What should back currency? - Page 4 - Politics Forum.org | PoFo

Wandering the information superhighway, he came upon the last refuge of civilization, PoFo, the only forum on the internet ...

Polls on politics, news, current affairs and history.

What should be used to back currency

Fiat
27
52%
Gold
10
19%
Silver
No votes
0%
Gold and Silver
2
4%
Barter System
2
4%
Other Commodity
3
6%
Other
8
15%
By Huntster
#13181828
And when the malevolent government seeks to destroy it, the populace should destroy the malevolent government.

But a population will not seek to destroy a government unless its policies' effects on the welfare of the population (ie inflation) become substantially burdensome. Considering that its possible to have a fiat currency and low inflation, overthrowing a government for simply having a fiat currency would be an idiotic, knee-jerk reaction.


That is true.

However, doesn't your statement ("considering that it's possible to have a fiat currency and low inflation.....) indicate doubt? Doesn't the reality and regularity of fiat failure indicate that eventually it will fail (which means economic disaster for society)?

Again, I'm only concerned for my children, not for folks like yourself. People who insist on disastrous policy deserve it's fruit. I'm fine. I owe nothing, and my investments are about as safe as any (and likely safer than most).

Even if our current economic situation (overboard "stimulus" printing and spending) results in hyperinflation in many areas, I suspect this area will fare better than most, anyway. We already are.

Quote:
This is not an inflation due to the instability of the currency like fiat currency creates, which is much more devastating, long lasting, and more difficult to extract a society from.

How so? You pretty much defined inflation in the paragraph above this one.


Inflation:

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.[1] When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.


Inflation can be caused by any of a number of economic situations. Figlio is desperately hanging onto the price revolution situation of colonial Spain, which I pointed out wasn't due to the collapse of a worthless fiat currency, but because the growth of wealth (due to the rapid influx of New World gold and silver) overran the supply of goods and services, not because the currency lost it's value and there were plenty of goods and services available if people were willing to trade them for the worthless paper (like in hyperinflationary Weimar Germany, where you spent your entire salary as soon as you could because it lost value by the minute, or like in hyperinflationary Hungary, where the value of the currency was declared by radio by the second).

If I must, I'll post more fact right here for those who wish to skirt it or just don't bother following the references I give:

The main cause of hyperinflation is a massive and rapid increase in the amount of money, which is not supported by growth in the output of goods and services. This results in an imbalance between the supply and demand for the money (including currency and bank deposits), accompanied by a complete loss of confidence in the money, similar to a bank run. Enactment of legal tender laws and price controls to prevent discounting the value of paper money relative to gold, silver, hard currency, or commodities, fails to force acceptance of a paper money which lacks intrinsic value. If the entity responsible for printing a currency promotes excessive money printing, with other factors contributing a reinforcing effect, hyperinflation usually continues. Often the body responsible for printing the currency cannot physically print paper currency faster than the rate at which it is devaluing, thus neutralizing their attempts to stimulate the economy.
Hyperinflation is generally associated with paper money because this can easily be used to increase the money supply: add more zeros to the plates and print, or even stamp old notes with new numbers. Historically there have been numerous episodes of hyperinflation in various countries, followed by a return to "hard money". Older economies would revert to hard currency and barter when the circulating medium became excessively devalued, generally following a "run" on the store of value.
Hyperinflation effectively wipes out the purchasing power of private and public savings, distorts the economy in favor of extreme consumption and hoarding of real assets, causes the monetary base, whether specie or hard currency, to flee the country, and makes the afflicted area anathema to investment..............

..............Thus when fiat money is printed, government obligations that are not denominated in money increase in cost by more than the value of the money created.
From this, it might be wondered why any rational government would engage in actions that cause or continue hyperinflation. One reason for such actions is that often the alternative to hyperinflation is either depression or military defeat. The root cause is a matter of more dispute. In both classical economics and monetarism, it is always the result of the monetary authority irresponsibly borrowing money to pay all its expenses. These models focus on the unrestrained seigniorage of the monetary authority, and the gains from the inflation tax. In Neoliberalism, hyperinflation is considered to be the result of a crisis of confidence. The monetary base of the country flees, producing widespread fear that individuals will not be able to convert local currency to some more transportable form, such as gold or an internationally recognized hard currency. This is a quantity theory of hyperinflation........
User avatar
By dilpill
#13181832
However, doesn't your statement ("considering that it's possible to have a fiat currency and low inflation.....) indicate doubt? Doesn't the reality and regularity of fiat failure indicate that eventually it will fail (which means economic disaster for society)?

You say that like fiat is always doomed to fail. Last time I checked, the gold standard was the one that hasn't been in existence for over 30 years. :|

not because the currency lost it's value

But that's exactly what happened. As the supply of gold and silver dramatically increased because of New World mining, the value of gold and silver declined, just as the value of paper currency declines when too much is printed.
By Huntster
#13181854
However, doesn't your statement ("considering that it's possible to have a fiat currency and low inflation.....) indicate doubt? Doesn't the reality and regularity of fiat failure indicate that eventually it will fail (which means economic disaster for society)?

