[noxvilleza]

Not sure if this is that good of a metric given that I've read before that in recent history, precious metals have much higher demand where there is crisis and instability - and 1944 is certainly one of the peaks for that. I guess since 2023 it's also been quite a peak.

[chaostheory]

It’s a great metric at the moment for the reasons that you’ve given. We are living in a period of crisis and instability. Just like in that time, we are close to yet another global war. The difference is whether or not nuclear weapons will keep things from further escalating.

[eru]

> We are living in a period of crisis and instability.

What? We are living in a golden age of unprecedented peace and prosperity. By and large, people never had it so good.

[Dalewyn]

The west (and some tag-alongs like Japan) is living in a golden age of unprecedented peace and prosperity.

The world at large has other ideas, especially continental Asia and the Middle East where people seemingly can't stop brutally killing each other.

[eru]

Have you had a look at the graph of GDP per capita in eg Bangladesh recently?

PR China has also seen enormous advances in prosperity, and hasn't been in a major war in 70 years, either. In India obesity is a bigger problem than starvation. And approximately everyone can afford a smartphone, too.

South East Asia is doing fairly well, too, compared to historical averages. Even Sub Saharan Africa is finally starting to catch up.

Yes, there are still wars, alas. But by and large people are richer and living more peaceful lives.

We could look at statistics, if you wish. (I was looking for a graph of casualties of war over time for my previous comment, but couldn't find one that was recent enough, sorry.)

The founding Prime Minister of my own adopted home of Singapore wrote a book called 'From Third World to First'. And he's right.

[ithkuil]

We have to put things in perspective.

During the Balkan wars about 5% of Europe's population lived in a country that was at war.

Yet that time period was relatively peaceful compared to the first half of the 20th century where Europe went through two total conflicts.

Yet for me the war in Yugoslavia was of personal significance and I felt it and its longer term effects closely.

But it wouldn't be fair for me to just dismiss that the second half of the 20th century was a time of peace and prosperity in Europe, because a part of it was burning in flames and committing atrocities to who were their brothers 5 minutes before.

The precariousness of peace is what makes it so valuable.

Yes. There are conflicts all around the world. Wars. Oppression. Injustice. Racism.

I don't think that recognizing that we're living unprecedentedly peaceful and just times is going to make those conflicts and injustices worse.

Quite the contrary. I feel that never recognizing the successes and progress that humanity has made in many of those fronts is what will eventually doom us to regress.

[richk449]

It was the best of times, it was the worst of times.

[lesuorac]

But why is gold a better metric than anything else?

Like if there's a global war I bet people are going to want canned food much more than a gold chain. So should we use the price of chicken soup in 1944 vs 2023?

---

But yeah I also agree with eru; being "close to yet another global war" is a way better place to be than "actually in a global war". Considering pretty much every century has them.

[noxvilleza]

Precious metals (gold/silver) are very expensive given their weight, relatively easy to divide up, and won't significantly go stale or decompose (some oxidation will occur - sure). I'm sure there are other assets that this is also applicable to - it's just the categorical example I remember discussing with my accounting teacher ~19 years ago.

[eru]

> [...] and won't significantly go stale or decompose (some oxidation will occur - sure) [...]

Just to nerd out a bit: You can dissolve gold in some particularly strong acids, but it doesn't really diminish the value of the gold. The effort for getting it back into elemental form is small relative to the price it fetches.

Compare this to eg aluminium, or to make an even starker contrast: wood.

[djtango]

Yes - exactly this. Gold is nature's money. Every other asset wishes it was told but it's gold's chemistry that makes it a good store of value for exactly what you said. The relative cost to purify and reshape/melt etc is cheap wrt its value. Cf Platinum which is much harder

[eru]

Maybe. I wasn't making any comments on suitability as money, only on chemistry.

Historically, gold has been a decent enough base money. But people soon make up notes to stand in for that base money, and those notes (and fiduciary coins!) win in the market. (To explain, fiduciary coins are those that like notes promise to pay the bearer. By themselves, they are not made of valuable material.)

If you don't move your base money around much, and just let it sit in vaults, then the chemical qualities we talked about don't matter all that much.

See eg https://www.cato.org/policy-analysis/rise-fall-gold-standard... for some background.

[noxvilleza]

Yeah I was just comparing it to other things that are very expensive (by weight and size) like, saffron, truffles, caviar, printer ink, etc.

[wakawaka28]

No, in 1944 the dollar was fixed at $35 per ounce of gold. It was not a time of crisis for the gold market, because gold was money. The peg was eventually removed (I think in 1971). Right now there are factors driving the price of gold up, including massive central bank purchases and also massive understated inflation in the West. Everyone knows that fiat currencies are fleeting so the world is preparing for an inevitable decline or collapse of the dollar.

[SideQuark]

It's easy to check BLS inflation against old ads for goods and see that BLS inflation is pretty spot on. I've yet to meet someone claiming "massive understated inflation" that has done this simple check honestly.

As to the claim that "fiat currencies are fleeting," it is a fact every country of 200+ has one, so it's safer to say every non-fiat currency has failed.

