> The U.S. domestic economy unlinked in 1933, permanently. Only international trade continued to use gold-backed currency, and it is that aspect which was finally eliminated in 1973.
If the iternational market for dollars is still linked, in spite of domestic unlinkage, there is still some level of grounding, because of the possibility of commodity arbitrage (both directly and indirectly). Certainly there was inflation during that era, and the dollar slipped so far that it led to Nixon's actions... But for the most part the standard of living was able to keep up, largely thanks to technological and infrastructural improvements. Moreover, you couldn't soak the bankers/financial sector quite as easily because of the international connection to gold (and international currency arbitrage is more important to bankers and finance than your average domestic schmoe).
> Likewise you have mixed up your cause/effect for the Great Depression
Sorry, I should have said, I believe if we hadn't unlinked it we would have only had a shorter, not-so-great depression (emphasis on great, not on depression). Obviously, I'm aware that the unlinking came after the stock market crash of 29.
> Holding currency to a gold standard by some fixed price would be called "price control" in any other context, and we already know price controls to be bad policy.
No, price controls are setting the price relative to a standard that's backed up by guns (guns = "control", as in, if you don't do what I say I can shoot you, or point a gun at you and take you to jail). Dollars are already backed up by guns, so the notion of 'price controlling' dollars makes no sense. If anything, you want to back dollars by gold to keep the people with guns honest.
The dollar is already an 'amarket' entity by virtue of its backing by the state. A better example of 'letting the market decide' in the context of 'valuing currency' would be letting the interest rate float, without manipulation, which is also something we most certainly don't do.
>The biggest irony for me with regard to Bitcoin is that it proves the fiat concept.
There are goldbugs who insist that Bitcoin is silly because it's not tied to anything with 'intrinsic value'. That's one interpretation of the fiat concept. But I (and many others) interpret fiat to mean 'by a higher power' (by analogy to fiat lux) except in the general case of state currencies, the higher power being the authority of the state.
Indeed a gold-backed dollar is still a fiat currency, albeit a more responsible one.
> No, price controls are setting the price relative to a standard that's backed up by guns (guns = "control", as in, if you don't do what I say I can shoot you, or point a gun at you and take you to jail). Dollars are already backed up by guns, so the notion of 'price controlling' dollars makes no sense.
On the contrary, with a fixed-ratio gold standard currency it is still the state who said that a dollar was by definition equivalent with, say, 1/35th of an ounce of gold (as it was just before the U.S. finally abandoned the standard for good). But the only reason the government would give you $35/troy ounce was because of the men with the guns, and the government could change their minds.
In fact, the U.S. did arbitrarily change their mind several times throughout their history about "what gold was worth". This didn't change the market value of gold of course, but this didn't stop the politicians from abusing fiscal policy for their own interests.
The interesting thing is more that there was a market value of gold which was different from the "official" government price of gold, which should illustrate by itself the issue.
Rather there was never anything special about gold except that people thought it was special. The U.S. started off on a gold and silver standard after all, which led to problems fairly soon after since the difference between gold and silver value that Congress decreed was not always the difference the markets created.
While I'll agree it's possible to have gold-backed fiat currency (like the Civil War-era greenbacks), there's no reason why it's "more responsible". It's still just as susceptible to government intervention and it unnecessarily conflates non-orthogonal concepts for the sake of... what?
Gold was only valuable because people thought it was valuable. If you went to a desert island you could form an economy on water bottles. Prisoners actually did form economies on cigarettes, and when cigarettes were banned the currency shifted to cans of mackerel.
As far as I'm concerned gold-backed dollars make as much sense as dollars backed by sardine cans. At least true fiat currencies (and Bitcoin) finally gave up the middle-man and acknowledge that their currencies are worth what people think they're worth. It may be too spooky, but it's the truth.
Not entirely true. Gold is a good choice because it's chemical properties make it fungible, durable, and easily verified (using low tech touchstones). These properties reflect themselves in bitcoin. As for why it's more responsible to have a commodity backed currency, it's because the exchange rate is set by statute and any legislator that messes with it is potentially accountable to the downstream effects.
If the iternational market for dollars is still linked, in spite of domestic unlinkage, there is still some level of grounding, because of the possibility of commodity arbitrage (both directly and indirectly). Certainly there was inflation during that era, and the dollar slipped so far that it led to Nixon's actions... But for the most part the standard of living was able to keep up, largely thanks to technological and infrastructural improvements. Moreover, you couldn't soak the bankers/financial sector quite as easily because of the international connection to gold (and international currency arbitrage is more important to bankers and finance than your average domestic schmoe).
> Likewise you have mixed up your cause/effect for the Great Depression
Sorry, I should have said, I believe if we hadn't unlinked it we would have only had a shorter, not-so-great depression (emphasis on great, not on depression). Obviously, I'm aware that the unlinking came after the stock market crash of 29.
> Holding currency to a gold standard by some fixed price would be called "price control" in any other context, and we already know price controls to be bad policy.
No, price controls are setting the price relative to a standard that's backed up by guns (guns = "control", as in, if you don't do what I say I can shoot you, or point a gun at you and take you to jail). Dollars are already backed up by guns, so the notion of 'price controlling' dollars makes no sense. If anything, you want to back dollars by gold to keep the people with guns honest.
The dollar is already an 'amarket' entity by virtue of its backing by the state. A better example of 'letting the market decide' in the context of 'valuing currency' would be letting the interest rate float, without manipulation, which is also something we most certainly don't do.
>The biggest irony for me with regard to Bitcoin is that it proves the fiat concept.
There are goldbugs who insist that Bitcoin is silly because it's not tied to anything with 'intrinsic value'. That's one interpretation of the fiat concept. But I (and many others) interpret fiat to mean 'by a higher power' (by analogy to fiat lux) except in the general case of state currencies, the higher power being the authority of the state.
Indeed a gold-backed dollar is still a fiat currency, albeit a more responsible one.