General > General Technical Chat

Silicon Valley Bank Collapses

<< < (35/48) > >>

EEVblog:

--- Quote from: Marco on March 17, 2023, 06:53:55 pm ---
--- Quote from: vad on March 17, 2023, 05:56:26 pm ---I wonder how this compares to resource wastage and environmental impact of gold mining.

--- End quote ---
It would be pretty disastrous to back a major currency with gold again too, yes.

--- End quote ---

Why?
You just have to peg a ratio.
Does mean you can't just print more out of thin air though, and well, they can't give up that magic ability.

nctnico:

--- Quote from: EEVblog on March 18, 2023, 01:39:45 am ---
--- Quote from: Marco on March 17, 2023, 06:53:55 pm ---
--- Quote from: vad on March 17, 2023, 05:56:26 pm ---I wonder how this compares to resource wastage and environmental impact of gold mining.

--- End quote ---
It would be pretty disastrous to back a major currency with gold again too, yes.

--- End quote ---

Why?
You just have to peg a ratio.
Does mean you can't just print more out of thin air though, and well, they can't give up that magic ability.

--- End quote ---
The latter is because you need to adjust the amount of money to the size of economy and add some inflation on top. Otherwise everything grinds to a halt. You can't back money with some physical item that is in limited supply (whether it is gold, crypto, sea shells, etc). In the end money represents an amount of work. The more people work, the more money you need and hence the need to being able to print more money.

Imagine a village which has 1kg of gold. Now the population doubles and twice as many people need to buy bread. With only 1 kg of gold it means that the amount of gold that used to pay for 1 bread now has to be worth 2 breads. And the people that have extra gold will sit on it instead of investing their gold into more economic growth so even less is available for use in the economy. Hyper deflation! 'Pegging a ratio' goes flying out of the window!

Bottom line: you really need to let go of the idea that money is actually worth something tangible. It isn't. It is a bartering tool to exchange labour. In the end any value of money is created by somebody doing work.
 

EEVblog:

--- Quote from: nctnico on March 18, 2023, 01:53:10 am ---The latter is because you need to adjust the amount of money to the size of economy and add some inflation on top. Otherwise everything grinds to a halt. You can't back money with some physical item that is in limited supply (whether it is gold, crypto, sea shells, etc). In the end money represents an amount of work. The more people work, the more money you need and hence the need to being able to print more money.

--- End quote ---

Gold backed currencies worked quite fine for a long time. You can build some inflation into your ratio peg.
The idea is to stop, or at least put the brakes on the modern theory of just printing your way out of problems instead of actually solving them. e.g. Let's actually cut back on military spening this year to pay for all this covid stuff. Radical thought, I know.

RJSV:
Yeah, I don't follow the logic, exactly, but seems to make sense, (the above discussion on GOLD based economies).
   However, I DID pick up on the fact that, Janet Yellen etc.al. were warned.  "DON'T do these massive spending, as inflation will, predictably, skyrocket."
But then, Yellen saying "Gee, we had no idea or warning, that this (runaway inflation) could ever happen."

   It all sounds just so fresh-faced and innocent, as she (they) shrug off any responsibility.  It's just "Whoops, must have been something Trump did...
They were warned, plenty.

nctnico:

--- Quote from: EEVblog on March 18, 2023, 02:35:37 am ---
--- Quote from: nctnico on March 18, 2023, 01:53:10 am ---The latter is because you need to adjust the amount of money to the size of economy and add some inflation on top. Otherwise everything grinds to a halt. You can't back money with some physical item that is in limited supply (whether it is gold, crypto, sea shells, etc). In the end money represents an amount of work. The more people work, the more money you need and hence the need to being able to print more money.

--- End quote ---

Gold backed currencies worked quite fine for a long time. You can build some inflation into your ratio peg.
The idea is to stop, or at least put the brakes on the modern theory of just printing your way out of problems instead of actually solving them. e.g. Let's actually cut back on military spening this year to pay for all this covid stuff. Radical thought, I know.

--- End quote ---
That is a bad idea and exactly why gold (or whatever) backed systems don't work. If you print extra money, you can get people to work on military stuff and improve (increase) the economy which in turns backs the value of the extra money. Government debt is only a problem when people stop to work so there is some carefull planning required (and why we have a limit on the debt versus GDP ratio in the EU). In a way you can even doubt government debt is an actual debt; more likely bookkeeping to show how much money was printed.

Navigation

[0] Message Index

[#] Next page

[*] Previous page

There was an error while thanking
Thanking...
Go to full version
Powered by SMFPacks Advanced Attachments Uploader Mod