gold based monetary system

[University]

why not have all countries print their paper currency .with a gold thread inserted in the money.

where a $5 will have so much gold inserted but $100. will have five times more and have then peg to u.s currency

then all money will have the same value

[Cap'n Refsmmat]

Why not peg everyone to US currency without using gold?

[Sisyphus]

While SFN is indeed influential, I don't think we're quite powerful enough to make that kind of a change to global monetary policy. Thank you for your suggestion, though.

[Incendia]

I don't see the point...By the why...a US penny costs more to make then it is worth...just thought I should throw that out whilst you are talking about money...It could by fixed by replacing the zinc in US pennies with steel but US pennies are useless anyway because you can't use them. [Places where Americans use coins don't accept pennies...]

Also nickels cost 9 cents to make but are worth 5 cents so there is money being wasted there too.

This should explain:

If you want America to change it's currency you might want to start by removing those coins from existence...

Edited November 15, 2010 by ProcuratorIncendia

[swansont]

While SFN is indeed influential, I don't think we're quite powerful enough to make that kind of a change to global monetary policy. Thank you for your suggestion, though.

 

Or, instead of pointing this out, one could move it. (I know, I know, if you did it, it would just move right back again. Damn Greeks and their mythology)

[tomgwyther]

why not have all countries print their paper currency .with a gold thread inserted in the money.

 

I fear that any attempt - such as this - to so directly attach the value of currency to the value of real-world goods would be met with fierce opposition by the banks.

 

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. ... This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

 

Alan Greenspan

[wright496]

Why does it matter if the banks are in opposition to this? They're in the minority. Yes, I know they do in fact wield quite a bit of power, but if people are alerted to this issue, we can change things. Don't be intimidated by those thugs.

[Incendia]

...It would still be pointless to attach real value to money...

[lemur]

Why do people need currency to be linked to gold to use gold for their savings? Why can't they just buy gold and keep it in a safe or safety deposit box? If USD were tied to gold and the government wanted to print money, they would just use some other currency. If they were forbidden from coining currency not based on gold, they would just prescribe economic activities and exchange networks for people who were excluded from existing economic networks. What I don't get is why people are always raising this issue of a gold-standard but never fully explain what it would really change about the way the economy functions.

[wright496]

Why do people need currency to be linked to gold to use gold for their savings? Why can't they just buy gold and keep it in a safe or safety deposit box? If USD were tied to gold and the government wanted to print money, they would just use some other currency. If they were forbidden from coining currency not based on gold, they would just prescribe economic activities and exchange networks for people who were excluded from existing economic networks. What I don't get is why people are always raising this issue of a gold-standard but never fully explain what it would really change about the way the economy functions.

 

I'm not sure what you're talking about. Books have been written on this subject. How can you say no good reasons have ever been given? The problem is that with the way things are now, the currency is too easily manipulated at the whim of the Fed. Inflation is a hidden tax on the American people. This wouldn't be a problem if the currency was or was linked to something of tangible value.

[Incendia]

I don't see any real reason to attach any real value to money. A monetary system would still work if the money was worth literally almost nothing. The system is there to standardise the exchange of goods. I would even argue against placing real value into money.

Edited November 20, 2010 by ProcuratorIncendia

[John Cuthber]

Gold has no intrinsic value*.

Why would you wish to peg your currency to it?

 

* OK it's useful for a few technical things like really thin wires in computer chips and reflective coatings on aircraft windows but that's not a big enough market to matter much.

[insane_alien]

Why not tie currency to energy?

 

Energy is used in manufacturing every product, service and so on. That way, the price of something reflects the resources needed to make and supply it.

 

This would encourage efficiency improvements and so on.

 

Also, you can't create more energy and you can't get rid of it either so balancing the books is nice and easy for accountants if they understand how to perform a simple energy balance.

[Incendia]

That sounds like a pricing system not a currency system.

 

My solution is don't give money any value at all. That way you don't waste resources and actual value on things that:

1. Don't need any value.

2. Would work without value.

3. Gets lost, and damaged all the time.

 

...All you have to do is make sure the money doesn't get faked.

