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/biz/ - Business & Finance

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366717 No.366717 [Reply] [Original]

If the US economy went back to the gold standard, would the price of gold rise or fall?

And why not just go back to gold standard? is there more fiat currency in print than there is gold in the world?
how do we fix the economy /biz/?

>> No.366721

>>366717

Fuck off to /pol/

>> No.366723

it would make us richer because we would have a surplus of gold and therefore be able to buy more slaves and oriental spices

>> No.366731

bump

>> No.366732

>>366717
>If the US economy went back to the gold standard, would the price of gold rise or fall?
Da fuck did I just read?

>> No.366870

>would the price of gold rise or fall?
The actual market rate would almost certainly rise.

>why not just go back to the gold standard?
Because it would completely destroy the economy? The gold standard only works when the economy is doing well, it doesn't CAUSE the economy to do well.

>> No.366886

>>366870
Wrong. Gold is only useful when your country is starting out. Typically your currency is valued for several reasons, a big one being your GDP and whether or not trade with your country is desirable.

Gold standard does hold your country back after awhile because gold is finite.

>> No.366892

>>366886
>Wrong.
No, I'm not. The gold standard causes problems during times of economic crisis. It's also a limiting factor to growth, but that's a different issue.

>> No.367143

>>366717
OP the US would not go back to the gold standard. It prevents the ruling class from printing money. Plus the rulers have already convinced people that it's bad through the schooling and university system.

>ITT muh gold inhibits growth, when your economy grows you need more units of money

Do you guys ever question this belief? What led you to this conclusion?

>> No.367365

>>366717

It would fucking SKYROCKET.

All indications are that there is not nearly as much gold in reserve as there are notes. That's a given. It's beyond given.

It's so bad that when other nations ask to even look at their gold which they keep in our vaults we shake our heads and shrug. Or we'll just give them a peek at a few bars and be like "Why do you need to see more? You're kind of being a jerk. See? Your gold is fine. No don't touch, but we'll talk about this later, you seriously offended us and are lucky we don't just destroy you. How dare you not trust us."

Being American is pretty badass.

>> No.367367

>>366717

Gold WOULD be the currency. There is no "price" because dollars would be worthless. The "price" would be, and ounce of gold would cost you an ounce of gold ....

>> No.367371

>>367365

Oh and to explain from what I understand (correct me if I'm wrong) - the price of Gold would skyrocket largely due to governments buying the world supply (and I mean every drop) by whatever means necessary. Like someone who just leaves their bedroom strewn about with clothes and bottles and cans and papers frantically gathering it all and trying to organize/clean their room as fast as possible before their parents walk in and see that they still haven't cleaned it up after months of being threatened at knifepoint.

girl-frantically-trying-to-screw-cap-onto-soda-bottle.gif

>> No.367377

>>367367

This wouldn't be allowed... governments would retain the world supply, I mean sure you could still be rich as a pirate and hoard/hide as much gold as possible. If you want to die.

But in the end, you will be forced to accept scripts for your gold, hand it over for the good of the community and play the game everyone else is, otherwise your life is weighed against the weight of gold you carry and that won't be much for most people.

>> No.367378
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367378

>>367367
I'm actually quite impressed, and fairly surprised I've never heard this brought up in the dozens of gold standard debates I've heard.

>> No.367414

>>367367
It's probably a bad sign that I can't tell if you're joking or actually being serious.

>> No.367483
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367483

OP, this is at least the 20th time we've had this thread. Let me clear it up again.

We cannot go back to the gold standard because one of the fundamental tenants of the gold standard is that the (dollar, euro, pound, whatever currency) is worth "x" amount of gold no matter what. With currency being traded globally and rapidly and gold being traded globally and rapidly a fluctuation in the price of gold typically ends with the nation's treasury being looted, as was the case when one Charles de Gaul of France decided to cash in his dollars for gold as the price of gold rose and the dollar fell. By dumping dollar reserves and buying up gold in bulk this caused the dollar to fall and gold to increase, meaning that the fixed exchange rate between the two led to the US losing its ass for a while until Nixon moved us off of the gold standard.

We changed off of it for a reason. Ignorance of that reason and other information on how and why the modern economy works the way that it does seem to go hand in hand with railing against the "system" when given small amounts of info about it without any meaningful context. Ergo your question about how we will "fix the economy" boils down to a lack of education coupled with a set of presumptions that somehow the old way of doing things was better, when in fact it is all part of a grand design created by leaders who have more wisdom than the ones we have now. Ergo. Vis a vis.

