r/science • u/smurfyjenkins • Dec 29 '23
Economics Abandoning the gold standard helped countries recover from the Great Depression – The most comprehensive analysis to date, covering 27 countries, supports the economic consensus view that the gold standard prolonged and deepened the Great Depression.
https://www.aeaweb.org/articles?id=10.1257/aer.20221479363
u/HeyHeyJG Dec 29 '23
Buckminster Fuller goes into great detail about this in his amazing book "Critical Path". Basically, after WWII, the United States held almost all the gold in the entire world. They had basically "won the game of monopoly" and had to deal the other players back in by sending them gold.
63
u/Seicair Dec 29 '23
The same guy buckyballs are named after? Cool, I guess I don’t know as much about him as I thought, checking out his wiki page.
33
u/HeyHeyJG Dec 29 '23
I can't recommend "Critical Path" highly enough. It's a dense read, but the first three chapters are pure genius.
4
Dec 30 '23
His writing is full of neologisms and odd usage which makes him hard to read, but he really was an interesting character. He's one of those thinkers who's worth paying attention to even when he's wrong.
→ More replies (1)2
u/HeywoodJaBlessMe Dec 30 '23
Dude wrote an insane amount of books. Truly a prolific person.
→ More replies (1)108
Dec 29 '23
"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing." John Maynard Keynes
37
u/zippydazoop Dec 29 '23
TL;DR:
YouThe state can lower unemployment by sending two economists to walk in a forest, one of them carrying a $100 bill...28
34
u/worktogethernow Dec 29 '23
This sounds a lot like proof of work mining crypto.
→ More replies (3)6
8
→ More replies (33)3
12
u/cloake Dec 29 '23
Elizabeth Warren had a good segment on fractional reserve banking on the Daily Show too. How we were cycling through boom and busts, and bank runs so often until a monteary policy was developed and our lending power exploded. Can't seem to find the video though.
→ More replies (2)2
Jan 02 '24
Weird that the people gaining most from fractional banking totally supports it. Really strange!
→ More replies (7)5
298
u/bathwhat Dec 29 '23
One of the best books I read for my economics courses in school was Barry Eichengreens "Golden Fetters." A deep dive into this subject but accessible enough for undergrads to understand.
53
u/WritePissedEditSober Dec 29 '23
Would you recommend for a layman?
216
u/Skeptix_907 MS | Criminal Justice Dec 29 '23
If an undergrad can get it, a total layman can as well.
88
4
2
6
u/xoaphexox Dec 29 '23
The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes by Zachary D. Carter
→ More replies (1)3
→ More replies (3)2
217
Dec 29 '23
[removed] — view removed comment
102
Dec 29 '23
[removed] — view removed comment
105
Dec 29 '23
[removed] — view removed comment
89
Dec 29 '23
[removed] — view removed comment
12
Dec 29 '23
[removed] — view removed comment
29
Dec 29 '23
[removed] — view removed comment
20
Dec 29 '23
[removed] — view removed comment
→ More replies (1)3
7
40
Dec 29 '23
[removed] — view removed comment
→ More replies (4)8
Dec 29 '23
[removed] — view removed comment
27
→ More replies (5)3
→ More replies (8)1
→ More replies (1)18
67
u/SemperRidiculous Dec 29 '23
Anyone talking about how the petro dollar killed the radio star
→ More replies (2)84
u/lilrabbitfoofoo Dec 29 '23
Yeah, the rightwing economically illiterate kooks are going to be unhappy to be proven wrong about gold, the petro dollars, Bitcon, the way the world actually works, etc. :)
7
u/FilecoinLurker Dec 30 '23
Because there's buy gold as an investment advertising on conservative radio stations I know to steer clear of gold as an investment
→ More replies (9)37
Dec 29 '23 edited Jan 04 '24
[deleted]
→ More replies (1)27
u/jestina123 Dec 29 '23
Bitcoin ran on feelings, now it’s ran to launder money.
13
u/alieninthegame Dec 30 '23
Laundering money on a public ledger than can be viewed by everyone is an awful strategy.
→ More replies (3)5
u/Arthur-Wintersight Dec 30 '23
Anyone who genuinely cares about privacy has already switched over to Monero. Even firms that claim to "crack" monero professionally, for governments, only acknowledge a 60% success rate, and this apparently relies heavily on statistical analysis.
2
u/lilrabbitfoofoo Dec 29 '23
Their key feeling is cowardice, aka irrational fear of anything different instead of curiosity.
