Modern monetary theory isn't doing fine and neither are the countries with fiat currencies. They're all in absolute crisis because their economies are built on ever-shifting quicksand.
The "gold standard" isn't a theory of economics, it's an observation. Money is a medium of exchange - a mechanism for judging the relative value of unlike goods. That is literally impossible if the thing used as money is non-economic, like fiat currency. The money must be itself a tradeable commodity. Commodities that are useful as money have all the traditional traits you learn in elementary school, and gold is the traditional and current best fit for those traits.
Belief in the viability of "monetary policy" and fiat currencies always comes from a belief that no one can really know how economics works, so whatever anyone does right now might not work in the future. Well, obviously that's going to be true of people who refuse to learn what economics as a field actually is.
> Modern monetary theory isn't doing fine and neither are the countries with fiat currencies. They're all in absolute crisis because their economies are built on ever-shifting quicksand.
Okay. What countries use representative currencies and how are they doing?
> The "gold standard" isn't a theory of economics, it's an observation. Money is a medium of exchange - a mechanism for judging the relative value of unlike goods. That is literally impossible if the thing used as money is non-economic, like fiat currency.
Are you saying the world economy is literally impossible?
> The money must be itself a tradeable commodity. Commodities that are useful as money have all the traditional traits you learn in elementary school, and gold is the traditional and current best fit for those traits.
You just said money a medium of exchange. As long as both parties agree to the transaction, and it wasn't a barter, whatever wasn't the good or service was the money.
And you don't mean the money must be a trade-able commodity. No one is going to walk around with a set of weights and tubs of water to determine the purity of coins so they can buy or sell a sandwich. You're making the argument that if the currency could be exchanged for lumps of metal at a treasury office that it would somehow be an improvement.
> Belief in the viability of "monetary policy" and fiat currencies always comes from a belief that no one can really know how economics works, so whatever anyone does right now might not work in the future.
I honestly have no idea what you're saying here. Which economists claim that no one can know how economies work?
> Well, obviously that's going to be true of people who refuse to learn what economics as a field actually is.
So far the fiat currency system has been a part of the most rapid progression of technology and trade in recorded history. I'm not saying it was the driver behind it, but that has been the dominant currency system in place for the last 70ish years. It absolutely has flaws, and absolutely can be ruined by corruption and poor governance. It also works so well that people who hate fiat currencies still use them every day. I'd bet .225 ounces of 99% pure gold alloy that you bought your lunch with it.
> So far the fiat currency system has been a part of the most rapid progression of technology and trade in recorded history.
There is an argument to be made that the progress would have occurred regardless of the currency system in place. That is to say it is nothing more than coincidence that fiat was in place during this period of progress. The progress is the result of capitalism not the currency system. However, had this progress occurred under a gold standard we would have been much better off. Fiat monetary policy has bled value from the economy for nearly 90 years. All of that value lost to inflation would still be in the economy if we had stayed on a gold standard.
Where do you get this notion from? If you separated the economic system from the global economy during the biggest expansion of the economy ever, we’d have been even better off? Based on absolutely what information?
The growth would have happened anyway. The economic system is just a way to trade wealth and keep score. It doesnt matter if it is fiat currency, gold or grains of sand that are traded. Being on a fiat system allows an outside player to siphon value out of the economy for their own gain the same as a tax. If we had been on a gold standard during this amazing growth period the only way an outside party could siphon off wealth is with taxes.
If we were on a gold standard and the government took 2% of every single transaction for the last 90 years we would still be better off. Inflation is a tax that is compounded over time.
Globalization has exploded since we got off the gold standard. It was heavily slowing the world economy down. There just isn't enough gold to represent all the amazing things people want to do.
With globalisation happening about the same time as coming off the gold standard I understand the conclusion.
There are two flaws in the logic leading there. First, globalisation is the result of the technonogy, particularly transportation and materials, available. Second, even with a gold standard the value of gold increases over time. A single unit of gold is able to buy more as the economy it represents grows. On the ground, with dollars pegged at an amount of gold, you would see this as prices decreasing as they were for the history of the US gold standard.
>Money is a medium of exchange - a mechanism for judging the relative value of unlike goods. That is literally impossible if the thing used as money is non-economic, like fiat currency. The money must be itself a tradeable commodity. Commodities that are useful as money have all the traditional traits you learn in elementary school, and gold is the traditional and current best fit for those traits.
If "money" is a physical medium of exchange then advanced economies do not have or need "money".
Our modern banking system simply lets people promise each other goods and services. It's effectively a system built around relationships.
The "gold standard" isn't a theory of economics, it's an observation. Money is a medium of exchange - a mechanism for judging the relative value of unlike goods. That is literally impossible if the thing used as money is non-economic, like fiat currency. The money must be itself a tradeable commodity. Commodities that are useful as money have all the traditional traits you learn in elementary school, and gold is the traditional and current best fit for those traits.
Belief in the viability of "monetary policy" and fiat currencies always comes from a belief that no one can really know how economics works, so whatever anyone does right now might not work in the future. Well, obviously that's going to be true of people who refuse to learn what economics as a field actually is.