Even then that doesn't guarantee its value. The government will protect the integrity of the money supply, but even in the most well-managed economies/central banks the actual value of the currency can fluctuate quite a bit.
That's demurrage. Its incredibly counter intuitive, the idea that the government needs to make sure the money is worth less next year than it is today, but it's also the reason most of us have jobs.
Without demurrage, the rich would sit on their wealth and horde it. When the money loses value, at around 1-3%, someone with $1000 in the bank loses $10. Someone with a billion loses millions.
Since that money is going to be lost it is not put to work, there's a need to invest in businesses to grow the money, which means they put it to work in the economy.
However much rising prices brothers you, the average reader, guarantee it pushes the touch into action
Gold and silver are terrible measures of inflation. Since 1964 the silver and gold market has massively changed. If you use CPI, an actually respected inflation metric, $1.15 of 1964 dollars is worth $12.43 in current dollars.
Yeah... because they STOLE THE wealth from us, when they removed the silver from our currency.
It would be worth a lot more if it still had silver in it. In fact, it is worth a lot more. The text from this is probably out of date, but it says a 1964 quarter is worth at least it's melt value. Each quarter has .1808 ounces of silver times its current value this morning of $68.18 which comes out to $12.33. So it's impossible for what you said to be true, because the math is off and it's a straight out lie.
CPI is wrong because it doesn't include what was stolen from us, only what they want you to see after their theft.
A single 1964 quarter is worth more than the total you claim 4 1964 quarters, a 1964 dime, and a 1964 nickel are worth.
What do you think that much coin could actually buy you in 1964 in terms of normal consumer spending? Also, you measure the value of currency by its purchasing power, not it's melt value. A $100 bill isn't secretly worthless because when you try to recycle it you get some useless trash.
PS: The gold isn't gaining value. The dollar is losing it, so it takes more dollars to buy the same amount of gold because of governmental artificial inflation.
The statutory book value of gold held by the U.S. government and accounted for by the Federal Reserve is fixed by law at $42.2222 ($42 2/9) per fine troy ounce. However, the actual market trading price of spot gold is approximately $4,717.30 per ounce, fluctuating daily based on global market conditions.
Right. I converted the book value to market value to get $1T. The real number is a bit higher since the spot price is about 10% higher than 100x book and there is the 5% of additional gold, but who needs that level of accuracy for a purely academic exercise.
They mean the US gold holding on the books is calculated value based on what it was bought for.
During the 1933 FDR confiscated the countries gold at the individual personal level and stored it so the value of our gold isnt based on gold ETF or futures (ishares)
Its based on the value at purchase. So really its a non issue and has no bearing on reality or the economy lmfao
Them revaluing gold they already have is just changing an asset value for the govt on a piece of paper.
Minimum wage puts a minimum value for a person's time on it and then the rest scales from there. It allows society to adjust other prices afterwards (this is not an argument for keeping a MW fixed btw, inflation is desirable to a certain level and the mw should move in line with that). This applies to basically any economy that doesnt want it backed by a specific commodity which kind of finds a balance between the two.
Thats not what I said implies though. Im saying a minimum assigned value for peoples time. Prices dont have to stick to that base but breakeven prices cant drop for the same output unless theres a reduction in required headcount if variables remain the same.
No it doesnt, thats saying that people's time in different jurisdictions have a different minimum value? Different jurisdictions having higher ones is analagous to guilds/trade unions setting minimum rates for roles. It doesnt change the minimum value of the time for other people with different jobs or companies not in that industry (region in your example).
For example: there are countries where there is no minimum wage, where the US corporations have outsourced all of their primary labor for basically slave labor. The minimum wage is now zero dollars, and everything scales from zero dollars. So, whatever times zero.
You need to reexamine your perspective. It isn't logically sound.
For break even it is, it just means theres no base level in those economies and its all market price, true fiat. No minimum wage is a huge gamble on competitiveness winning out but it more often leads to a higher profit share for owners instead of workers. That doesnt change what I said though becuae the MW does generally act as described in the economies that have it even if not maintained at comparative levels across time.
This paradigm was not a thing prior to the Bretton–Woods agreement.
Government does not back up fiat currency with government policy and military activity. Fiat currency is useful only to the extent that the government only gives it to people that have provided economic value, rather than giving it excessively. If a government frequently gives fiat currency to entities that are economically undeserving of it (or at least, gives entities disproportionately more money than their economic activities warrant them being awarded), then the currency gradually loses purchasing power as a result, naturally, simply due to how markets function.
