Gold Standard (Re: Fail Quotes)

[Lord T Hawkeye]

Gotta give credit where due, he actually came here to defend his points which is leaps and bounds ahead of the spineless cowards we've dealt with on youtube who talk a big game but back down the minute the pressure is on.

[gamer0004]

I can be short about this. There was inflation in Spain, and they didn't print any money (this is the 16th century we're talking about here). The fact that there are Nobel prize winning economists in favour of the gold standard doesn't mean you're right. Other Nobel prize winning economists (Paul Krugman) are opposed to it.

But again, I'm not arguing specifically in favour of paper money or against the gold standard. What I'm arguing about is the fact that you make elementary mistakes in claiming that paper money doesn't work. And talking about claims to authority: I have almost every economist, Nobel prize winning or not, in support of my point, because it is just basic economics. Your idea of "paper isn't worth anything so it can't work as money" was one of the reasons why the gold standard was kept for a long time, but after WWII it wasn't used as an argument anymore, because science has progressed. We now know that it's not about how valuable the commodity is what the money consists of, because money can have it's own value for just being money.
Your argument is basically that paper money doesn't work because it requires coercion from the government (and in the video that it's value is determined by production, which I've already dispelled). Yet the whole economy, that very same free market system you so love, only works in combination with government coercion. That is again basic economics. Without a legal system (which is government coercion), without a police force (which can even use physical violance - again, coercion) an economy cannot develop, because people have to consume everything immediately, because otherwise it can be taken away. This is the exact reason why countries in Africa which have a weak and corrupt government do not develop, despite development money from rich countries and investments from some companies.

Also, it was GDP per capita, in constant dollars, adjusted for PPP. So it represents how much people could buy (how much food and clothes and all that) and nothing else (a government printing money doesn't change GDP per capita adjusted for PPP). That said, there are obviously limitations to measurements of GDP. GDP is not a social welfare function. It is simply an aggregate of economic activity, and if economic activity increases, the economy grows. That doesn't mean people are better off, but it does mean the economy has become bigger. And considering how low their production (a small 'economy per person' so to speak) was, they didn't have a lot of food and other commodities, and we do (in the Chinese Empire, farmers didn't even eat any meat. I can now, as a student, easily eat meat two times a day).

You are saying "I have tons of facts" but you're not showing me any. Until then, I think we can safely assume you don't, because you can't even understand basis economics.

[MrBogosity]

There was inflation in Spain, and they didn't print any money (this is the 16th century we're talking about here).

They went into MASSIVE debt. Get your facts straight.

The fact that there are Nobel prize winning economists in favour of the gold standard doesn't mean you're right.

YOU were the one saying that it contradicts basic economics. This fact shows it DOESN'T.

We now know that it's not about how valuable the commodity is what the money consists of, because money can have it's own value for just being money.

Funny how every single time in history that concept has been tried it's been a massive failure.

Yet the whole economy, that very same free market system you so love, only works in combination with government coercion.

Again, BULLSHIT, and it's been pointed out to you so many times by now it's like talking to a brick wall. The free market is the ABSENCE of coercion!

Without a legal system (which is government coercion),

A PROPER legal system isn't coercion; it's the PROTECTION FROM COERCION.

without a police force (which can even use physical violance - again, coercion)

No, again, they're there to protect and defend AGAINST violence.

Did you not watch my video on the Free Market and what it is?

Also, it was GDP per capita, in constant dollars, adjusted for PPP.

So?

So it represents how much people could buy (how much food and clothes and all that) and nothing else (a government printing money doesn't change GDP per capita adjusted for PPP).

That is ABSOLUTE BULLSHIT. ONLY if you de-aggregated it to remove the government spending component would that be the case.

You are saying "I have tons of facts" but you're not showing me any. Until then, I think we can safely assume you don't, because you can't even understand basis economics.

I've shown you LOTS, and I've given you LOTS of explanations. You've ignored EVERY SINGLE ONE. Why is that?

[gamer0004]

I didn't say insider trading was against basic economics, I said I hadn't heard of anyone in favour of it. When you pointed out there were people in favour of it, I immediately accepted this.

Massive debt is not printing money. And your argument is still "it didn't work in history". This still doesn't change the fact that what is going on today never happened in history either, so the two are not comparable. And that besides the fact that there are obvious difficulties in determining causation: empires which had big difficulties might be inclined to use paper money. And apart from that, not a single big civilization survived to today, including the ones which never used paper money. The comparison is, in other words, utterly useless.

