[OT] Ameros will clog the tubes - was Re: Network Neutrality

Michael Torrie torriem at gmail.com
Thu Dec 4 10:54:42 MST 2008


People hoping to read about linux probably should delete this subthread!

Everything I said below can be summarized in Nicholas Leippe's comment
that came in while I was typing this.  So feel free to ignore, killfile
me, etc.

Von Fugal wrote:
> I don't want to drag this out, (and I do think we should return to a
> gold standard) but I was merely stating facts and not really making a
> case for the gold standard. One 1933 dollar would be worth about 14
> dollars today by the most conservative estimates. Some say as high as
> 40 (unskilled wage) or even 200 (something about GDP which I don't
> understand so I don't really count that, since 94% inflation is plenty
> enough to get me outraged). My point is regardless the cause, or how the
> gold standard could or could not have prevented it, our dollars ARE
> devaluing at an alarming rate.

Currency devaluation is largely a government policy.  And deflation is
as bad for country as inflation.

As for one 1933 dollar being worth $14 today, that is true, to a point.
 While the dollar was indeed worth more compared to a basket of goods,
our economy is so large now that there's no amount of gold that could
cover the entire value of our economy.  In fact, if we were to return to
a gold standard, our money might be stable and even worth more
(dramatically more, even), but there wouldn't be enough money to
actually do anything in total.  Our growth would have been restricted to
whatever level of gold reserves were possible.  If you think today's
loan crisis is pretty bad, imagine what it would be like with a
gold-standard currency.  Banks simply wouldn't have *any* money to lend,
and folks wouldn't be able to buy anything because no one would have any
money themselves.  It just doesn't scale.

And apparently in a global economy, a gold standard would dramatically
increase the disparity between rich and poor.  It's no fault of a poor
nation they don't happen to have any gold to mine.  One of the miracles
of our modern fiat currency system is that it allows very poor nations
to push off poverty simply through education!  Information processing
can actually generate wealth.  (Hard work is still applicable of course!)

Besides all that, what makes gold valuable?  If gold is just sitting in
a bank somewhere, it's doing no one any good.  Arguably the industrial
uses of gold are far more valuable to an economy than if gold just sat
around and rusted, propping up some currency.

All this reminds me of Hitchhiker's Guide where the Golgafrinchams land
on prehistoric earth and try to start a civilization.  After debating
the color of the wheel, whether fire should be fitted nasally, and so
forth, they turn to financial policy.  Since adopting the leaf as legal
tender, they had, of course, all become fabulously rich.  This led to
some major inflationary problems, owing to the ready availability of
leaves.  Hence they embarked on a massive program of deforestation to
prop up their currency.  Cue the closing scene of forests burning and
Louis Armstrong singing "what a wonderful world."



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