What if a Country go back to Gold (bitcoin) standard?

[camponez]

Does anyone have an idea on what happen if a country decide to go back to a Gold standard?

Imagine that there is no threat to this country come from the others. It's a middle sized economy.

Its economy would become strong. It would not be able to inflate there currency for obvious reason.

What are the pros and cons? A fly solo like this is even possible/imaginable?

I'm just curious to know what you guys think it might happens.

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[spazzdla]

America would instantly refuse to trade with them and force everyone they could to do the same utterly destroying the country.

[camponez]

America would instantly refuse to trade with them and force everyone they could to do the same utterly destroying the country.

What if it does not happen?

I'd like the views from a economic point of view.

[painlord2k]

Depend on the size of the country.
If it is a medium sized country, like Switzerland, with a 534,500,000,000.00 M1 (in USD). Currently they have around 10% of that value in gold (53 billions over 530 billions). This is 1430 metric tons of gold.
They should buy 12.9 K tons of gold to back their currency in full at current prices of $37.5/gram.
Current global production is around 1000-1200 ton/year.

The referendum of November 30th, 2014, if passed, will force them to back the currency moving from the current 9% to 20% in five years. 1.3 KTon in 5 years or 260 tons per year.

But I digress. What would happen if they had a fully backed currency.
What did happen to Germany when they had the Deutsche Mark?
Their import/export balance would immediately go to zero. They would be forced to export as much as they import.
If imports would exceed exports gold would be exported and people would have less gold to pay for imports. Given people WANT and NEED savings at certain levels before increasing consumption/investments, as the saving go down consumptions go down. Credit inside the country (in gold) would reduce to exactly the quantity of savings in existence or less. So bubbles would be impossible to form and grow and after a few years unheard. Banks lending would reduce drastically 5 to 10 times the current levels and bank reserves would go up from 5% to 20-50% or more (because there would not be a central bank able to print gold for them). Interest rates would grow in the 5 to 10, event 20% per year (depending of conditions)

On the other side, prices of goods would collapse with the collapse of credit, so people would be able to pay cash for a house and save in a few year to buy a house with minimum need of credit. Instead of 30 year mortgage loans, people would save for three years and buy a house with a loan they would repay in other three years. Or they would save for five year and pay the house in full.

They would be forced to back up every government expense with taxes and with minimal credit. Because, if the loaners must give them gold and the government must give them back more gold, people must take in account how much gold exist to do the repayment and where they would take it, if they are able to take it.
People would be force (it is a good thing) to take care of their own saving account. With gold it is easy. Just put some coins away consistently.
The falling prices would allow people to leave cheaper and debt free. But they would NEED to work. No make-believe jobs from the government or mandated by the government or subsides for fake jobs and a lot of government employees pushing paper and fining people.

[camponez]

Depend on the size of the country.
......

Thank you for this. Very helpfull.

[twiifm]

Does anyone have an idea on what happen if a country decide to go back to a Gold standard?

Imagine that there is no threat to this country come from the others. It's a middle sized economy.

Its economy would become strong. It would not be able to inflate there currency for obvious reason.

What are the pros and cons? A fly solo like this is even possible/imaginable?

I'm just curious to know what you guys think it might happens.

Read what happened when England went back to Gold Standard in 1925.  Results werent good and they went off it in 1931

[misterpressman]

Bitcoin gambling sites will close for sure. Maybe that will happen if internet suffers a big crash and it will not be used ever again.

[camponez]

Does anyone have an idea on what happen if a country decide to go back to a Gold standard?

Imagine that there is no threat to this country come from the others. It's a middle sized economy.

Its economy would become strong. It would not be able to inflate there currency for obvious reason.

What are the pros and cons? A fly solo like this is even possible/imaginable?

I'm just curious to know what you guys think it might happens.

Read what happened when England went back to Gold Standard in 1925.  Results werent good and they went off it in 1931

I don't think the same apply. We are much more global now. The effects could be better or worse.

[ClownHunter]

America would instantly refuse to trade with them and force everyone they could to do the same utterly destroying the country.

Gaddafi, and Saddam Hussein both wanted to introduce currencies backed by gold. This whole oil for gold movement, is why both of these guys were murdered by the US state, why their countries were invaded and looted for their entire Gold reserves.

In short the powers that be don't want this to happen and will go to the furthest extent to prevent it

[arbitrage001]

Does anyone have an idea on what happen if a country decide to go back to a Gold standard?

Imagine that there is no threat to this country come from the others. It's a middle sized economy.

Its economy would become strong. It would not be able to inflate there currency for obvious reason.

What are the pros and cons? A fly solo like this is even possible/imaginable?

I'm just curious to know what you guys think it might happens.

Russia and China already accumulated a lot of gold. Any deal between these two countries will probably be backed by gold.

[camponez]

Does anyone have an idea on what happen if a country decide to go back to a Gold standard?

Imagine that there is no threat to this country come from the others. It's a middle sized economy.

Its economy would become strong. It would not be able to inflate there currency for obvious reason.

What are the pros and cons? A fly solo like this is even possible/imaginable?

I'm just curious to know what you guys think it might happens.

Russia and China already accumulated a lot of gold. Any deal between these two countries will probably be backed by gold.

I'd like to see that happen...

[twiifm]

Does anyone have an idea on what happen if a country decide to go back to a Gold standard?

Imagine that there is no threat to this country come from the others. It's a middle sized economy.

Its economy would become strong. It would not be able to inflate there currency for obvious reason.

What are the pros and cons? A fly solo like this is even possible/imaginable?

I'm just curious to know what you guys think it might happens.

Read what happened when England went back to Gold Standard in 1925.  Results werent good and they went off it in 1931

I don't think the same apply. We are much more global now. The effects could be better or worse.

What's the reason to use gold standard?  Historically, countries went off gold standard because there wasn't enough gold to back the monetary demand.

What would probably happen is that boom & bust cycles would be extreme and you get things like Great Depression

[painlord2k]

Read what happened when England went back to Gold Standard in 1925.  Results werent good and they went off it in 1931

I don't think the same apply. We are much more global now. The effects could be better or worse.

What's the reason to use gold standard?  Historically, countries went off gold standard because there wasn't enough gold to back the monetary demand.

What would probably happen is that boom & bust cycles would be extreme and you get things like Great Depression

England returned to the gold standard with the same exchange rate the pound had BEFORE the war. Unfortunately, to pay the costs of the war, England printed four times that quantity of notes.
This caused inflation and, obviously, who understand the situation converted as many notes as he could in gold and waited the endgame.

Countries went off the Gold Standard because there was not enough Gold to back the government expenditures and promises.
So, instead of cutting expenses, they printed fiat money. Easier, someone else would pay the costs of their decision a few years or decades down the road. Who care?

Had they allowed the Great Depression to go unchecked, it would have ended by 1931. They had just to compensate for the easy money and inflation of credit of the Roaring '20s (thank you Federal Reserve).
Instead the socialist government of FDR (he told his secretary they were doing the same thing they were doing in Italy, Russia and Germany, but without bloodshed and chaos) decided to manage the economy and fix it. And instead of being a Depression it become the Great Depression. And today we have the Greater Depression because the US government (and all government of the world) think they can fix the economy (and have it doing their bidding).

[erre]

Does anyone have an idea on what happen if a country decide to go back to a Gold standard?

Imagine that there is no threat to this country come from the others. It's a middle sized economy.

Its economy would become strong. It would not be able to inflate there currency for obvious reason.

What are the pros and cons? A fly solo like this is even possible/imaginable?

I'm just curious to know what you guys think it might happens.

