[quote]rainjack wrote:
…
Inflation is not a bad thing.
[/quote]
A little inflation is not a bad thing – I think Milton Friedman said a good rate of money-supply growth was 2-3% per year.
[quote]Zap Branigan wrote:
Money, like everything else must decay. There is no free lunch. You cannot stockpile money and expect it to have the same value in 50 years.
[/quote]
Not true. If instead of paper money you had to actually carry gold and there were the same inflation rates we have seen do you honestly think that it could be sustained?
Imagine going from having to pay 1 oz of gold to having to pay 20 oz of gold then having to pay 400 oz of gold for the same items due to inflation. The laws of supply and demand would not allow this.
Paper is not money. Money is a commodity that originates in the market as a desirable exchange item. Travel back in time and try to give paper to someone for a chicken and you’d get laughed at.
[quote]Zap Branigan wrote:
A gold standard cannot in a large economy. That is the reason no one uses a gold standard!
[/quote]
You have little understanding of monetary history.
The gold standard isn’t used because government can’t expand under it. If market traders had a say and the banker did not…gold would be all that is used because it always retains and even appreciates in value.
You cannot distort the supply of gold.
[quote]LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
Money, like everything else must decay. There is no free lunch. You cannot stockpile money and expect it to have the same value in 50 years.
Not true. If instead of paper money you had to actually carry gold and there were the same inflation rates we have seen do you honestly think that it could be sustained?
Imagine going from having to pay 1 oz of gold to having to pay 20 oz of gold then having to pay 400 oz of gold for the same items due to inflation. The laws of supply and demand would not allow this.
Paper is not money. Money is a commodity that originates in the market as a desirable exchange item. Travel back in time and try to give paper to someone for a chicken and you’d get laughed at.[/quote]
Wow. You just don’t get it. Money decays just like everything else. The main method of its decay is inflation.
Imagine keeping a chicken for 40 years or even 40 days without adding any extra work to it (food etc.). It is not worth the same. It is worthless. Money is the same way! There is nothing magic about money that lets it transcend the laws of nature.
The gold standard cannot work long term. Value of gold is based on speculation and has little to do with anything.
[quote]LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
A gold standard cannot in a large economy. That is the reason no one uses a gold standard!
You have little understanding of monetary history.
The gold standard isn’t used because government can’t expand under it. If market traders had a say and the banker did not…gold would be all that is used because it always retains and even appreciates in value.
You cannot distort the supply of gold.[/quote]
Stop using talking points and think for yourself. Gold is a metal. It can be used as a form of money but it is not money!
Chickens can be used as a form of money!
[quote]Zap Branigan wrote:
Stop using talking points and think for yourself. Gold is a metal. It can be used as a form of money but it is not money!
Chickens can be used as a form of money![/quote]
The point is that they are a commodity and carry a value in that people want them. You could use chickens as money and it would be more stable than paper until avian flu killed them.
You cannot inflate or deflate gold…or any other earth element for that matter. That is why gold WAS used as money. It originated as a desirable good in the market place and is divisible into smaller units.
Why should paper have natural inflation but not gold?
[quote]LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
Stop using talking points and think for yourself. Gold is a metal. It can be used as a form of money but it is not money!
Chickens can be used as a form of money!
The point is that they are a commodity and carry a value in that people want them. You could use chickens as money and it would be more stable than paper until avian flu killed them.
You cannot inflate or deflate gold…or any other earth element for that matter. That is why gold WAS used as money. It originated as a desirable good in the market place and is divisible into smaller units.
Why should paper have natural inflation but not gold?[/quote]
Gold is a metal. It is not goods and services. You really are not thinking this through.
Money is a representation of goods and services. It is not gold. When gold was the standard people had to barter to get around it.
When governments started issuing paper backed by gold the scarcity of money created the great depression.
Gold is not money.
Gold is not money.
Gold is not money.
[quote]Zap Branigan wrote:
Gold is not money.[/quote]
Where did I ever say gold is currently money – legal tender. All I said was that money has to be a commodity that originates in the market as a desirable medium of exchange. Historically it WAS gold. Now, according to “legal tender laws” money is fiat paper.
I am arguing against paper as a form of money because UNLIKE gold it can lose it’s value to inflation. Please address this issue. Again I ask, why does fiat paper lose its value “naturally”, as you state, yet historically gold DID NOT?
[quote]LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
Gold is not money.
Where did I ever say gold is currently money – legal tender. All I said was that money has to be a commodity that originates in the market as a desirable medium of exchange. Historically it WAS gold. Now, according to “legal tender laws” money is fiat paper.
