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Going back to the old gold standard, if there is a piece of gold equaling the value of every piece of printed currency in circulation then inflation should not exist. Obviously there is more currency than gold.
If every single piece of paper money or coin was required, by law, to contain its current
value in actual gold, then printing money out of thin air would no longer be an option.
A (slightly) more complex take
Intrinsic_20Value_20Currency
produce coinage from a wide variety of metals, equal to their intrinsic value at minting; almost, but not quite, the old way that was premised on inflation being zero, actual composition being rarely, if ever, changed. [FlyingToaster, Dec 07 2013]
The value of all the gold in the world.
http://www.onlygold...ld_In_The_World.asp
[DrBob, Dec 08 2013]
The value of the US National debt.
http://www.brillig.com/debt_clock/
[DrBob, Dec 08 2013]
Fiat money
http://en.wikipedia.../wiki/Fiat_currency
There's your problem. [spidermother, Dec 08 2013]
The Shape Of Things To Come
http://en.m.wikiped...e_of_Things_to_Come
Prophetic … [8th of 7, Dec 08 2013]
Free Silver! No evil Gold
http://en.wikipedia...ross_of_gold_speech
You shall not crucify mankind upon a cross of gold!! [sninctown, Dec 09 2013]
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[marked-for-expiry] I didn't see the linked idea. |
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As a people we should demand this. I can see the signs now.. |
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[No inflation without representation!] |
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There is no such thing as "intrinsic value". You
should easily be able to find info about inflation in
Spain, using the gold standard, in the mid-to-late
1500s because of all the gold that was hauled into
that country from the Americas. In Spain at that
time the "value" of gold dropped significantly. |
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And don't be sure something like that can't happen
again. For example, in Alaska there is a proposal
to build a large copper AND gold mine, which if it
happens will certainly pump gold into your "fixed
value" economy. And all it takes is additional
discoveries (like on the ocean bottom) and even
more gold will eventually be added to mess things
up. |
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Very true. There is gold in sea water even, but the total amount of gold on this planet is finite. The work taken to extract any more of it has value that does not take away from its worth unless we learn to synthesize it. Markets will fluctuate but always stabilize as long as each piece of currency contains the actual standard it is derived from. |
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Which is why we couldn't base it on diamonds. |
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I think the trick is to have a different substance for each denomination. So, if a huge new deposit of gold is found, only the $100 coins become intrinsically worth less (though retaining their currency value, making them semi-fiat until they're pulled from circulation). The next run of coins the amount of gold in them is increased to reflect the new rate. |
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Likewise, if the value of gold increases, then the next issue contains less metal, or a different metal is used. |
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This sounds like an argument for writing off all national debt & going over to bitcoins to me. A currency based not on commodities but by something more easily predicted & accounted for, in this case the increase in universal computing power (that's how I understand it, at least).
As an aside, I'm not sure where I stand on bitcoins, really, but you can be sure if it starts to gain serious ground then governments will clamp down on it hard; the legal authority to print money is one of the main methods that states (as opposed to governments) use to maintain their power & if people can just calculate their own money then that poses them a serious threat. |
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[2 fries] You are quite correct in every detail. The
problem is that your post amounts to "Please stop
committing that massive fraud involving the printing
of money out of thin air." |
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Most of the money in the economy is not physical cash, it is bank credit created by private commercial banks. E.g. your bank balance. This idea does nothing to affect this. Also the //printing money out of thin air// thing that governments have been doing recently is not actually the physical printing or stamping of actual paper banknotes and metal coins, but is simply entering numbers onto a computerised bank ledger. This idea does nothing to affect this. |
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H G Wells proposed the idea of the Air Dollar,
which was linked to the average cost of
moving a given mass a fixed distance at a set
speed. |
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//entering numbers onto a computerised bank ledger. This idea does nothing to affect this.// |
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Au contraire: if precious-metal coins are minted at current intrinsic-value, then it behooves people to keep their money only in a bank or financial vehicle which gives better returns than the inflation rate. Otherwise keep it in a sock, or a safety deposit box, and sell the oldest coinage to the smelter, by weight, when needed, thus better keeping up with inflation. |
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Incompetent banks and untrustworthy governments are thus given nothing to squander. |
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The hope is, by controlling the amount of money
governments might be able to serve society better.