Read what happened when England went back to Gold Standard in 1925.  Results werent good and they went off it in 1931

I don't think the same apply. We are much more global now. The effects could be better or worse.

What's the reason to use gold standard?  Historically, countries went off gold standard because there wasn't enough gold to back the monetary demand.

What would probably happen is that boom & bust cycles would be extreme and you get things like Great Depression

Why you say so? You can divide 1g.of gold indefinitely, just as btc!

[camponez]

Does anyone have an idea on what happen if a country decide to go back to a Gold standard?

Imagine that there is no threat to this country come from the others. It's a middle sized economy.

Its economy would become strong. It would not be able to inflate there currency for obvious reason.

What are the pros and cons? A fly solo like this is even possible/imaginable?

I'm just curious to know what you guys think it might happens.

Read what happened when England went back to Gold Standard in 1925.  Results werent good and they went off it in 1931

I don't think the same apply. We are much more global now. The effects could be better or worse.

What's the reason to use gold standard?  Historically, countries went off gold standard because there wasn't enough gold to back the monetary demand.

What would probably happen is that boom & bust cycles would be extreme and you get things like Great Depression

Why you say so? You can divide 1g.of gold indefinitely, just as btc!

In theory yes. Nobody would use gold, but gold certificate instead. However, it would be difficult to get your gold back for very little amounts

[countryfree]

Just look at the size of the market that deals with commodities trading. Every single investor in the world would want a piece of the pie, and he will buy currency from that country. After only a few weeks, value of the currency would have tripled, or more, causing every company which was successfully exporting goods to go bankrupt, causing mass unemployment. The good part being that the people who had money in the bank would enjoy unprecedented purchasing power of cheap imported goods.

Still, in a very small country which would ban currency convertibility, I guess it could work.

[Nicolas Dorier]

Just look at the size of the market that deals with commodities trading. Every single investor in the world would want a piece of the pie, and he will buy currency from that country. After only a few weeks, value of the currency would have tripled, or more, causing every company which was successfully exporting goods to go bankrupt, causing mass unemployment. The good part being that the people who had money in the bank would enjoy unprecedented purchasing power of cheap imported goods.

Still, in a very small country which would ban currency convertibility, I guess it could work.

Having more import than export is the path to wealth.

If you replace "the country" by "a familly", and "the resources of the country" by "house's furnitures".
Then, as a family, you would prefer a well furnished house (in other words goods imported in it), than an empty house.
Why is it not the same for a country ?

The goal is to have more import than export, without indebt ourselves.

Putting that aside.
The domestic industries also profit of strong currency, since they can buy more productive capacity cheaper.
If they can't sell it, the price of their good will drop until it does (that and the fact that supply goes up). Then buyer aboard will buy the goods, which will lower the value of the currency until equilibrium.

[doge94]

This idea is moot. There is not enough gold to sustain a gold standard at current economic output.

[Nicolas Dorier]

This idea is moot. There is not enough gold to sustain a gold standard at current economic output.

What does it mean "not enough gold" ?
Does it mean that the smallest gold coin price is too high to buy a cup of coffee ?

If that's your point, the problem is with divisibility.
So the question is : if that's the true problem, then does BTC is protected about that ?

I think yes, a Satoshi will never cost more than the price of a cup of coffee.
And if it was not the case, a protocol change with "MilliSatoshi" (or through a side chain), would permit unlimited divisibility.

[painlord2k]

Just look at the size of the market that deals with commodities trading. Every single investor in the world would want a piece of the pie, and he will buy currency from that country. After only a few weeks, value of the currency would have tripled, or more, causing every company which was successfully exporting goods to go bankrupt, causing mass unemployment. The good part being that the people who had money in the bank would enjoy unprecedented purchasing power of cheap imported goods.

Still, in a very small country which would ban currency convertibility, I guess it could work.

Having more import than export is the path to wealth.

If you replace "the country" by "a familly", and "the resources of the country" by "house's furnitures".
Then, as a family, you would prefer a well furnished house (in other words goods imported in it), than an empty house.
Why is it not the same for a country ?

The goal is to have more import than export, without indebt ourselves.

Putting that aside.
The domestic industries also profit of strong currency, since they can buy more productive capacity cheaper.
If they can't sell it, the price of their good will drop until it does (that and the fact that supply goes up). Then buyer aboard will buy the goods, which will lower the value of the currency until equilibrium.

You got nearly all right.
A country and a family want to import exactly as much as it export.
If you export more than you import, you depend on the solvability of the debtors.
If you import more than you export, you depend on your creditors not needing their money back all together earlier than you foresight.

When West Germany had his currency (hardest fiat around for a long time), all other countries needed to buy Marks to buy stuff from West German industries and West Germans found incredibly cheap to go and spend their Marks in countries with weaker currencies like Italy or Greece. In the end, the Import/Export balance of West Germany was always balanced. Do not appear they had any economic problem from having the strongest currency around. A lot of people went to work in Germany from other countries, because they had full employment and needed workers.

The interest rate would raise (a lot higher than the zero or 2% of today) and only very profitable enterprises would be able to get financed. Work intensive sectors (usually in cheap productions) usually have lower margins, so they would receive less investments or none at all where capital intensive sectors would receive more investments. People would save a lot and savers would receive very interesting returns if the lend part of their savings. So you would have people working in highly productive jobs, making more money, saving a lot more and being paid back for their saving loaned.

Bubbles would not form or would be one or two orders of magnitude smaller and rarer. Even better, with more savings, when these bubble would burst, people would not be so severely affected as today (because they would have a lot larger cushion). The economy would grow at a faster rate than today and would have no long recessions.

The only "problem" would be debtors and carefree lenders. The government would not be able to spend so much as it would like (as the politicians and bureaucrats would like). Higher rates of interest would force them to not be indebted and would turn the market against them when the indebtment would go over 20-30% and not 80-100% of the GDP. There would not be enough gold to lend the government so much money at all, in fact. The government would need to revert to taxation, but taxation make people angry and restive. Government would be forced to balance the budget, like it or not. Because it would be forced to pay people in gold coins and it would need to raise them first.

[Nicolas Dorier]

A country and a family want to import exactly as much as it export.
If you export more than you import, you depend on the solvability of the debtors.
If you import more than you export, you depend on your creditors not needing their money back all together earlier than you foresight.

This is true if you speak of import and export of money. (the so called, trade balance)
But for goods, this is false. You want import, not export. You want more goods coming into the house not less, and not equivalent.

Having a balanced trade balance while importing more good than exporting is what should be aimed for.
The only possible way of doing that is to add value to imported product before exporting less of them for the same amount of money.

The trap is we should not measure export and import in money terms to deduce if the country is wealthy.
A variable is missing, a variable that should not be measured in money. Goods. Accumulation of good, not accumulation of money.

[DhaniBoy]

between bitcoin and gold have similarities and differences, similarities among other
1. To get it together through the mining process, albeit in a manner different mining
2. The value of investment is quite capable to benefit more
3. have a tendency to rise in the exchange rate against the US dollar

whereas the difference among others:
1. The different physical form, gold has a physical form, and bitcoin is cryptocurrency
2. The gold can be directly used for trading, bitcoin can be used when there is an internet connection
3. The release of funds to the higher gold compared to bitcoin

so I think if a country back to the gold, it is a very good for the economy of a country, because gold is very unaffected against currencies of other countries, and according to the experience of countries which use gold as a currency, the country's economy is relatively more stable ... 

[painlord2k]

A country and a family want to import exactly as much as it export.
If you export more than you import, you depend on the solvability of the debtors.
If you import more than you export, you depend on your creditors not needing their money back all together earlier than you foresight.

