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Social Unrest and the Gold Standard

How much of our 20th and 21st century conflicts have been a result of fiat currencies?

 

 

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7 Responses

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  1. semuren says

    “You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.”

    There are some downsides to the gold standard too, and that is why systems with representative government tend to abandon it in times of economic hardship.

  2. Charlie says

    Gold is as fiat as money.
    What is the intrinsic value of gold? Can you eat it? Can you sleep in it? No. Gold is an accepted storage of value because people say it is –no different than the US government dictating USD. Simply because it has always been so (almost) makes it no different.
    Don’t believe me? Go through history and you will find many civilizations that realized gold was nothing more than a piece of metal.
    This is an analysis for an 8-year old.

  3. SurlyTrader says

    I agree with that. If you have a boom cycle followed by a bust, it is hard to dampen the blow. The arguments between those who believe in fiat currencies versus those who do not really depend on if you believe the economy should be intervened with at all. Many in the austrian school would have said we should have let all of those big banks fail, let housing markets crash to their market clearing levels, and let the economy go into a much deeper recession before rebounding. The problem is that the stimulus of the past helped create the past bubble which made it larger than it would have been had their not been intervention…so we are almost in a self-perpetuating state of required stimulus before the whole system resets.

    My own take on it is that fiat currencies provide a vast and opaque cover for government corruption, taxation, and expansion. Pegging a currency to any hard asset takes away that control… Business cycles can be ugly during the downturn, but they can also tend to quickly correct. The more meddling you do, then the more meddling that is required.

  4. semuren says

    @ SurlyTrader:

    I more or less agree with all that you have written above. My point in quoting Bryan is that there is a politics to these issues. When the politics includes meaningful participation by the population in political decision making hard money (gold standard, currency board etc.) policies tend to be abandon to lessen the temporary economic distress for most wage earners.

  5. theta says

    I agree with your thoughts above SurlyTrader, however this video is a joke. WW1, Hitler, Vietnam, Iraq etc. happened because we left the gold standard? Seriously??

  6. SurlyTrader says

    I think the idea is that Fiat money allows governments to fund operations without getting approval from taxpayers. That is really the only point. I would never says Fiat money *caused* wars, but that Fiat money allowed the government to do what it wanted.

  7. theta says

    I would argue quite the contrary, that fiat issuance in a democracy is given to the government by the people that elect said government, by definition, and the government is always accountable to the people for all its actions, including spending, taxing, going to war or whatever. Whereas in a gold standard, someone owning a lot of gold could be a self-acclaimed ruler and pay for whatever war they wish with their gold.

    By the way, post BW, there has been no World War and compared to all previous human history under the gold standard, it’s the most peaceful time ever (relatively speaking). Not that correlation necessarily implies causality, but at least you can take it as an additional data point to disprove your point.



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