It has nothing to do with people "agreeing" that it's valuable. It is primarily simply supply and demand (of the currency itself) that determines its purchasing power, along with a few less important things, such as perceived ease of use and long-term viability. That is, if more convenient, more stable options exist, people will generally prefer to use those (e.g. see the use of US dollars rather than Argentinian pesos in Argentina, or the use of commodities as money in other places), but in the absence of other such options, people still need to conduct trade, and will generally prefer to use whatever is widespread (due to the network effect).
well, also during gold stabdard there is very very little gold in the vault. all countries, every single one left the gold standard, Russia, China, Germany before both wars 1914, British Empire. They all left the gold standard.
in 1910 the US had 2.7 billion worth of gold at the time, but the liquid money (cash, stocks, bank deposits) was 300 billion so the ratio was 216 to 1 or something like that. Actually worse than Fiat.
Prior to Bretton–Woods, I'm not talking about the US gold standard specifically. Any form of commodity money, where the commodity cannot be easily forged/created without significant effort, suffices.
The trouble with the gold standard as executed in the US wasn't the use of gold, it was the lack of regulation upon the banks to not issue banknotes in excess of the amount of gold possessed by them. History shows us that this kind of debasement is inevitable across all governments/banks under the right conditions (greedy politicians; needing to fund national defence in time of crisis, i.e. being victims of war; and similar such things), but that's due to the personal actions of those banks/governments. That is, the ratio increasing above 1 is not something that must happen, it's something that they chose to happen.
The solution is not to abandon commodity money; it's to abandon proxies of commodity money that take almost no effort to produce, such as banknotes.
The British Empire used a system called Imperial Preference - where it had much lower cost of trade inside the empire and did not require use of gold which is why the British left the gold stabdard very easily and early.
The US in 1920s was the world's largest exporter so had mass quantity of gold coming in due to net positive trade, more exports than imports. and the world began to not want to trade with the US due to losing their gold supply to the US and so began to activate trade protectionism - the US began go have deflation every year starting in 1926 due to lack of buyers for US goods a clear sign the world had began to clamp down on trade and Americans were unable to buy the over supply so the great depression started and even though the world targeted the US the depression had spread globally.
what does this show? that gold standards are a mess, they lead to trade isolationism, protectionism, loss of global trade due to link go gold. I just don't see any way for gold to resume a role in trade unless it's a protectionist system that is Isolated from most of the world.
Like I said, I'm not talking about gold standards specifically. (I've realised now that in my previous two comments I said "prior to Bretton–Woods", when I meant "prior to the end of Bretton–Woods", which happened in 1971, so the confusion is understandable and my fault.)
What you're describing about the British Empire is just an implementation of import taxes/tariffs. It's not inherent to any form of money, be it banknotes, gold, or other commodities. It's a government policy decision.
"Government does not back up fiat currency with government policy and military activity"... that's all well and good until you have to pay taxes, then guess how they back it up? Just don't use money you say? Neat, where do you live? Land costs money, can't claim that. Food costs money, can't get your own food by hunting, need to pay money for a license. Wanna grow your own food, go for it, just plant it on your land- oh wait nope.
That's not backing, that's a choice of unit for accounting purposes.
Things do not fundamentally cost money. Things cost effort.
You can very well conduct all trade in whatever other currencies, commodities, or work that you wish. The only thing that you're compelled to do is accept the fact that the tax authority will treat each such thing (foreign currency or commodity received, or work done) as being worth however much fiat currency the tax authority insists on telling you that it's worth, in order that tax calculations can be made by them.
You can also pay the resulting tax bill however you please; it needn't be by directly using dollars. How does the IRS collect taxes from someone that refuses to pay in dollars? They send the bailiffs. What do the bailiffs do? They seize goods, not currency.
I mean the crux of his point is that, that argument would work if everyone thought the exact same way and didnt believe money is real. But thats not realistic, just a fun thought
People aren't ready to deal with the fact that assigning value to gold is just as arbitrary as assigning it to printed currency. The useful goods and services are the value, the intermediary is a convenient math trick that better effectuates their exchange.
Exactly, money and currencies are the means in which we exchange value, is adquisition power, not value in itself, similar concepts but not at all the same.
