Currency backed by gold is an llusion

Having fiat currency backed by nothing is what allows banks to inflate the currency beyond reason, to expand the money supply beyond actual value production in the economy. Compare the value (relative spending power) of $1 today with its value 50 years ago.

Gold is inherently valuable, because people will always have use for it. Precious metals are like that. Gold is rare but not too rare, and incredibly useful. Also it’s pretty to look at. Therefore it serves a nice function for monetary backing.

Just because gold is backing currency doesn’t mean poor people who don’t own gold can’t have any currency.

I’m not really opposed to fiat currency without precious metals backing, philosophically speaking, but in a practical sense I am, because obviously this is a power too great for the idiots who happen to be in charge to handle. It’s like having your own credit card that has no spending limit and you can create money for it out of thin air and use that money to “pay it off”, quite absurd. People are too stupid to manage that sort of value-power intelligibly, it seems.

Money is nothing more than symbolic representation of real value created. If you start making more money than actual value being created then you reduce the relative value of your money, and misrepresent your economy to itself. That is stupid. But it’s what leftists do, they always want to follow this stupid Keynesian approach like some poor retard maxing out the credit card cause “like I’ll worry ‘bout it later yo! Duh”.

A gold backed currency could still inflate if banks are allowed to lend more of the currency than they hold, as is the case with fiat currency. If a bank only needs a 10% reserve, they can effectively increase the amount in circulation 10-fold, whether or not the currency is backed by a commodity.

None of these is tantamount to “inherent” value. If some alternative material is found to be better suited to the things we use gold for, if a large gold deposit is discovered, or if gold falls out of favor, the value of gold would be significantly impacted. At various times, silver and even aluminum were considered more valuable than gold. That changed when significant silver deposits were found in Argentina, and when new processes for purifying aluminum were created.

So the value is not inherent, it’s determined by the market. Different people value gold differently, and the market value fluctuates over time. Gold is just another commodity.

Creating new money is effectively a form of taxation. The total pool of value remains constant; in creating new money the existing money is devalued and the new money assumes that value but puts control in the hands of whoever is printing the money (the government for fiat, miners for cryptocurrencies, etc.). It’s certainly a misrepresentation to think that in printing money you are creating new value, but inflation is not inherently a misrepresentation.

Note that it was famed leftist Richard Nixon who took the US off the gold standard…

I never said they couldn’t do that. You want a small amount of inflation as a predictor/attractor point for present value being created in the economy but which is not quite measurable yet as GDP or whatever (you do not want the monetary supply to lag behind growth in real value creation). And beyond that you might even say that the monetary supply can still be increased a little bit for certain purposes, i.e. borrowing as debt from the future of the economy itself. But the sort of inflation we have had in the US since the gold standard was dropped is…literally insane. And not at all sustainable. Hence 21 trillion in debt, hence severely curtailed buying power of the consumer, hence the massive shrinking of the middle class.

Inherent value does not mean “always has a high value”. It means that it always has some value.

You are conflating two things here, the idea of inherency of value and the idea of fixed, absolute or absolutely ‘high’ value. I never said anything about gold not having relative market value. I said it is always inherently valuable, along with other precious metals. And that is true. Not sure why you are arguing the point, since based on your above statements you are not disagreeing with what I actually said.

Point taken. But massive inflation, which I am talking about, is indeed a misrepresentation. Just like if you were to take out five credit cards, now you can spend a lot more money than you actually have, that is a misrepresentation; similarly, when you give people a lot more money because you are flooding the economy with it (subprime loans, for example), this creates the illusion that there exists in the economy more value than there actually does exist. Just because inflation of the monetary supply readjusts the relative value of the individual currency notes in circulation does not belie this fact.

FDR did it first, 40 some years earlier.

I’m a little less sure about this, but I don’t think a gold standard would prevent this level of inflation. The government can still borrow money when there’s a gold standard, by e.g. selling treasury bonds.

I think you are right that the gold standard prevents runaway inflation, by eliminating the possibility that the government will just print money to cover its debts, though it would need to be both a fixed gold peg and a minimum reserve.

My mistake, I think I understand your claim now and agree that my points don’t contradict it.

In that case, I would say instead that gold isn’t special in having inherent value. Rice, lead, and sand have inherent value. Gold is just another commodity. It has properties that made it a useful store of value, but it isn’t inherently more stable than any other metal, or really any physically stable material. Why not back a currency with silicon?

This is an interesting example. If you take out five credit cards, in theory that fact is reported to the credit reporting agencies, and so each card will be issued with a credit limit proportional to your creditworthiness given that you already have four other credit cards. For the average consumer, I think it’s fair to call it a misrepresentation, but to a sophisticated market player, the local inflation of your spending power is understood to decrease your credit worthiness. I think this is also true of an economy printing too much money. Debtors would be miffed if the government printed money to pay off its debts, because that would mean paying a fixed sum with a currency of decreasing value, causing the value of government debt to decrease and making it harder for the government to borrow.

