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Comment by roenxi | Hacker News Reader

> ...they’ll learn why the gold standard stopped being cool.

Because governments are massive borrowers and the gold standard tilts the market towards people having to repay their debts from time to time?

Literally the reason not to be on a gold standard is to enable money creation. Creating money has winners and losers - the losers shouldn't be happy about that. I own enough assets that I've been making out like a bandit (eg, by owning gold) but the situation is hardly fair to people who think that working productively at a job should be linked to better outcomes.

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>I own enough assets that I've been making out like a bandit (eg, by owning gold)

The returns for gold have been absolutely trounced by just about every asset out there. It's worth less today than it was 10 years ago. I know, because I also own some. Even with inflation, it has a ton of ground to make up versus real estate or SPY or BTC.

So, pray tell, how have you "made out like a bandit" by owning gold?

> It's worth less today than it was 10 years ago. I know, because I also own some.

You're dating yourself with this comment, you hit a pretty small window around 2012 to manage to lose money. I didn't buy then so I'm doing well. Now, admittedly, the reason the price was high in that window was because a lot of people panicked and wanted to buy in so there are probably an unusual number of stories of people who managed to lose money.

But the rest of the time gold is posting (alleged) real returns. Which is fantastic work for a shiny rock. People call what is happening in bitcoin crazy, but the idea that I'm making a productive contribution to society by owning a rock is bananas. Really it just means that money is losing value faster than the powers that be admit.

> The returns for gold have been absolutely trounced by just about every asset out there.

Well yeah, it sits there and does nothing. The return is not competitive with more productive assets. Still crushing the poor fools who think that they should be using inflation as a reference point to plan/negotiate their finances. Or anyone who thinks they can use wages to get ahead; they're getting washed out by the money hose that has been pointed at assets for the last 15 years.

The gold standard didn't stop money creation.

The linkage in the banking system was to the price of gold, as fractional reserve lending slowly increased the amount of deposits in the system, the price of gold drifted up, and the amount of lending increased with it.

Then the entire system eventually broke apart (several times), because gold wasn't evenly distributed, and so the resulting rates of money creation drifted apart in different countries.

It goes both ways. In the early days of colonization of the Americas, Spain suffered inflation due to an influx of silver.

The point is, the amount of money needs to correlate with the size of the economy.

There's no single physical good that naturally has the required correlation, so using physical goods as the basis of money is foolish.

> In the early days of colonization of the Americas, Spain suffered inflation due to an influx of silver.

Ironically that did end the Great Bullion Famine, a decades long period where not enough bullion being mined lead to Europe-wide deflation.

Gold has had a weak return vs most assets over the past decade and is usually upsold as a worthwhile asset by the people making money off selling gold. It sounds like you're drinking the flavor aid.

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