This is true if you speak of import and export of money. (the so called, trade balance)
But for goods, this is false. You want import, not export. You want more goods coming into the house not less, and not equivalent.

Having a balanced trade balance while importing more good than exporting is what should be aimed for.
The only possible way of doing that is to add value to imported product before exporting less of them for the same amount of money.

The trap is we should not measure export and import in money terms to deduce if the country is wealthy.
A variable is missing, a variable that should not be measured in money. Goods. Accumulation of good, not accumulation of money.

We must define what is a "balanced trade balance".
I define it as exporting as much goods and service measured in money/gold as we import goods and services measured in money/gold.
If you do not use a common denominator you can not have a total balance, just individual balances you can not compare with each other.
If you export peas and  apples and import cars how do you balance them? You can not. But if you price them in gold or fiat you can.

Agree the balance of imports and exports and the quantity of imports and exports are not solid measures of wealth for a country.

But you miss the point, I think, because the act of importing and exporting happen not in a vacuum.
We import what we want more and export what we want less.
What we export is always less valuable to ourselves than what we import, because the exchange happen only when what we give is worth less for us than what we receive.
If the balance is always zero, but the input and output are not zero, both are increasing their subjective wealth because both are giving out what they value less in exchange of what they value more.

A dynamic equilibrium in the trade balance is beneficial for both parties, so both should prefer a hard currency.
In fact, really hard currencies will force all parties to have a balanced trade balance, like it or not

[countryfree]

Just look at the size of the market that deals with commodities trading. Every single investor in the world would want a piece of the pie, and he will buy currency from that country. After only a few weeks, value of the currency would have tripled, or more, causing every company which was successfully exporting goods to go bankrupt, causing mass unemployment. The good part being that the people who had money in the bank would enjoy unprecedented purchasing power of cheap imported goods.

Still, in a very small country which would ban currency convertibility, I guess it could work.

Having more import than export is the path to wealth.

Please, go back to school. It's the other way around. Germany and Japan got rich because they have been successful exporters for decades, and China's getting richer and richer because it's selling its goods all over the planet.

[Nicolas Dorier]

We must define what is a "balanced trade balance".
I define it as exporting as much goods and service measured in money/gold as we import goods and services measured in money/gold.

Yes, I define it like that also the key point is "measured in money/gold".

But imagine you import 2 car for 1000$ each + some raw material for 100$.
You upgrade one of these car with the raw material, and manage to sell the upgraded car for 2100$.
In term of trade balance, you are balanced => 2100 import and 2100 export.

In term of goods though, you are better off.
Since you imported 2 car + raw material, but only consumed the raw material + exported one car.
Your wealth has improved of 1 car, the added value of your work is 1 car. Even if the trade balance, is at equilibrium.

This is what I mean by "importing more than exporting", but only in term of goods, not in term of trade balance.
As you said, the trade balance will always tend to go into equilibrium.

The root of this incomprehension is that people tends to measure good's value objectively in money/gold.
When as you said, Mises clearly point out that value is subjective and always created when 2 actors exchange without coercion.

I agree that even if your position in the above example would not be improved by 1 car, the exchanges would have created value based on the subjective theory of value.

My point is that exchange of good should not be measured with money.
What you really do when you measure export and import in term of money is only looking the export/import of money itself. Not the export/import of goods.

[Nicolas Dorier]

Just look at the size of the market that deals with commodities trading. Every single investor in the world would want a piece of the pie, and he will buy currency from that country. After only a few weeks, value of the currency would have tripled, or more, causing every company which was successfully exporting goods to go bankrupt, causing mass unemployment. The good part being that the people who had money in the bank would enjoy unprecedented purchasing power of cheap imported goods.

Still, in a very small country which would ban currency convertibility, I guess it could work.

Having more import than export is the path to wealth.

Please, go back to school. It's the other way around. Germany and Japan got rich because they have been successful exporters for decades, and China's getting richer and richer because it's selling its goods all over the planet.

I'm a self taught person. Look at my previous post for understanding what I mean by that.
The point is that I do not measure goods with money, the so called "trade balance".

My point is not to run into deficit by importing more than exporting.
The point is having more good imported than you export. This is very different.


For comparison. As a family you don't want to run into debt.
However you want a furnished house, not an empty one where you had to sell all your furnitures to survive.
You don't want to export the furnitures, you want to import them.
But this is not the same as saying that you want to be in deficit.

[twiifm]

Just look at the size of the market that deals with commodities trading. Every single investor in the world would want a piece of the pie, and he will buy currency from that country. After only a few weeks, value of the currency would have tripled, or more, causing every company which was successfully exporting goods to go bankrupt, causing mass unemployment. The good part being that the people who had money in the bank would enjoy unprecedented purchasing power of cheap imported goods.

Still, in a very small country which would ban currency convertibility, I guess it could work.

Having more import than export is the path to wealth.

Please, go back to school. It's the other way around. Germany and Japan got rich because they have been successful exporters for decades, and China's getting richer and richer because it's selling its goods all over the planet.

I'm a self taught person. Look at my previous post for understanding what I mean by that.
The point is that I do not measure goods with money, the so called "trade balance".

My point is not to run into deficit by importing more than exporting.
The point is having more good imported than you export. This is very different.


For comparison. As a family you don't want to run into debt.
However you want a furnished house, not an empty one where you had to sell all your furnitures to survive.
You don't want to export the furnitures, you want to import them.
But this is not the same as saying that you want to be in deficit.

This post makes no sense.  Why would you compare a household to GDP?  Households don't import export.  They usually work for salary and buy things.  If they need furniture they work and save to buy

[Nicolas Dorier]

This post makes no sense.  Why would you compare a household to GDP?  Households don't import export.  They usually work for salary and buy things.  If they need furniture they work and save to buy

Milton Friedman is better than me at explaining why importing stuff is better than exporting.
http://doc.cat-v.org/economics/milton_friedman/the_case_for_free_trade

Another fallacy seldom contradicted is that exports are good, imports bad. The truth is very different. We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports. As Adam Smith saw so clearly, the citizens of a nation benefit from getting as large a volume of imports as possible in return for its exports or, equivalently, from exporting as little as possible to pay for its imports.

This talk on Youtube from Friedman : https://www.youtube.com/watch?v=c9STBcacDIM

[pattu1]

Does anyone have an idea on what happen if a country decide to go back to a Gold standard?

Imagine that there is no threat to this country come from the others. It's a middle sized economy.

Its economy would become strong. It would not be able to inflate there currency for obvious reason.

What are the pros and cons? A fly solo like this is even possible/imaginable?

I'm just curious to know what you guys think it might happens.

That country will be forced to store large amounts of unproductive gold.
Don't you think it would be better off selling its gold and using that to build its infrastructure?

[painlord2k]

Does anyone have an idea on what happen if a country decide to go back to a Gold standard?

Imagine that there is no threat to this country come from the others. It's a middle sized economy.

Its economy would become strong. It would not be able to inflate there currency for obvious reason.

What are the pros and cons? A fly solo like this is even possible/imaginable?

I'm just curious to know what you guys think it might happens.

That country will be forced to store large amounts of unproductive gold.
Don't you think it would be better off selling its gold and using that to build its infrastructure?

NO.

The gold the country keep in reserve it is called savings. It is needed just in case something don't go as planned.
Your reasoning is like the people telling others like they should be lean and fit, like the people on a BodyBuilding magazine cover, the only problem being with too low fat you are at risk of a lot of physical/health problems.