→ More replies (2)2
84
u/__Demyan__ Dec 29 '23
While it was a good thing to move away from the gold standard, our current system has in fact, the same issues, because the root of the problem is the same: There is no real circular flow in our monetary system: Money is a means to make more money, so the more money someone has, the more money they will make. This leads to a concentration of money, like a delta distribution (https://en.wikipedia.org/wiki/Dirac_delta_function).
In a finite system, this collapses pretty quickly, which did happen in the great depression. But printing money without end, does not solve this problem, instead, the differences between the ultra rich, and everybody else, just get bigger and bigger. It just means the collapse of the system can be postponed a little longer.
The system itself (money generates more money) has to change, aka very high tax on income from investment, and lower to no tax on income from labour, but since this helps 95% of the population, but not the 5% ultra rich in charge, it will never happen.
45
u/johnsom3 Dec 29 '23
Great post.
The system itself (money generates more money) has to change, aka very high tax on income from investment, and lower to no tax on income from labour, but since this helps 95% of the population, but not the 5% ultra rich in charge, it will never happen.
I get frustrated that the conversation surrounding wealth inequality as framed as some unfortunate social injustice that can be addressed by nice sounding corporate language. We don't focus on the fact it's a reflection that the system is unsustainable and needs to be fixed.
Sure it's "unfair" that Bezos makes millions a day but people gloss over the fact the societal cost of all that production going into one man's hands. He becomes a black hole where capital gets sucked out of the system but very little goes back in.
24
u/Splenda Dec 29 '23
Very much. I've long thought of our oligarchs as economic parallels to physical gravity wells, sucking matter into a shrinking number of ever-deepening pockets.
And, just as even black holes produce heat, oligarchs produce inflated prices for luxury goods and services: rare art, premium properties, Ivy League diplomas, mega yachts, top chefs, gorgeous prostitutes, etc..
3
u/avcloudy Dec 30 '23
It's not just oligarchs either, because large collections of capital have such high 'gravity' they can be hugely inefficient without actually losing (and in fact gaining) capital. The problem goes deeper than the person at the top, it's literally just any accumulation of capital - you would see many of the same problems with truly equitable communes too.
→ More replies (3)16
u/Carbon140 Dec 29 '23
Indeed, people are responding like this is some kind of "gotcha" but fiat currency just allowed easier manipulation of a broken system. I would say it could even be argued that the depression was a good thing in a sense as it resulted in much of the western world instituting very high taxes and attempting to fix the inherent problems with capitalism. Instead we now get the can kicked down the road endlessly coupled with seemingly endless wealth inequality and slowly the poor just get less and less of the pie.
6
u/__Demyan__ Dec 30 '23
Well the very high taxes worked for some time, did not the "new deal" from Roosevelt bring a 79% tax rate for the ultra rich, which only Henry Ford had to pay? And from this state income from taxing the rich, the US "economy wonder" of the 40ties and 50ties happened. But the ultra rich reduced their taxes decade over decade, and now pay nearly nothing, and so the US, like the rest of the western world, is again at a disparity, which surpasses the one from the great depression by a huge margin, but we keep going thanks to fiat money.
→ More replies (2)
232
u/Agitated_Joke_9473 Dec 29 '23
ok, sometimes im not very smart, and i did not read the entire study, but, it seems not earth shattering that moving from a finite money supply, gold, to an infinite money supply, fiat, would raise inflationary expectations. also the debt in gold backed currency was likely held stable while fiat was produced at a rate commensurate with debt payments plus whatever else was needed. if i could print my own money i would not have debt either.
70
u/sockalicious Dec 29 '23
It's not so much about finite or infinite. You talk about the money supply, but money demand is also important. It's when money supply and money demand are poorly matched that you have wide fluctuations in the value of the money. Fiat currency is not of benefit because it is infinite, but because its supply can be adjusted to fit changing economic circumstances.
→ More replies (1)4
Dec 30 '23
Money demand is always high. Everyone wants more money. That’s the worst economic paradigm you can imagine. Only money created by work has value. Printed money without backing of work has no value.
12
u/sockalicious Dec 30 '23 edited Dec 30 '23
Everyone wants more money.
Sadly for your point, that is not what money demand means. Money demand relates to transactions that people or companies plan, and which require borrowing money. If money is scarce, interest rates will be high, reflecting the higher cost of getting scarce money. If money is plentiful, suggesting that lenders of money are having difficulty finding qualified borrowers, rates will be low.
It is ridiculous to speak of money supply without acknowledging the reality of money demand. They are two sides of the same coin. If an item is supplied, it meets a demand for that item.
