Hacker News Reader

Comment by netbioserror | Hacker News Reader

There are also many Americans who have always desired de-dollarization, since the dollar has been the foundation of our imperial system and abuses of state power. Say what you will about how dated a gold standard is, but it forces immediate fiscal responsibility upon governments; fiat currencies defer responsibility, turning it into a Sword of Damocles that catastrophically falls upon future generations. You trade geopolitical dominance now for guaranteed future withering. Of course, fiscal responsibility and the rejection of imperial ambition were core principles of the Anti-Federalists, Democratic-Republicans, and Whigs. It's baked into our history and tradition to not want to be the unilateral arbiters of a global trade and alliance system.

View on HN

> Say what you will about how dated a gold standard is, but it forces immediate fiscal responsibility upon governments

We were on metal standards for millenia. Governments routinely spent beyond their means, including for imperial aims. This is like four centuries of Roman history.

Yes, but there were practical limits to currency debasement when the currency was a physical commodity with intrinsic value. People notice when their coins start getting filled with lead, and there were serious political repercussions for it. You cant just conjure a trillion gold/silver coins out of nothing like you can with fiat, and the ability to do so is 100% guaranteed to be abused.

> there were practical limits to currency debasement when the currency was a physical commodity

"In the second century, a modius of wheat (approximately nine liters), during normal times, had sold for ½ Denarius…. the same modius of wheat sold in 335 AD for over 6000 denarii, and in 338 AD for over 10,000" [1].

Note that inflation can also occur with zero debasement if the economy around the fixed money supply collapses. This happened in Rome when Pompey and later Augustus were trashing trade routes. It may have even led to the collapse of India's ancient democracies.

> there were serious political repercussions for it

There weren't. The state historically borrowed from the hilt of the sword. Economic collapse constrained kings and emperors. Not politics.

[1] https://etedge-insights.com/featured-insights/analysis/how-h...

What @cheeseomlit said, plus: During the Age of Exploration/Colonization, competing European powers each minted metal currencies and couldn't reasonably debase their metals without immediately being out-competed (which is why the trusted purity of Spanish gold and silver coinage slowly dominated). The primary mode of failure for those empires was bankruptcy via war. The impossibly high cost of fielding armies around the globe was laid bare during that era. Paper money lets us (funnily enough) paper those costs over and live with the illusion that it's all a free lunch. But what we're actually doing today is debasement, and eating, vociferously, all of the deflationary efficiency gains won by 20th century technological progress.

> During the Age of Exploration/Colonization, competing European powers each minted metal currencies and couldn't reasonably debase their metals without immediately being out-competed

You're hitting the nail on the head. Metalness didn't matter. It was competition in money supplies (and strength of private property).

The fact that a banker in Italy could finance (or not) a war by Great Britain is what restrained governments. Same as in the 1990s, the bond market was king.

The historical record simply does not support the hypothesis that metal-based economies are more peaceful or inflate less than modern fiat-based ones. I'm open to revising that opinion if someone has re-run the data. But everything I've seen comes from blogs that start with the conclusion, itself reached from assumptions from first principles that rarely contemplate how armies were actually financed in antiquity. (Hint: they take your shit. Marketing campaigns sharing the martial term isn't a coincidence. If you're a general in the olden times, you got wealthy through your commission because your army took the enemy's shit. If you needed help getting there, you paid a 'friendly' visit to your nobles.)

Reply on news.ycombinator.com