If you had no savings, just spent everything you earn in consumption and investments, you have no way to pay easily if something go wrong: you must liquidate your investments at any price you can get i n a short time. If your check delay, if your refrigerator break and you food rot, and you have nothing in reserve, no money, no other reserve of food, etc. You must go out and sell that beautiful car just to eat. Or ask a loan to someone.
Sometimes others have extra capacity available and your loans will cost little more BUT think about the case you refrigerator stop working:
it was just your refrigerator or every refrigerator in the county?
Did your refrigerator fail or was the power lines?
In the first case you just go out and politely ask to your neighbour if he could loan you some bread and ham. But if was the power lines, your neighbours is in the same situation.
Then the idiot of a prepper (the one you called lunatics, paranoid, etc.) with autonomous power for his refrigerator can ask you and your neighbours to be paid to sell some of his 6 months reserve of food (payback time bitches).
Your neighbour have some money and can pay for the food immediately, a backup generators and fuel in the next few days, until thing improve some week later.
You, without savings available, can just liquidate what? What you have your prepper neighbour want? Your fine car? Now you must liquidate something worth 100 at 10 or less (food, a spare generator and enough fuel), because you would starve otherwise. Then the lack of savings will cost you ten times what would cost you to save something in a sensible form (like gold, silver, cash, bitcoin).

The same is true for countries.
When a recession come, all people will be short of cash, so all of them must liquidate what they have for what they can get to obtain what they need.
And it is not pretty.

A few weeks of savings often are a life saving. Few months savings are a real cushion in case of problems.
Wealthier you are, more saving you need.

[countryfree]

Just look at the size of the market that deals with commodities trading. Every single investor in the world would want a piece of the pie, and he will buy currency from that country. After only a few weeks, value of the currency would have tripled, or more, causing every company which was successfully exporting goods to go bankrupt, causing mass unemployment. The good part being that the people who had money in the bank would enjoy unprecedented purchasing power of cheap imported goods.

Still, in a very small country which would ban currency convertibility, I guess it could work.

Having more import than export is the path to wealth.

Please, go back to school. It's the other way around. Germany and Japan got rich because they have been successful exporters for decades, and China's getting richer and richer because it's selling its goods all over the planet.

I'm a self taught person. Look at my previous post for understanding what I mean by that.
The point is that I do not measure goods with money, the so called "trade balance".

My point is not to run into deficit by importing more than exporting.
The point is having more good imported than you export. This is very different.


For comparison. As a family you don't want to run into debt.
However you want a furnished house, not an empty one where you had to sell all your furnitures to survive.
You don't want to export the furnitures, you want to import them.
But this is not the same as saying that you want to be in deficit.

The comparison between a country and a family is a difficult one, because the average family doesn't produce anything.

Still, we may take the example of a farmer selling its produce on a local market. If he wants to buy furniture for his home (or a car),the value of the produce he sells on the market will have to higher than the cost of what he wants to buy. The situation will be even more difficult than for a country, since a country can run a budget deficit whereas banks won't allow that to happen in a small farm.

In the third world, where people don't have bank accounts, having a balanced budget and selling more than what you buy isn't a choice. There's just no other way around.

Back to the case of Switzerland, this is old people versus the young. The older folks want to play safe with solid gold stored at home.

[Nicolas Dorier]

The comparison between a country and a family is a difficult one, because the average family doesn't produce anything.

Still, we may take the example of a farmer selling its produce on a local market. If he wants to buy furniture for his home (or a car),the value of the produce he sells on the market will have to higher than the cost of what he wants to buy. The situation will be even more difficult than for a country, since a country can run a budget deficit whereas banks won't allow that to happen in a small farm.

In the third world, where people don't have bank accounts, having a balanced budget and selling more than what you buy isn't a choice. There's just no other way around.

Back to the case of Switzerland, this is old people versus the young. The older folks want to play safe with solid gold stored at home.

You don't understand my point, but again, maybe I'm not explaining well, I sugget you take a look at https://www.youtube.com/watch?v=c9STBcacDIM.

In the third world, where people don't have bank accounts, having a balanced budget and selling more than what you buy isn't a choice. There's just no other way around.

I'm not advocating having a deficit trade balance. (Even if, as Friedman explain, for a country, it is a good thing since nobody can print cheaper the green piece of money than you)
I'm advocating having more goods imported than goods exported. And it is important to not measure them in term of dollar.

Like I said :
If you buy 2 cars + some raw material for tuning for 1200$.
Tune one of the cars and sell it for 1200$, then your trade balance is balanced.
However your wealth improved of one car. You imported more goods than exporting and keep a favorable trade balance.

The comparison between a country and a family is a difficult one, because the average family doesn't produce anything.

Where does their paycheck comes from ? Is it not for importing more goods in their lives ?

[WestHarrison]

With an established standard like gold or bitcoin I would assume that banking, stocks, bonds, insurances as we know it would cease to be and they would transform into something else. Could be catastrophic on the short run since that country might get shunned, but maybe it could work if it's a very slow transition over many years.

[spazzdla]

http://www.zerohedge.com/news/2014-10-28/things-make-you-go-hmmm-swiss-gold-status-quo-showdown

Seems one might just try.

[painlord2k]

I'm advocating having more goods imported than goods exported. And it is important to not measure them in term of dollar.

Like I said :
If you buy 2 cars + some raw material for tuning for 1200$.
Tune one of the cars and sell it for 1200$, then your trade balance is balanced.
However your wealth improved of one car. You imported more goods than exporting and keep a favorable trade balance.

The comparison between a country and a family is a difficult one, because the average family doesn't produce anything.

Where does their paycheck comes from ? Is it not for importing more goods in their lives ?

The problem for your line or reasoning is simple:
you measure different things with the same meter.

When you write:
If you buy 2 cars + some raw material for tuning for 1200$.
Tune one of the cars and sell it for 1200$, then your trade balance is balanced.
However your wealth improved of one car. You imported more goods than exporting and keep a favorable trade balance.

The one untuned car he buy is different from the tuned car he sell.
You can not say his wealth improved of one car, because is the car tuned or untuned. The work of tuning the cars is free? NO.
The work to tune the car have a cost, so you must add it to your accounting.

This is even more evident with the other example you give:
Still, we may take the example of a farmer selling its produce on a local market. If he wants to buy furniture for his home (or a car),the value of the produce he sells on the market will have to higher than the cost of what he wants to buy. The situation will be even more difficult than for a country, since a country can run a budget deficit whereas banks won't allow that to happen in a small farm.


If the farmer want to buy furniture and sell corn it is evident he is selling something he value less (the corn) for something he value more (the furniture).
On the other side, the woodworker selling the furniture evidently value less the forniture he is selling than the corn he is receiving in exchange of it.
No one sell what  is worth (for him) more in exchange of something is worth less (for him). It would be a loss. Every voluntary exchange is a positive value exchange for both parties. Every time. At least ex-ante (before and when it happen). Someone could change its mind after, but this do not matter.

You mix the value (subjective) of the corn and of the furnitures for the woodworker, attribute it a objective value and then use these values to compute the profit of the farmer.
And it obviously it have no sense at all.

I could add to this, you must compute the trade balance in some common terms. Money (be it USD, gold, bitcoins, whatever). More stable is the value of the money used easier is to compute it.
If you talk about cars, apples, peas, massages, etc. You can not build a serious balance:
1) You balance every individual item (in effect import and export the same stuff)
2) You must decide the ratio between cars and peas, massages and apple, etc. And track them as they change. No minimally developed economy can do it. This is because money was developed naturally. As you have a minimally deep production line you MUST have a common denominator enabling you to calculate if the costs of a work are lower or higher of the possible price you foresee.