You say that like fiat is always doomed to fail.


That is precisely what I believe, and I believe history supports that.

Last time I checked, the gold standard was the one that hasn't been in existence for over 30 years.


1) "The last time you checked" isn't a very impressive measure of time for those of us well over 30 years of age or with a good grasp of history

2) Thirty years isn't much of a span of time for measuring the ultimate success/failure of a fiat currency

3) The gold standard is still in existence in Switzerland, and the Swiss franc is currently doing quite well against the USD, and has risen dramatically over the past year (just like gold has)

Quote:
not because the currency lost it's value

But that's exactly what happened. As the supply of gold and silver dramatically increased because of New World mining, the value of gold and silver declined, just as the value of paper currency declines when too much is printed.


No, it did not. The price of goods and services rose. Again:

......inflation is a rise in the general level of prices of goods and services in an economy over a period of time.


In particular:

Used generally to describe a series of economic events from the second half of the 15th century to the first half of the 17th, the price revolution refers most specifically to the high rate of inflation that characterized the period across Western Europe, with prices on average rising perhaps sixfold over 150 years.
It was once thought that this high inflation was caused by the large influx of gold and silver from the Spanish treasure fleet from the New World, especially the silver of Peru which began to be mined in large quantities from 1545. According to this theory, there was simply too much money for the amount of available goods.
The start of the price rises actually predated the large-scale influx of bullion from across the Atlantic, reflecting in part a quintupling of silver production in central Europe in 1460-1530: though this output fell by two-thirds by the 1610s, it was significant in fueling the early stages of inflation that were causing an undermining price regime in place since the previous upsurge in silver production in 1170-1320.
Demographic factors also contributed to upward pressure on prices, with the revival (from around the third quarter of the 15th century) of European population growth after the century of depopulation and demographic stagnation that had followed the Black Death.


The problem wasn't too much wealth. The problem was too little supply of goods and services to buy.
User avatar
By ThereBeDragons
#13181859
Huntster wrote:3) The gold standard is still in existence in Switzerland, and the Swiss franc is currently doing quite well against the USD, and has risen dramatically over the past year (just like gold has)

The Swiss Franc was taken off the gold standard about a decade ago in a national referendum.

Huntster wrote:The problem wasn't too much wealth. The problem was too little supply of goods and services to buy.

If the government "finds" a few extra trillion dollars, couldn't the parallel claim be made that "it's not that there's too much money, it's that there's more wealth but not enough goods and services." Goods and services *are* wealth. Money, fiat or otherwise, is just what it's measured in.
By Huntster
#13181955
Huntster wrote:
3) The gold standard is still in existence in Switzerland, and the Swiss franc is currently doing quite well against the USD, and has risen dramatically over the past year (just like gold has)

The Swiss Franc was taken off the gold standard about a decade ago in a national referendum.


1) After intense pressure from Senator Alphonse D'Amato and the U.S. Government in unprecedented support of the World Jewish Congress

2) The constititutional requirement to the gold standard was removed, however the Swiss franc is still backed by gold at a rate of 20%, which is half what it was before the U.S. pressured it to sell off

3) Before this move, the Swiss franc was backed at a 40% rate, far, far more than any other world currency, and I suspect this is why the U.S. was so "moral" as to support the WJC

Huntster wrote:
The problem wasn't too much wealth. The problem was too little supply of goods and services to buy.

If the government "finds" a few extra trillion dollars, couldn't the parallel claim be made that "it's not that there's too much money, it's that there's more wealth but not enough goods and services."


Not if our markets are still full of junk for sale like they are today.

Goods and services *are* wealth.


Goods and services are what wealth buy:

In macroeconomics and accounting, a good is contrasted with a service. In this sense, a good is defined as a physical (tangible) product, capable of being delivered to a purchaser and involves the transfer of ownership from seller to customer, say an apple, as opposed to an (intangible) service, say a haircut. A more general term that preserves the distinction between goods and services is 'commodities,' like a flashlight. In microeconomics, a 'good' is often used in this more inclusive sense of the word.


A service is the non-ownership equivalent of a good. Service provision has been defined as an economic activity that does not result in ownership and is claimed to be a process that creates benefits by facilitating either a change in customers, a change in their physical possessions, or a change in their intangible assets.


Money, fiat or otherwise, is just what it's measured in.


