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RE: Why Bringing Back The Gold Standard Is Not The Solution To Current Day Economic Problems

in #life8 years ago (edited)

Are you sure you don't mean fixed level of inflation? (not increasing over time, stable like between 1-2% every year). Still predictable then, and if your population grows like we did in the past 50 years it could help to keep up with demand (i think close to, if not tripled. we were around 2.5 billion in the 1950s and 6.5 billion in the mid 2000s). If it's a fixed supply for the long long run, you might run into some weird problems when the population and the demand for money starts to very quickly outgrow supply.

Like unless you started out with $100 hamburgers, what happens when they cost a fraction of a penny at some point in the future? But, okay, let's assume that's not a problem, because bitcoin can go down to like 8 decimal places, and we'll adopt newer technology by then. But there's another problem, which we know of occurs in deflationary periods. If you know the value of your money will always increase, then there's an incentive to horde and less of an incentive to take risks, meaning less loans, less investment, etc. etc. Eventually you'll really freeze up productivity.

This is why gold has been money for so long, because that IS the value of gold--that it serves so well as money. It's also why bitcoin was modeled after it (we'll see sometime in the future how accurate that modeling was though). Ideally, you want a little inflation, but at a stable, predictable rate to keep up with growing demand. There must be a limited amount of gold on the planet, but as we progress technologically, we find new ways to mine deeper. So it works there too, as you would expect increased demand for money when you have a rise in productivity, which stimulates more growth, etc etc. Another cycle. And sometimes, when you get a huge breakthrough, let's say, technology to mine asteroids and other planets for gold, it'll work there too. Of course it'll never match up perfectly, so there'll be small booms and busts, but that's natural. Doesn't sound like you're a fan of the Fed either, so you're probably familiar with their track record.

Anyway, just some reasons to explain why we've stuck to gold for, i think around...5,000 years? And it's actually remained fairly stable in terms of purchasing power. You might have heard that with an ounce of gold, a citizen in Ancient Rome could buy a toga. Today, a ounce of gold would still buy you a nice outfit for work or daily use. That kind of stability is impressive.

I'd like to see more ideas that combine precious metals and crypto currencies...they complement each other so well in some ways. For example, gold and silver are heavy for everyday carry, or at least annoying for large transactions. So cryptos have the best portability of any money. And any worries about "getting hacked" (i don't think that's a huge problem) or the grid going down (that's much more likely, due to the fairly regular patterns of solar flares. nukes could do it too, but let's hope not) would be covered by gold, as the best tangible form of money (almost indestructible). So yea, that's my hope for the future of money. Hope you got something out of this. Man I should've made this a post...