[dnautics]

> Modern monetary theory is doing just fine,

How's that gap between the rich and the poor going?

Look, the US was on the gold standard between 1850 and early 1900s, and not only recovered from a civil war, but ALSO freed all of its slaves AND went from a backwater country to a world superpower, and reduced inequality all at the same time.

https://voxeu.org/article/american-growth-and-inequality-170...

[AnimalMuppet]

> How's that gap between the rich and the poor going?

It's quite high - as high as it was in 1850, when we were on the gold standard. So... what's your point?

[posix_me_less]

The gap is reported to be increasing, but is that actually regarded as a problem by the ruling class? They may actually prefer this, as it gives them greater chunk of power and secures their position.

In other words, the gap may be increasing and we don't like it, but this may very well be the intended "how is it going".

One case in point: in 1970's, instead of giving employees their share of profits from productivity increases, the system gave them an easy way to get into debt instead (the credit card).

[dnautics]

I'm not in the ruling class, so I would not say "monetary theory (modern or otherwise) is doing just fine". Perhaps nicoffeine is in the ruling class?

[nicoffeine]

The US was on the gold/silver standard from 1792-1850. Was that the reason it continued the genocide of millions of indigenous people, took their land, and then imported millions of slaves to farm that land? Maybe there are other possibilities for history other than the currency system during a given time period.

I remembered there were a series of financial crises leading up to the Civil War, and sure enough, the first use of fiat currency in the US was to solve a financial crisis caused by the gold/silver standard:

'In 1853, the U.S. reduced the silver weight of coins to keep them in circulation and in 1857 removed legal tender status from foreign coinage. In 1857 the final crisis of the free banking era began as American banks suspended payment in silver, with ripples through the developing international financial system. Due to the inflationary finance measures undertaken to help pay for the U.S. Civil War, the government found it difficult to pay its obligations in gold or silver and suspended payments of obligations not legally specified in specie (gold bonds); this led banks to suspend the conversion of bank liabilities (bank notes and deposits) into specie. In 1862 paper money was made legal tender. It was a fiat money (not convertible on demand at a fixed rate into specie). These notes came to be called "greenbacks".' [1]

Technically Continental Dollars were zero interest bearer bonds, but they were also issued to help finance the Revolutionary War[2].

So, your argument for the gold standard is not only logically incoherent, but even if it was, it's completely ignorant of the history of currencies in the United States.

[1] https://en.wikipedia.org/wiki/Gold_standard

[2] https://en.wikipedia.org/wiki/Early_American_currency#Contin...

[dnautics]

> So, your argument for the gold standard is not only logically incoherent

Wrong. The argument is a refutation of the idea that economic growth cannot happen while on a gold standard, that it will be disastrous. It is an existence statement, not a universality statement.

[rsj_hn]

> The argument is a refutation of the idea that economic growth cannot happen while on a gold standard,

This is correct. Rapid economic growth happened on the gold standard. The issue is not about long term economic growth, but volatility. Hard money creates an environment with lots of rapid inflation and deflation and very strong boom/bust cycles. That volatility has costs (human costs of the pain of mass layoffs) but also benefits (weaker companies are more rapidly weeded out). After the Great Depression, it was decided that the costs outweigh the benefits, but it's a legit question that should not be so readily dismissed.

[nicoffeine]

Who said economic growth cannot happen on a gold standard? I said it's a useless technology for civilizations that have better ones. You responded with an incoherent argument and a claim that 1850-early 1900s is a time period that shows the value of representative currency.

Instead of the straw man and the red herrings, please explain how abandoning the gold standard in order to survive the Civil War is evidence of how effective it is. Here's more context that might help:

"The beginning of 1862 found the Union's expenses increasing, and the government was having trouble funding the escalating war. U.S. Demand Notes — which were used, among other things, to pay Union soldiers — were unredeemable, and the value of the notes began to deteriorate. Congressman and Buffalo banker Elbridge G. Spaulding prepared a bill, based on the Free Banking Law of New York, that eventually became the National Banking Act of 1863.

Recognizing, however, that his proposal would take many months to pass Congress, during early February Spaulding introduced another bill to permit the U.S. Treasury to issue $150 million in notes as legal tender. This caused tremendous controversy in Congress, as hitherto the Constitution had been interpreted as not granting the government the power to issue a paper currency. "The bill before us is a war measure, a measure of necessity, and not of choice," Spaulding argued before the House, adding, "These are extraordinary times, and extraordinary measures must be resorted to in order to save our Government, and preserve our nationality." Spaulding justified the action as a "necessary means of carrying into execution the powers granted in the Constitution 'to raise and support armies', and 'to provide and maintain a navy'".

https://en.wikipedia.org/wiki/United_States_Note#The_Legal_T...

[dnautics]

going back to your original point:

> [the gold standard] is a terrible idea for civilizations that have technologies like accounting systems and currencies that are difficult to counterfeit. Tying economic expansion to the ability to mine and store one type of element doesn't make any sense.

Hear me out. I will first start a counterstatement with two supporting points (I'm sure it's easy to find more supporting points too, but let's keep this simple).