Currency:

In economics, the term currency can refer either to a particular currency, for example the US dollar, or to the coins and banknotes of a particular currency, which comprise the physical aspects of a nation's money supply. The other part of a nation's money supply consists of money deposited in banks (sometimes called deposit money), ownership of which can be transferred by means of cheques or other forms of money transfer such as credit and debit cards. Deposit money and currency are money in the sense that both are acceptable as a means of exchange, but money need not necessarily be currency.
Historically, money in the form of currency has predominated. Usually (gold or silver) coins of intrinsic value commensurate with the monetary unit (commodity money), have been the norm. By contrast, modern currency, as fiat money, is intrinsically worthless. The prevalence of one type of currency over another in commodity money systems has arisen, usually when a government designates through decrees, that only particular monetary units shall be accepted in payment for taxes.


Perhaps an Econ 101 class would help?
User avatar
By Fasces
#13181967
A gold standard would result in exponential deflation, and the collapse of capitalism. Inflation is necessary for the capitalist mode of production to remain feasible and optimal, and I do not understand criticisms of the existence of inflation.
By Huntster
#13181974
Both hyperinflation and deflationary spirals are disastrous, but modest inflation and modest deflation are simple economic cycles which are inevitable.
User avatar
By ThereBeDragons
#13181977
Huntster wrote:Goods (definition) and services (definition) are what wealth buy:

While you're on your dictionary definition spree, would you mind looking up the definition of wealth?

Huntster wrote:Currency: (definition of currency)

Perhaps an Econ 101 class would help?

I don't see how this illustrates the falsity of the statement, "money is the measure of goods and services."
By Huntster
#13181993
Evidence?


Of what?

Huntster wrote:
Goods (definition) and services (definition) are what wealth buy:

While you're on your dictionary definition spree, would you mind looking up the definition of wealth?


Wealth:

–noun
1. a great quantity or store of money, valuable possessions, property, or other riches: the wealth of a city.
2. an abundance or profusion of anything; plentiful amount: a wealth of imagery.
3. Economics.
a. all things that have a monetary or exchange value.
b. anything that has utility and is capable of being appropriated or exchanged.
4. rich or valuable contents or produce: the wealth of the soil.
5. the state of being rich; prosperity; affluence: persons of wealth and standing.


And now?

Huntster wrote:
Currency: (definition of currency)

Perhaps an Econ 101 class would help?


I don't see how this illustrates the falsity of the statement, "money is the measure of goods and services."


Because it didn't include anything like money being "the measure of goods and services", because it's not.
User avatar
By Cheesecake_Marmalade
#13182023
but modest inflation and modest deflation are simple economic cycles which are inevitable.

Evidence?
User avatar
By ThereBeDragons
#13182040
Why do you use Wikipedia articles for the definitions of goods and services, but a dictionary for the definition of wealth?

"Wealth is an abundance of valuable resources or material possessions."

Even so, 3a and 3b (economics definitions) would seem to suggest that goods and services are, in fact, wealth.

Huntster wrote:Because it didn't include anything like money being "the measure of goods and services", because it's not.

Technically this is correct, money isn't the measure of a good or service, the money value associated with the good and/or service is its measure.
User avatar
By dilpill
#13182106
Hunster's definition of wealth wrote:–noun
1. a great quantity or store of money


:|

Looks like money is wealth. Start printing away, boys! :cheers:

Since Hunster's accepted definition of wealth means that we're just causing the value of goods and services to rise, we're really doing something good for everyone. Who wouldn't want to be worth $1,000,000,000,000?!

:knife:
User avatar
By Citizen J
#13183103
A silly question. The concept of money is an anachronism that had served us well for over 6000 years. But now it produces more problems than it resolves. We must rid ourselves of its use before we drive ourselves to extinction.
By Huntster
#13183338
Why do you use Wikipedia articles for the definitions of goods and services, but a dictionary for the definition of wealth?


Because I was so moved by the spirit.

"Wealth is an abundance of valuable resources or material possessions."

Even so, 3a and 3b (economics definitions) would seem to suggest that goods and services are, in fact, wealth.


While I don't think a service can be defined as wealth, possessions can.

The problem with that in the Spanish colonial example is that the hyperinflation was caused (as I have repeatedly pointed out) by the lack of goods.

Therefore, the wealth was the gold and silver like I stated.

Who wouldn't want to be worth $1,000,000,000,000?!


Me.
User avatar
By Kasu
#13183457
Other:

Labour.
User avatar
By Dr House
#13183459
So fiat, in other words.
User avatar
By Kasu
#13183481
What does fiat mean?
User avatar
By Dr House
#13183488
Unbacked currency. Said currency would by default be backed by the country's economic performance, thus it would be backed by labor.

By the way, you're not gonna earn any brownie points by using Marxoid terminology FFS. Say labor like any American would.
User avatar
By Nets
#13183491
Kasu, fiat

Ricky Rossello is the son of the previous nepotist[…]

Syrian war thread

They're mainly mercenaries. This was established[…]

Election 2020

quite frankly I was not aware of her. She was los[…]

Nice or Gentle Dictatorships

Oh, I love free thinking. I also happen to hate […]