Gold is not a money system at all. no one is getting paid in gold coins or bullion unless you explicitly ask for it.
Stop saying stuff;
Gold is a hedge against inflationary pressures, both ways, as is many other store of value commodities with quantifiable use cases.
Gold WAS the monetary system for most of human history... Either by itself or with Copper and Silver...
The developed countries of the world were backing their currency by gold AND minting coinage with gold and silver in the beginning of the 20th century.
The middle part of that century saw a transition away from that towards fiat.
The last third of that century saw the full move to the fiat system.
What’s the confusion here?
There is no confusion.
Right On đź‘Ť
People used to be paid in precious metal coinage.
Sometimes that coinage was debased, sometimes it was real.
We don’t pay people in precious metals from our coin purse anymore.
We usually pay them in electronic fiat, but we’re starting to see people pay in bitcoin.
indeed it was debased. When Mansa Musa travelled through North Africa and parts of the Middle East on his way to Mecca, he handed out Gold like it was candy, which lead to severe debasing of gold due to over supply.
I believe on the way back he collected some of it just to help regulate the economies of Italy, Greece, Egypt etc.
Indeed, also the Spanish flooded the gold markets with their spoils of the New World which led to an economic crash.
yes, well this is post WW2 because again, the limited number of reserves meant that Europe couldn't rebuild itself WITHOUT debt. So the USA facilitated that debt but shifting away from hard commodities into paper reserves or IOUs/promisary notes.
These promissory notes take on more than just the debt burden; it encompasses all American potential GDP, future growth and labour endeavors, which makes it more worthwhile than just gold.
“it encompasses all American potential GDP, future growth and labour endeavors”
Not clear on this point.
so the dollar is less about it's gold reserves, but more so about ALL reserves, from military, oil, gas, technology, open markets etc.
It is also based on the future production of goods and services; in other words, there is a premium on the dollar because the future labours of the US citizen will be used to repay the debt. It's a high labour class and product class too.
You're taking a dollar for the potential of a US worker to pay you back on that dollar that they borrowed from you
Does this make sense? Don't worry - it took our class a few good sessions to understand this concept too.
The US worker in this case, in comparison to other workers i.e. education, skills, labour etc. but I suppose that has changed in the past ten years
The demand for stacking US Treasuries has definitely changed in the past ten years. I don’t think it’s a debate that it has been a desirable asset to hold, that’s a fact.
With regard to holding US treasuries, all that matters is the debt can be repaid and in most cases it’s the ability to print money that has kicked that can down the road.
You're taking a dollar because it’s a currency that’s universally accepted and in most cases because it’s being debased far less than an unstable currency, and yes this gets us back to what underpins that global reserve currency status but I wanted to at least set the table on a few of those points.
Creating massive amounts of debt to rebuild Europe happened because there was a war that reached the levels of mass destruction it did from creating massive amounts of debt to finance that destruction.
yeah that gain in value from the potential future labour seems to be eroding as people are less and less confident that the USA can maintain it's economy.
The US has shifted to move it's debt into USDT and basically offload it to others via USDT
The dollar is about proof of violence. The dollar has power not because of any reserves. I has value only because of the full faith and credit of the US government and their ability to pay back their loans.
basically so, but the "pay back the loan" is just printing more dollars. That's why the US is in a position where it's reserve currency of the world, at the detriment to every other country.
Which is why the "full faith" part becomes less trustworthy every day. This nation will collapse for the same reason every other economic powerhouse failed. Loose fiscal policy.
yeah but that's why empires collapse.
In order for excessive growth, you need to issue the debt to facilitate that growth because the reserves cannot. Unless you go an horde someone else's economy - but that only works for a short time.
Hence why the US leaps and bounds in growth, it has high debt issuance that facilitates everything.
And they can't default because they can just print their way out of the default, no other country can do this.