There's also significant empirical evidence such economies are on the whole less volatile than older ones limited by how fast one can dig material out of a hole. See a list of severity and frequency of US recessions, or study the Great Moderation, or simply look at the volatility of gold prices, to see how unstable non-fiat pricing is.

[djtango]

Have you ever noticed how inflation metrics are always finding ways to ignore how housing and rent has gone up much faster than wages?

Pretty much all the important things in life have gone up more than stated inflation.

I don't care that I can get a cheap very environmentally unsustainable cardigan for less than ever before. Likewise for a watery nutrition-less tomato.

Meanwhile education, housing and healthcare are the least affordable they've ever been.

https://en.m.wikipedia.org/wiki/Baumol_effect

[randomdata]

Inflation isn't a cost of living metric, it is an attempt to determine change in value of the currency. A change in value of, say, housing is independent to a change in value of the currency. And housing is undeniably more valuable than it once was for a long list of factors.

If you want to understand cost of living, just look at your personal bookkeeping. It will paint the most accurate picture. There isn't much to be gained in reporting cost of living in the news – unless you think aliens on some far away planet will take interest a thousand years from now when the signal arrives at their location.

[wakawaka28]

CPI is the most commonly cited inflation metric, and it is actually a cost of living metric. We could also use the velocity of money plus money supply stats, but that is very hard to relate to.

Housing might be somewhat more valuable than it used to be, but the extreme valuation swings we've seen in the last 20 years were due to monetary policy and macroeconomic conditions, and not actual demand. Or I should say, demand for housing is always proportional to population. It's not like when people can't afford a house, that demand disappears. It just can't be acted on.

[randomdata]

> and it is actually a cost of living metric.

It is not. A CPI measures the change in cost of a fixed basket of goods. A COLI measures a change in cost of a fixed level of "well-being".

> It's not like when people can't afford a house, that demand disappears.

It is like that. That's literally what defines demand. Perhaps you have confused "demand" with "desire"? They do share the same first couple of letters.

[wakawaka28]

>It's easy to check BLS inflation against old ads for goods and see that BLS inflation is pretty spot on. I've yet to meet someone claiming "massive understated inflation" that has done this simple check honestly.

When property values blow up 50% in a year or two and people pay $20k+ over sticker for cars, it's not "supply chain issues" nor 8% inflation dude. I have looked at old ads for stuff, and the difference is that now the same goods are manufactured for 1/10th the cost overseas and somehow cost way more anyway or at best roughly the same price as before. The BLS has a very complex scheme for understating inflation that involves substitutions, hypothetical costs, and other gimmicks. It wasn't always so fishy but the change was made to make the economy look better. I could argue with you at length about details but I can tell it will not be productive.

>As to the claim that "fiat currencies are fleeting," it is a fact every country of 200+ has one, so it's safer to say every non-fiat currency has failed.

Gold and silver are valuable everywhere and have been since they were first discovered many thousands of years ago. So your claim is utterly false. Every fiat currency that has existed has gone to zero, as well as any that were based on claims of redeemability.

>See a list of severity and frequency of US recessions, or study the Great Moderation, or simply look at the volatility of gold prices, to see how unstable non-fiat pricing is.

Gold prices are only volatile in terms of dollars, due to speculation in the futures market. The banks and governments play games with gold prices to discourage investors from seeking it. There are some cyclical or geopolitical factors in it too. But as JP Morgan said, "Gold is money. Everything else is credit." It can be manipulated but not nearly as much as fiat.

[SideQuark]

> I have looked at old ads for stuff, and the difference is that now the same goods are manufactured for 1/10th the cost overseas and somehow cost way more anyway or at best roughly the same price as before

If you believe this is the general reason, then you should invest in all these companies making 80+% profits and get the amazing returns.

Oh yeah, those companies don't exit, maybe because the claimed reason doesn't exist.

> Gold prices are only volatile in terms of dollars, due to speculation in the futures market

That's nonsense. Gold has always been far more volatile than goods, which is precisely the reason the world saw the incontrovertible evidence during the Great Depression, which is why all of the 200+ countries on the planet left it as a standard. If it were some magical better way, then surely at least one of the 200+ countries would do it and win, but it has been clear nearly a century what a bad idea it is.

> Every fiat currency that has existed has gone to zero,

Well, there's 200ish of them that exist right now above zero. And guess what? Every single non-fiat currency has failed, since there are zero left. You can keep claiming otherwise but this is reality.

> Gold and silver are valuable everywhere and have been since they were first discovered many thousands of years ago.

So are cattle and a zillion other old goods. That does not make them a good currency or a basis for an economy.

Tying your economy growth to the rate you can dig up gold is also a reason that those thousands of years saw economic growth at a fraction of a percent. When mankind realized the stupidity of limiting growth in all areas to the growth in digging up gold, and detached the two, economic growth greatly increased. You cannot invest in new production, inventions, and goods, without having capital. Limiting capital, i.e., gold supply, results in lower growth.

[wakawaka28]

>If you believe this is the general reason, then you should invest in all these companies making 80+% profits and get the amazing returns.

