[cryptography] Digital cash in the news...

James A. Donald jamesd at echeque.com
Sun Jun 12 22:24:21 EDT 2011


On 2011-06-12 6:13 AM, John Levine wrote:
> Useful for something, but not useful for money.  I can't help but note
> that the level of economic knowledge in the digital cash community is
> pitifully low, and much of what people think they know is absurd.
> (Anyone who thinks that a gold standard is better than what we have
> now, or that the supply of gold is fixed in any but a purely
> hypothetical sense, is either ignorant of economic history or shilling
> for gold speculators.)

What we have now has been tried many times before, and failed many times 
before.

The gold standard has never suffered the kind of wild alarming 
fluctuations that fiat currencies routinely suffer.  Gold inflation was 
always very slow, and gold deflation was always very slow, possibly 
because people expected the value to remain stable, so in the event of 
deflation, disinvested in gold and increased their investment in other 
things, and on gold inflation, vice versa.

The most alarming gold deflation was the long depression, caused by the 
demonetization of silver and accompanying rise of the value of gold.  By 
modern standards, it was not even a recession.  The most alarming gold 
inflation was caused by the conquest of the new world, which resulted in 
inflation at about 1% per year for about a hundred years.




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