I am arguing against paper as a form of money because UNLIKE gold it can lose it’s value to inflation. Please address this issue. Again I ask, why does fiat paper lose its value “naturally”, as you state, yet historically gold DID NOT?[/quote]
I am not sure what you are asking. Why didn’t gold inflate when there is a finite supply of gold? Kind of self defining.
Unfortunately a finite supply and an inability to to create money leads to money shortages and ultimately disaster. See the Great Depression.
When too many people have hoarded gold and gold is the only means for exchange then there is a problem. That is why the entire world has gone away from the gold standard.
The current price of gold is based on speculation. It has been this expensive before. It will drop and lots of people will lose lots of money because they did not think clearly. The smart man is the one that bought gold a few years ago and is selling now.
Gold is speculative. Pegging a currency to it is idiotic. That is why no one does it.
The more I think about it the worse idea I think it is. It can only lead to disaster. I have explained why. You have ignored it. I am done.
[quote]Headhunter wrote:
In 1900, a $20 gold piece probably got you a nice new suit and dinner in a nice restaurant. I suspect that at $840 today, you could get a decent suit and a dinner in a nice restaurant. The $20 piece would actually sell for more, due to numismatic reasons. But the idea is the same.
…[/quote]
How many weeks labor did it take to earn a suit then? How many weeks now?
Based on the number of suits and other clothing in peoples wardrobes today we are better off.
We are better off because we are not stifling our economy with a static and limiting money supply.
[quote]Zap Branigan wrote:
How many weeks labor did it take to earn a suit then? How many weeks now?
[/quote]
Labor does not set value since by definition production is measured by the good being produced. To earn a suit it takes as long as it takes to produce that same suit – maybe one per hour by primitive methods though I am not sure.
If there were no inflation the suit would be cheaper today because production methods have made the supply greater. A good hand made suit would still be expensive, and indeed they are.
[quote]LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
How many weeks labor did it take to earn a suit then? How many weeks now?
Labor does not set value since by definition production is measured by the good being produced. To earn a suit it takes as long as it takes to produce that same suit – maybe one per hour by primitive methods though I am not sure.
If there were no inflation the suit would be cheaper today because production methods have made the supply greater. A good hand made suit would still be expensive, and indeed they are.
[/quote]
If there were no inflation the economy would be stifled due to limited money supply. It is likely the better production methods would not have been put into effect. The limited money supply may even cause deflation. People would default on loans because they are paying a higher price than the current value. Banks would go out of business. People would jump off roofs. Banks would not be able to fund the people that develop superior production. All because the money supply is artificially limited because someone decided that a yellow metal is the means to trade.
Money represents goods and labor. If you stockpile goods and labor without any further attention it will decay. This is what inflation is. This is a natural law. Entropy exists. Unless you add energy into a system things fall apart. You keep avoiding this!
[quote]LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
A gold standard cannot in a large economy. That is the reason no one uses a gold standard!
You have little understanding of monetary history.
The gold standard isn’t used because government can’t expand under it. If market traders had a say and the banker did not…gold would be all that is used because it always retains and even appreciates in value.
You cannot distort the supply of gold.[/quote]
Google The Hunt Brothers. Cornering a market would certainly distort supply, no?
[quote]rainjack wrote:
LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
A gold standard cannot in a large economy. That is the reason no one uses a gold standard!
You have little understanding of monetary history.
The gold standard isn’t used because government can’t expand under it. If market traders had a say and the banker did not…gold would be all that is used because it always retains and even appreciates in value.
You cannot distort the supply of gold.
Google The Hunt Brothers. Cornering a market would certainly distort supply, no? [/quote]
Seriously Lift. You have to think for yourself and not get all your info from these libertarian think tanks.
They are not telling you the whole story. The whole premise of the libertarian movement is to reduce government intervention in all things. They will present the facts as required to make their case and ignore any information that undermines their case.
By nature I am drawn to libertarianism but my intellect allows me to see the many flaws. You need to think more critically about this.
I am headed out to a party and am not sure if I will get a chance to get back into this for a few days.
[quote]Zap Branigan wrote:
When governments started issuing paper backed by gold the scarcity of money created the great depression.
[/quote]
This is false. The United States dramatically inflated its money supply to help the British. The British had instituted welfare and wanted to keep inflating to pay for it all. The US agreed to inflate so gold would not flow out of Britain. We had then a very speculative stock market bubble. Economic History 101.