I didn't say they were getting great returns. Although their returns are good (and if I could go back in time and invest like 20 years ago I could 100x my money), the fact is that although stuff is cheaper we (individuals and businesses) still can't buy more because money is worth less than it used to be.

>Well, there's 200ish of them that exist right now above zero. And guess what? Every single non-fiat currency has failed, since there are zero left. You can keep claiming otherwise but this is reality.

You can keep denying the reality that gold has much value, but you're wrong. It may not be the official currency anywhere, but it is worth a lot everywhere in the world. Furthermore, central banks hoard gold. If it was as worthless and detached from money as you propose, they would sell it all immediately. But they're buying instead. BRICS countries are launching a gold-backed currency any time now. Get your head out of the sand.

>Gold has always been far more volatile than goods, which is precisely the reason the world saw the incontrovertible evidence during the Great Depression, which is why all of the 200+ countries on the planet left it as a standard. If it were some magical better way, then surely at least one of the 200+ countries would do it and win, but it has been clear nearly a century what a bad idea it is.

Every country wants fiat because they can print it, plain and simple. The way these governments win is not by having a functional currency so much as by having something they can manipulate in their favor. Gold is not easy to manipulate because you can't print it. The avoidance of gold-backed money has nothing to do with "volatility" of gold. The supply of gold is steady, growing at perhaps 2% per year. There can be localized shortages of gold in a gold-based system that create volatility, but that is nothing compared to reckless printing of fiat. A responsibly managed fiat system could potentially be more stable than gold, but artificial manipulations of the money supply are not free and represent unfair enrichment or impoverishment of different players in the economy.

>Tying your economy growth to the rate you can dig up gold is also a reason that those thousands of years saw economic growth at a fraction of a percent. When mankind realized the stupidity of limiting growth in all areas to the growth in digging up gold, and detached the two, economic growth greatly increased. You cannot invest in new production, inventions, and goods, without having capital. Limiting capital, i.e., gold supply, results in lower growth.

You have really muddled things here. For thousands of years, debasement of currency and fiat currencies were also real threats. What really stimulated progress in the last 200 years was the discovery of steam power and oil. The Industrial Revolution. You can certainly invest in new innovations with a gold-based system, and that is indeed what happened. The Great Depression was caused by nothing other than reckless expansion of credit. Some people even think it was deliberately planned so that gold could be stolen by the government in the aftermath. I'm not saying gold is perfect or fiat absolutely can't work, but gold is real and it is the one thing that has truly lasted. Fiat currencies go to zero. Gold has not and will never go to zero, unless a solid gold asteroid hits the planet and we end up with an explosion in supply.

[SideQuark]

> the same goods are manufactured for 1/10th the cost overseas and somehow cost way more anyway

> I didn't say they were getting great returns

Ah, the old voodoo defense of the missing money.

> You can keep denying the reality that gold has much value, but you're wrong

I never said it didn't have value. It's bad as a currency. It's volatile and it hamstrings economies. Please read what is actually written and don't argue with your own strawmen.

> Every country wants fiat because they can print it, plain and simple

Then you have very little understanding of modern economies. Explain carefully the difference between the Fed and Treasury and how new money actually enters the system. You seem to know nothing of this.

The actual reason countries switched is the evidence against gold is overwhelming. Simply google the papers with the empirical data across several hundred years and ~100 countries that make it clear.

You can continue to argue from ignorance, or you can simply educate yourself and read the literature and evidence.

> The supply of gold is steady, growing at perhaps 2% per year.

This too is simply untrue, e.g., https://en.m.wikipedia.org/wiki/File:World_Gold_Production_1....

The mismatch between gold discovery and production versus needs of an economy is simply bad for a currency, which should expand and contract as the needs of the economy demands, otherwise there is more inflation/deflation cycles.

For example. around Christmas, as people increase spending, there is a need for more actual money, otherwise prices will fluctuate as too little money chases more goods. Every January this spending decreases, so, if the money supply didn't contract, then again prices will fluctuate as too much monry chases less sales. As a result, the Fed every xmas releases more money as demand increases, and every Jan pulls money back to prevent these cycles. You cannot do that with gold, or BTC, or any of the "too ignorant to understand money" crowd that has claims of "better" solutions without first understanding the current solutions, and in particular why those solutions exist and what previous problems they solved.

I suspect you're completely unaware of these things, yet continue to argue from ignorance.

> The Great Depression was caused....

You might want to read some literature on the topic first https://scholar.google.com/scholar?hl=en&as_sdt=0%2C15&q=gol...

Question: how many courses on economics have you formally taken and what were they?

[csomar]

It's important for people to realize that the US dollars market are quite open that if the current actors thinks that the dollar is going down, it'll go down very fast. So if you are an average HNer (citizen) don't go freak out and put all of your money on gold or bitcoin. (This is not a long-term assessment though; that being impossible to predict the far future).

Nobody wants to see the US dollar collapse overnight. Neither the US nor China (which holds trillions of US bonds). But everyone wants to move from that standard including the US (which, being the reserve currency, has suffered a horrible NIIP since the end of the gold standard[1]).

1: https://en.wikipedia.org/wiki/Net_international_investment_p...