People who live in regions with truly incompetent
governments do as you say and try to move assets
into things less prone to inflation - gold, or
currencies of other governments. I wonder where
you are in 2013 that this sort of inflation is
problematic? I thought things had settled out even
in Zimbabwe. |
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Contra-gonflablement? Sacre bleu! |
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[DrBob] , though the feds may in the end come
down on Bitcoin, I'm not sure that ultimately
governments are able to control this kind of
concept. |
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As trading becomes more efficient and more
transparent, the value of manipulating money
supply is diminishing anyway. |
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For instance, many here fret that the US Dollar,
which benefits from being a reserve currency, will
lose that status and with it, the US consumer will
lose purchasing power. |
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But in reality, what difference does it make what
currency something is priced in if it is traded
globally and transparently, meaning the losses in
efficiency that used to be extracted by converting
currencies, settling trades, etc, shrink further and
further until they are irrelevant? If, for instance,
the printing of each additional dollar instantly
drops the value of a dollar in a visible way, the
government gains nothing from it. This already
happens with hyper inflation, of course -- but as
trading becomes more transparent, this will
become more and more noticeable even at lower
levels of inflation. |
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So somewhat contrary to current events, I
would say that the era of printing money is
(almost) over. |
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The danger, of course, is that with the diminishing
of this power, comes also the diminishing of
governments' ability to act in a counter-cyclical
way, thus
they have to invent new and ever more dangerous
ways to do it, kind of like a super nova cycle, first
you run out of hydrogen, then helium, then
carbon, then... |
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Some points to note:
1. Companies like Planetary Resources are working
on ways to obtain outer-space resources and
import them to Earth. Gold would be included, of
course. |
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2. Bitcoins are derived from a mathematical
procedure, and By Design there can NEVER be
more than a certain total quantity (21 million).
Current bitcoin "mining" operations are all about
mathematically generating those 21 million.
However, once done, just because the number is
fixed, that doesn't mean their value can't change. |
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3. For one reason, bitcoins exist as data stored in
various sorts of computer-associated hardware; a
"wallet" can be destroyed in a fire, and I think I've
already heard about some instances of that. The
total supply of bitcoins could be expected to go
down slowly with Time, which would cause their
value to increase. |
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4. Even if you perfected ways to forever fix some
quantity of something, its value can STILL change,
because your whole Idea here only considers ONE
side, the "supply" side, of the Law of Supply and
Demand --the latter side depends on Population.
If population goes up, so does Demand and value;
if population goes down, so does demand and
value. |
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Would gold that is radioactive be included? |
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I'm for stopping inflation, but active control of the money supply is
needed to do this, for reasons mentioned previously. |
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//active control of the money supply// which, contextually, means . . . |
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hmm.... shouldn't you be able to sue if the government mandates inflation ? Think about it: taxes are paid for the protection of property: the feds get so much for the army to keep foreigners from setting up shop on your land; local law enforcement gets taxes to keep trespassers and litterbugs away, and thieves out of your house. |
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So if the government is intentionally screwing the value of your bank balance then they're obviously not doing their job, rather the opposite. |
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//shouldn't you be able to sue if the government mandates inflation// Sure, go for it, I'll watch. |
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//shouldn't you be able to sue if the government
mandates inflation ?// |
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Since inflation causes the cost of those services
(i.e. taxes) to also decrease, not sure how much
of a case you have. A |
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class action by everyone who has money in the
bank, and has thus lost untold money -- certainly
trillions -- in interest due to the Fed's policy since
2008 could be interesting |
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I really think currency should be measured in hours of sunlight. Getting more sunlight becomes more expensive. Since living in a sunny place is theoretically easier, places like Spain and Greece have typically been cheaper, since their currency is in sunlight, almost regardless of the gold-traders who want to move there. |
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As I've also been saying (many of you, sadly, weren't in my circle of trust at the time) Bitcoin is really just a ready-made invitation for banks to crash your party again. Not only do they have the computing and manpower to mine till the coins come home, but their natural flair for strictures comforts the sheeples. |
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As of this week, Goldman Sachs and another major bank are in the Bitcoin game, strictly on their own terms of course. |
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