But wouldn't the resulting iron shortage just cause bigger problems? I mean, gold is great, but steel is really useful. Not to mention all that oxygen we'd be locking up, too. People might start suffocating!
</sarc>
Better for what? If you want to have stable money supply, commodity money is better. If you want to manipulate money supply in order to achieve political purposes - of course fiat money is better.
BTW, if fiat money are so great and gold money is so inferior, why exactly the government snatched the private gold in the 30s[1]? Did they want the inferior thing so much that they had to force people to give it up because they wouldn't voluntarily exchange it for the much better thing? I imaging they were rescuing those people, that's what it was. A sacrificial act by the Feds.
The gold standard wasn't as "stable" as you think. There were severe inflation crises during the California and Alaska gold rushes, while the Nevada silver rush made bimetallism untenable.
Your other argument is incoherent--there's no fundamental reason to build monetary policy such that it favors individual investors over the health of the economy as a whole. In fact, if people simply hoard money rather than spending and investing it, that's generally an indicator of a poor economic system that can cause the type of deflationary spirals that caused the Great Depression in the first place.
in ground gold reserves are reasonably well known and factored in. There is a finite amount of gold in the crust. There is no limit to the amount of digits one can add to the banks balance sheet.
dollarizing won't be possible for the USD.
We only have estimates for unknown discoveries, and the margin of error is huge for those. Not well known at all. There is definitely a finite amount of gold in the crust, but no one knows how much, and even "knowing" how much China has locked up in their vaults is difficult (they keep it secret for obvious market manipulation reasons). Of course, we are less than a hundred years away from being able to mine asteroids, but I'll doubt we'll bother mining for something as intrinsically worthless as gold.
The US dollar is still a very stable currency, whatever the libertarian alarmists claim.
1. User A submits link to HN explaining the intrinsic properties of gold that are useful for space program at NASA.
2. User B lists a number of additional areas in science and technology that rely on the intrinsic properties of gold and bemoans financial system reliance on gold. Somewhat off topic and interesting discussion of fiat currencies ensues.
3. User C comments that gold is intrinsically worthless.
Great example of why I find HN so interesting and infuriating.
The value of gold in any of those technologies is only worth as much as the alternatives that accomplish the same effects. Gold as a concurrency is completely detached from gold as a useful commodity.
people have been telling us that probable in-ground oil reserves have been known for decades, but those estimates keep going up. I see no reason to believe there is a better estimate for in-ground gold reserves, nor do I believe the true size of those reserves is factored into the price. Considering the 40+% margins shown by Barrick Gold, I doubt even the marginal cost of mining gold is factored that well into the current price.
Gold currency was only ever a "promise" to pay. Banks could invent money out of thin air just as easily with gold-backed currency as with pure fiat currency, and banks did just that since the founding of the U.S.
There's some investment debate but ethically, there's no debate.
It's simply not "right" to tie the value of everything in society to the value of a specific good. Gold, like all other goods should be free to have a value that is intrinsic to its uses (of which there are many in science and engineering) and other goods should not be subject to price fluctuations due to supply and demand issues related to gold.
Obviously, people have issues with their fiat currency issuer – especially since currencies tend to be a government monopoly and lots of governments abuse that monopoly. However, that's well outside the point I was making. In any case, that's not an issue with fiat currency per se but with government monopolies on fiat currency (something that currencies like Bitcoin have set out to address).
Debate can't really be had. Fiat currencies are better and more predictable... right up until they aren't. Which takes so long that hard-earned experience has long since diffused.
Err, some of those are tied to stock exchange crashes, others to extended warfare periods etc. And all are tied with ever-expanding industrial production, which is another independent parameter.
When did the actual observation that gold economies are not more stable happen?
The list provided only shows that they also have crises -- it doesn't show how those crises measure (respective to fiat currency economies) in magnitude, frequency and consequences.
Well, go on and make your point then. They seemed pretty frequent, consequential, and high-magnitude to me, certainly comparable to the 20th and 21st centuries (and even the Great Depression began under the gold standard).