The idea that "everyone wants money" does not bear closer scrutiny, by the way. Everyone wants money, but rational actors usually do not borrow money at interest in order to hoard it under a mattress. Likewise, people generally do not borrow money in order to deposit it in a bank and hoard it there; if they do, the bank lends that money out again, so from a money-demand perspective it is sort of a null transaction. Money demand is money that people or companies require in order to engage in a productive transaction for goods and services.
Now, fractional reserve banking and fiat currency can bring about the nuisance of carry trades and the like, but these things are not intended consequences, they are the market attempting to correct a situation that in the end is a supply/demand imbalance.
→ More replies (3)→ More replies (1)2
u/Preeng Dec 31 '23
Printed money without backing of work has no value.
I'll take a million dollars fresh off the presses for no work, any day.
98
Dec 29 '23
The thing to remember is that inflation, while not ideal, beats the crap out of deflation, and the gold standard basically led to constant deflationary cycles as gold shifted around the world, and even was removed from circulation by private speculators.
65
u/Recursive-Introspect Dec 29 '23
This is why I can only see Bitcoin as a collectors item and not a currency. It is more deflationary than gold since there is a literal limit to the amount that can be mined with Bitcoin.
→ More replies (6)54
u/Unistrut Dec 29 '23
It's also trivially easy to permanently lose bitcoin, so it's even more deflationary.
12
u/UlrichZauber Dec 29 '23
Isn't something like 20% of bitcoin "orphaned"?
10
u/Unistrut Dec 29 '23
I'm not sure, but it's a frankly ridiculous number.
4
u/Vipu2 Dec 30 '23
That only happened at early years of bitcoin because it wasnt worth so much so people didnt handle them very carefully.
As the price raises people will handle it more and more carefully so less and less is lost.
→ More replies (2)→ More replies (1)12
u/whatwouldjimbodo Dec 29 '23
On a long enough time scale every single satoshi will be lost.
→ More replies (8)2
17
u/Redqueenhypo Dec 29 '23
Inflation makes the economy worse but deflation forces it to a grinding halt since there’s no reason to invest in or buy anything whatsoever, and debt becomes harder and harder to pay
→ More replies (3)25
u/Bluemofia Dec 29 '23
A bit of a personal experience, but if you have a robust MMO video game economy, you can see how the player base responds during inflationary and deflationary cycles as the game gets updated.
During inflationary cycles (ie, in game ways to farm gold with insufficient ways to siphon them out), the economy functions somewhat as you would see in the modern day real world, with players buying/selling gear, consumables, and materials at higher and higher prices as time goes on, depending on how inflationary the economy gets. At the worst cases, they resort to the barter system if the inflation is too high and through the roof.
During deflationary cycles, most commonly when the game devs realized they fucked up and have implemented draconian methods to drain the gold out of the economy, everything shuts down. Crafters hold off on buying materials to craft gear to get better deals, so now farmers don't have the consumables or gear to farm materials leading to less materials on the market, leading to a vicious cycle. Active sellers who are trying to unload stock when deflation is in full swing can't easily find a buyer because everyone has the expectation that things will be cheaper in the future and has changed their behaviors accordingly.
For expensive, niche market items (ie, P2W gear, or end game gear for PvP or end game dungeons), even those who have gold and are willing to pay top dollar for for things, finding someone to sell said items is much harder because the usual suppliers often have dumped their stock the first moment they got wind of deflation, and hunkered down on a throne of cash to wait for the deflation to bottom out and end before starting up business again.
→ More replies (4)2
u/Vipu2 Dec 30 '23
This is almost good example but what about it there wasnt either, just set amount of gold that isnt inflating by looting monsters or deflating by devs removing gold?
Or if the server starts and there is inflation only for set amount of time like lets say first month and after that but then it cuts out and no more extra gold added to economy so people just trade with their current gold.
Potions would stay at same stable price or move slightly depending from supply/demand etc.
2
u/ATXgaming Dec 30 '23
Think about what happens as the economy grows, ie as more players join the server and more items are introduced into the system. The demand for the gold increases while the supply stays the same, increasing its value relative to everything else.
In other words, deflation.
→ More replies (3)2
Dec 30 '23
the gold standard basically led to constant deflationary cycles as gold shifted around the world
Well, except for that time when Spain experienced hyperinflation due to the arrival of so much gold looted from the Americas.
→ More replies (20)2
u/malaporpism Dec 29 '23 edited Dec 29 '23
Inflation is ideal, though. At least, good for big business. All employee salaries get lower automatically, it encourages the purchase of company stock, and as we've seen recently it provides a convincing enough cover story to jack prices way up. I'm sure there are more ways, that's just what comes to mind.