It is a terrible idea for a civilization that exists in a system with finite resources to use a currency that is unbounded and exponential. The disconnect between the nominal economic substrate and raw reality will lead to broad class theft and environmental destruction.

1. For class theft, don't just take my word for it, take Paul Krugman's: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi...

"even in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis."

Now, let's unpack what he says very carefully. In short it is this:

"we need to keep our society looking like it's humming by posting great employment numbers, and the most effective way to do this is to incrementally cheat the labor class out of the value of their wages"

2. As for environmental destruction, surely you can see how putting society on a compounding treadmill of devaluation encourages consumption as a driver of economic growth (if we fail to post a positive growth number, we WILL have at least a transient economic crisis), and it's patently evident that we buy more, shittier things that need to be replaced, because there is diminished opportunity cost for saving your money to buy something better and more robust: but hey, it's good for circular flow.

--

Now, if you accept that an unbounded currency is terrible for a society in a finite resource regime - then, in the big picture it doesn't matter too terribly much what is restricting the expansion of the nominal basis[0]. What matters is that something restricts the expansion. If that's physical mining of metals, the capacity to expand the currency is soft-capped to a certain rate that flexes with real economic performance -- and hard-capped to the total amount of metal in the earth; if that's some digital ledger that can't be expanded, that would be fine too, but anyways the point is it's bounded.

Or, maybe you like environmental destruction and screwing the poor. If you do, you should probably say that up front, instead of hiding it behind difficult-to-unpack-ese like Krugman does.

[0] in the small, probably cryptocurrencies (which burn to make CO2) are better than mining, which dumps mercury effluent into the environment, and maybe there will even be efficient cryptocurrencies that burn up less CO2. But all are better than, say, an economic system that has the unboundedness property AND is propped up by paying off defense contractors that build depleted uranium tipped rounds that are dropped on civilians halfway around the world.

[nicoffeine]

> It is a terrible idea for a civilization that exists in a system with finite resources to use a currency that is unbounded and exponential. The disconnect between the nominal economic substrate and raw reality will lead to broad class theft and environmental destruction.

Well, this is certainly a different argument than "1850-early 1900s is a great example of the benefits of the gold standard"

> 1. For class theft, don't just take my word for it, take Paul Krugman's

Or, take his word on why the gold standard is a bad idea? (written before the EU was a thing)

"Why not emulate our great-grandfathers and tie our currencies to gold? Very few economists think this would be a good idea. The argument against it is one of pragmatism, not principle. First, a gold standard would have all the disadvantages of any system of rigidly fixed exchange rates--and even economists who are enthusiastic about a common European currency generally think that fixing the European currency to the dollar or yen would be going too far. Second, and crucially, gold is not a stable standard when measured in terms of other goods and services. On the contrary, it is a commodity whose price is constantly buffeted by shifts in supply and demand that have nothing to do with the needs of the world economy..."

> As for environmental destruction, surely you can see how putting society on a compounding treadmill of devaluation encourages consumption as a driver of economic growth (if we fail to post a positive growth number, we WILL have at least a transient economic crisis), and it's patently evident that we buy more, shittier things that need to be replaced, because there is diminished opportunity cost for saving your money to buy something better and more robust: but hey, it's good for circular flow.

I agree that inflation can drive part of the problem in the constant pursuit of growth and profit at the expense of the environment. The problem is that moving to a gold backed currency wouldn't change any of that. We know this because the regulations introduced by the EPA in 1970, just as the US moved completely off the gold standard, are the reason that the US has cleaner air and water. Along with the fact that corporations externalized the environmental costs of our consumption habits to Southeast Asia. None of that would be different if the US had stayed on the gold standard.

> Or, maybe you like environmental destruction and screwing the poor. If you do, you should probably say that up front, instead of hiding it behind difficult-to-unpack-ese like Krugman does.

Ignoring the mild annoyance of this insinuation, it remains completely ridiculous. What was the life expectancy in the height of the gold standard? What is it now? What countries are the most carbon neutral, the most environmentally sound, and have the highest standard of living? Are they using a fiat currency system?

The difference is in policy. Most of the EU is beating the US on every metric for the average person because of their laws. Individuals in those countries have rights to food, shelter, healthcare, and education, and because those governments are legitimate and relatively uncorrupted, those rights are not only recognized but realized. Having the ability to build homes, schools, and hospitals without having to dig gold out of the ground first is part of the reason why they are able to do it.

> in the small, probably cryptocurrencies (which burn to make CO2) are better than mining, which dumps mercury effluent into the environment, and maybe there will even be efficient cryptocurrencies that burn up less CO2.

Finally, we can agree. Gold makes about as much sense as cryptocurrency. When used as a mechanism to try and restrict the money supply for a given economy, they complicate the situation with zero benefits for the economy or the environment.

> But all are better than, say, an economic system that has the unboundedness property AND is propped up by paying off defense contractors that build depleted uranium tipped rounds that are dropped on civilians halfway around the world.

Please elaborate on how the gold standard would eliminate the problems of the military industrial complex and American imperialism.