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Thread: Pandemics can't be stopped with monopoly bills

  1. #21
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    Re: Pandemics can't be stopped with monopoly bills

    Quote Originally Posted by Ahlevah View Post
    But at least the "social convention" regarding gold has some basis in logic in that it is tangible, durable, relatively rare, and finite.
    Whether or not it is tangible is inconsequential for the question of value. As many as a hundred million corpses have been left behind communism, at best in the pursuit of an ideal and at worst in the pursuit of power and influence, neither of which are tangible. Moreover, as far as human purposes are concerned, there is nothing about the durability of gold that makes it more suitable than the assets we today consider to be money: all of it will outlive you, very likely several times over. I also have yet to run into anything that was not in finite supply and that includes all currencies, even under hyperinflated regimes.

    As for scarcity, I am afraid we have a bit of problem here. Suppose that the moon is up for sale. There might be only one such moon orbiting the Earth, but if no one has any desire or use to own it, it is not scarce in any meaningful sense of the word. Stated differently, scarcity is a notion of distance between supplied and demanded quantities. It literally means "insufficient for the demand." If you allow me to paraphrase Carl Menger, all the gold of Fort Knox is without value to a man stranded on an island. That's why contemporary economic theory begins with the simple idea of supply and demand. It's the minimum you need to make sense of things.

    Quote Originally Posted by Ahlevah View Post
    On the other hand, modern fiat currencies have absolutely no intrinsic value (...).
    Then, you misread me. I meant to say that absolutely nothing has intrinsic value. You have a market for gold, you have a market for currencies, each with actors making choices from both sides of the market.

    Quote Originally Posted by Ahlevah View Post
    There is something "more real" in knowing that the value of an ounce of gold can't be easily debased on the whim of a government. On the other hand, modern fiat currencies (...) are based solely on faith the governments will keep them relatively rare and finite. Once that trust is shattered, look out below.
    And there we have it. The only reason people actually go down that rabbit hole is distrust in governments. It's not unwarranted to a certain degree, even if I don't think it's a reasonable expectation for countries like the United States or Canada. Even setting this aside, it's unnecessary to go further than saying you distrust the government generally. I don't know if ever heard of Carl Menger and the "marginal revolution," the debate surrounding the nature of value in economics has been settled over a 100 years ago. We think in terms of preferences and opportunity costs because it is manifest to everyone involved that value doesn't manifest itself as an objective property, but as the consequence of human interactions.
    All people who oppose free speech are trying to sell you snake oil. There is absolutely no exception to this rule.

  2. #22
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    Re: Pandemics can't be stopped with monopoly bills

    Quote Originally Posted by TheEconomist View Post
    As many as a hundred million corpses have been left behind communism, at best in the pursuit of an ideal and at worst in the pursuit of power and influence, neither of which are tangible.
    I used to work with a Vietnamese gentleman who had been a pilot in the South Vietnamese Air Force. After the North Vietnamese communists invaded in 1975, he was imprisoned for five years in a so-called reeducation camp. After his release, he escaped from the country on a fishing boat in the South China Sea, ultimately ending up in a UN-administered refugee camp in the Philippines. He was able to bribe and pay his way out of the country because he had gold. Assuming you could keep it dry, imagine trying to do that with nearly worthless Vietnamese currency. Notwithstanding the fact that the notes had Uncle Ho's portrait on them, even the communist cadres didn't want that crap. But GOLD? You betcha!

    Quote Originally Posted by TheEconomist View Post
    Moreover, as far as human purposes are concerned, there is nothing about the durability of gold that makes it more suitable than the assets we today consider to be money: all of it will outlive you, very likely several times over. I also have yet to run into anything that was not in finite supply and that includes all currencies, even under hyperinflated regimes.
    Long after you, I, and all the banknotes on the planet have turned to compost, the gold mined in the days of the Pharaohs will still be here.

    Quote Originally Posted by TheEconomist View Post
    As for scarcity, I am afraid we have a bit of problem here. Suppose that the moon is up for sale. There might be only one such moon orbiting the Earth, but if no one has any desire or use to own it, it is not scarce in any meaningful sense of the word. Stated differently, scarcity is a notion of distance between supplied and demanded quantities. It literally means "insufficient for the demand." If you allow me to paraphrase Carl Menger, all the gold of Fort Knox is without value to a man stranded on an island. That's why contemporary economic theory begins with the simple idea of supply and demand. It's the minimum you need to make sense of things.
    I tell you what. You can have the moon, and I'll take all the gold in Ft. Knox.

    Quote Originally Posted by TheEconomist View Post
    Then, you misread me. I meant to say that absolutely nothing has intrinsic value. You have a market for gold, you have a market for currencies, each with actors making choices from both sides of the market.
    Nonsense. A basic rule of debate is to, wherever possible, avoid words defining absolutes because: 1) there are few absolutes; and 2) all it takes to invalidate your position is one example. You've managed to use two words defining absolutes--"absolutely" and "nothing"--in the same sentence. Of course, in our discussion it depends on how you define the word "intrinsic." It would be difficult to place a monetary value on an igloo in the middle of an inhospitable, desolate Arctic, but it does have value in and of itself to the Eskimo who inhabits it, unless he wants to freeze to death.

