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Where does money come from?
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Post by
204878
This post was from a user who has deleted their account.
Post by
Meggie
In the old gold was a spoil. These spoils could be exchanged for food and materials. As civilisation increased, so did materials and food. It takes 1 gold to buy seeds, 2 gold to buy grown vegetables and 5 gold to buy a salad. This is the base of inflation.
Over the centuries the progress of civilisation became apparent. Gold only held some symbolic marginal value as cities do burn, but gold does not. Gold is the baseline, gold is the stone age spoil. If you are not living in the stone age you do not seek gold.
.
To exploit rampant civilisation, Jan van Leiden invented the "paper debt": the gold you hold today is a futile amount in future. What Jan van Leiden added was a government actively devaluating gold without adding progress civilisation. This system ended with the loss of trust in governments, previously deemed divine. The resulting killing spree is known as the French Revolution, but it swept all over Europe.
Ever since, civilisation progressed. But then there was a turn: gold itself became a material, for manufacturing electronics. I don't know where this twist will be leading to.
Post by
166779
This post was from a user who has deleted their account.
Post by
Hyperspacerebel
I don't have time to watch the video, but I can't believe that anyone who was the least bit interested in the economy wouldn't already understand the role of debt in the modern system.
Post by
Tauge
Why is it any better to tie an economy to something like gold which is dependanty on primary production, and can be mined out of the ground in a completely unregulated way destabilising the entire economy? The current system relies on the value of the economy itself. It's actually in many ways more stable than tying to a standard is. the instability comes when people lend too much, but that is just as likely to happen in a gold-tied system than it is any other.
Just wanted to focus on this point here. The price of gold can be manipulated...easily. And can just as easily damage the economy.
http://en.wikipedia.org/wiki/Black_Friday_%281869%29
I'll summarize: After the US Civil War, people believed that the government would be buying back the paper money issued during the Civil War with gold. Two men decided to profit off this and began buying up gold, to corner the market, while delaying Grant from selling off the government's gold for as long as possible. This caused the price of gold to increase and stocks to plummet. Grant saw this happening and sold off 4 million USD of the government's gold stocks. Gold prices plummeted and many were ruined.
Post by
421339
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Post by
pezz
I read
this book
recently, and Liaqaut Ahamed made the fascinating point that it was purely an accident that gold production roughly, more-or-less, kind of sort of, mirrored world economic growth for several hundred years.
Further, when we get into a trouble, a president can just say 'right, one dollar buys a tenth of an ounce of gold now. I know it was a fifth before, but now it's a tenth.' Gold isn't the miracle metal pro-gold standard types think it is.
Post by
Hyperspacerebel
Further, when we get into a trouble, a president can just say 'right, one dollar buys a tenth of an ounce of gold now. I know it was a fifth before, but now it's a tenth.' Gold isn't the miracle metal pro-gold standard types think it is.
By definition a gold standard is is a fixed value. For someone to change the value would be for them to change the gold standard. That's exactly what FDR did in 1934, and it was exactly the thing that is meant to be avoided by sticking to a "standard" gold standard.
Post by
pezz
That's my point. A gold standard by definition is impossible to adjust, but there's really no guarantee that you'll stick to it.
Post by
Hyperspacerebel
That's my point. A gold standard by definition is impossible to adjust, but there's really no guarantee that you'll stick to it.
Who's "you"? The government? That's why you make laws that explicitly deny that power to the government.
Post by
pezz
Well, I suppose that's true. It would be a terrible idea but it does at least prove my point wrong.
Post by
166779
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Post by
706709
This post was from a user who has deleted their account.
Post by
mindthegap5
oil is the new gold not silver
Post by
706709
This post was from a user who has deleted their account.
Post by
Hyperspacerebel
And precisely the problem with this is that countries with gold to mine can simply dig up vast quanities of it. If it were another material, the market cost of it would adjust normally. If there is a standard amount tied to gold, however, there is no balancing mechanism.
Tying to standards was fine in localised economies but in a global economy makes no sense at all. The video linked at the start is seriously bad.
Finding new gold is a great thing, because it combats the inherent deflation of the system. I don't see what your problem is.
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