tag:blogger.com,1999:blog-7857986220109964085.post5823872724610111622..comments2023-10-13T19:42:07.764-07:00Comments on Spherical Model: The Fifty-Year War, Part IISpherical Modelhttp://www.blogger.com/profile/03075073544063199778noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7857986220109964085.post-77459546034062582302014-01-19T22:06:37.252-08:002014-01-19T22:06:37.252-08:00You're right, of course. What we need is an id...You're right, of course. What we need is an ideal way to connect money supply with actual wealth creation. Any type of fiat risks the "deciders" printing more, leading to inflation. Gold standard prevents that, and it is why there's still a pull toward that. But you're right that it does depend on the supply and demand of gold--and does keep it in reserve. So, for shorthand, here, I invented an ideal world with the ability to approximate actual wealth through a combination of partial gold standard (reserves I proportions, as banks do, for relative security) combined with limited fiat connected to something measurable--preferably something even more accurate than GDP. If I could invent something perfect that wasn't fiction, I would offer that. In the meantime, we can debate the New Zealand model, which is interesting. BTW, what do you know about Bitcoins? Any worthwhile future there?Spherical Modelhttps://www.blogger.com/profile/03075073544063199778noreply@blogger.comtag:blogger.com,1999:blog-7857986220109964085.post-27186703068581465482014-01-18T04:36:28.749-08:002014-01-18T04:36:28.749-08:00"partially due to the return to the gold stan..."partially due to the return to the gold standard, and partially due to matching the value of the dollar to actual economic wealth creation"<br /><br />This portion is contradictory. Pinning to the gold standard is by definition pinning the creation of money to the amount of gold they have, which has been shown to be deflationary most times with a notable exception in Spain when they were conquering the new world and hauling back tons of gold and silver. This is different than tying it to wealth creation, which would be an attempt to make purchasing power relatively consistent. <br />With the gold standard you are stuck by the fluctuations in the gold market, but with wealth creations standards, such as setting an inflation target or a purchasing power parity path, you are tied to growth in the economy as a whole.<br /><br />The advantage to the gold standard is that it is hard for governments to cheat and print too much, because they might have to pay it back. However, it ties up a lot of gold on the simple task of sitting there needing to be guarded when there are many other beneficial uses for such a wonderful precious metal resource.<br /><br />I would recommend an inflation target for its simplicity for the government to enforce and because it is tied to real GDP and economic growth. The best example of this currently is New Zealand, which has successfully kept a stable currency and had significant growth since its central bank has kept an inflation target of 1% +-0.5%.Parzhttps://www.blogger.com/profile/08507037776846293494noreply@blogger.com