>> No.367491

>>367143
The supply of Gold on Earth is not sufficiently divisible to prevent the inevitable crippling deflation of a boundless economy.

>>367367
>>367378
Because it's wrong. No economy that has had a Gold or Silver Standard has ever had trade done in only these precious metals. These economies have always had paper representation of these materials, being held in banks. Before Bretton Woods was killed, the exchange rate was $35 per troy ounce.

>> No.367502

>>367491

It's not wrong. Gold was the currency. The 'paper representation' of the gold are receipts. If you look a U.S. dollar bill before the gold standard was repealed, it states on there that the dollar bill is a receipt for gold and could be traded in to the bank for it's worth in gold.

The brand new "currency" would be backed by gold, say for example, one dollar is one ounce of gold. This is the exact same thing as one ounce of gold is worth one ounce of gold.

The price of gold does not change. Gold is the currency and the only thing that increases or decreases the supply would be a drastic increase or decrease in the gold reserves. This would cause deflation or inflation based around the GOLD supply, but wouldn't change the price of gold at all, one ounce of gold is still one ounce of gold.

Jesus fucking christ, read an actual economics book. Don't think that just because you watched some quick 5 minute Youtube video by people who are trying to sell you gold, makes you an expert on economy currency and trade theory.

>> No.367512

>>367502
>one dollar is one ounce of gold
>this is the exact same thing as one ounce of gold is worth once ounce of gold

No, it's not. If you actually understood things like arbitrage you'd understand why it's not.

>> No.367525

>>367502

Holy fuck. There's no hope for you anon.

>not understanding that the price of all currencies and commodities rises and lowers relative to one another
>not understanding that this is also true of gold
>not understanding that fiat currency's purpose is to serve as an expediter of transactions to stabilize the economy while offering a chance to store wealth in currency form, which is both affordable to the average person and highly liquid

I'm sorry. If you understood anything about econ you would know better.

>> No.367526

>>367502
You're absolutely retarded. Just read the shit you're writing and ask yourself, 1. Why am I writing this, and 2. Why do I think this is useful to anyone?

>> No.367839

Stick with me on this hypothetical here:

What if the US government discovered a way to synthesize gold, but no one else in the world knew? Could we go back to the gold standard, let the world think there's still a finite supply and buy up all their shit, and then keep printing gold?

Then at the end of the day revert to USD

>> No.367847

>>367502
>nobody buys gold to use them in electronics or any other shit like that

>> No.368054
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368054

>>367839
if that happened, they would do the exact same thing they're doing with dollar bills and electronic balances. they'll just make more just like they print more, and add more zeroes

also to answer OP's question, if we went to the gold standard, the price of gold wouldn't "go up or down" since it becomes the measuring stick for everything else.
meaning a dollar is 1/1250th of an ounce of gold. regardless of whether the relative of worth of gold relative to other commodities and products goes up or down, the value of the dollar remains pegged to it - 1/1250th. that's what gold standard means

How times have changed. A dollar used to be a little under 1/20th of an ounce of gold (actually 20 dollars is .9677 oz of gold)

>> No.368059

>>367847
it's much more sparingly used than it used to be

they now make interconnects out of coppers and aluminum, and even when using gold, they can electroplate it in microscopic thicknesses (hence the gold content of the pentium pro was 1 gram, yet that of subsequent processors like the pentium ii is negligible
http://www.ozcopper.com/computer-cpu-gold-yields/

>> No.368072

>>366717
People like you are retarded and belong trapped in /pol/. Paper money is just a proxy to goods and services, as is Gold. The only difference is that one is physical and the other is abstract. However, with Gold you will have a lot of issues. First, tying your money to gold makes your economy volatile. Lets say, a giant mine was found in Australia and it is getting mined so much that the supply of gold forces the demand to lower thus the value of Gold drops. Now say you have a business, producing airplane parts. You have a large project coming up. That company gives you half the money upfront, some of which you will use to buy materials. The value of gold drops, thus goods and services require more gold to be spent on them. Say prior to the goldmine, aluminum was going at 10 pounds for every ounce. After the goldmine, it was more like 1 pound for every ounce. You've lost so much money, all because the currency was unstable. Because of that, your company is forced to take drastic steps drafting up a plan. Every resource on this planet changes prices. You could introduce a cap at mining companies, telling them they can't introduce that much gold whenever they want, but that just makes things even worse because then You have to buy gold using other gold. That's illogical. That is why papermoney works best. There are interest rates which determine values, and that generally is tied to a country's performance and will stabilize better after a crisis than basing it off a resource.

