Financial Collapse and Energy - Something Other than a NINJA Problem

Re:Financial Collapse and Energy - Something Other than a NI... by gibsonf1 on Thursday May 28, 2009 @10:02AM (#630209)

You are avoiding the issue of how difficult it is to dig up gold vs. print money. At $1000/ounce, that is a pretty big incentive to dig for gold now, so why aren't people dumping it on the market? Do you know of any examples of hyper-inflation with a gold standard?

If we return to a gold standard, the value of a dollar would change from the current situation, and then hold steady. How is this a problem? Does it make sense to value current dollars in gold equivalent now as a premise for an argument on the "value" of the money supply? This sounds like a non-sequitor to me.

The gold standard removes the most pernicious and powerful way for the government to take our money, inflation. It is happening now at a rate faster than ever in US history.

http://bloomberg.com/apps/news?pid=20601087&sid=aIeLg1dj...

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Re:Financial Collapse and Energy - Something Other than a NI... by Xichekolas on Thursday May 28, 2009 @10:45AM (#630272)

And you are avoiding the issue that the Gold Standard removes a lot of flexibility in monetary policy, and buys you zero protection from manipulation.

There are numerous points in history that the US Gold-backed currency was manipulated. During WWI, it was suspended twice. In fact, gold standards are regularly and habitually suspended in times of war. (Ideally, once reinstated, a deflationary postwar period would counter the inflationary period during the war, but there is no rule saying the standard must be reinstated at the same notational value, so this is wishful thinking.)

During the depression, the Gold Reserve Act reset the value of gold from $20.67/oz to $35/oz, effectively devaluing the dollar against every other gold-backed currency (inflation), and, to quote wikipedia "the higher price increased the conversion of gold into dollars, allowing the U.S. to effectively corner the world gold market".

So the government can still manipulate the value of it's currency at will, simply by changing the redeemable value of it's notes. This is on top of the possible manipulation by private parties (mining companies) and other governments (nationalized mining companies) that I have already pointed out.

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Re:Financial Collapse and Energy - Something Other than a NI... by gibsonf1 on Thursday May 28, 2009 @03:42PM (#630902)

I think the point of the gold standard is to remove flexibility in Government monetary policy. The government should not be able to reduce the value of your wealth, or do you think they should?

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Re:Financial Collapse and Energy - Something Other than a NI... by Xichekolas on Thursday May 28, 2009 @04:33PM (#630978)

Money is a medium of exchange. So no, I don't think they should be able to arbitrarily reduce your wealth, but hopefully cash doesn't comprise more than a tiny fraction of your wealth.

If inflation truly scares you, don't keep a significant portion of cash on hand. Go take it all and buy gold/houses/land/businesses/securities. If hyperinflation truly happens, we can both laugh all the way to the bank (most of my 'wealth' is likewise in some kind of asset). If it doesn't happen, you'll probably still have made some decent investments.

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