And by most accounts there are only about 3 million bitcoin left…
But a suit is not the same thing as it was in a couple of hundred years ago. And it’s nothing like it was in the middle ages for example (no, an ounce of gold would have bought you nothing like a posh suit in the middle ages, the gold was easier and cheaper to mine and transport than the suit was to make).
The comparison is always going to be specious or, at best mildly interesting, it’s not going to tell you a huge amount.
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Electronics have a short usable life, then they wear out. Like shirts. They aren’t an investment commodity. Economics is … complicated.
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Don’t get me wrong, a gold standard would be a disaster. Merely an interesting factoid. You are right, everything changes.
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Sure. That’s the change in ratio between gold and silver. Since they are no longer actual currency as defined by governments, they float. It is nothing unusual and has been going on for a long time. Over a long period of time, this ratio remains more or less consistent. Gold and silver are commodities now, since no country pegs its currency to any standard, other than to ensure the electricity is running to the printing presses.
Meanwhile Downunder
I’m not at all sure which entity I’d propose be tasked with setting an upper limit on the world’s economy. To say nothing of the fact that if we’d done this, say, 150 years ago we wouldn’t be having this conversation across a digital medium both sitting in climate controlled rooms.
Which is a problem…why? I’m sorry to harp on this, but there have been a lot of assertions of fact that pegging a currency to gold or bitcoin or some other non-inflationary benchmark would be self-evidently a good thing. But I don’t see any actual explanation of why you believe that to be true.
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Given only 15 $100 1891 treasury bills are known to exist, I’ll have two of those, please.
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This exactly. If you want money backed by something with value, why gold? Why do people even think gold (in your had or in a vault somewhere) has intrinsic value, instead of also being a collective fiction? Just because it’s hard to get? So what?
The only reason people ever came to believe gold and other coins had value was the same reason we all believe US dollars have value: the US Government demands US dollars in payment for taxes, fines, and so on, backed by the threat of force. You make something you control the supply of, give it to certain people in exchange for goods and services, and demand everyone give some of it back to you regularly, and all of a sudden the whole population has to either revolt or else do something for the people you suupplied with that item with, trading for it.
In other words: as long as the US government has enough power to demand taxes in dollars, the dollar will have value. Inflation, however high the rate, as long as it’s reasonably stable and predictable on average, changes nothing, no matter how long it goes on for.
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Diamond is a comparatively common stone; there are bunches of other stones that are far rarer. I own large chunks of several of them. Many of these rarer stones are, at least to me, far prettier than relatively boring diamond. And yet, you can buy a chunk of (for example) Hiddenite, Wulfenite, Tanzenite, Alexanderite, or even natural Pearls for far less per pound than diamond.
What am I saying? The gold standard makes a lot of sense to people who are completely and utterly ignorant in economics and makes a useful marker for someone who can be easily taken advantage of. The market for gold is very manipulated, just like the diamond market.
Oh. Yeah. Just try to sell gold or diamond back to the store that sold it to you. That tells you everything you need to know about the gold standard and the real value of a diamond.
Dunning-Kruger is real.
(Note: if you like shiny rocks and metal with a nice sheen, and can afford the expense, nothing wrong with owning diamond or gold. But it’s an expense, not an investment; much like the house you live in.)
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Venezuela. The Weimar Republic. Zimbabwe. The Roman Empire! Whenever governments have the ability to inflate their currency for short-term gains, bad things happen all the time. How can you make more bitcoins when there is a fixed amount? Gold is not fixed but it pretty much is based on how much if left in the ground compared to what has already been mined. This takes the power away from the government and puts it back in the hands of the people.
https://finance.yahoo.com/news/12-countries-highest-inflation-rates-180545361.html
You think people in those country saw the future before this happened?
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According to Google, the price of an ounce of gold yesterday was US$1,946.77, or £1488.43. That would put the price of a loaf of bread at about £4.25.
I can pick up a loaf of Hovis or Warburtons for a bit more than a quid. If I’m skint or the shelves are bare, I can get the nasty* own-brand supermarket stuff for 50p/60p a loaf; if I’m feeling flush, I can get the fancy stuff with the seeds for about £1.60-£1.80. I’ve never paid £4 for a loaf of bread in my life, and hopefully never will.
Was gold just having a particularly pricey day yesterday? Or does this fall within in your definitions of “approximately” and “variations”?
* actually Asda wholemeal is pretty good
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Lived this when I bought some gold to cast a ring using a friend’s rig and the mold broke (bubbles in the investment). Long story short it ended up with me asking casually if I could sell the gold back to the jewler from whom I bought it, (in a gold rush town in Northern California) and the proprietor looked at me like I’d grown a new head. (Which I hadn’t, at least not recently).
He was only interested in stamped bars, crystalline gold finds from the local area (more as curiosities than anything), and potentially a good vial of panned gold, but that at very low prices.
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Ok. $200 in worn out pennies then. 
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Emphasis on “less.”
You’re willing to go to the mat over inflation but seem happy to handwave away significant fluctuations in the benchmarks you claim are a fixed hedge against inflation.
In 2010, 10,000 bitcoin were exchanged for two pizzas. Now, one bitcoin is worth $11,000, which strikes me as a pretty significant fluctuation in the bitcoin-to-pizza exchange rate.
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And not only that but in order to compare a loaf of bread now versus a loaf of bread at whatever time you are thinking of you would need to apply a whole set of approximations as to its relative value. Just as with the suit above a loaf of bread is nothing like the same thing from century to century across very different cultures. Lots of them a loaf of bread is a frivolous, exotic luxury item which would show your cosmopolitan nature.
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Hyperinflation isn’t a problem of an increasing money supply, but of the running down of productive capacity. Germany had to pay reparations faster than it could produce to maintain its capital stock. Venezuela and Zimbabwe had asset stripping by government kleptocrats and their cronies. Same thing happened after the collapse of the Soviet Union as well. If your country’s production falls suddenly and drastically, everything is going to get very expensive very quickly (in other words, without outside help, you are going to get poor). It is the same as for individuals - if you suffer a physical trauma that renders you unable to work, your income will fall quickly.
Running the printing presses only matters economically if it drastically alters the relative distribution of money (e.g. print and distribute $10 million to everyone whose net worth is below $1 million), otherwise all effects are the result of changes to the real/productive asset base. Revalue everyone’s bank account right now equally by a factor of 100 or by a factor of 0.01 and nothing would change either way, save for the number zeroes on price stickers.
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I’m going to bed but I will try again. You can’t compare it like that since there is a fixed amount of bitcoins and an infinite potential amount of USD. In 2010, the US dollar was pegged much higher compared to bitcoins and now it is pegged much lower, if you reverse the visualization. If the US dollar was pegged to bitcoins, governments could not print an infinite amount of money since they would need to have the assets to cover the paper money. Now, the only assets governments have is their good name and “please, just trust us”. There is a reason why so many people in Asia keep gold (I am currently in China). They understand true wealth and don’t trust their governments. Same with Venezuelians buying bitcoins.
There was an NPR Planet Money episode at PorcFest where Libertarians ran into this problem:
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That “whenever” is doing some heavy lifting given that you’ve given three examples of modern (ish) states that have experienced hyper-inflation that all had some pretty significant issues that caused the hyper-inflation. These weren’t states that were trucking along without a problem that just fell victim to the inevitable collapse of inflationary currency.
If your argument is that hyper-inflation and financial collapse is an inevitable feature of inflationary currency, I’m not so sure that these examples stack up against the hundreds of contrary examples.
Hmmm.
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