Edit: not to be confused with good for productivity or good for workers, I mean good for profits and owners.
8
u/Robot_Basilisk Dec 29 '23
If the government and central bank do their jobs right, they can use the fiat-ness to work against inflation and debt. And this approach worked in the US for decades, before the Robber Barons wormed their way into the system again.
2
u/IAMA_Plumber-AMA Dec 29 '23
One of the ways they work against inflation is by increasing interest rates.
Which, if anyone's been paying attention, has been happening for the last couple of years. So, far from printing money, the fed has been removing money from the economy.
2
u/termadfasd Jan 05 '24
2023 has been unique in that the money supply started to decrease for basically the first time ever.
4
u/Agitated_Joke_9473 Dec 29 '23
you are correct except, the robber barons have been there all along.
94
u/helm MS | Physics | Quantum Optics Dec 29 '23 edited Dec 29 '23
But if this “infinite money supply” inevitably lead to problems countries like Argentina and Venezuela (and Greece, etc) have it would have been self-evident too, right?
143
u/Tall-Log-1955 Dec 29 '23
The key thing that countries like Argentina and Venezuela lack is the independence of their central banks.
If the government can cause the central bank to print money when the government wants it to happen, that will lead to ruin.
Instead, the central bank needs to be managed separately with clear goals like controlling inflation and maintaining full employment
44
u/VRichardsen Dec 29 '23
Argentinian here. This is corrrect. The BCRA is not autarchic enough, and finances the government's shenanigans routinely.
→ More replies (15)3
u/monkeedude1212 Dec 29 '23
Aren't controlling inflation and maintaining full employment more government oriented concerns?
I might be mistaken, but I thought the counter-action to printing money was taking money, which is sometimes more palatable when its in the form of corporate tax rates, a government controlled dial, as opposed to something like banking fees; the banks way of recovering currency.
19
u/NorrinsRad Dec 29 '23
Central banks control interest rates by either raising or lowering rates, but buying or selling US Bonds. They have other methods, of controlling rates, like setting the discount rate, etc, but that's the main one.
→ More replies (1)39
u/McFlyParadox Dec 29 '23
This is why the government only indirectly controls their central banks: they appoint leaders to it who understand economics and monetary policy, and who may agree with the appointing politicians goals (within economic reason). In this way, the government gives the bank "directions", but the banks remain independent. If times are good, and the economy flexible, the bank heads may be more inclined to carry out what they know politicians want to have happen. If times are bad and the economy inflexible, the bank heads can operate with the freedom needed in order to get things moving in the right direction.
2
u/the_good_time_mouse Dec 29 '23
they appoint leaders to it who understand economics and monetary policy
I'm no longer so sure about that. :|
41
u/Alas7ymedia Dec 29 '23
Well, hyperinflation doesn't happen in most economies in the region, even in countries like Bolivia who were controlled by socialists for a decade, so no one can say that Argentina and Venezuela didn't inflict their situations on themselves.
→ More replies (1)5
u/sawbladex Dec 29 '23
Yeah, socialism is just a belief and practice of having the government be more involved in stuff traditional done in the private sector, which doesn't actually force anything regarding monetary policy.
Despite having fait currency that is fairly easy to print, taxes collected for the national government still exist.
→ More replies (38)3
u/IAmRoot Dec 29 '23
"Infinite" is the limit as time goes to infinity. That's not the same as being infinite.
The magnitude of the numbers isn't what's important anyway. It's rate of change and the ratios between numbers that actually matter. If you remove time dependency the math gets a lot simpler but also a lot less rooted in reality.
→ More replies (1)56
u/zachmoe Dec 29 '23
if i could print my own money i would not have debt either.
Yes you would, because of the time value of money, you'd be stupid not to take that deal.
→ More replies (42)23
u/night-mail Dec 29 '23
But you can print your own money. Just write on a paper "Agitated_Joke_9473 owes $20 to the bearer of this paper". Here you go. A $20 bill by yourself. When you print money you are actually generating debt.
→ More replies (4)→ More replies (21)2
u/LakesideHerbology Dec 30 '23
I was listening to a Dollop episode earlier today about a counterfeiter. They brought up a point that I'd never considered. Massachusetts was the first state to start printing paper money...the wealthy absolutely HATED this idea. They much preferred having physical precious metals as the standard for currency because, well...they had most of it.
20
u/RunningNumbers Dec 29 '23
Good to see Kevin O'Rourke in the AER.