Money is just the common denominator for all other goods and services. Money being a good itself in a way or another. Just a good never used but only acquired to be exchanged at a later time for what you really want.

[Nicolas Dorier]

If the farmer want to buy furniture and sell corn it is evident he is selling something he value less (the corn) for something he value more (the furniture).
On the other side, the woodworker selling the furniture evidently value less the forniture he is selling than the corn he is receiving in exchange of it.
No one sell what  is worth (for him) more in exchange of something is worth less (for him). It would be a loss. Every voluntary exchange is a positive value exchange for both parties. Every time. At least ex-ante (before and when it happen). Someone could change its mind after, but this do not matter.

Yes, I agree, by reading again what I said about the farmer, I confused myself. For the farmer, the corn is worth less than the furniture.

However, I don't understand your reasoning on the car.

You can not say his wealth improved of one car, because is the car tuned or untuned. The work of tuning the cars is free? NO.
The work to tune the car have a cost, so you must add it to your accounting.

Where the added value appear of the work appear ?
Your work, the work that tuned the car and could sell it at higher price, increased your material wealth of 1 unturned car (the second that you kept for you) despite having a trade balance at 0.
In term of goods, you have more goods now than after. You imported more good in your possession than exported.

Why are you thinking that you are not wealthier now that before ?
Do you disagree with the fact that you just imported more than exported ?
If you agree with it, then why do you disagree with the fact that maximizing good import over export is what make you wealthy ?

[Btcparis]

in few yrs to come
guess many countries will go back to gold.

[galbros]

They would have to fix the price of their currency in gold very carefully.  This is always the hard part, especially if you are going alone.

Assuming they got that part right, their currency would generally be strong.  This would result in lower inflation for their citizens as imports would be relatively inexpensive but potentially hurt their exports as their goods would be more expensive in the marketplace.  This is the irony of strong currencies, countries often don't want them as they hurt exports, hence China's capital controls and very tight management of the RMB.

Also, countries are in no way like families.  It's counter intuitive but has been shown many times, e.g. paradox of thrift.

[Nicolas Dorier]

Also, countries are in no way like families.  It's counter intuitive but has been shown many times, e.g. paradox of thrift.

Can you show it to me ? What is the paradox of thrift ? Here is your counter argument : https://www.youtube.com/watch?v=c9STBcacDIM
Gives me arguments not dogmas.

[Erdogan]

A state that went with gold, would have to have relatively free markets and a small government. That would be good for all, except for the government, which means that you probably will not see it.

Beware of different levels of gold standards. Private money, which would be gold coins produced by multiple businesses, and private paper media denominated in grams, and banks which are not in any way guaranteed by the public, could work. A gold standard money denominated in something else, backed by gold, but monopolistically produced by a government,will ultimately fail and lead us back to where we are now.

[painlord2k]

A state that went with gold, would have to have relatively free markets and a small government. That would be good for all, except for the government, which means that you probably will not see it.

Beware of different levels of gold standards. Private money, which would be gold coins produced by multiple businesses, and private paper media denominated in grams, and banks which are not in any way guaranteed by the public, could work. A gold standard money denominated in something else, backed by gold, but monopolistically produced by a government,will ultimately fail and lead us back to where we are now.

Amen

[painlord2k]

However, I don't understand your reasoning on the car.

You can not say his wealth improved of one car, because is the car tuned or untuned. The work of tuning the cars is free? NO.
The work to tune the car have a cost, so you must add it to your accounting.

Where the added value appear of the work appear ?
Your work, the work that tuned the car and could sell it at higher price, increased your material wealth of 1 unturned car (the second that you kept for you) despite having a trade balance at 0.
In term of goods, you have more goods now than after. You imported more good in your possession than exported.

Why are you thinking that you are not wealthier now that before ?
Do you disagree with the fact that you just imported more than exported ?
If you agree with it, then why do you disagree with the fact that maximizing good import over export is what make you wealthy ?

The problem is a problem of accounting:
1) You import two untuned cars + stuff needed to tune one of them for 2100$
2) You work on a car, consume the stuff to tune it, EXPEND some time and efforts, and successfully tune it
3) You export the tuned car for 2100$

The balance is: one untuned car in exchange for some time and efforts.

You could have simplified the problem stating it differently:
1) You work for a foreigner and he give you a job: you tune a car, he give  you the stuff to tune it and it give you an untuned car in exchange for the work done successfully

The exchange is one untuned car for your efforts and time.

The difference in this example is who take the risks of the job:
1) you take them all in the first,
2) you risk your time and efforts and the foreigner risk the stuff to tune the car in the second

Suppose both example are a success and their end state is the same: Are you better off?

It is no sure, because you have to evaluate the value of the untuned car and the value of the efforts and time expended to obtain it for you.
In fact you are exporting your work and time (call it "service") in exchange for the untuned car.
You have not an infinite quantity of time or efforts to export, so more you export less you have for yourself.

The marginal value theorem imply, even in this case, you will find the value of the car you import decreasing and the value of the effort and time you spend increasing (because more you spend less you have left).

So you can not say you are exporting less than you are importing, you are just exporting something you value less at the time (time and efforts) in exchange of something you value more at the time (the untuned car). The same is doing the other guy on the other side. As he give away untuned cars, his subjective value for untuned cars increase and its subjective value of the service he is buying decrease.

If you use gold instead of bartering, because it is a more efficient medium of exchange,
You just export gold in exchange for service or goods and import gold in exchange of good  and services.
If you import gold you just value gold more than what you are exporting. If you export gold, you just value gold less than what you are importing.
It is just a matter of preferences at the time of the exchange: Do you want more gold? more stuff? more leisure time?

[Nicolas Dorier]

So you can not say you are exporting less than you are importing,

I think this is where we don't understand each other.
I said : you are exporting less goods than importing.
Whereas you are comparing accounting value of export and import.

I agree that if you count Time and Work in your accounting, you will deduce that you are not better off than before. But this is only true from the accounting point of view.
But not in term of goods.
And I say that this is what really matter : the acquisition of goods. (In the sense explained by Friedman https://www.youtube.com/watch?v=c9STBcacDIM)
Not the acquisition of money, but the acquisition of goods.

So from the wealth perspective, in my car example, you still have imported more goods than exported.
You earned a car.

You can argue that you loss time and work to earn it, so you are not better off.  
But I say this does not matter since material wealth has increased.

Accountants value everything is term of money, which is the right way to calculate taxes, get a general idea about where money flows, predict and prevent liquidity problems.
But this is not the right tool for measuring value. (As Mises pointed out by the way)

Having higher import in terms of good than export is the meaning of wealth. (Without running on deficit)

I like this extract from the Richest Man in Babylon, which does not explain our import/export problem, but why money flow does help measuring wealth.

"Wealth grows wherever men exert energy," Arkad replied. "If a rich man builds him a new
palace, is the gold he pays out gone? No, the brickmaker has part of it and the laborer has part of it, and
the artist has part of it. And everyone who labors upon the house has part of it Yet when the palace is
completed, is it not worth all it cost?

[kutaka]

in few yrs to come
guess many countries will go back to gold.

Not a single country will return to gold. Sorry. Sooner crypto, but I would not bet on it.

[cutesakura]

current crypto currency is on the rise, compared to gold, when gold tends to stabilize the exchange rate and increase each year, crypto currencies like bitcoin, the exchange rate fluctuated up and down, depending on how the market atmosphere of the market, when many buy bitcoin then the price exchange rate will be higher, whereas when many are selling bitcoin exchange, the price will fall, in contrast to bitcoin gold, but both can be used as a future investment ... 