Guess it’s a leftist and a rightist thing then.

Technically all currency runs on the illusion of confidence through value. It’s all a con-fidence game.

What do you mean by the “illusion of confidence”? Confidence plays a role, in that people accept cash because they are confident that they will be able to find others who will accept it in the future. They invest because they are confident that they will see returns from their investment. Is that the confidence you’re referring to? What’s illusory about it?

He acts as if real value created in the real world is just an illusion, because we happen to enable its exchange via fiat money or any kind of currency. Such a claim is a non starter.

Your two options are barter or money. Money is obviously superior. And money is awesome, is a neutral tool like a gun: you can use it for good or ill. Thus it merely exemplifies one’s own values.

Which is exactly why these people oppose it. They don’t like having to face themselves, or take responsibility for their own lives and actions.

That’s all money is, and that’s all guns are too; taking responsibility, facing yourself.

I guess what I am trying to say is the value of currency is all illusory or artificially contrived in that by itself only it has no real intrinsic value where only confidence (faith) in currency creates its applied valuation in practice. This is why more than anything economics is a measure and metric of social confidence or discontent depending on what is more prevalent.

No, I’m just saying all value is artificially contrived. I’m not saying it is meaningless or worthless. I’m not saying is useless either.

Basically I’m saying a lot of what we value is a sort of self reflective and referential mirage that we surround ourselves with.

Actually if we study the sociological underpinnings of currency or money itself it is about social control.

You nailed it! =D>

The idea is to encourage folks to argue for a gold standard OR a central bank because either way those with the gold will be in charge. The last thing they want is for a country to issue its own money, interest free, like Lincoln’s Greenbacks or the Colonist’s Colonial Scrip because it removes control of the money supply from the banksters.

“One man’s trash is another man’s treasure.”

All value is subjective and therefore an illusion. Gold is not intrinsically valuable and is therefore just as fiat (“authoritative sanction,” from Latin fiat “let it be done”) as paper money or tally sticks. You cannot eat gold or use it as an energy source, so it’s just another medium of exchange that is worth only what someone will give you for it… and you need faith that someone will give you something for it in order for it to have any value whatsoever.

I think this sums up the disconnect. Value is intersubjective, it’s based on a widespread social agreement, and the intersubjective facts are empirically demonstrable. You demonstrate the objective value of money every time you exchange it for goods and services, or exchange your labor or its fruits for cash. As such, it’s value is an objective fact about the world.

The fact that its value may change over time, and may differ from place to place, doesn’t make it subjective. Even the fact that one individual may choose to reject all money or to value it differently does not make its value subjective, any more than one person refusing to use a specific word or using a word idiosyncratically deprives that word of its usual meaning.

If the orderbook for a stock has several bids to buy at a range of prices, then what is the value of the stock? One guy says he will buy 100 shares @ $10, but another guy says he will sell 100 shares at $11. What is the value? It isn’t the “last” price because that’s history and is nothing more than a coincidence of subjective valuing.

Value is determined and issued by individuals and not a collective agreement or consensus among them as if buyers and sellers got together to set the price.

That’s right, but the fact that value changes from person to person does.

Sure if a large group of people subjectively value something similarly, then you’ll have a large pool to trade with at a seeming objective value, but that value could suddenly change on the whim of some central banker who chooses the wrong language.

If I would call a person who is 6"2’, “tall”, but you think that someone isn’t “tall” until they are at least 6’3", is “tall” meaningless?

It is both. If I have access to a large number of buyers, then the consensus price of a stock matters greatly: it will affect both the price I can sell it for, and the price others are willing to buy it for. I can sell it to the person who is willing to pay me the most, and that person’s bid will be based in part on the information that others will pay a similar price.

It’s true that each transaction is between two individuals, but then we are just two individuals talking and using words that are defined by the consensus of a speaker population. The individuals in a market make their decisions in the context of consensus around a price, it’s incomplete to look at that transaction as just concerning the two individuals involved and their purely subjective preferences.

But this is true of everything, every concept is subject to sudden changes of meaning on the basis of new information. If we discovered that apples were poisonous, the concept of ‘apple’ would change immediately. When we found out that ‘jade’ was really two different materials, the concept changed immediately. A piece of clothing that was ugly can become attractive and hip if Kim Kardashian (or whoever, I’m not up on who’s hip) suggests it’s the next big thing. A white and gold dress can become blue and black by providing more information about the lighting at the time it was photographed.