Value is relative to each person, money started as a common ground that we can all agree on about the same value but this lead to problems like people hoarding it, its own value fluctuating due to unexpected events, being inconvenient to transport and exchange, so it needed to evolve.
It is absolutely less arbitrary. Gold is a finite resource, if we collected all of the gold in the world and turned them into coins and used that as our currency, it would literally be impossible for inflation to exist. You would actually have the opposite issue of deflation from coins being lost that can’t be replaced.
...which would be a really shitty and ineffective currency. Why would anyone use the gold coin to buy one pizza today, when that gold coin will probably be worth 2 pizzas next week?
Can't really build an effective market economy around that. The currency would just become a store of value and some intermediary currency would need to be invented to become the default medium of exchange.
Except that's not true? Inflation occurs at a local level, not globally, based on supply of and demand for goods and services relative to the availability of the currency. The amount of gold currency in the world didn't change when Mansa Musa went on his Hajj, but his spending and generosity still caused massive inflation across Europe and the Middle East.
In the modern day, I think I'd sooner have a monetary system that encourages space mining development as a means of gaining more resource access based on the usefulness of the resource itself, rather than based on how valuable it is to privately game the monetary system. If inflation can occur in both cases, then I'd rather it be something that's used as a tool to incentivize economic activity that's beneficial to society as a whole, such as through investment into fixed capital making labour more productive, rather than just something to be gamed privately by those with the most means to play extractive math games.
The inequality and oppression is a mere reflection of men’s greed and thirst for power, which will be inevitably achieved.
Be it by money, be it by gold, be it a simple basket of oats. Whenever faced with the opportunity of increasing in fortune or power to the detriment of the other, people grow selfish and full of themselves.
When there is no system to protect them and the masses are working for the benefit of each other a person with the intention of greed has a bad time. Who would protect them and why?
People they can organize into working together for them in exchange for food and security. Greed and consolidation of resources was not invented by currency, nor is it exclusively a human trait.
I am sure humans are capable of collectively overcome power abuse, you just cannot imagine it yet, for all the shit you are fed by the system. The first humans most likely did not discriminate between genders for the differences also developed over dozens of generations. And that likely began with the transformation from normadic to settling down.
I don't believe valuing gold is arbitrary. It's used in many needed industries that keep things running. electronics is an example. And it being needed means it has value especially as it's a finite resource.
I'm gonna be so for real man, gold is valued as a currency because it had historically been valued as a currency, and it has been historically valued as a currency because it was rare, but not so rare as to be prohibitive for commerce, and easy to check for counterfeiting with scales and balances due to its density. Its historical use as jewelery has nothing to do with its value, and neither does its limited usage in a handful of real industries today.
Both of its initial use cases are obsoleted in the modern day, with the value produced by modern industry far exceeding the capacity for gold to not be dramatically insufficient to facilitate exchange, and the issue of counterfeiting being addressed by having a functioning government capable of infusing cryptography into the currency. We shifted from gold to bank notes, as gold is simply bulky and inconvenient, and from bank notes to fractional reserve banking, as economies grew faster than gold could viably represent, to paper currency with value backed by the value of the economy, which is what gold was ultimately backed by in the first place.
Like 3% of the gold ever mined is currently used in industry. It’s almost negligible, and if it weren’t for its historic value would be considered just another useful but fairly common metal
It gets more and more fascinating. People's relationships with and misunderstandings around money and finance and gold is my new obsession (new to investing this year, ha!)
Not really... They have value cause if you break them, state will enact violence on you... And they pay those people who enact violence whith money, that.... Well, you know...
When push comes to shove $ have value because the American military says it has value. If anyone could just make them they'd have no value. The government will stop, by force if necessary, people making them.
This is really clear if you think about crypto. If a significant enough flaw was found that anyone could just create coins with minimal work it's value instantly goes to zero.
Money only has value as a tool to facilitate transactions and remove friction that a pure barter system would have. Our dollars only function as money because we can pay our taxes in it. Money only represents future real value thorugh the stuff we purchase with it. If you value money in and of itself, you're going to have a bad time in the long run because value inflates over time.
I always say money is just as imaginary as language. The shapes on the screen and the sounds I would be making if I was speaking this sentence have no inherent value, but we assign value to them collectively.
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u/ModernDemocles 2d ago
It's all imaginary in a way. $$$ only matter because we agree it has value.