Monopoly Men

[Belz...]

you can't just keep making it, possibly recklessly

That just means it has a rarity, not that it's better or more practical, or less arbitrary.

 

[JonnyFive]

Unfortunately it would have the downside of the store owner not agreeing to accept 4 of my sheep in exchange for a DVD recorder, even if _I_ think it's the best currency.

And why should business owners be forced to accept your fiat sheep?

I mean, you can just create more sheep. It's like you have a license to print money!

 

[Belz...]

Suppose you had a printing press in your bedroom and you could create counterfeit $100 bills that were so realistic that not even a bank manager could tell they were bogus.

That reads remarkably like something you copy-pasted.

You're confusing that situation with government-minted money.

1. The exclusive right to print money = the right to steal real wealth.

That's a flat-out lie. Things are way more complicated than that.

Money is a generally accepted medium of exchange.

The monopoly power to create it is theft.

And what do you do when the population increases ? Or when REAL wealth that is represented by your gold increases ?

Names of people who benefit greatly from central banking?

George Bush
Dick Cheney

Why ? Are they given a percentage of every dollar printed so they can buy stuff before the economy inflates ?

 

[sickmint79]

That may help to define it's effectiveness, or its properties as a currency, but it doesn't change the fact that it's fairly arbitrary. People picked certain precious metals as currency because they tend not to corrode, they look nice, they're rare enough to disallow the free-wheeling creation of currency by anyone, and they're common enough that we can actually put them into circulation on some level.

As we've discussed before, one of the possible problems with currencies like gold is the inability to create more of them as the economy expands, or in response to harmful deflationary trends.

I'll take a look at the articles you linked to, sickmint.

well in times of crisis we could allow ourselves to deviate and produce more currency. change from 100% backed to 90% or 90 to 80 or something. and then try to work back up to where we were originally at.

did they readjust the percentage rate for the bretton woods system?

 

[JonnyFive]

well in times of crisis we could allow ourselves to deviate and produce more currency. change from 100% backed to 90% or 90 to 80 or something. and then try to work back up to where we were originally at.

Of course, and that would make a backed currency much more resistant to the issues associated with it. Unfortunately, it has exactly the same effect as forcibly removing currency from circulation now. From what I've read, the most fervent opponents of "fiat money" would probably hate the idea of instituting it at any time, and the resultant removal of currency from circulation. You could always take it out of bank reserves, which would deflate the currency again.

But, we can do that now as well. If you're going to allow the removal of the backing requirement if needed, then you might as well not bother with it in the first place. The same end could be achieved through the central bank removing currency from circulation.

It's not just times of crisis, either, the backing system can be a hinderance in times of economic growth, when the population and economy is growing. If the currency is fixed (and cannot be readily expanded, as it potentially the case with precious metal backing), it can cause deflation, which can be problematic in the long run.

I suppose you could also back the currency with various other resources, such as oil or timber. If the national economy goes belly-up, we all have a giant fire sale to China and they buy all of our crap in exchange for whatever we need to continue to live.

If you're willing to make such concessions, having a semi-backed or sometimes-backed currency would weather many economic issues, but there's no particular point to it in such a case. With the ability to change to respond to world economic conditions, you have exactly what we have now!

The US currency went off the gold backing (and it wasn't always backed before that, bear in mind) because of an expanding economy and the need for a flexible currency to respond to that. Ironically, it was always the "big bankers" pushing to keep the US on the strict gold standard.

A lot of the arguments of the strongest opponents of the current US currency system seem to stem from the idea that the current currency is worthless, or steals wealth from consumers, or that gold is somehow this perfect currency that will fix all of our problems. Very few of them address many of the issues we've talked about here, and I haven't seen any propose the kind of compromises you've suggested to deal with those issues.

did they readjust the percentage rate for the bretton woods system?

You mean the gold exchange rate under the system, or something else?

 

[sickmint79]

But, we can do that now as well. If you're going to allow the removal of the backing requirement if needed, then you might as well not bother with it in the first place. The same end could be achieved through the central bank removing currency from circulation.

with the backing though unless there are times of duress, it would force the monetary policy to be more restrained. here is a graph of cpi - upload.wikimedia.org/wikipedia/commons/thumb/3/34/US_Consumer_Price_Index_Graph.svg/750px-US_Consumer_Price_Index_Graph.svg.png
it just jumps after we got off of bretton woods and kept on climbing.

my understanding was we didn't go off the gold because of an expanding economy, but because we printed a **** ton of money to spend and went hugely off the bretton woods agreement, and other countries (especially france) were asking for gold.

i understand the steals wealth from consumers theory, it makes sense to me. the first people that receive the new dollars benefit from it the most. they still have their full buying power at that time because the market prices have yet to change based on their entry.

i meant the gold rate under the bretton woods system, was it always a fixed percent or did it float around or change based on some meetings and info?

still curious to see what you think about that article from the bank of international settlements. today the dollar hit a 52-week low i believe. household debt and household savings are the worst they have ever been, budget and trade defecits are huge, and the artificial demand that props up the dollar based on its necessity for oil purchase is being threatened by iran (unless we bomb them of course) - a more real nuclear threat is kim jong il but i don't see us running over there right now. don't we have a good recipe going on for a repression to depression now??

 

[sickmint79]

jonnyfive - what do you think of this? interesting video just saw tonight. actually only halfway done. check it out.. costs 50 minutes though!

video.google.com/videoplay?docid=-9050474362583451279