pmaitra
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@asianobserve, do not respond to anything if you don't understand what you are responding to.
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What do you mean by asset being the standard? You mean each country will value their own currencies based on their total national assets? How do you do that and how do you value intangible assets of countries?@asianobserve, I agree with you that gold standard is not possible. However a standard based on "Assets" is possible.
The biggest issue is taking away national government right to print money; if an international agency prints money for everybody.
The EU was the experiment that was supposed to create a precursor of an international currency. However EU is under a lot of strain lately. The next two years are crucial.
India uses Consumer Price Index and Wholesale Price Index to calculate inflation, and this is just one example how the value of the currency (precisely, the inflation) can be calculated. This is more practical than the gold standard.What do you mean by asset being the standard? You mean each country will value their own currencies based on their total national assets? How do you do that and how do you value intangible assets of countries?
I already posted the comparison chart between gold and Dollar (if you want to compare them then you put them on the same axis). All other charts I came across have the same result.@asianobserve, do not respond to anything if you don't understand what you are responding to.
Inflation is only one of the factors that determine the value of a currency.India uses Consumer Price Index and Wholesale Price Index to calculate inflation, and this is just one example how the value of the currency (precisely, the inflation) can be calculated. This is more practical than the gold standard.
I was talking about comparing tonnes of gold available at time t vs total Dollars available at time t;I already posted the comparison chart between gold and Dollar (if you want to compare them then you put them on the same axis). All other charts I came across have the same result.
Yes, each piece of currency (a piece of paper with symbols and pictures printed on it) will be equivalent to a certain amount of some precious metal, say gold, in case of gold standard.@pmaitra
Can I ask you a question: Under gold standard, does it mean that the value of a country's currency will depend on how much gold they have in reserve?
The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to gold and the ability of the IMF to bridge temporary imbalances of payments.
Source: Bretton Woods system - Wikipedia, the free encyclopediaOn 15 August 1971, the United States unilaterally terminated convertibility of the US dollar to gold, effectively bringing the Bretton Woods system to an end and rendering the dollar a fiat currency.[1]
Source: 1973–75 recessionAmong the causes were the 1973 oil crisis and the fall of the Bretton Woods system.[2]
Yes, each piece of currency (a piece of paper with symbols and pictures printed on it) will be equivalent to a certain amount of some precious metal, say gold, in case of gold standard.
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Source: Bretton Woods system - Wikipedia, the free encyclopedia
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Source: 1973–75 recession
Yes.It means that countries with big natural deposits have the unfair advantage of getting rich. They can simply pass a law to ban the export and private sales of all gold produced within their borders. These countries can buy gold from their domestic mines at very low prices. That means that USA will remain on top as it has the highest deposits, that's unfair. On the other hand, countries with small natural gold deposits are at a severe disadvantage as they will have to buy gold at higher prices from foreign sources.
This is not good news for meritocracy. This system invites laziness.Yes.
It is how much gold you have, but not only gold, but also, how much oil, uranium, etc., you have; or how much arable land you have.
Exactly what I mean by unfair. Smaller countries will have a hard time competing.Big countries, such as, Russia, Canada, PRC, US, Australia, Brazil, will always have more resources, and that means these countries will always be rich (this is keeping in mind their respective populations). India would also be rich if its population were to be 0.12 billion instead of 1.2 billion.
No, it doesn't. Let's say a country has a lot of uranium and not much of anything else, but if no one knows how to build a nuclear reactor, then that uranium is useless, and the country will remain a poor country. When scientists and engineers research and build a nuclear reactor, all of the sudden, that uranium becomes useful and the country begins to get rich.This is not good news for meritocracy. This system invites laziness.
True, it is indeed unfair.Exactly what I mean by unfair. Smaller countries will have a hard time competing.
No, it doesn't. Let's say a country has a lot of uranium and not much of anything else, but if no one knows how to build a nuclear reactor, then that uranium is useless, and the country will remain a poor country. When scientists and engineers research and build a nuclear reactor, all of the sudden, that uranium becomes useful and the country begins to get rich.
So, resources + innovation = wealth;
Just like resources + labour = wealth.
Even Wootz Steel was a result of meritocracy.
Scientific development always invites laziness. If you have a washing machine, you do not need to use your hands to wash clothes. Many can afford to be lazy, only after some manage to be meritocratic and invent the washing machine.
However, I get your point. Some people are blessed with more resources, so they can afford to be lazy. The Bedouin people of the Arabian Peninsula used to live in tents and ride camels. The live in palaces and ride Rolls Royce's now; and do little compared to other more meritocratic countries.
True, it is indeed unfair.
Yes, if we have gold standard, then the value of the currency purely depends upon its gold reserves. Yes, in a way you are correct as to how much gold resources a country has determines how rich it is, but the value of the currency purely depends upon how much gold bullion its central bank has in its vaults, and this does not include the unmined gold.We were talking about gold standard. Since the amount of gold a country has determines the value of its currency, gold rich countries can simply hoard their gold to become rich (their money has more value). It does not need cutting edge technology to mine gold.
BTW, under gold standard the sole basis of the value of currency is the amount of gold in a country's central bank. Oil, platinum, gas, etc. have no effect on the valuation of a country's currency.
So you're now proposing a hybrid system of valuing currencies, gold + other products? I must say it'll be very hard to place values on the products of other countries (this brings to mind China that has a penchant for inflating production and export figures). What about the political stability of a country? There are countries that are very rich in natural resources but are very politically unstable and the government very corrupt. Are you prepared to give higher values for their currency than countries that have lesser gold deposits and natural resources but are economically stable?Yes, if we have gold standard, then the value of the currency purely depends upon its gold reserves. Yes, in a way you are correct as to how much gold resources a country has determines how rich it is, but the value of the currency purely depends upon how much gold bullion its central bank has in its vaults, and this does not include the unmined gold.
Now, we come back to what I mentioned before - can we eat gold if we are hungry?
Like I mentioned CPI and WPI, it is more practical to peg the value of the currency to not only precious metals, but also to things that are necessary for our survival [ref], such as energy, food, etc.. The advantage of using gold is it is more preservable than grain or oil.
Gold, silver, platinum, all are preservable. There is platinum bullion as well.
I am "now" proposing a hybrid system? Did I propose anything else earlier? Please go back and check all my posts.So you're now proposing a hybrid system of valuing currencies, gold + other products? I must say it'll be very hard to place values on the products of other countries (this brings to mind China that has a penchant for inflating production and export figures). What about the political stability of a country? There are countries that are very rich in natural resources but are very politically unstable and the government very corrupt. Are you prepared to give higher values for their currency than countries that have lesser gold deposits and natural resources but are economically stable?
You've always wanted the gold standard versus fiat money.I am "now" proposing a hybrid system? Did I propose anything else earlier? Please go back and check all my posts.
I was talking about the merits of gold standard. We arrived at that discussion from Russia buying up gold. I never claimed gold standard is the best standard. The proof of it lies in the fact that I mentioned tangible items that humans need for survival.
I strongly urge you to spend time reading existing posts.
As you are reading this post, please go back and revisit all the previous posts, before you respond.