[galbros]

Also, countries are in no way like families.  It's counter intuitive but has been shown many times, e.g. paradox of thrift.

Can you show it to me ? What is the paradox of thrift ? Here is your counter argument : https://www.youtube.com/watch?v=c9STBcacDIM
Gives me arguments not dogmas.

Here you go from the start of the wikipedia on it:

The paradox of thrift (or paradox of saving) is a paradox of economics, popularized by John Maynard Keynes, though it had been stated as early as 1714 in The Fable of the Bees,[1] and similar sentiments date to antiquity.[2][3] The paradox states that if everyone tries to save more money during times of economic recession, then aggregate demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth. The paradox is, narrowly speaking, that total savings may fall even when individual savings attempt to rise, and, broadly speaking, that increase in savings may be harmful to an economy.[4] Both the narrow and broad claims are paradoxical within the assumption underlying the fallacy of composition, namely that what is true of the parts must be true of the whole. The narrow claim transparently contradicts this assumption, and the broad one does so by implication, because while individual thrift is generally averred to be good for the economy, the paradox of thrift holds that collective thrift may be bad for the economy.

So this is a good example of how national economics is different from family economics.

[Nicolas Dorier]

Also, countries are in no way like families.  It's counter intuitive but has been shown many times, e.g. paradox of thrift.

Can you show it to me ? What is the paradox of thrift ? Here is your counter argument : https://www.youtube.com/watch?v=c9STBcacDIM
Gives me arguments not dogmas.

Here you go from the start of the wikipedia on it:

The paradox of thrift (or paradox of saving) is a paradox of economics, popularized by John Maynard Keynes, though it had been stated as early as 1714 in The Fable of the Bees,[1] and similar sentiments date to antiquity.[2][3] The paradox states that if everyone tries to save more money during times of economic recession, then aggregate demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth. The paradox is, narrowly speaking, that total savings may fall even when individual savings attempt to rise, and, broadly speaking, that increase in savings may be harmful to an economy.[4] Both the narrow and broad claims are paradoxical within the assumption underlying the fallacy of composition, namely that what is true of the parts must be true of the whole. The narrow claim transparently contradicts this assumption, and the broad one does so by implication, because while individual thrift is generally averred to be good for the economy, the paradox of thrift holds that collective thrift may be bad for the economy.

So this is a good example of how national economics is different from family economics.

So let me parse than

The paradox states that if everyone tries to save more money during times of economic recession, then aggregate demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth.

So in another words : recession => saving => less consumption => bankrupt => no paycheck => less saving => less consumption => bigger bankrupt ....
Two solutions from Keynes to break the vicious circle : Prevent saving in the first place (by devaluating the money, or with taxation) and make it possible for companies to still give the paycheck (deficit spending, subsidies).
So going back to gold will prevent both from happening, and apocalypse follows.

First, it should be noted that "recession" does not come from cosmic forces, but caused by money expansion in the first place.
Also, when consumption falls, prices fall. This transfer wealth from debtors -the state being the biggest- to creditors and savers.
Savers and creditors, with this new earned wealth will then spend again enjoying small prices, causing a break in the loop.

Keynes just say that this cycle is bad for the state. (And this is true, since he is the biggest debtor)
But this is not bad for individuals.
"The state is us" some will claim, expecting to make us think that anything that is bad for the state is bad for the citizen.
But this is clearly false when we consider the state and the citizen as separate entities.

So, by keeping in mind that I don't consider the shrink of the State caused by its economic problems as relevant to the wealth of the country, I keep my analogy.

If 2 cars comes in the country (or family), and 1 goes out, with a trade balance at 0, the country is richer. (Not necessarily the state, which is a separate entity)
As a country or family, if you import more goods into your life than export, you accumulate true wealth.

[Erdogan]

Also, countries are in no way like families.  It's counter intuitive but has been shown many times, e.g. paradox of thrift.

Can you show it to me ? What is the paradox of thrift ? Here is your counter argument : https://www.youtube.com/watch?v=c9STBcacDIM
Gives me arguments not dogmas.

Here you go from the start of the wikipedia on it:

The paradox of thrift (or paradox of saving) is a paradox of economics, popularized by John Maynard Keynes, though it had been stated as early as 1714 in The Fable of the Bees,[1] and similar sentiments date to antiquity.[2][3] The paradox states that if everyone tries to save more money during times of economic recession, then aggregate demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth. The paradox is, narrowly speaking, that total savings may fall even when individual savings attempt to rise, and, broadly speaking, that increase in savings may be harmful to an economy.[4] Both the narrow and broad claims are paradoxical within the assumption underlying the fallacy of composition, namely that what is true of the parts must be true of the whole. The narrow claim transparently contradicts this assumption, and the broad one does so by implication, because while individual thrift is generally averred to be good for the economy, the paradox of thrift holds that collective thrift may be bad for the economy.

So this is a good example of how national economics is different from family economics.

I am sure you can find better critisisms of this proposition in the literature, but let me try:

There is a fundamental error, and there are errors in the predicted consequence of saving. The fundamental error is that it does not matter. Every individual can do with his money as he sees fit, including saving them for later. The effect on the economy, or the greater good, is of no relevance to rights. A right to dispose of your property trumps everything, that is why it is a right. So the fact that it can have adverse effect on others, is of no importance. What Keynes here says, is that somebody else can better take care of your money using monetary intervention, that means taking away rights, and declaring that there are two sets of people, those who are masters, and those who are serfs.

The remaining arguments are the effects. These are secondary, due to the fundamental rights proposition, nevertheless there are effects. Every economic decision you make and act on, affects every aspect of the rest of the economy, albeit marginally. So if someone saves, that does not make a whole lot of difference, and if someone else spends, or reduces his savings, to the same degree, the effect of the total is even smaller, but not nil. This is normally the case, because saving is tied to the different stages in life that everybody goes through. The interesting question is when a large portion of the actors starts to save more at the same time.

There are different effects depending on the availability of sound money, and if the form of the saving is in money or in investments.

If we have sound money, and a large portion of actors starts to save more in money, the first effect is that the value of the money increases because they are bid up, which is the same as prices of goods goes down. This is really the same thing. The savers reduce their consumption, that is what saving is and that is why they accumulate money. The prices of goods will not all go down at the same rate, the consumer goods will go down first, and capital goods least, which is ok because point of the saving is to spend later, and the businesses will focus on producing for the future, so capital will go to the earlier stages. Since consumer prices go down, the non-savers can consume more.

If we have sound money as before, but most of the saved money goes to investments, or indirectly to deposits in savings and loans institutions (old fashioned banks), the interest rate will go down and the investments can increase, so the effect on the capital structure is increased investment in general, and a change of the capital structure to the earlier stages. This means a capital structure well adapted to the expected later consumption, plus general increase of investment which increases productivity and therefore the ability for all to consume more. This will be the normal situation, because the savers will first secure their position with the safest asset (the money), after that they will invest or lend to get profits or interest. You see that saving generally is positive both for the saver, who acts in his own interest, and everybody else. In fact, saving is a precondition for a prosperous society.

What the monetarist will do in this situation, is to expand the money volume either directly or through lending out money they don't have. They will expand the consumption in the government, and they will reduce the interest rate down from its natural level (expanding money supply and reducing interest rate depend on each other). The adverse effects of this are plenty, everybody knows the transfer of wealth from the savers to the spenders. Somebody gets the new money first, the cronies, it's bad in itself. There is also waste in government spending. They can not spend the money as well as individuals in the free market, due to lack of pricing information. Government spending is a negative sum game. The worst effect, is the wrong signal the low interest rate gives to the market. It signals to the public to spend, to loan more for spending or postpone downpayments of loans. The public will bid up the consumer prices. The low interest rate, as before, will signal to the capitalists to invest in the stages of production most remote from consumption, like oil rigs and surveying for minerals, which is supposed to return way out in the future, while the spenders consume now. So everybody is happy for the new money, while savings halt, and therefore capital is eaten up, and the wrong investments are started. This leads to destruction of value down the road, and crashes in market, the new word for that being turmoil.

