Now, I may have a mere "man in the [relatively well educated] street" knowledge of economics, but I thought one of the things that modern economists were virtually all certain about is that returning to a gold standard would be a foolish idea. (I mean, I don't think even Steve Kates - the most highly self- regarding Trump cultist economist on the planet - even advocates for it?)
Yet the WSJ has a London editor who argues that economists are fearful that this Judy Shelton is right on this?
OK, I see from a Marketwatch article that her ideas about gold and money are more complicated - and actually (if I understand it correctly) kind of globalist-friendly. Which means Trump probably doesn't understand her ideas at all. And no one seems to think her ideas are at all practical. She has also done a huge flip flop on low interest rates.
I always feel I should understand economics more on a theoretical level: but when you see a field with the supposed life long experts on the subject holding such divergent views, it more-or-less dis-incentivises me from spending too much time on the subject.
David Glasner of Uneasy money fame has highly discredited her in that she does not even understand what a gold standard is.
ReplyDeleteOnly Trump could nominate such a person
a gold standard would be way better than the way the central bankers have degraded our money with QE and low interest rates while stoking housing bubbles
ReplyDeleteAlan Greenspan used to believe in a gold standard too
ReplyDeleteJason, your recent endorsements of Birdecomics gives me hesitation as to how much to trust your judgement on this.
ReplyDeleteBut if you have any links to articles by non-ratbags along the lines of "why a return to a gold standard is a good economics idea and how it could be done" I will consider them.
Jason is absolutely correct. The Gold standard is really really rotten. But the only time the fiat standard has been superior is in the first half of Greenspans reign. The rest of the time the fiat standard has seen almost all loanable funds going to wealth destruction.
ReplyDeleteThis is a great provocation and Steve has done a good thing to not ignore it. There are many wrinkles to this story. A silver standard would be far better. And bringing the fiat standard up to 100% backing would be far better still.
But the fiat standard, unless its at 100% backing, will be the death of civilisation. Its already put most of the wealth into a few peoples hands.
The Gold standard itself was always second or third best. The Venetian bankers, back in the day, and the Rothschilds later on, always tried to demonetize silver.
ReplyDeleteBut Jason didn't claim that the gold standard was the best thing ever. He merely said it was better than the system we have now. That ought not be a big claim. Plus we have the welfare now to cope with the deep gold standard depressions.
The Gold standard is a really bad system. But Jason is right to point out that its so much better than what we have now. What we have now is an absolute disgrace.
This comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteSoony is beyond belief. Shelton has been outed as a person who do does not understand the gold standard. I have to admit to having problems and even Kruggers gets it wrong sometimes.
ReplyDeleteThe problem is now lack of fiscal policy and too much emphasis on monetary policy
She may not fully understand the gold standard. But what she understands is that the current standard is dishonest and dysfunctional. Thats a start. If we had of had 100% backed silver these last 50 years we would be far richer, far more egalitarian. We would have less centi-millionaires but virtually all our rich people would be acknowledged as productive and job creators.
ReplyDeleteThese days who do we think has been awesomely productive? Andrew Forest perhaps? And he's only a billionaire because of inadequate royalties and too much funny money? Who else in history? Steve Jobs maybe. Henry Ford. But these billionaires in the US now are all bums. Deleterious to the open society.
I'm listening now to the new interest in the gold standard. And we should oppose it for now. Bringing gold into the monetary system ought to be the last part of the process and not the first. But I've noticed the line that is being taken right now. And these guys are going to make a pigs breakfast out of it. Its that bad.
ReplyDeleteThe first thing to get right is to note that any form of fractional reserve is a system of thieving. The first step in monetary reform is to stop the direct theft. But there is also secondary value capture thats inherent in fast monetary growth. So you want to get rid of that too, but only ahead of a program of debt reduction.
But while you were dealing with the above problems you could start a humble silver monetization program. The dead-weight loss to doing this would be zero to the nearest integer since silver is currently undervalued. As it gained value it would still be in a pocket where it was amortising the cost of other metal extracts. Not so with gold. Gold is so expensive that people go looking for it on its own. So any extra resources spent on Gold are likely to be unnecessary cost to inflation.
We can also start monetizing other metals purely digitally. We need stockpiles of titanium, tungsten and nickel for energy and defence projects of the future. To fail to stockpile these elements now is to face unnecessary cost over-runs in the future. We Australians are not Americans or Israelis. We must not commit the repeated war crimes of putting depleted uranium about the place. We could let the Americans off the hook one time only. But they went and did it again, thats a war crime.
The substitute for armour piercing for weaponry is Tungsten. Tungsten ought to be much more expensive than it is. Its ideal for digital monetization. Titanium is super hard and super light. Obviously its a key element for all manner of military vehicles.
Another problem with Gold. We can now counterfeit gold with Tungsten. Thats a big problem. Its only time to monetize gold when its already undervalued with regards to a lot of these other metals. Or otherwise when we have ironed out the other problems to do with getting rid of fractional reserve, and introducing both coin and digital money.
In the past we have had a lot of different metals used as coins. But we could do so much better today. We used to have nickels. Actually made of nickel at one stage. We had copper coins. So nickel, copper and silver are good for coinage. Their face value ought to be a little bit higher than their pure metal value. But not too much more. Probably about ten per cent would do it.
We have to be in favour of monetary reform but against these current ideas about taking a currently pure fiat currency and making it convertible to gold. These are bad schemes. These are schemes to lock in fractional reserve .
If we cannot get this right these bankers are going to continue to steal off us and take us to the cleaners.
"So any extra resources spent on Gold are likely to be unnecessary cost to inflation." No sorry thats a mistake. Its meant to read:
ReplyDeleteSo any extra resources spent on Gold are likely to be PURE DEADWEIGHT LOSS.
Consider the situation now where Graebar has estimated that 37% of jobs are bullshit jobs. But its much worse than that since you have bullshit industries that are really big when they ought to be quite small like finance and insurance. Government itself should ultimately be quite small, but admittedly for the forseeable future, it would need to be reasonably large in order to take remedial action for the catastrophe of past policy.
ReplyDeleteAnd then there is the consideration that every bullshit job will likely be supported in part by non-bullshit jobs. When you add it all up the wastage will surely be North of 60%. Nearly everyone at Catallaxy will be involved in high paid bullshit jobs just for example.
Well consider the Gold standard? What is the major complaint with Gold backed fractional reserve? Its the absolutely brutal monetary crunches that are in the genes of gold-with-fractional-reserve. These seemingly unnecessary and heart-breaking crunches.
So vicious were they, that they got rid of every bullshit job around. The monetary crunches sought out, like Sherlock Holmes, every example of waste and redundancy far beyond the powers of the auditors to detect. We can do so much better than fractional reserve gold, but at the same time it beats seven shades of shit out of what we have now.
This is a catastrophe that you have so many high-paid bludgers around. Some of these bludgers working really hard at doing nothing useful. It affects peoples world-view. As you see when you go to Catallaxy. But not just Catallaxy. Almost anywhere.