[John Cuthber]

"My solution is don't give money any value at all."

It hasn't any value- it's just bits of paper.

[Incendia]

It's actually fabric...paper is too brittle. And coins have value...

[tomgwyther]

Why not tie currency to energy?

 

Energy is used in manufacturing every product, service and so on. That way, the price of something reflects the resources needed to make and supply it.

 

I think we had this debate a couple of years ago.

 

I'd advocate tying money to anything of substance, be that, Gold, Silver, Energy, Giant toroid stones or belly-button fluff.

At present, money's value is tied to the borrowers pledge of debt and their credibility to repay, or pledge of capital or consideration for that debt.

The only way the money can exist for this debt to be repaid, is for it to be borrowed in the manner stated above.

The application of interest makes the above scenario mathematically self-defeating, as there is only enough liquidity (Money) to pay the principle of the loan, the money to pay the interest has not been borrowed into existence yet.

This makes, bankruptcy, foreclosures, economic collapses on individual and national scales, literally built into the current monetary system.

 

The Money = Energy / Energy = Money, - although not a silver bullet - is actually a very sensible and pragmatic approach to trade and commerce

The current: Money = Debt / Debt = Money system is just retarded.

[Sisyphus]

Why does money have to be tied to something "concrete" in order for it have scarcity? Just stop printing/"borrowing into existence" more of it.

 

I'm also really not sure how energy is supposed to work as a medium of exchange. How do I buy a loaf of bread with it?

[Cap'n Refsmmat]

Why does money have to be tied to something "concrete" in order for it have scarcity? Just stop printing/"borrowing into existence" more of it.

 

I'm also really not sure how energy is supposed to work as a medium of exchange. How do I buy a loaf of bread with it?

I suppose it could work like the old gold-backed US money. Bills would represent an obligation of the government to supply you with a certain amount of energy, rather than a certain amount of gold.

[insane_alien]

That sounds like a pricing system not a currency system.

 

 

No, its a currency system. Or rather, a Financial System.

 

A company would be free to place whatever margin they want on their product. Say a product has an energy cost of 0.4kJ (or whatever) the company could apply a 50% margin and sell it for 0.8kJ if they wanted to.

 

All the tying into energy would do is provide some rules for how money behaves. A lot of the economic problems caused (such as hyper inflation) are caused by currency not being a conserved value. ie. currency can appear and disappear on the whim of a government which means people, and people are about as sensible as a platypus on a platinum pogostick.

 

Energy on the other hand IS a conserved value. It's value isn't going to wave about, it's value is universal and its value is stable even when there are large fluctuations that would send the stockmarkets into a death spiral.

 

for instance, if we had an energy based currency and tomorrow somebody started up a massive fusion reactor that could power half the globe do you know what would happen to the value of a Joule? nothing.

 

now lets take a comparable situation with our own currency. Lets say tomorrow all the governments in the world decided to print currency until their printers broke or they ran out of paper. BAM economic collapse that would make the current situation seem like a slight blip in the market.

 

energy is safe, energy is sensible, energy has rules. I've yet to see either of these three things in the current currency system.

 

ADDITIONAL: Sort of Cap'n. I would also prefer to do away with 'hard' currency and move to an electronic one. more efficient, cuts down on the incentives to perform muggings etc.

 

But i imagine that wouldn't be too popular with enough people so there probably would be a hard version and yeah, that would work like a gold (or whatever) backed currency.

Edited November 21, 2010 by insane_alien

[Sisyphus]

I'm still not really seeing it. So I have a certain number of "joule credits," or whatever. But that energy doesn't actually exist, yet, in a usable form. Say I want to redeem it. What actually happens? The government is obligated to produce something? In what form? Electricity? How could they possibly produce that much, equal in value to all the currency in circulation? And what could I do with it? I can't store it, like I could gold or something. So what does the redemption consist of? No electric bills for a thousand years?

 

 

 

for instance, if we had an energy based currency and tomorrow somebody started up a massive fusion reactor that could power half the globe do you know what would happen to the value of a Joule? nothing.

 

On the contrary, the exchange value would plummet, just like in any other situation where you double the supply but don't change the demand.

