Debate and Discussion

Gold vs Fiat currency
kyupol at 1:48PM, July 10, 2008
(offline)
posts: 3,713
joined: 1-12-2006
What do you think about Gold and Fiat currency? What do you think is a better economic system?


Here are the arguments on both sides of the issue:

GOLD

Money nowadays is just fiat currency. There is no gold or silver value attached to it. Thats why it is prone to lose its value and collapse into worth less than toilet paper. But Gold has been used as currency for thousands of years. Gold always retains its value and is the most secure investment.

——–

FIAT CURRENCY

There isnt enough gold circulating in the world to maintain the global economy. It isn't the gold that has the value but rather, the value of gold is a result of what society puts value on. Besides, how would you divide the gold when purchasing items that have low value?
NOW UPDATING!!!
last edited on July 14, 2011 1:26PM
imshard at 1:18PM, July 11, 2008
(offline)
posts: 2,961
joined: 7-26-2007
kyupol
What do you think about Gold and Fiat currency? What do you think is a better economic system?


Here are the arguments on both sides of the issue:

GOLD

Money nowadays is just fiat currency. There is no gold or silver value attached to it. Thats why it is prone to lose its value and collapse into worth less than toilet paper. But Gold has been used as currency for thousands of years. Gold always retains its value and is the most secure investment.

——–

FIAT CURRENCY

There isnt enough gold circulating in the world to maintain the global economy. It isn't the gold that has the value but rather, the value of gold is a result of what society puts value on. Besides, how would you divide the gold when purchasing items that have low value?

Personally I support the reintroduction of the gold standard. Fiat standards are a bad idea because the only real value they have is the willingness of people to redeem it.

In a capitalist (or really any trade system) goods or services are exchanged for goods or services between two people that agree they are equal in value.
In early civilizations it became impractical to cart around sacks of goods or spend hours out of your day performing your craft for the various vendors you were buying from. Instead you give a token that represents the goods or services like a big system of mini-contracts and the tradesman you gave it to could redeem it later or trade it to somebody else.

We've used money so long that the tokens themselves have taken on all the value without representing any actual physical items. At best you could say that the store accepts the value of whatever job you perform and are willing to take the credit you earned from your employer.

Now let's put that in perspective. Say I bought a $1 cheeseburger at McDonald's. That effectively McDonald's just gave me a cheeseburger for spending 4 minutes on a telephone at a call center. Why McDonald's values me talking to one of my customers in a different country enough to give me food, I'll never know.

I don't really care if its gold in particular that backs my currency I just like being paid in something that has actual value. For now I have to accept pieces of paper with ink on them
Don't be a stick in the mud traditionalist! Support global warming!

Tech Support: The Comic!! Updates Somedays!!
last edited on July 14, 2011 12:58PM
ozoneocean at 1:07AM, July 12, 2008
(online)
posts: 25,113
joined: 1-2-2004
imshard
For now I have to accept pieces of paper with ink on them.
How quaint. :)
It's rather unusual that my wallet has any actual notes or coins in it.

I don't know Kyupol… The value of gold depends on its rarity. You could base a money standard on anything at all, it doesn't have to be gold, but should be rare and the quantity should be fairly stable.

I don't know much about this but it while “gold” seems a pretty stable system, it really lacks flexibility. That wouldn't make it much good these days…
 
last edited on July 14, 2011 2:31PM
lothar at 9:57AM, July 12, 2008
(online)
posts: 1,299
joined: 1-3-2006
in the future - money will be based on calories ! everybody needs to eat
last edited on July 14, 2011 1:45PM
imshard at 2:29AM, July 13, 2008
(offline)
posts: 2,961
joined: 7-26-2007
ozoneocean
imshard
For now I have to accept pieces of paper with ink on them.
How quaint. :)
It's rather unusual that my wallet has any actual notes or coins in it.

I don't know Kyupol… The value of gold depends on its rarity. You could base a money standard on anything at all, it doesn't have to be gold, but should be rare and the quantity should be fairly stable.

I don't know much about this but it while “gold” seems a pretty stable system, it really lacks flexibility. That wouldn't make it much good these days…

I was talking about my check. ;)

I agree with Ozone on this one. You can use almost anything to back your currency. The point is that it IS backed and not akin to toy money like in a fiat system. Gold could be a viable backing if you're willing to adjust the trade amount (ie how much actual gold a dollar could get you if redeemed) dynamically to market conditions. this would radically redesign the markets if stock decisions were not based on the FED interest rate.

One reason a non-fiat system wouldn't work is redemption. Anybody with a dollar bill of currency could go to the bank or local treasury office and demand the equivalent amount of gold (or whatever material the currency is based on). That kind of thing is hazardous to national treasuries for obvious reasons and in part lead to the development of fiat systems in the first place. So that National governments could artificially control the location and value of money. Conspiracy and corruption accusations aside this is ostensibly to preserve and grow the nations power and wealth. I Do see the wisdom of a fiat system, I just don't like them. It preserves the national integrity at the expense of leaving the citizenry out in the wet should a rainy day come along, by separating the actual national treasury from the national currency.

Oh yes thats right kiddos, fort knox is the US government's very own insurance policy. It will still be there, no matter what happens to the dollar, the gold is not touched. The federal reserve is an independent corporation, legally, that can be cut loose if needed and it alone is responsible for that cotton based green paper in your pocket and in your bank. Fun huh?
I wouldn't mind having Real money that says “United States Note” on it instead of “Federal Reserve Note”

Just for fun see if you can spot the differences between the gold backed and fiat bills
Current Fiat bills
Older Treasury issued
Don't be a stick in the mud traditionalist! Support global warming!

Tech Support: The Comic!! Updates Somedays!!
last edited on July 14, 2011 12:58PM
imshard at 2:34AM, July 13, 2008
(offline)
posts: 2,961
joined: 7-26-2007
Here are few other examples of gold backed tender.



Don't be a stick in the mud traditionalist! Support global warming!

Tech Support: The Comic!! Updates Somedays!!
last edited on July 14, 2011 12:58PM
Aussie_kid at 10:02PM, July 16, 2008
(online)
posts: 591
joined: 1-1-2006
The reason money was invented was because often there were disputes over the trade system (I'll give you an apple for an orange) for what an item was worth. Because of its appeal, gold was chosen to be made into coins. Then moving around so many coins became a problem and people started writing I.O.U notes. This soon became the cheque and that then gave way to paper money.

Personally, I don't think things are going to change unless something drastic happens. We're humans and we can only adapt to subtle change. To reorganise the economic systems would cause problems everywhere. People working in that area would need to be retrained. Thousands would lose their jobs because they'd no longer be necessary. In the end, would it be worth it?
Insanity Complex: We may not be insane, but we like to think we are
last edited on July 14, 2011 11:11AM

Forgot Password
©2011 WOWIO, Inc. All Rights Reserved