Newbies

Re: Newbie Question: How the Gold Standard helps our Standard of Living?

Jonathan — Tue, 09 Mar 2010 03:30:37 GMT

Thanks guys for all the info really appreciate it. Looking forward to joining in many of the discussions going on in here and how we can make a difference in our society with our knowledge.

Re: Newbie Question: How the Gold Standard helps our Standard of Living?

The Late Andrew Ryan — Mon, 08 Mar 2010 15:39:57 GMT

If you don't consider the industrial revolution as a major reason for economic progress then there is no hope for you.

As for the question on the gold standard it looks like we have that covered.

As for intro to Austrian Economics, please do not read economics for real people. That book is an insult to your intelligence. Just read the section on the buisness cycle, and on the various Austrian economists. Those were the only valuable parts of that book.

Read some bastiat the complete collection (on this site) and Economics in one lesson. Economics in one lesson is on PDF in a few places.

Welcome.

Re: Newbie Question: How the Gold Standard helps our Standard of Living?

Nielsio — Mon, 08 Mar 2010 14:12:23 GMT

jjorge3:

What are some other things that I can present to my friend that the gold standard is better then believing this myth that we would not have cars or computers if we were still backed by gold?

This video deals with that specific myth:

The Gold Standard in Theory and Myth (by Joseph Salerno)
http://www.youtube.com/watch?v=ToEgZnMUuno

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This also deals with it:

The supply of money

What is the optimal supply of consumer goods? The answer is generally: more is better than less. For producer goods, the answer is the same, as more producer goods give rise to more consumer goods. If we look at money however, we come to a different conclusion. Why isn't more money better than less money? Suppose the amount of money each individual has doubles overnight. Would society be better off because of this? What will happen is that the prices of consumer goods and producer goods expressed in the money will double. But our standard of living depends on the consumer goods and producer goods in existence. We don't consume money, we don't produce anything out of money. Money is just a facilitator of exchange. What may happen in the case of an increase of that good is that a different commodity will now outcompete the previous commodity as money. In reverse, if the money supply falls in half, are we worse off? What will happen then is that the prices of goods will fall in half. What we conclude from this is that any quantity of money is equally as good as any other quantity. Only to the extent that the money commodity is used in a non-monetary way (for example, how gold is used for filling teeth and making high tech equipment), does an increase make us wealthier.

In the case of paper-money, where there exists no non-monetary use for it, any increase in the amount is something that does not benefit society as a whole. But where it can't benefit society as a whole, an increase in the supply of money can redistribute income within society; it can make some people richer and other people poorer. To illustrate, imagine again a sudden doubling of the amount of money in existence for each individual. Upon this discovery, two hypothetical people react differently. The first person spends his additional money immediately. What will happen to prices? The goods on which he spends his additional money will begin to rise in price, as there is an increased demand for that good. The goods on which he spends his additional money will begin to rise in price first, and then as the new money comes into circulation, other goods will experience an increased demand, and those goods will rise in price too. But initially when this person spent his additional money, he could buy at the old, lower, price. And what of the second person, who waits for four weeks to ponder what to do with his additional money? He will find that he can no longer buy many goods at the old, lower prices. So that person who spent his money first gains in wealth at the expense of the person who waited, and there is an income redistribution taking place. In real life, increases in the money supply do not occur equally for all individuals. Instead, additional supplies of money come into the hands of particular individuals at particular places. And it is those who get the money first and spend it first who gain at the expense of those who's income has not yet risen and who in the mean time have to pay higher prices, driven up by the first person spending the money first.

Purchasing power

Some economists believe that the purchasing power of money should remain the same over time. Money that has a purchasing power that allows us to buy the same quantities of goods with the same amount of money over the course of time. Money is used to purchase goods in the economy. So prices are the amount of money in relation to the amount of goods. In growing economies there is an increase in the quality and quantity of goods, because of savings and investments, technological discoveries, cost-cutting optimizations, and so on. So if such an economy was under a free market gold standard and there were only tiny additions in the amount of gold from year to year, then prices would continue to drop. This is a sign of a healthy economy. If we look at computers or telecommunication, we notice that we can buy better products over the course of time for the same amount of money. That is how we measure progress. If despite advances in production and cost-cutting, the prices of goods don't drop, then that means that all advances that have been made are at the same time being inflated away through an increase in the supply of money. Remember that an increase in the money supply, if it is distributed evenly, has no effect on our wealth. But when one group claims for itself the power to print money, in the name of price stability, they are just taking away our would-be increase in standard of living, for their personal gain. Under a paper-money standard, you can increase the amount of money at will. Hereby it is easy to explain why prices expressed in terms of paper money increase all the time instead of fall.

From: http://www.vforvoluntary.com/wiki/WhatIsMoney#The%20supply%20of%20money

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And lastly, according to his thesis, private counterfeiting would also benefit society. So why is that illegal?

Re: Newbie Question: How the Gold Standard helps our Standard of Living?

E. R. Olovetto — Mon, 08 Mar 2010 07:12:55 GMT

Hard Rain:

Economics for Real People by Gene Callahan

Free download, from the official mises.org torrent

Re: Newbie Question: How the Gold Standard helps our Standard of Living?

Hard Rain — Mon, 08 Mar 2010 06:58:47 GMT

Economics for Real People by Gene Callahan

Available online, for free, Murray Rothbard's:

The Case for a 100 Percent Gold Dollar

What Has Government Done to Our Money?

Newbie Question: How the Gold Standard helps our Standard of Living?

Jonathan — Mon, 08 Mar 2010 06:24:39 GMT

I was arguing with a friend regarding the gold standard and was to trying to explain to them the reason we have advanced so much technologically wise for the last 200 years compared to the rest of the history is because of freedom, the gold standard and capitalism. This friend of mine actually thinks that we have advanced a lot because of the central banking system and the dollar not being held back by gold because if not we would be living in caves.

I said before the US won its independence the world has been in control by kings, monarchs, emperors, religious leaders etc so people did not have the liberty to think and do things for themselves. If not they would be burn on the stake or go to prison for the rest of their lives.

Another thing that I tried to point out that during the industrial revolution it occurred while we were in the gold standard. Also the times our country had the most prosperity we were still on the gold standard until Nixon came along and took us off in 1970 or 1971 (someone please correct me if I am wrong on the year).

Standard of living has gotten worse in my opinion now during a fiat currency (central banking system) then being on the gold standard. My grandparents had only one person providing the food for the whole family (and had savings) now if one of the parents loses their job the entire family is in trouble because we do not save and now our standard of living is supported by debt instead of savings.

What are some other things that I can present to my friend that the gold standard is better then believing this myth that we would not have cars or computers if we were still backed by gold?

Also can someone give me some reading material explaining what Austrian economics is for dummies kind of way because I really like reading about this stuff (kind of nerdy, LOL) but to some other people they would fall asleep and cry if they read the works of Mises, Hyak, Rothbard etc.