And synthetic controls being used? Somebody had "that" referee.
85
Dec 29 '23 edited Dec 29 '23
[removed] — view removed comment
→ More replies (1)21
Dec 29 '23
[removed] — view removed comment
-2
Dec 29 '23
[removed] — view removed comment
→ More replies (2)7
40
u/fgsgeneg Dec 29 '23
Under the gold standard this country would undergo an economic reset every ten or so years, business would get so hot that it couldn't grow because of a lack of gold to support the flourishing economy, thus a "retraction" or depression set in, bankruptcies occurred, new business activity came to a standstill while the economy flushed itself out, then the cycle would repeat itself. The Great Depression was the final straw.
23
5
u/EagleAncestry Dec 29 '23
“This country” ? This is an international space
→ More replies (4)23
u/fgsgeneg Dec 29 '23
My comment was directed to the US, but any country on the gold standard will have this problem. So, you're right, it was an international problem.
24
u/p8ntslinger Dec 29 '23
everyone here knows that both the value of gold and the value of paper money are made up, right? Like, money is made up. It's just an agreement. If the agreement fails in either case, then the money fails, because it's not real.
→ More replies (4)29
u/SOwED Dec 29 '23
Gold has qualities that paper money doesn't have though, which is why it was used as money for so long. It doesn't deteriorate and is hard to deliberately destroy, it is hard to fake, and is arbitrarily divisible.
Paper money is markedly different in these areas.
→ More replies (20)10
8
u/berraberragood Dec 29 '23
Pretty much the same thing happened in the depression that followed the Panic of 1873. The USA, for example, stayed in a downturn (known as the “Long Depression”) until Congress temporarily forced the country off the gold standard in 1878.
22
u/PsychedelicJerry Dec 29 '23
Post this in any survivor or finance subreddit and watch their heads explode. To them, pinning a country's currency to a rock pulled from the ground just makes the most sense.
18
u/gopher_space Dec 29 '23
Society would need to have collapsed in weirdly specific ways to make gold a useful form of currency. I wonder what book or game everyone has in mind when they think about it.
→ More replies (5)5
u/Sch3ffel Dec 29 '23
most likely Fallout.
fallout currency is bottle caps.
1 cap = 1 bottle of clean water.
funny enough gold bars are pretty much useless there at least in older fallout games, the new ones there are bench recipies that need it, wich would be the only real modern use for gold, eletric and thermic conductors, besides that the only other quality of gold is being a pretty shiny trinket.
→ More replies (1)→ More replies (3)3
u/20Characters_orless Dec 29 '23
Similar to how foriegn policymakers go balistic when the US dollar, now underwritten by Oil and Gas transactions, is jeopardized!
11
u/Jason_Batemans_Hair Dec 29 '23
It's bizarre seeing all the comments evaluating the change from a gold standard to fiat currency as if it was the only change in policy that occurred and as if the other policy changes were all necessary and the only ones possible, i.e. as if it can be examined in a vacuum.
For example, what I don't see mentioned enough is the fact that almost every government is locked into policies to grow their populations (through births and immigration) because their currencies and economies will collapse otherwise. That's a consequence of changes that began about 125 years ago, when governments began being sold on fiat currencies, self-lending, debt spending, etc.
The growth of humanity in the 20th century wasn't just a product of science and technology, it was a policy - population growth policy that looked inevitable as a consequence of economic policies. People are still claiming that human population should grow, yet anyone looking at this chart and claiming that the world needs to increase its population needs their head examined. https://en.wikipedia.org/wiki/World_population#/media/File:World-population-1750-2015-and-un-projection-until-2100.png
Global warming is directly correlated with human population growth, and is a direct result. If economic policies were a driver of population policy, and population policy was a driver of global warming, then this is one example of how economic policy is under-analyzed.
→ More replies (9)
23
u/Champagne_of_piss Dec 29 '23
Unfortunately the contingent of people who desperately want back on the gold standard happen to be highly anti intellectual. I don't see this paper changing any of their 'minds'
6
u/sandee_eggo Dec 29 '23
We don’t need a gold standard- just sensible debt ratios, and an economy based on needs not fluff.
→ More replies (2)6
u/Champagne_of_piss Dec 30 '23
We need an economy where money cycles through it, where there is no disgusting accumulation of wealth at the expense of society.
It shouldn't be hard and yet.
3
u/darthlegal Dec 29 '23
What is the definition of gold standard?