    Quote Originally Posted by TheEconomist View Post
    And there we have it. The only reason people actually go down that rabbit hole is distrust in governments. It's not unwarranted to a certain degree, even if I don't think it's a reasonable expectation for countries like the United States or Canada. Even setting this aside, it's unnecessary to go further than saying you distrust the government generally. I don't know if ever heard of Carl Menger and the "marginal revolution," the debate surrounding the nature of value in economics has been settled over a 100 years ago. We think in terms of preferences and opportunity costs because it is manifest to everyone involved that value doesn't manifest itself as an objective property, but as the consequence of human interactions.
    Yeah, I don't trust governments to preserve the value of their currency. And why would anyone, given the stated goal of monetary authorities to devalue their currency at a steady rate, which they seem to think they can control over the long term. But do I own gold because of that? No, actually, I don't own ANY gold, either physical gold or in the form of a proxy such as a gold ETF. But I'm not dumb enough to loan the federal government dollars for 30 years at 1.45%, either. I would rather own a productive asset like shares in a corporation that should increase in value over time, unlike gold which really will just maintain its purchasing power over time. Maintaining a stable value is supposed to be a prime trait of a currency.
    Last edited by Ahlevah; 03-25-20 at 10:38 PM.
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    Re: Pandemics can't be stopped with monopoly bills

    Quote Originally Posted by relator View Post
    The debts of the countries convert the money of those countries into monopoly bills, and pandemics must be stopped with real money, not with monopoly bills.
    Got news for you... pandemics can't be stopped. Period. All of this isolation business is just to slow the spread of the virus. About 70%+ of the population is going to end up getting this thing. That's already in the cards. What's not in the cards is when we get it. If we all get it at one time, that's obviously going to swamp the healthcare system and a lot of people are going to die who don't have to... but if we can spread it out over a longer time period, then the healthcare system at least has a fighting chance to keep up. Or at least not get swamped any more than it has to.
    "He who knows, does not speak. He who speaks, does not know." --- Lao Tzu

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    Re: Pandemics can't be stopped with monopoly bills

    Quote Originally Posted by Ahlevah View Post
    Long after you, I, and all the banknotes on the planet have turned to compost, the gold mined in the days of the Pharaohs will still be here.
    You're missing the point. As far as human purposes are concerned, anything that can outlive you several times over is sufficiently durable to be used as a medium of exchange.

    Quote Originally Posted by Ahlevah View Post
    Of course, in our discussion it depends on how you define the word "intrinsic." It would be difficult to place a monetary value on an igloo in the middle of an inhospitable, desolate Arctic, but it does have value in and of itself to the Eskimo who inhabits it, unless he wants to freeze to death.
    An intrinsic property of an object is something which is an integral part of an object, something which cannot be dissociated from the object. Value is the consequence of human desires and needs as they meet the cold hard fact that not all of them can satisfied. In the economic jargon, value is a matter of supply and demand; in the sociological jargon, value is a social fact. There is nothing about gold itself that makes it valuable independent of the judgement of human beings. The reason I made an absolute statement is simple: it's a tautology. Litterally nothing is intrinsically valuable. To find out what something is worth, you need to find out what someone is willing to sacrifice to acquire it.

    The example you give above: there is a demand for a shelter and there is a limited amount of sheltered space. The value of the igloo is whatever the Eskimo is willingto sacrifice to acquire it. That's a statement about their preferences, not about the igloo.

    Quote Originally Posted by Ahlevah View Post
    Maintaining a stable value is supposed to be a prime trait of a currency.
    Stabilizing the price level is completely pointless. Making choices requires comparing alternatives and the relevant metric here are price ratios, not prices. We could decide tomorrow to work using pennies instead of dollars. This would multiply every price tag, account balance, paychecks, etc by a unique factor of 100 -- and it would have exactly no relevance, whatsoever. If you prefer, we could use a factor of 20 billions. Besides being a mouthful and requiring us to print new bills, it changes nothing.

    The little story above should give you a hint as to what actually is important: stabilizing the inflation rate. We suspect that rapidly changing prices tend to cause both more susprises and more dispersion in prices which leads to unanticipated redistribution of ressources. There are also reasons to think that inflation is costlier than most macroeconomists would have thought, especially because of the large impacts it can have on pricing adjustments in imperfectly competitive markets (such as on wages in the labor market). So, we should try to make sure it's not too high and that it's rather stable. You might ask if we should make it zero. I doubt that it would be such a smart move because there is an obvious difficulty in convincing people to accept a reduction in income. A mild positive rate of inflation can give you a fall in real income without having to bring the nominal figures down.

    If someone wants to bet that the Federal Reserve will generate hyperinflation through QE, I am more than willing to take that action. It's not going to happen.

    Quote Originally Posted by Ahlevah View Post
    But I'm not dumb enough to loan the federal government dollars for 30 years at 1.45%, either. I would rather own a productive asset like shares in a corporation that should increase in value over time, unlike gold which really will just maintain its purchasing power over time.
    You're comparing apples and oranges.
    All people who oppose free speech are trying to sell you snake oil. There is absolutely no exception to this rule.

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