So now someone who purchased an ounce of gold yesterday at $1600 suddenly finds himself with an ounce of gold worth a small fraction of that, whereas someone with a $1600 in greenbacks still has $1600?No, wait, I've got that backwards - someone with $1600 in greenbacks will have $1600, but someone with $1600 in gold will have $50000 (or whatever) in gold.
In short, you don't get anything out of a gold standard that you didn't bring with you. If your government is a credible steward of the money supply, you don't need it; and if it isn't, it won't be able to stay on it long anyway. (See Argentina's dollar peg). Meanwhile, the limitations on the government's ability to respond to fiscal crises, the necessity of defending against speculative attacks in times of crises, and the possibility of independent changes in the relative price of gold, make your economy more unstable. It's a terrible idea, which is why there are so few economists willing to raise their voices in support of it.posted by TheophileEscargot at 12:16 PM on January 16, 2012 [13 favorites]
So now someone who purchased an ounce of gold yesterday at $1600 suddenly finds himself with an ounce of gold worth a small fraction of that, whereas someone with a $1600 in greenbacks still has $1600?Isn't that backwards? Today, the U.S. has 8,000 tons of gold, worth about $400 billion. There is $1.2 trillion of currency outstanding (I have no idea if this is the right measure of money for this purpose, because I don't really understand exactly what would be backed by gold, but I don't think it matters for this purpose). If all the currency becomes exchangeable for all the gold, that means each ounce of gold would be exchangeable for about $4700 (or $1,200,000,000,000 / (8,000 tons of gold * 2,000 pounds in a ton * 16 ounces in a pound)).
So 256,000,000 ounces of gold divided by $1,200,000,000,000 is something like two one hundredths of a penny per ounce.But look at your units. Dividing ounces by dollars gives ounces per dollars, not dollars per ounce. Just like dividing miles driven by hours elapsed gives miles per hour.
Ron Paul is a prominent politician in the same way that Tim Tebow is a prominent quarterback. While he may meet the dictionary definition...Other then Michael Vick he's probably the only quarterback I could even name.
Not to get too Californian on you, but some energy is definitely vibing off this thing. Until now the idea of holding gold as an investment or otherwise hasn't offered the faintest allure, but now I am tuning something in, an unheard, insistent bleating that says, "Gather up a bunch of me and you will be safe from a bad and uncertain world."They always say, when the 'average person' now thinks an investment is hot, it's over. Just look at the attitude towards housing in 2007.
If you've got 10 people, and everyone pitches in $10 for pizza, figuring whatever's left over goes as the tip, that's $100 on pizza.Other then the math, you have the metaphor backwards. The people with the gold are the pizza stand in your metaphor. They already have the gold. Now what they want is a law that forces the government to buy it from them.
Assuming you magically resolve the storage problem, there are way too many risks. It will overly reward low-cost dirty fuel such as coal. You cannot accurately price long-dated debt (such as home mortgages), due to risks of supply-shocks/discoveries. It encourages hoarding of energy.It wouldn't reward dirty fuel any more then the current regime. It would have to be some kind of derivative, like an energy future. You'd get "300kj delivered on June 17th 2024" and you could trade that for products -- people who use power would need to acquire the contracts in order to get energy that month.
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posted by delfin at 10:49 AM on January 16, 2012 [12 favorites]