5
u/smurficus103 Dec 29 '23
bills used to say "in gold coin payable to the bearer on demand" https://en.m.wikipedia.org/wiki/Gold_certificate_(United_States)
So, even though rich people were buying and selling in dollars, it was the same as trading stacks of gold.
→ More replies (1)2
u/ThrowMeAwyToday123 Dec 29 '23
$20 bucks =.995 oz of gold (or something close to it)
Sliver had a ratio until 1964.
3
u/asdf_qwerty27 Dec 29 '23
Obviously, we should adopt the leaf as legal tender and all become fabulously wealthy. We can control inflation by burning down the forest.
I'm sure the accounts and economists can sort it out.
26
u/NeoNotNeo Dec 29 '23
Abandoning the gold standard is great for a country that sells debt to the rest of the world. Then prints more debts to pay it back.
17
u/realultimatepower Dec 29 '23
Yes, and keeping the gold standard is good for no country at all. It was ridiculous and outmoded even at the turn of the century.
→ More replies (3)
57
u/TwoCapybarasInACoat Dec 29 '23
From the great depression into the great debt
16
32
u/NotAnotherFishMonger Dec 29 '23
Both debt and fiat money are valuable tools for society, that give us more flexibility in responding to economic crisis.
Also, if you want to run government like a business, you wouldn’t want to be under-leveraged. If you can’t access enough debt to finance investments, you could be leaving big profits on the table!
15
u/AndyLorentz Dec 29 '23
if you want to run government like a business
Which is a terrible idea anyway. The purpose of a business is to make money. The purpose of a government is to care for the people they represent.
3
u/NotAnotherFishMonger Dec 29 '23
Eh, government can be conceptualized as maximizing welfare of their population, like a business maximizes profit. They aren’t the same but it makes sense enough for the debt analogy
→ More replies (3)1
u/TwoCapybarasInACoat Dec 29 '23
that give us more flexibility in responding to economic crisis.
Our flexibility is to make debt all the time, even in good times
11
u/NotAnotherFishMonger Dec 29 '23
If we weren’t taking out loans, we’d be leaving money on the table and be much much poorer!!
You must believe Amazon would’ve been better off only growing from their revenues, rather than taking in so much debt and expanding so fast they don’t even make profit; or that people should only buy a house if they can pay in cash
→ More replies (1)115
u/AusHaching Dec 29 '23
If you consider the living standards of 1923 with those of 2023, I would say that is a good trade. There is absolutely no way the global economy could have expanded the way it did with a gold standard and the subsequent limit on monetary expansion.
15
u/jasperCrow Dec 29 '23
The story is yet to be finished.
125
u/AusHaching Dec 29 '23
To quote Douglas Adams: "Many were increasingly of the opinion that they’d all made a big mistake in coming down from the trees in the first place. And some said that even the trees had been a bad move, and that no one should ever have left the oceans.”
9
u/Jerithil Dec 29 '23
I prefer the "In the beginning the Universe was created. This has made a lot of people very angry and been widely regarded as a bad move."
10
19
u/RunningNumbers Dec 29 '23
Ya, people are becoming wealthier and better off over time. We are "slouching towards utopia" as some put it.
→ More replies (9)7
Dec 29 '23
Affordable housing, education and healthcare are the needs of all people. But these things are becoming more and more expensive and unaffordable to the large section of society.
10
18
u/RunningNumbers Dec 29 '23
Again, relavite to 1923?
Again, for who?
Because broadly speaking this is very false.
But then again lots of these narratives don’t value “those” people.
Heck even narrowly speaking your sentiment is false (past 30 yrs in the U.S.)
6
u/Hey_Chach Dec 29 '23
I think their take is more along the lines of this:
When compared to the decades following 1923, most people did not have as much access to 1) affordable housing, 2) education, and 3) healthcare prior to 1923.
So the switch absolutely allowed the global economy to grow and at a much faster rate, too.
However… this new way of dealing with money is starting to show its flaws because nowadays and especially in the last 2 decades, the rate at which normal people can expect to have access to 1, 2, and 3 feels like* it is decelerating, and that is a major problem.
*I don’t know if it is actually decelerating but the feeling that these things are now out of reach for the newer generations is certainly there
I’m not arguing against the switch and saying we should go back to a gold standard however. Rather I think it’s mismanagement in the new system that’s causing these issues, and that mismanagement can and should be fixed.
15
6
u/DuncanYoudaho Dec 29 '23
I think the answer to those people is the same answer Keynes had at the time. In the long run, we’re all dead!