Governments protect people against violence by using violence. It protects the value of money by keeping it valuable. It's both government intervention by using force. If you're against monetary government intervention then that's a reason why the gold standard would be better, because it limits the options of monetary intervention (though as I said, they can simply drop the gold standard at any time so it's not that stable either). But that's not a reason why "paper money doesn't work". You can say that governments are bound to misuse the power they have when using paper money. You can prefer the gold standard. But these are opinions, and they don't change the fact that paper money works.

And your videos are not the truth, they are made by the very same person who makes extremely elementary mistakes and as such do not hold value. I prefer to base my opinion on decades of proper economic research, backed by proper econometrics, thank you. Of course I do listen to different opinions, but none have convinced me so far, and yours certainly won't convince me if you keep making these basic mistakes. Apart from that, it's obviously pointless to argue that you're right because in your mind all economic phenomena work differently then they do. That's the same argument religious people use: their ideas are correct because the bible says so. That doesn't work. And you don't have to show me your videos because I understand how things work, thank you. Have you already read a modern macroeconomics textbook yet? Explain the IS-LM model. And the AS-AD model.

Production as measured by GDP measures production, which measures what people can buy, ultimately, irrespective of who is buying what (like I said, a GDP of $600 in the Chinese empire was mostly because of the rich elite (the government) being relatively rich). And your problems understanding GDP or your conceptual issues with GDP (and there are conceptual difficulties, obviously) don't change the fact that compared to the Chinese or the Roman empire, everybody is better off (except maybe a few drug addicts). Even if you are right about GDP (which to some extent you are), this is in favour of my argument that our economy produces far more per person, and that people can consume far more per person. Production in our economy is far higher (again, GDP measures production! Not consumption!) because our economy is fundamentally different. As such, it can't be compared to economies of ancient civilizations.

And again, you keep saying you have lots of explanations and facts, but where are they? Quote them directly or write them down. It's no use to me if they're in your head. (for instance, give me all empires and their financial history, why you think the switch to paper money led to their downfall, give me proper sources, and then explain why it would be a good comparison in the first place, since our economy is so different (far higher production per capita).

[VectorM]

And again, you keep saying you have lots of explanations and facts, but where are they? Quote them directly or write them down. It's no use to me if they're in your head. (for instance, give me all empires and their financial history, why you think the switch to paper money led to their downfall, give me proper sources, and then explain why it would be a good comparison in the first place, since our economy is so different (far higher production per capita).

So far all you've done is post one Wikipedia link (LOL), and 2 graphs. You don't even bother to mention the names of these "proper textbooks" that you want us to read, yet Shane has done that already.

And you demand proper sources, when you haven't done that ONCE!?

I prefer to base my opinion on decades of proper economic research, backed by proper econometrics, thank you.

The Austrian school of economics has all of those:

http://mises.org/etexts/austrian.asp
http://en.wikipedia.org/wiki/Austrian_School

Of course I do listen to different opinions

How? You refused to watch videos, because you disagreed with them! You listen to different opinions, my arse!

[Goaticus]

"I can be short about this. There was inflation in Spain, and they didn't print any money "

Yes, if we find another continent chock full of Gold the Gold standard could cause a modest increase in inflation. Although not anything like the Weimar Republic.

[Goaticus]

"And your videos are not the truth, they are made by the very same person who makes extremely elementary mistakes and as such do not hold value. "

Ironic coming from someone who quotes the noted Economist and intellectual the Amazing Atheists video about the Gold standard.

[Goaticus]

"Massive debt is not printing money."

From the Wikipedia article for Monetization. "This process of financing government spending is called monetizing the debt.[2] Monetizing debt is thus a two-step process where the government issues debt to finance its spending and the central bank purchases the debt, leaving the system with an increased supply of base money."

But Shane is the one that allegedly makes elementary errors. Monetizing the debt is very basic first semester Macro-economics.

[MrBogosity]

Massive debt is not printing money.

That's how government RUNS a massive debt!

what is going on today never happened in history either,

Funny, seems like history repeating itself to me everywhere I look!

And apart from that, not a single big civilization survived to today, including the ones which never used paper money. The comparison is, in other words, utterly useless.

The ones that lasted over two centuries DID NOT USE PAPER MONEY. FACT. Bleat all you want, but you're just denying reality.

And once again, you conflate violence and coercion--the INITIATION of force--with the defensive use of force.

And your videos are not the truth, they are made by the very same person who makes extremely elementary mistakes and as such do not hold value.