>> No.368075

>>368072
So you're telling me that a mine in Australia could pump out ten times the existing gold supply? At least come up with a realistic argument.

>> No.368076

>>368075

It doesn't need to pump out ten times of existing supply to have profound impact on price relations.

Impact, that would add to volatility and that could be easily avoided by not sticking to redarded concepts like golds standard.

Why the fuck would you even want currency to have fixed price relative to gold? If it's gold you want, spend your dollars on it.

>> No.368078

>>366717
>If the US economy went back to the gold standard, would the price of gold rise or fall?

In the short term I don't know. In the medium/long term, no.

>And why not just go back to gold standard? is there more fiat currency in print than there is gold in the world?

https://www.marxists.org/archive/marx/works/1867-c1/ch03.htm#S2c

>how do we fix the economy /biz/?

Capitalism is doomed.

>> No.368079

>>368076
It all depends on how you define "profound." Increased supply due to mining would not be any worse that inflation by printing.

>> No.368081

>>368075
What are you even talking about? Maybe not Australia, but certainly other nations put together can and will destabilize the global economy if we were gold-based.
>>368079
Bro you are a true idiot. Inflation isn't caused by printing because printing is well-regulated. How often do you see older currency in circulation? Most of the time, banks get reissued money, in which they give up the old money in exchange for new ones. And actually, yes it would be worse than printing, because banks are strictly regulated(believe it or not) and base it off market interest rates which is a lot healthier than someone just mining gold. A bank can control its supply, and since paper money has no other uses, it can be strictly limited. Whereas gold, having many uses, you can't regulate that. To make matters worse, since gold is volatile currency, people can make things worse by selling gold when it skyrockets. Think about what happens whenever everyone tries to sell their gold when it is at high value.

>> No.368126

First of all it's impossible because not enough gold exists to represent all the dollars in existence.

>> No.368142

>>367483
The reason our gold supply was even raided in the first place was because we went overboard on Keynesian economics and decided to pump out paper as a solution to everything, resulting in inflation. The depression didn't really 'go away' until post-WWII, so until that time we crunched the numbers and stimulated growth during that time period to create liquidity and relieve the pressure the population was facing. Had we sustained a degree of restraint and allowed the economy to grow on its own after this stage, things would have probably been fine. Instead, the dollar was devalued and stripped down to further expand the state budget. We made gold a better alternative than the dollar by our own devices and monetary mischief, hence Europe wanted gold and Nixon shut out the supply to save what remaining stocks of gold we had left. And that was it, no more gold standard. We would rather print money and back it up with <enter something here, no seriously, use your imagination, it's fun!>

At this point we have somehow reversed the laws of economics. Nations that have taken on the most debt are ahead of the curve and more prosperous. Should we skip the hyperinflation part and use the trees to make caskets or should turn the dollar into nothing more than confetti?

>> No.368145

>>368126
>yea because the derivative bubble and staggering debt is fucking huge

>> No.368147

>>368145
Did I say that out loud? Sorry, I get antsy when I start melting down my pennies for the scrapyard

>> No.368155

>>368142
>>368145
>>368147

Ron Paul is strong with this one.

>> No.368165
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368165

>>368155
>implying

What? All I said was we destroyed the dollar needlessly after we refused to taper out Depression era strategies and treated the whole thing like monopoly money, burning ourselves in the process. But fuck yea, derivative bubble, debt, unfunded liabilities.....oh yea things are going to get real fucking nice around here.

>> No.368166

>>367483
To back up this post by you morons it must be pounded in your head that a gold standard pegs our paper currency to gold. Because gold is finite and outside of government control, whomever has the most gold can control/cripple economies, governments, and the rest of us just by hoarding or dumping said gold.

As a lesson in history you fuckmonkeys should read about what happened to the global economy when all of that New World gold and silver tonnage was being shipped back to Portugal and Spain. It reduced the wealth of everyone in Europe and there were no controls in place to stave this off or protect anyone. The inflation was very real and dramatic.

Someone must always have control, but how do you decide who to give it to: the government, the oligarchs, or the philosopher kings?