar used to represent some fraction of an ounce of gold, for example. Modern currencies are "fiat" money that has no intrinsic value--a government simply declares it is uses a currency as a medium or the parties involved simply agree it can be used for exchange.
https://en.wikipedia.org/wiki/... [wikipedia.org]
https://en.wikipedia.org/wiki/... [wikipedia.org]
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Nothing has "intrinsic" value. Gold was used as currency back in the day because it doesn't degrade, is easy to mint and, most importantly, is a rare metal - the estimation is that the total amount of gold available on this planet is something like 240,000 metric tons.
Unfortunately, all of the above make it completely unsuitable as a modern day currency, specially within a economy the size of the US's.
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Nothing has "intrinsic" value.
Absolutely false. The intrinsic value of something has to do with its base supply and demand and value to *required* functioning society. Unless you want to go back to the stone age then gold is necessary. You reading this would not be possible without gold.
Now as to whether gold's current value matches its intrinsic value, that's a different debate (spoiler: it doesn't) but to argue that nothing has intrinsic value is more of a reflection that you do not know the definition of the word.
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If value is dictated by supply, demand and usefulness to society, then it's, by definition, not intrinsic.
A metaphysics course would help. This is quite literally the kind of stuff discussed on those.
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So you don't have to play along, you can buy gold with your salary and when you need to buy something else sell the gold. What's the problem? What is "intrinsic" value? It is found in the ground. In fact oil may be more useful as a currency, you can use it for more things. Gold's value is because so many people want it. Same thing with the US Dollar. People can manipulate gold the same way. Presumably, there'll be wars to take over gold mines if it was rare enough.
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The reason why gold was a good currency was almost certainly the discovery of touchstone, which allowed it to be verified easily and quickly.
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Diamonds are so damn useful, though. I own so many diamonds that I use them once and throw them away, along with the paper that they are glued to.
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No, gold is not as volatile as crypto.
Buildings do go bad, as you'll find out. Especially stick framed ones with brick facade, as you'll find out. You might even had to sell at a loss to contractor if you fall so far behind with keeping to code it can't be sold normally. Disasters can destroy buildings too, and depending on how your insurance company might say "act of god, sorry"