Money as Debt Society vs Money as Value Society

[Inedible]

On these forums, there's much debate about gold backed currencies vs fiat backed currencies.

I'm a believer that you should only spend what you have so instinctively, I'm in the gold backed currency camp, however, I'm as yet unsure what is better for society.

Sure, gold backed currencies might be more fiscally responsible but would we have a society much less developed/advanced as we have today were we still stuck on the gold standard?

Which is better, to have a solvent world with half the population and technology of the 70s or today's world with defaults happening left and right?*

If we were each in charge of a world, which world would you prefer?





*Figures plucked from my proverbial and are used as an illustration only. Please do not base your world economy on them as I take no responsibility for the final outcome. Past performance is not an indicator of future performance. Your house is at risk if you do not maintain payments. Terms and conditions apply. See reverse for details.

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[LightRider]

I would encourage the implementation of a resource based economy, in which we no longer subscribe to the notion of monetary value, but instead recognize that we can only utilize the resources, knowledge, skill and technology we have available to us. The distorted values that arise from the ultimately rigged monetary game, and the institutions that arise from it, are a detriment to all human life, and the entire biosphere of this planet. If we held values and beliefs consistent with the ordered and coherent physical laws of the universe, we would be much better off as a species.

[SeanArce]

Be careful not to dismiss the reality of the digital age. Gold is obsolete IMO. Crypto is in for the fact that competing currencies can instantaneously override the currency monopoly. Gold is heavy, doesn't communicate well, requires constant guard. It just looks aesthetics. I'm not dismissing golds value as its scarcity is what make people want it, it's just that technology has taken over all aspects of our lives, and that includes currency

[PerfectAgent]

Be careful not to dismiss the reality of the digital age. Gold is obsolete IMO. Crypto is in for the fact that competing currencies can instantaneously override the currency monopoly. Gold is heavy, doesn't communicate well, requires constant guard. It just looks aesthetics. I'm not dismissing golds value as its scarcity is what make people want it, it's just that technology has taken over all aspects of our lives, and that includes currency

So gold 2.0!

[SeanArce]

Be careful not to dismiss the reality of the digital age. Gold is obsolete IMO. Crypto is in for the fact that competing currencies can instantaneously override the currency monopoly. Gold is heavy, doesn't communicate well, requires constant guard. It just looks aesthetics. I'm not dismissing golds value as its scarcity is what make people want it, it's just that technology has taken over all aspects of our lives, and that includes currency

So gold 2.0!

And crypto was born

[acoindr]

... were we still stuck on the gold standard?

I cringed reading that. You say "stuck" like it's a bad thing when in fact it's exactly what we want.

The Founding Fathers of America were surprisingly knowledgeable about money. They understood a gold standard was what was best for the people which is why they enshrined it in the U.S. Constitution.

Let me explain it this way. Imagine two separate games of Monopoly. In one the participants are all equal. The "Bank" of money is at the side where everyone can see it and be sure nobody playing has unfair access to it. This game should be most competitive and fun as all participants are on equal footing. In the other game one player convinces the others he will administer the game so everything goes smoothly, but while also playing himself. He places the Bank behind him where he alone has access to it. With this setup over time what do you think would happen?

It should be obvious the player in the second version is a super player with unfair advantage for controlling game outcome. Yet the second version is exactly the setup we have where the government (in partnership with the Fed) has a monopoly on money. The setup is great for government and banks but ordinary people are not so empowered.

This actually means less innovation not more. Innovation comes from the private sector not government, but our setup has placed more resources with government than the private sector. The people have been robbed, actually, for years now.

Which is better, to have a solvent world with half the population and technology of the 70s or today's world with defaults happening left and right?*

As I said, the people have been robbed. We would be far better off today (with solvency/innovation etc.) having had a true gold standard than we are now.

[johnyj]

If we were each in charge of a world, which world would you prefer?

It's not about now, it is about a long term perspective. The debt based money creation might excel in 50 years, but in the long run it is destined to collapse by the weight of itself

[Bitweasil]

If we were each in charge of a world, which world would you prefer?

I would strongly prefer a gold or other commodity backed currency system with full transparency.  Money systems should not be managed by the men behind the curtain.  I don't trust the government to pull the levers of the money supply, because they have repeatedly demonstrated they are not trustworthy to do so.

The "Guilded Age" was on the gold standard, and was one of the most successful periods of time in terms of generation of actual wealth.  Many other quite successful times have involved the gold standard or similar hard currency standards.  Some have even involved multiple banks with differing currencies - which works just fine, as the banks "keep each other honest" with regards to reserves/etc.

The end of debt backed currencies is collapse, not sustained growth in the real wealth/value of a society.

Money is not value or wealth (it is only a useful representation of such), and anyone who confuses the two and is in power tends to screw things up badly.

[xxjs]

"Money as debt" is a confused concept.

Money is base money plus debt.

Base money is bitcoins, gold, dollar bills and token coins, euro bills and other base fiat.

Base money is not debt.

Debt includes bank accounts.