Basically, to intervene in savings using monetary politics, is wrong on all accounts.

[Aur3]

in few yrs to come
guess many countries will go back to gold.

Not a single country will return to gold. Sorry. Sooner crypto, but I would not bet on it.

I agree. For a country to from from a traditional fiat currency to a gold based currency would simply make it so the subject country would lose too much control over their economy. The only exception to this would be a country that has experienced a true economic crash that was not felt throughout the rest of the world (and corresponding currency crash)

[Nicolas Dorier]

Great summary erdogan
You made me want to shut down computer and go back reviewing my mises and rothbard books.

[Erdogan]

Great summary erdogan
You made me want to shut down computer and go back reviewing my mises and rothbard books.

There was a really good Tom Woods podcast recently, called
"The Truth about the Crash of '08" - October 24, 2014

[ScreamnShout]

They would have to fix the price of their currency in gold very carefully.  This is always the hard part, especially if you are going alone.

Assuming they got that part right, their currency would generally be strong.  This would result in lower inflation for their citizens as imports would be relatively inexpensive but potentially hurt their exports as their goods would be more expensive in the marketplace.  This is the irony of strong currencies, countries often don't want them as they hurt exports, hence China's capital controls and very tight management of the RMB.

Also, countries are in no way like families.  It's counter intuitive but has been shown many times, e.g. paradox of thrift.

All they would need to do is declare that "n" units of their currency is redeemable for "x" ounces of gold and to not issue more currency then it has in gold reserves.

The reason a country would potentially want it's currency to be "strong" is because confidence in the economy/government is low enough such that it's currency has little/no value on the foreign exchange market

[twiifm]

Great summary erdogan
You made me want to shut down computer and go back reviewing my mises and rothbard books.

Dude stick to Friedman.  At least he's a real economist.

His summary is whack cause post-bubble Japan has exactly the Paradox of Thrift problem for decades.  And FYI, Friedman did think QE was the correct policy.  However, QE didn't work in that Japan situation because monetarists are wrong about how to get out of recession.  Monetary policies only arrest the deflationary spiral, but it can't increase AD.  Monetary policies worked for 70's stagflation because its easier to impose discipline on inflation than it is to stimulate spending.  "Pushing on a string" is what they call it

[Erdogan]

Great summary erdogan
You made me want to shut down computer and go back reviewing my mises and rothbard books.

Dude stick to Friedman.  At least he's a real economist.

His summary is whack cause post-bubble Japan has exactly the Paradox of Thrift problem for decades.  And FYI, Friedman did think QE was the correct policy.  However, QE didn't work in that Japan situation because monetarists are wrong about how to get out of recession.  Monetary policies only arrest the deflationary spiral, but it can't increase AD.  Monetary policies worked for 70's stagflation because its easier to impose discipline on inflation than it is to stimulate spending.  "Pushing on a string" is what they call it

How can they have it, when it doesn't exist?

What Japan do, is exactly the third, monetarist response. It was done before they declaimed the last QE.

I call it double harakiri. http://dictionary.reference.com/browse/harakiri

[Nicolas Dorier]

Great summary erdogan
You made me want to shut down computer and go back reviewing my mises and rothbard books.

Dude stick to Friedman.  At least he's a real economist.

His summary is whack cause post-bubble Japan has exactly the Paradox of Thrift problem for decades.  And FYI, Friedman did think QE was the correct policy.  However, QE didn't work in that Japan situation because monetarists are wrong about how to get out of recession.  Monetary policies only arrest the deflationary spiral, but it can't increase AD.  Monetary policies worked for 70's stagflation because its easier to impose discipline on inflation than it is to stimulate spending.  "Pushing on a string" is what they call it

This is the only thing that is odd to me (and rothbard talk about it), is that Friedman make an exception for the monopoly of monetary policy.
Rothbard have a highly negative view on Friedman because of such incoherence.  (and the negative income tax idea)

I'm not sure what is a "real economist". I'm not anarcho capitalist yet, but from what I read in Rothbard's book, his arguments and conclusions are coherent and logical.
Rothbard starts from the non aggression principle, and explain how to fix whatever domestic or foreign matter within those bounds. Most of the time referring to successful instance in history.

We might say that Rothbard is not real economist, but we can't say that he is incoherent and illogical.

However any compromise on the non aggression principle, and you'll end up with different conclusions.

For Rothbard, a QE would violate the principle, because it transfer wealth from savers to stock holders.

[painlord2k]

For Rothbard, a QE would violate the principle, because it transfer wealth from savers to stock holders.

For Rothbard, any type of money printing (not only a QE) and legal tender law would violate the NAP.

[twiifm]

Great summary erdogan
You made me want to shut down computer and go back reviewing my mises and rothbard books.

Dude stick to Friedman.  At least he's a real economist.

His summary is whack cause post-bubble Japan has exactly the Paradox of Thrift problem for decades.  And FYI, Friedman did think QE was the correct policy.  However, QE didn't work in that Japan situation because monetarists are wrong about how to get out of recession.  Monetary policies only arrest the deflationary spiral, but it can't increase AD.  Monetary policies worked for 70's stagflation because its easier to impose discipline on inflation than it is to stimulate spending.  "Pushing on a string" is what they call it

This is the only thing that is odd to me (and rothbard talk about it), is that Friedman make an exception for the monopoly of monetary policy.
Rothbard have a highly negative view on Friedman because of such incoherence.  (and the negative income tax idea)

I'm not sure what is a "real economist". I'm not anarcho capitalist yet, but from what I read in Rothbard's book, his arguments and conclusions are coherent and logical.
Rothbard starts from the non aggression principle, and explain how to fix whatever domestic or foreign matter within those bounds. Most of the time referring to successful instance in history.

We might say that Rothbard is not real economist, but we can't say that he is incoherent and illogical.

However any compromise on the non aggression principle, and you'll end up with different conclusions.

For Rothbard, a QE would violate the principle, because it transfer wealth from savers to stock holders.

Its not odd.  Friedman is the founder of monetarism.  He sees economics as money supply.  So all problems can be fixed via monetary policy.

Also Friedman is not what you call a modern American libertarian.  He's  more an admirer of Adam Smith.

Rothbard is big into logical deduction via praxeology.  But just because something is logical doesn't mean its true.  He reaches conclusion w/o finding empirical or statistical evidence

I say not 'real' because he neither uses modelling or statistics or facts, the common tools of economists

[Nicolas Dorier]

But just because something is logical doesn't mean its true.

The thing is either you reject his end goal : maximizing liberty, and can trash what he said.
Either you don't reject this goal, and good luck with finding a flaw in the reasoning.

Nowadays economists, find the right statistics that support policies of the elites. (by tweaking GDP calculation methods, or finding metrics that favor particular policy)
Thinking elites make policies to improve statistics is wishful thinking.
The reality is not really different from the pope granting the holy power to the king.

This is not to say I did not appreciate monetary history of the US of Friedman, which opened my eyes about the history of money and its meaning.

But judging on principles, not on faith (of god power, of stats), is the only way each of us can evaluate if a policy goes for or against it without being manipulated.