Money is what the marketplace decides is money. Fiat money is declared to be money by government orders, by fiat. It has to force people to accept the fiat money ‘for all debts public and private’. Gold was chosen by the marketplace because it is immune to manipulation and is more handy to use than a chicken.
The government institutes, by fiat, a monopoly on what IS money. It wants to inflate and escape the consequences. It takes away the gold standard and delivers its subjects into the mercy of the whims of politicians.
I’m surprised that some of you gents support that.
[quote]Zap Branigan wrote:
LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
How many weeks labor did it take to earn a suit then? How many weeks now?
Labor does not set value since by definition production is measured by the good being produced. To earn a suit it takes as long as it takes to produce that same suit – maybe one per hour by primitive methods though I am not sure.
If there were no inflation the suit would be cheaper today because production methods have made the supply greater. A good hand made suit would still be expensive, and indeed they are.
If there were no inflation the economy would be stifled due to limited money supply. It is likely the better production methods would not have been put into effect. The limited money supply may even cause deflation. People would default on loans because they are paying a higher price than the current value. Banks would go out of business. People would jump off roofs. Banks would not be able to fund the people that develop superior production. All because the money supply is artificially limited because someone decided that a yellow metal is the means to trade.
Money represents goods and labor. If you stockpile goods and labor without any further attention it will decay. This is what inflation is. This is a natural law. Entropy exists. Unless you add energy into a system things fall apart. You keep avoiding this![/quote]
Entropy is a physical process. Money is an abstract concept, and people attach the concept to a physical entity. A physical entity may decay; a concept cannot.
Does the concept of ‘table’ decay if an individual table rots and falls apart?
[quote]Headhunter wrote:
This is false. The United States dramatically inflated its money supply to help the British. The British had instituted welfare and wanted to keep inflating to pay for it all. The US agreed to inflate so gold would not flow out of Britain. We had then a very speculative stock market bubble. Economic History 101.
[/quote]
Currency was backed by gold back then.
You say pegging currency to gold prevents inflation.
You just contradicted yourself.
If the gov’t can create new currency at will even when said currency is backed by gold, what incentive is there to go back on the gold standard?
[quote]Zap Wrote:
If there were no inflation the economy would be stifled due to limited money supply. It is likely the better production methods would not have been put into effect.[/quote]
I don’t think so. Man by his nature is in constant refinement of his condition. He always seeks greater wealth. Wealth is production.
Imagine being stranded on a deserted island with no means for trade. You would have to be self-sufficient. Your standard of living – wealth – would be your ability to produce. This does not change even with the ability to trade. Money, which you earn for your labor, is a proportion of your productivity.
[quote]Headhunter wrote:
Zap Branigan wrote:
LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
How many weeks labor did it take to earn a suit then? How many weeks now?
Labor does not set value since by definition production is measured by the good being produced. To earn a suit it takes as long as it takes to produce that same suit – maybe one per hour by primitive methods though I am not sure.
If there were no inflation the suit would be cheaper today because production methods have made the supply greater. A good hand made suit would still be expensive, and indeed they are.
If there were no inflation the economy would be stifled due to limited money supply. It is likely the better production methods would not have been put into effect. The limited money supply may even cause deflation. People would default on loans because they are paying a higher price than the current value. Banks would go out of business. People would jump off roofs. Banks would not be able to fund the people that develop superior production. All because the money supply is artificially limited because someone decided that a yellow metal is the means to trade.
Money represents goods and labor. If you stockpile goods and labor without any further attention it will decay. This is what inflation is. This is a natural law. Entropy exists. Unless you add energy into a system things fall apart. You keep avoiding this!
Entropy is a physical process. Money is an abstract concept, and people attach the concept to a physical entity. A physical entity may decay; a concept cannot.
Does the concept of ‘table’ decay if an individual table rots and falls apart?
[/quote]
Money represents physical goods and labor. It is not abstract. You still have not addressed it. You keep trying to redifine money so the laws of nature don’t apply. They fact that you have to do this to make the system you support work should tell you that your system will only work in fantasy land.
[quote]rainjack wrote:
Headhunter wrote:
This is false. The United States dramatically inflated its money supply to help the British. The British had instituted welfare and wanted to keep inflating to pay for it all. The US agreed to inflate so gold would not flow out of Britain. We had then a very speculative stock market bubble. Economic History 101.
Currency was backed by gold back then.
You say pegging currency to gold prevents inflation.
You just contradicted yourself.
If the gov’t can create new currency at will even when said currency is backed by gold, what incentive is there to go back on the gold standard?
[/quote]
None. It does not stand up to any scrutiny. It is all double talk and a complete waste of time.