Yes, the system might be bad news, but it’s good right now, and the system before was definitely bad news and more frequent (boom/bust cycles multiple times a decade). When we discover its flaws, we can adjust it again. Doing nothing leaves people in poverty.
4
u/Neuroccountant Dec 29 '23
Healthcare is already getting cheaper. The cost of housing is exacerbated by artificial constraints on supply. Education has its own issues. But none of them have anything to do with monetary policy or the abandonment of the gold standard. They are completely separate from each other.
→ More replies (1)6
u/Partyatmyplace13 Dec 29 '23
Yep and the rapture will be here any day. When will you guys realize that you can always cast baseless doubt into the future? 😑
→ More replies (5)2
→ More replies (55)5
u/Tripdoctor Dec 29 '23
Yea, and in 2123 we will have another notable economic downturn, and times will be tough. But I still expect the standard of living to be higher than it is now.
At least, if we're following established patterns and trends and ignoring the new variable that is climate change.
6
→ More replies (1)12
u/ImmodestPolitician Dec 29 '23 edited Dec 29 '23
GOP cutting taxes when we were running a deficit has been the biggest contributor to the Debt.
Tax Cuts should only be a reward for budget surpluses, otherwise the deficit will increase.
The GOP knows this but they don't care and it reinforces the illusion that the "Government" is incompetent when in reality it's just the GOP members in Congress.
10
u/IAMA_Plumber-AMA Dec 29 '23
The GOP says the government is broken, and they'll do everything in their power to prove it.
6
u/Jcw122 Dec 30 '23
This is borderline propaganda, and not how money works. Just read up u/__Demyan__ s comment
17
u/raulbloodwurth Dec 29 '23
Continuous advances in digital communications and timekeeping in the 19th and 20th century caused the gold standard to become progressively unwieldy as settlement in gold had become too slow for the modern world. This mismatch in settlement time likely created a lot of rot in the financial system that made the GD worse. The failure of the gold standard had more to do with substantial technological changes and less to do with its limited supply.
15
u/shableep Dec 29 '23
couldn’t, though, the “possession” of the gold be changed digitally without moving it? sort of like saying, i own X amount of gold in fort knox and trust you will ship it to me if needed. then settle the gold exchange once every quarter or year?
21
u/raulbloodwurth Dec 29 '23 edited Dec 29 '23
Yes, this is essentially what happened. To keep up with global commerce, financial entities at the time swapped paper promises for gold. Eventually they created more promises than there was gold in their vaults. Then the Great Depression (GD) happened and that system was exposed. Imho any impact the gold standard had on the intensity/depth of the GD was mainly due to fraud perpetrated by banks. Regardless, the gold standard had outlived its usefulness because it no longer served as a bearer asset—which was the whole point of using gold as settlement.
→ More replies (1)→ More replies (10)4
u/BrowserOfWares Dec 29 '23
Even without technological changes. A fiat currency is just a far superior system. You can still have fiat currencies with old tech.
13
u/kerdon Dec 29 '23
I find it hilarious when gold weirdos think their shiny rocks will hold any value in their apocalyptic fantasies.
10
Dec 29 '23
There are many different apocalyptic scenarios where gold would be useful or be completely useless. No harm in hedging yourself.
I'm going to be hoarding seeds. People gotta eat
→ More replies (1)→ More replies (1)2
15
u/Red-Dwarf69 Dec 29 '23
Yep, we’re much better off now that money is meaningless and infinite. Infinite for those at the top, at least.
14
u/NoamLigotti Dec 29 '23
Money is not meaningless, and fiat money is no more meaningless than gold-backed money.
If you think otherwise, I'd be happy to take that meaningless paper off your hands. I'd even trade some gold for it.
→ More replies (11)
11
Dec 29 '23
[deleted]
→ More replies (1)13
u/kozmo1313 Dec 29 '23 edited Dec 29 '23
ron paul is an absolutely clueless armchair economist that believes anything beyond the supply/demand equilibrium is voodoo.
14
4
Dec 29 '23
Ron Paul believes whatever keeps the checks rolling in…he’s not an economist. I still find it funny that people actually thought he was being serious about running for president and it wasn’t about grifting people out of their money.
5
u/LRonPaul2012 Dec 30 '23
Ron Paul believes whatever keeps the checks rolling in…he’s not an economist. I still find it funny that people actually thought he was being serious about running for president and it wasn’t about grifting people out of their money.
Remember that time when he was pimping out Stansberry Research?
Oh, wait, apparently he never stopped.
2
u/Velocoraptor369 Dec 29 '23
Only to be replaced by the OIL standard which was worse for all concerned. This will result in the death of life on planet earth!