This is what I like about Rothbard.
Right now, if you have policy A, you will have 50% economists for and 50% against, each with their own data and stats justifying both side.
Then the policy maker just pick the stats he needs to make it pass.

When you follow Rothbard reasoning, he will explain why policy A is better or worse, only based on the single NA principle. There is no "maybe right, maybe wrong", only clear cut.
But an anarcho capitalist, don't have to read what Rothbard to reach the same conclusion. With only NAP, he will walk on the exact same steps.

I need some time to digest what I read from him, so I am not yet anarcho capitalist, but he definitively opened my eyes on what I did not think could exist.

[twiifm]

But just because something is logical doesn't mean its true.

The thing is either you reject his end goal : maximizing liberty, and can trash what he said.
Either you don't reject this goal, and good luck with finding a flaw in the reasoning.

Nowadays economists, find the right statistics that support policies of the elites. (by tweaking GDP calculation methods, or finding metrics that favor particular policy)
Thinking elites make policies to improve statistics is wishful thinking.
The reality is not really different from the pope granting the holy power to the king.

This is not to say I did not appreciate monetary history of the US of Friedman, which opened my eyes about the history of money and its meaning.

But judging on principles, not on faith (of god power, of stats), is the only way each of us can evaluate if a policy goes for or against it without being manipulated.

This is what I like about Rothbard.
Right now, if you have policy A, you will have 50% economists for and 50% against, each with their own data and stats justifying both side.
Then the policy maker just pick the stats he needs to make it pass.

When you follow Rothbard reasoning, he will explain why policy A is better or worse, only based on the single NA principle. There is no "maybe right, maybe wrong", only clear cut.
But an anarcho capitalist, don't have to read what Rothbard to reach the same conclusion. With only NAP, he will walk on the exact same steps.

I need some time to digest what I read from him, so I am not yet anarcho capitalist, but he definitively opened my eyes on what I did not think could exist.

That is naive.  You cant just say "oh you dont want liberty?" That's a strawman argument. Of course everyone wants liberty.  Marx wanted liberty,  Keynes wanted liberty. 

What you should consider is if he understands economics or not.  Does his theory support what is observable.  Is there data support his theory?

Praxeology is logical deduction.  You cant get useful answers from praxeology.  At worst you fool yourself into tautological arguments

[Nicolas Dorier]

That is naive.  You cant just say "oh you dont want liberty?" That's a strawman argument. Of course everyone wants liberty.  Marx wanted liberty,  Keynes wanted liberty.

If liberty is so blurry concept, the liberty of rothbard is the freedom to choose without stepping on someone else property. This is very specific definition, not a blurry one.

[twiifm]

That is naive.  You cant just say "oh you dont want liberty?" That's a strawman argument. Of course everyone wants liberty.  Marx wanted liberty,  Keynes wanted liberty.

If liberty is so blurry concept, the liberty of rothbard is the freedom to choose without stepping on someone else property. This is very specific definition, not a blurry one.

We already have that.

[Nicolas Dorier]

If it were the case I would not debate.
I suggest you just try to sell one cheeseburger on your doorstep without breaking a law. I am waiting.

If you never tried to build a business and secure your income from tax payers, then sure you are in pony land. (Either that or your business is protected from competitor by the state)

[twiifm]

If it were the case I would not debate.
I suggest you just try to sell one cheeseburger on your doorstep without breaking a law. I am waiting.

If you never tried to build a business and secure your income from tax payers, then sure you are in pony land. (Either that or your business is protected from competitor by the state)

Ive had a business for 18 years.  No problems here.  And a lot of business sell cheeseburgers.  Where is your problem exactly?

[Nicolas Dorier]

If it were the case I would not debate.
I suggest you just try to sell one cheeseburger on your doorstep without breaking a law. I am waiting.

If you never tried to build a business and secure your income from tax payers, then sure you are in pony land. (Either that or your business is protected from competitor by the state)

Ive had a business for 18 years.  No problems here.  And a lot of business sell cheeseburgers.  Where is your problem exactly?

Because you can't do that with licence of government and paying them fees up front.
If you can't do business on the doorstep of your own house, then don't talk about any freedom to choose and non aggression.

I know that lot of business sell cheeseburger, but it is ridiculously complicated and impossible to do it in your own house legally.
This is the tip of the iceberg of liberty broken.

If you made the kind of business that can survive thanks to his customer, and not with special privilege, licence, and subsidies protecting your from competition, then kudo.
You are the only honest businessman I have seen defending the state.

[WestHarrison]

If it were the case I would not debate.
I suggest you just try to sell one cheeseburger on your doorstep without breaking a law. I am waiting.

If you never tried to build a business and secure your income from tax payers, then sure you are in pony land. (Either that or your business is protected from competitor by the state)

Ive had a business for 18 years.  No problems here.  And a lot of business sell cheeseburgers.  Where is your problem exactly?

Because you can't do that with licence of government and paying them fees up front.
If you can't do business on the doorstep of your own house, then don't talk about any freedom to choose and non aggression.

I know that lot of business sell cheeseburger, but it is ridiculously complicated and impossible to do it in your own house legally.
This is the tip of the iceberg of liberty broken.

If you made the kind of business that can survive thanks to his customer, and not with special privilege, licence, and subsidies protecting your from competition, then kudo.
You are the only honest businessman I have seen defending the state.

I think your overall argument is great, just that the example of cheeseburgers wasn't the best.

[Nicolas Dorier]

I prefer pizza or French fries actually. But it still applies ! :p

[twiifm]

If it were the case I would not debate.
I suggest you just try to sell one cheeseburger on your doorstep without breaking a law. I am waiting.

If you never tried to build a business and secure your income from tax payers, then sure you are in pony land. (Either that or your business is protected from competitor by the state)

Ive had a business for 18 years.  No problems here.  And a lot of business sell cheeseburgers.  Where is your problem exactly?

Because you can't do that with licence of government and paying them fees up front.
If you can't do business on the doorstep of your own house, then don't talk about any freedom to choose and non aggression.

I know that lot of business sell cheeseburger, but it is ridiculously complicated and impossible to do it in your own house legally.
This is the tip of the iceberg of liberty broken.

If you made the kind of business that can survive thanks to his customer, and not with special privilege, licence, and subsidies protecting your from competition, then kudo.
You are the only honest businessman I have seen defending the state.

Im not defending the state.  I just acknowledge that a state is there.  The state never hindered my business.  The competition however, hinders my business greatly.  Haha

BTW im pretty sure its pretty cheap and easy to register as a sole proprietorship.  So I dont know what complications you are talking about.  

[leopard2]

Does anyone have an idea on what happen if a country decide to go back to a Gold standard?

Imagine that there is no threat to this country come from the others. It's a middle sized economy.

Its economy would become strong. It would not be able to inflate there currency for obvious reason.

What are the pros and cons? A fly solo like this is even possible/imaginable?

I'm just curious to know what you guys think it might happens.

Weapons of mass destruction or terrorist training camps will be found and the country will be liberated, what else? 

[BootstrapCoinDev]

Bitcon simply has the 'features' required. I think its more a matter of when society is ready for something like it, this bicoin crypto tech offers a true opportunity away from centralization. I made a more humorous post around similar thoughts.  http://servanlog.blogspot.com/... Also the loss issue you point out with a paper equivalent is still present with bitcoin. If people loose a wallet or  their key in some way , those bitcoins and gone forever. But thats ok as they are not sitting anywhere in the physical world to be seen and claimed, i dont think anyone would ever know there is no owner to those lost coins, but there will forever be a growing proportion of the final 21million coins issued that is 'lost'.