US 10 days from bankruptcy.

[Kasierith]

No. Tying your currency to a metal is stupid.

Not really knowledgeable on this aspect of economics.. but isn't it essentially because the value of your currency is based not on the health of the economy, but on the current value of gold?

[obdigore]

Not really knowledgeable on this aspect of economics.. but isn't it essentially because the value of your currency is based not on the health of the economy, but on the current value of gold?

That would be an advantage that fiat currency has, yes. Fiat currency also allows countries to play with the price if needed.

[semaphore]

Not really knowledgeable on this aspect of economics.. but isn't it essentially because the value of your currency is based not on the health of the economy, but on the current value of gold?

The government has better control over it. The two primary policy tools at the disposal of governments for maintenance of the economy is fiscal policy (tax and spending) and monetary policy (money supply). During the recent recession/depression, the Feds doubled the monetary supply of the United States. They couldn't have done that to mitigate the disaster if it's a gold standard (takes time to mine gold).



In the case of the United States, there's also the huge benefits of seigniorage.

[Reeve]

The government has better control over it. The two primary policy tools at the disposal of governments for maintenance of the economy is fiscal policy (tax and spending) and monetary policy (money supply). During the recent recession/depression, the Feds doubled the monetary supply of the United States. They couldn't have done that to mitigate the disaster if it's a gold standard (takes time to mine gold).



In the case of the United States, there's also the huge benefits of seigniorage.

Seigniorage isn't real, though. I mean the US government does make money on it, but it's just money that's wasted somewhere else in the economy. It's essentially just another kind of tax.

[semaphore]

Seigniorage isn't real, though. I mean the US government does make money on it, but it's just money that's wasted somewhere else in the economy. It's essentially just another kind of tax.

Yes, but it's tax on the entire world, because the US Dollar is the predominant medium in international exchanges. That's why I specified that it's a special case for the United States.

[Reeve]

Yes, but it's tax on the entire world, because the US Dollar is the predominant medium in international exchanges. That's why I specified that it's a special case for the United States.

That's a good point. I hadn't thought about that before. I wonder how much noncirculating physical US currency is outside the US, and if it really accounts for a significant portion of our typical seigniorage revenues.

[semaphore]

That's a good point. I hadn't thought about that before. I wonder how much noncirculating physical US currency is outside the US, and if it really accounts for a significant portion of our typical seigniorage revenues.

That's a complicated question. Some years ago the Feds published a study based on multiple estimates and I think they concluded that it was between 55-70% held overseas or something like that (http://www.federalreserve.gov/pubs/b...6/1096lead.pdf), but I don't know how it measures up to subsequent research or if circumstances changed that much since then.

[Elegiac]

Not really knowledgeable on this aspect of economics.. but isn't it essentially because the value of your currency is based not on the health of the economy, but on the current value of gold?

Yes. There have been several instances in history where the growth of an economy has actually outstripped the supply of specie, resulting in market issues.

[Afrospinach]

The government has better control over it. The two primary policy tools at the disposal of governments for maintenance of the economy is fiscal policy (tax and spending) and monetary policy (money supply). During the recent recession/depression, the Feds doubled the monetary supply of the United States. They couldn't have done that to mitigate the disaster if it's a gold standard (takes time to mine gold).

Pffft, it could work. Just pretend you have the gold even if you don't in times of crisis. Paint some lead or some such, no one will ever know (they probably won't show up demanding it either)

[semaphore]

Pffft, it could work. Just pretend you have the gold even if you don't in times of crisis. Paint some lead or some such, no one will ever know (they probably won't show up demanding it either)

The problem with a gold standard is that people always show up demanding the gold in a crisis...

[PizzaSHARK]

The problem with a gold standard is that people always show up demanding the gold in a crisis...

That's okay. Lead is a soft, dense metal, right? And if they bite the coins to determine if they're real - hey, lead poisoning! One less person whining about money!