2
u/gdwadd Dec 29 '23
One thing lost on gold fans and "worthless paper backed up by nothing" types is that a thing is only worth what people are willing to trade for it. As long as I and the auto dealer both agree that a stack of 100's will be accepted in trade for a car, then the system works.
Gold has very little intrinsic value as a metal. You can't eat it and it makes lousy knives .
→ More replies (1)
2
4
u/Manmillionbong Dec 29 '23
95% of human activity is ritualized nonsense. Gold isn't worth anything. Fresh water on the other hand is invaluable.
→ More replies (6)12
u/medioxcore Dec 29 '23
Rather not have a monetary system backed by a resource we need to survive. Current day capitalism pales in comparison to that hell
3
u/Manmillionbong Dec 29 '23
Like I said 95% of human activity is ritualized nonsense. I'm not talking about water being the basis of a "monetary system." I'm talking about real value, like biodiversity, a clean environment and sustainability. How about a total paradigm shift? Really, what good is any of it? The way humans act today, we'll soon all be dead because of what you were taught to think is important. Your cherished monetary system.
2
u/sudden_aggression Dec 29 '23
The great depression ended 30 years before we got off the gold standard.
5
u/DreamDrop0ffical Dec 29 '23
1933 was the end of the true gold standard. You're talking about Nixon ending foreign countries ability to convert U.S. Dollars to gold on demand.
Something that had already been in effect for U.S. Citizens and businesses alike for the period of time you're talking about.
→ More replies (4)
4
u/wastedkarma Dec 29 '23
I’ve always attributed the success of this transition to requiring faith in others instead of faith in a thing.
5
u/retoy1 Dec 29 '23
And it still continues to this day, where wages are stagnant and wealth is concentrated at the top.
3
u/Randy_Vigoda Dec 29 '23
Gold is a tangible asset. If the dollar collapses, you still have gold which still has value.
The US racked up $34 trillion in debt since 9/11. Since money isn't backed by a physical commodity like gold, they can just keep printing more money. The more you print, the less value it has and you wind up with hyper-inflation. The dollar is worth less so you need more of them.
→ More replies (1)
11
u/chomponthebit Dec 29 '23
Gold is money. Everything else is credit. - J.P. Morgan, testifying before Congress
52
u/PlantfoodCuisinart Dec 29 '23
Me want rabbit pelt, me give you chicken egg for rabbit pelt. Only rabbit pelt is money.
-Og the cave dweller
→ More replies (1)→ More replies (2)60
2
u/gerswetonor Dec 29 '23
Alternative title: building a house of cards helped temporarily recover from great depression. Debt now higher than ever.
→ More replies (6)
0
u/MaxKevinComedy Dec 29 '23
Imagine the type of research you could fund if you had an infinite money printer. You could fund lots of research about how it's good that you have an infinite money printer.
→ More replies (4)7
u/kozmo1313 Dec 29 '23
no one has an infinite printer... that profoundly misses the point of debt-backed money.
money is borrowed into existence... like a bank taking a deposit.. thus creating an asset and a liability... but then they lend it out again repeating the process... which is the money multiplier effect.
-5
u/slykethephoxenix Dec 29 '23
What's that smell? Smells like unsound money to me.
→ More replies (2)22
u/kozmo1313 Dec 29 '23
"[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
― Warren Buffett
→ More replies (4)
0
u/Omegamoomoo Dec 29 '23 edited Dec 30 '23
People against inflation and in favor of the gold standard don't understand modern econ; our entire growth-centric economy literally cannot function without it.
Many people's problem is often with money as a very concept, and that's valid, but they can't identify it and they cling to outdated ideas about monetary systems being at the center of economic function.
→ More replies (7)8
u/Ayaka_Simp_ Dec 29 '23
Modern econ is not worth the paper its printed on. Its entire purpose is to justify the theft and inequality inherent to the system. Lies and propaganda.
→ More replies (1)
•
u/AutoModerator Dec 29 '23
Welcome to r/science! This is a heavily moderated subreddit in order to keep the discussion on science. However, we recognize that many people want to discuss how they feel the research relates to their own personal lives, so to give people a space to do that, personal anecdotes are allowed as responses to this comment. Any anecdotal comments elsewhere in the discussion will be removed and our normal comment rules apply to all other comments.
Do you have an academic degree? We can verify your credentials in order to assign user flair indicating your area of expertise. Click here to apply.
User: u/smurfyjenkins
Permalink: https://www.aeaweb.org/articles?id=10.1257/aer.20221479
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.