The difference between debt money and base money is that there is a link of trust between the debtor and the debt holder. The trust can evaporate, and the debt money disappears.

The value of money is the inverse of all prices of goods. It can not be stable. There is no fixed reference.

[Wekkel]

The value of money is the inverse of all prices of goods. It can not be stable.

That's why a policy of aiming at a 'stable price level' is wrong in itself.

[xxjs]

The value of money is the inverse of all prices of goods. It can not be stable.

That's why a policy of aiming at a 'stable price level' is wrong in itself.

Exactly. The most stable situation requires sound money where central banks can not regulate, and a free and unregulated interest market.

[johnyj]

"Money as debt" is a confused concept.

Money is base money plus debt.

Base money is bitcoins, gold, dollar bills and token coins, euro bills and other base fiat.

Base money is not debt.

Base fiat money is debt in today's system, before 1971 it is backed by gold, now it is only backed by debt

When central bank create base money, they buy government bonds, so that government get money to spend. Government must payback the interest and principal of those bonds, so government is debt laiden when they get the money

Since all the newly created money is entering the society through this way, every dollar is backed by corresponding amount of national debt

[xxjs]

"Money as debt" is a confused concept.

Money is base money plus debt.

Base money is bitcoins, gold, dollar bills and token coins, euro bills and other base fiat.

Base money is not debt.

Base fiat money is debt in today's system, before 1971 it is backed by gold, now it is only backed by debt

No. Who is the debtor, who is the creditor? What is the interest rate, and what is the termination date?

When central bank create base money, they buy government bonds, so that government get money to spend. Government must payback the interest and principal of those bonds, so government is debt laiden when they get the money

The Fed does not buy government bonds with base money.

Since all the newly created money is entering the society through this way, every dollar is backed by corresponding amount of national debt

The dollar is unbacked.

[Inedible]

The dollar is unbacked.

It's backed by the American government and population.

[Inedible]

I cringed reading that. You say "stuck" like it's a bad thing when in fact it's exactly what we want.

The Founding Fathers of America were surprisingly knowledgeable about money. They understood a gold standard was what was best for the people which is why they enshrined it in the U.S. Constitution.

Let me explain it this way. Imagine two separate games of Monopoly. In one the participants are all equal. The "Bank" of money is at the side where everyone can see it and be sure nobody playing has unfair access to it. This game should be most competitive and fun as all participants are on equal footing. In the other game one player convinces the others he will administer the game so everything goes smoothly, but while also playing himself. He places the Bank behind him where he alone has access to it. With this setup over time what do you think would happen?

It should be obvious the player in the second version is a super player with unfair advantage for controlling game outcome. Yet the second version is exactly the setup we have where the government (in partnership with the Fed) has a monopoly on money. The setup is great for government and banks but ordinary people are not so empowered.

This actually means less innovation not more. Innovation comes from the private sector not government, but our setup has placed more resources with government than the private sector. The people have been robbed, actually, for years now.

Which is better, to have a solvent world with half the population and technology of the 70s or today's world with defaults happening left and right?*

As I said, the people have been robbed. We would be far better off today (with solvency/innovation etc.) having had a true gold standard than we are now.

Perhaps I was unfairly being negative to the gold standard (completely unintentionally). I didn't mean for it to sound so negative.

I've just been wondering recently if having a larger (and thus more productive) society is a fair cost to having fiat. Sure, better controls to prevent massive fraud and theft would be good.

Wouldn't a society that can expand faster and grow faster be a better one than a smaller although significantly more economically stable society be better?

[semaforo]

If the dollar was backed by gold there wouldve alrwady been a run on it.

[johnyj]

Which is better, to have a solvent world with half the population and technology of the 70s or today's world with defaults happening left and right?*

The point is, gold has value, in a gold standard, in order to expand the money supply, banks must first get gold by providing valuable asset/service in exchange, so it is fair trading

But without the back of gold, banks create money out of nothing, so in principle the new money worth nothing. But in reality they still use these worthless paper to buy valuable things, it means banks unfairly benefited from the people's consensus of money's old value

A common argument is that the resources are wasted in producing gold, but that's exactly why gold has value. If something you can create as much as you want without any effort, then it should have no value

Fiat money still hold their value because people have no other choice, if they have alternative payment medium, then the fiat value will drop quickly because in principle they worth nothing

[Inedible]

The point is, gold has value, in a gold standard, in order to expand the money supply, banks must first get gold by providing valuable asset/service in exchange, so it is fair trading

It's this artificial ability to expand the money supply that allows the fiat economy to grow quicker. Properly managed, could this be beneficial to society?

[xxjs]

The point is, gold has value, in a gold standard, in order to expand the money supply, banks must first get gold by providing valuable asset/service in exchange, so it is fair trading

It's this artificial ability to expand the money supply that allows the fiat economy to grow quicker. Properly managed, could this be beneficial to society?

Thats what the keynesians says.

[Wekkel]

If printing money would bring prosperity, we would not be in a crisis right now.