You say this when, BY YOUR OWN ADMISSION, you refuse to even WATCH them. While you yourself arrogantly bleat on about how knowledgeable you are in economics, while showing yourself to be a complete ignoramus. Ever heard of the Dunning-Kruger Effect? Well, you're at the very top of that first curve--so ignorant that you don't realize how ignorant you are!

yours certainly won't convince me if you keep making these basic mistakes.

Except they AREN'T basic mistakes! You just don't even have enough of a handle of the basics to see what they are.

Production as measured by GDP measures production, which measures what people can buy,

BULLSHIT. Complete and utter BULLSHIT. The Production Function is a COMPLETELY DIFFERENT THING--and ANY macroeconomics textbook will tell you that! GDP DOES NOT MEASURE PRODUCTION and IS NOT INTENDED TO. GDP is a measure of consumption, investment, government spending, and net exports. That's IT. And when government prints a trillion dollars, GDP goes up BECAUSE THE GOVERNMENT SPENDING PORTION GOES UP. It does NOT mean that production has gone up--in fact, it usually means quite the opposite!

So, here's another example: you don't even know what GDP IS, and you're trying to school ME on it! Pathetic.

And again, you keep saying you have lots of explanations and facts, but where are they?

You--BY YOUR OWN ADMISSION--ignored them.

It's no use to me if they're in your head.

It's NOT "in my head." They've been presented to you AND YOU KNOW IT.

[Travis Retriever]

Gotta give credit where due, he actually came here to defend his points which is leaps and bounds ahead of the spineless cowards we've dealt with on youtube who talk a big game but back down the minute the pressure is on.

Dude!  You must be psychic!  I just said that to D last night!

[Ibrahim90]

now, I kept out of this so far, since this isn't necessarily my forte (though my bias would be towards that of Shane et al.). however, I do have this to say, which should be independent of my biases, and because the whole discussion here is being affected by it.

I'm not going to watch that video, as it is a video by you and I'd probably disagree, and I'd rather stick to the current discussion.

then why the fuck are you here again? what point is there to trying to debunk or debate a person, when you won't even see his videos/documents/evidence surrounding his claim?

that would be like a person trying to deal with a creationist, without at first seeing his claims in detail; if you don't know them, you can't begin to actually deconstruct them.

besides, if you'd just watch the videos (I just did), you'd find all the evidence you were asking for, that led to Shane's conclusions. and perhaps you would have a better chance of actually dealing with them. as it is, I'm getting a mighty headache watching everything going in circles here-the last thing I need, when I'm here trying to unwind after a long day's studying.

[evensgrey]

"I can be short about this. There was inflation in Spain, and they didn't print any money "

Yes, if we find another continent chock full of Gold the Gold standard could cause a modest increase in inflation. Although not anything like the Weimar Republic.

Years ago (about 22, in fact) I read a really neat article in an already old Scientific American about inflation in two different systems of silver coinage in Imperial Rome, and in gold coinage in 16th century Spain.

As you might suspect, there were two causes in Roman silver, and a completely different one in Spanish gold.  The Romans systematically debased their silver coinage with base metals (two different times, having replaced one debased system with another that was then also debased in the same manner) and rampant counterfeiting which produced bogus coins often officially accepted as valid by the relevant regulator (counterfeiting silver coinage being entirely legal, unlike counterfeiting gold coinage, which was also not substantially debased).  Spanish gold coinage inflation was simply the result of stripping vast chunks of Central and South America of their gold (and usually their silver as well) without there being any expansion of the Spanish economy to go along with it.  Naturally, increasing the quantity of money in circulation while the quantity of goods and services available to buy with it stayed mostly the same only resulted in prices rising, one of the most obvious symptoms of currency inflation.  This apparently puzzled many people at the time, in part because currency itself was, for the most part, something that was only fairly recently back into general usage in much of Europe.  People had largely bartered in the Middle Ages.

[Travis Retriever]

No, it FUCKING ISN'T, because the reason WHY the money buys more is the key factor! As I showed in the video you refuse to watch, if it buys more because of monetary contraction, then capital is lost and you have deflation, which is bad. But if it buys more because production is more efficient, it's NOT deflation, and it's not bad because capital isn't lost--it's freed up to be used for other things.

Reminds me of a bit from Stefan Molyneux regarding that fear of falling prices (which they wrongly call inflation):  "I will never understand why people are so terrified of falling prices.  I used work work in the computer software industry.  Computer prices fall all the time, yet no one ever says 'boo' about it." (Paraphrased)