Name me an attribute of anything, I’m reasonably confident I can come up with a plausible way in which that attribute could be changed in concept by the introduction of new information. And if that’s so, then this criticism doesn’t undermine the objective truth of the value of money unless it undermines all objective truth.

If you say someone is tall, I can never know what you mean, so it’s objectively meaningless.

There is no consensus price. If I want to sell stock, I don’t ask what everyone else thinks of the idea, but even if I did, that still would be my subjective view that popularity determines value since someone else may not value it with the same method. If many participants value it the same, then it is a co-incidence of subjective valuing. Objective valuing would be more like price dictation by the state so the value would not depend on subjective opinion. For instance when gold was set at $35 by law, then everyone valued gold at $35 and what the dollar was worth was subjective.

Even when buyers bid prices up in competition, they still have a maximum price they are willing to pay. If I value a house at $100k, I can’t pay over that amount. If I get excited by the bidding process and up my bid, then I’ve changed my subjective value of the house depending on what someone else is willing to pay based on his subjective valuing of what others are willing to pay, but it’s not a consensus since many are priced out of the market and their valuing is now inconsequential. If I buy the house, I am the one who solely determined its value with my subjective assessment of things, which may have been misplaced by the excitement of the bidding process itself.

Notice how you said “consensus around a price” and not “of a price”. So the consensus price is fuzzy and not so certain because it’s a pool of subjective opinions.

No, of course, suddenness doesn’t mean anything. I was just describing how fragile subjective valuing is. When the gold price was $35, anybody could say just about anything and it wouldn’t change the price (except announcing the repeal of the law).

Maybe another example is the objective valuing of BMI for what determines “obese”. Or perhaps what BP determines “high blood pressure”, which is somewhat subjective depending which country you ask, but objective concerning all doctors in the country since their opinions don’t matter.

I think our disagreement here is largely semantic. I would say the word “tall” has an objective meaning, even if it isn’t specific or uniform. If I point to two people standing side by side, and one is 5’8" and the other is 6’3", and I tell you that “the tall one is my brother”, you know which one is my brother, there is no ambiguity. In the sense I am using the term “objective”, that is evidence that the word “tall” has an objective meaning.

One revealing difference is in what conclusions we draw from the fact that price is based on “a pool of subjective opinions”. Compare how you are describing price to how we might describe the rate of flow of a river, or the wind speed of a hurricane, or the rainfall during a storm. There are lots of difficulties in measuring these quantities, but it doesn’t make them meaningless or illusory or subjective.

But note also that price isn’t just a pool of subjective opinions, but a network of subjective opinions. The price that an individual is willing to pay for something is influenced by the price that others are willing to pay for it, because what others are willing to pay changes the expected return. I might value gold jewelry at zero in terms of using it for myself (and I do), but because other people value gold jewelry, I would be willing to pay hundreds a piece of gold jewelry that I intend to turn around and sell for thousands.

I don’t disagree that a gold value peg is objective, or even that it’s objective in a different way from a floating valuation, but I don’t think that means that the floating valuation isn’t “objective”. Maybe I’m being sloppy here, and it’s better to treat intersubjective facts as neither subjective nor objective, but I do think they act more like objective facts that subjective facts.

While a gold peg currency is still obviously more valuable than one without it there is the acknowledgement that the world’s global gold supply in terms of numbers is actually quite small where it will never be a viable currency for seven plus billion people worldwide in usage.

Yes, “tall” used in relativity is meaningful, but abstractly it doesn’t carry much meaning. If there were only one object in the universe, could you say it is tall?

Well, just like each person values differently, each particle in a river or hurricane travels at different speeds. We could say the average speed is the speed of the wind or water, but it seems a misappropriation to describe it as objective since “average” is more unambiguous and “objective” can be reserved to describe other phenomenon.

I think, in the truest sense, or in essence, an objective situation has no observer because any observer will only be able to observe subjectively. Therefore it seems these words are interchangeable with “relative” and “abstract”. So subjective value would be value assigned to the object relative to the subject whereas objective value would assign value abstractly regardless if subjects exist (no observer). Of course, that doesn’t make much sense, but objectivity rarely does. When asked to take an objective view, we must use a lens of subjective rules for what objectivity means, which most often means “logical” without emotion, so “objective view” = logical view", but it isn’t really objective. Or perhaps I may want someone to take an objective view of my life and even though all I can get is a subjective opinion, it’s more objective than my own introspection. I think it’s easy to conflate several different meanings and perhaps there could be degrees of objectivity in light of that.

Even if a subject consults the network for influence, it’s still a subjective interpretation on whether or how to interpret what the network values. I can see your point though and it does seem like value is dictated without us having much say in it.

You could be right and it may boil down to how we define the words.