[insane_alien]

I'm still not really seeing it. So I have a certain number of "joule credits," or whatever. But that energy doesn't actually exist, yet, in a usable form. Say I want to redeem it. What actually happens? The government is obligated to produce something? In what form? Electricity? How could they possibly produce that much, equal in value to all the currency in circulation? And what could I do with it? I can't store it, like I could gold or something. So what does the redemption consist of? No electric bills for a thousand years?

 

That is an interesting question. hmm. well i suppose its not quite like the gold backed currency system so i suppose the only way to get something physical to represent your money would be to buy something with it. This seems(to me at least) what happens with a gold backed currency system. you exchanged some money for its equivalent value in gold as in, you bought the gold from the government.

 

On the contrary, the exchange value would plummet, just like in any other situation where you double the supply but don't change the demand.

 

Ah but have you seen how electrical grids work, if they produce more than the demand the surplus gets wasted or shunted into storage. The supply is dependant on demand. Also, the work you can do with one joule will remain the same. IE, you run a manufacturing plant and your materials cost you 3GJ a month. With all those extra joules capable of being produced isn't going to drive your energy costs down, so its still going to take 3GJ/month to make your product, you won't have to pay your workers any more joules and so on.

 

you seem to be basing your comment on the current system and how many pennies it cost for a unit of leccy. True this is a down point of the system but the system would only work if everywhere used it. And that is the ultimate goal of this system, a universal currency system. The change over would be tricky, and i don't pretend to know enough about the current financial system to even begin to know how to do that.

[Sisyphus]

That is an interesting question. hmm. well i suppose its not quite like the gold backed currency system so i suppose the only way to get something physical to represent your money would be to buy something with it. This seems(to me at least) what happens with a gold backed currency system. you exchanged some money for its equivalent value in gold as in, you bought the gold from the government.

 

But then it's not really backed, per se, is it? You've got quantities of money in circulation that can't possibly be redeemed. It's as if the national currency were free sandwich coupons for the deli around the corner from me. They just can't make that many sandwiches, and if they could, we'd all have far too many of them to be useful. Sandwich coupons (or energy credits) could be a medium of exchange, but I don't think it would work as the only medium of exchange.

 

Ah but have you seen how electrical grids work, if they produce more than the demand the surplus gets wasted or shunted into storage. The supply is dependant on demand.

 

Well, right. So then if that fusion reactor powers half the globe for free, that means half of all existing power production gets shut down, which means they expend half as many resources meeting all demand, which means electricity is suddenly worth half as much.

 

Also, the work you can do with one joule will remain the same. IE, you run a manufacturing plant and your materials cost you 3GJ a month. With all those extra joules capable of being produced isn't going to drive your energy costs down, so its still going to take 3GJ/month to make your product, you won't have to pay your workers any more joules and so on.

 

How much you need is only part of the equation. What matters is what its exchange value is worth. I need to breathe the same amount of air whether I'm on Earth or on the Moon. But air is a lot more valuable on the Moon, since it takes a lot of work to supply it. You could buy and sell air on the Moon, but not on Earth.

[zapatos]

...but US pennies are useless anyway because you can't use them. [Places where Americans use coins don't accept pennies...]

I'm not sure what you mean by this. I use pennies all the time and they are always accepted.

 

Also nickels cost 9 cents to make but are worth 5 cents so there is money being wasted there too.

I am also not sure what you mean by this. Are you saying there is some inefficiency in the manufacturing process? If it cannot be made for less than 9 cents then I don't see where money is being wasted. And if a nickel cost 4 cents to make there could still be money being wasted if they could potentially make it for 3 cents.

[lemur]

I'm not sure what you're talking about. Books have been written on this subject. How can you say no good reasons have ever been given?

I meant that I haven't heard any in popular political discourse even though I regular hear people insist that it is a good idea to "return to the gold standard."

 

As for having an energy-standard for currency, this is an interesting idea. How much energy do you think 1 USD should translate into? How would exchange-rates between different currencies fluctuate if they were all tied to an objective measure like the joule/btu/kwh?