Frezik
Basically Outdated Stereo Equiptment
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Posted - 2007.12.10 21:39:00 -
[61]
This thread is amazing. I haven't seen such a bad set of arguments since the t2 BPO problems.
1) I can understand a libertarian/objectivist position against fiat. The argument is this: "The government can't directly fiddle with the amount of gold that exists in the world, but can screw with fait currency all it wants. Since centralized government control is bad (taken as almost axiomatic if you're libertarian or objectivist), the gold standard is superior." I understand this position, and it's the one argued by Ron Paul and Alan Greenspan.
2) Gold-bugs take it further than that. They see fiat as a big lie being told the common people. Their rhetoric tends to be scattered with dire warnings of impending collapse, the mere existence of inflation, and using loaded terminology when describing the banking system. The problem is that fiat actually works pretty well, unless you've been stupid enough to "invest" by burying jars of dollar bills.
3) Gold-backed currencies have a bad history of being a major driving force behind imperialism, to the detriment of both the conquerers and the conquered. The Spanish, for instance, spread to the New World looking for gold, killing a whole lot of indigenous peoples as they went, but ignored more practical economic activities. You can look at Spain's current standing as a world power to see how well that worked out for them.
4) In the long run, fiat is probably the only currency system that's going to work. You can get more gold by either transmutation (which is theoretically possible but very energy intensive) or asteroid mining (which will probably be economical within 10-20 years). A breakthrough in either of those will plummet the price of gold. Where will your gold-backed currency be then? Indeed, any currency backed by a physical item is likely susceptible to this problem. Therefore, in the long term, it's fait or nothing.
I think #4 is so strong that event the most hardcore libertarian might agree with a central banking system based on fait purely on practical grounds.
 Originally by: Hexxx
Privately run? Thank GOD for that. Have you seen the government actually run anything properly? Social Security anyone? Geez...
Actually, the strongest argument against fait is that it isn't privately run. However, the US Fed isn't really part of the proper US federal government, and tends to be insulated from the normal political mucking about in Washington. This means that it actually works.
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Gold standard? Do you actually know how much Gold exists in the entire world? Really? You do? Not that much. 
That's considered a benefit. A currency based on iron would collapse due to how easy it is to get more iron. Gold is rare and has few practical uses outside of being rare. In other words, it's usefulness is a bigger lie than fiat currency.
My open question is if there's a way to decentralize fiat to remove the need for the Fed. This would satisfy the requirements of libertarians/objectivists while leaving gold-bugs in the dump bin of conspiracy theories, where they belong.
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