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

Von Fugal von at fugal.net
Thu Dec 4 11:12:03 MST 2008

<quote name="Michael Torrie" date="Thu,  4 Dec 2008 at 10:54 -0700">
> 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.
Very true.

> 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.
This is the one keynesian idea that really boggles my mind! Economic
growth is an increase in GOODS, not an increase in MONEY. How can you
say that no amount of gold could cover all of the goods in todays
economy? Gold can be subdivided indefinately (well except past the
atom, could we really have that much economic prosperity??). It's true,
to say that a pie in 1933 was worth this much gold, and now we have this
many pies, there's not enough gold. The truth is each pie would be worth
LESS gold. So then economic growth would truly make everyone richer, in
that more goods would be available to more people at cheaper prices,
there would simply be a massive abundance that your gold could now buy.
Instead we have the illusion of wealth with more and more dollars when
really those dollars are not worth all that much. (That said, yes,
standard of living has risen IN SPITE of inflation).

> 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.
Again, how does the available money restrict what someone can grow?
build? paint? write? mine? People will continue to be productive. They
will simply recover less gold for their production, but this is true
accross the board, so no biggie. (Inflation doesn't apply equally
accross the board, hence the insideous evil I perceive it to be.)

> 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.
They would have just as much money to lend, they would simply lend it to
more people (less per person) but that's ok, becuase economic growth
makes everything cheaper.

> 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!)
On a gold standard poor countries could trade whatever they produce for
gold, they could aqcuire gold, get educations, etc. Information
processing generates wealth whatever the monetary standard. Fiat money
might allow it to generate wealth dispraportionately, but how is that

> 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.
Gold doesn't rust. And when industry needs gold, they can pay market
price for it. That is, trade a pie or whatever, or maybe they could just
use some of the gold they sell their product for, and include that in
the gold cost. As it stands now, they pay dollars for the gold they
need, how is that any different?

> 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."
I'm really confused. How is this an argument _for_ green paper money

I am oversimplifying a lot in all these points, but I can't stand by and
let the equally oversimplified statement "gold doesn't scale" just sit

Von Fugal
Government is a disease that masquerades as its own cure
-- Robert Lefevre
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