Talk:Gold standard
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I added the copyedit tag because some of the text is duplicated and some of the grammar is questionable. I haven't the time to fix it at the moment.
Selected on Template:March 18 selected anniversaries (may be in HTML comment)
I presume that "reasons why" in the article as it was were those given by the Nixon Administration - the opposing view is attributable to nearly everyone who commented on the Euro-dollar. Pick your source. I'll stand by the fact that there was no way there was enough gold in Fort Knox to redeem the notes in 1975, and no way to test for it, since US citizens couldn't own gold and Europeans couldn't redeem notes.24
Well duh........
U.S. currency was representative money and as such no one ever pretended that the United States had the gold reserves to redeem all the dollars in circulation if everyone decided to redeem their dollars at the same time.
- ok, this is our "representative" versus "commodity" argument again. I think it arises because really there is some degree of commodity, credit, and fiat involved in *every* kind of money. In other words we should not write about "commodity money" but rather "commodity settling", and likewise "credit clearing", and "fiat backing" - any of which may be involved in a given currency.
The trouble was that in 1971 to 1974, everyone *did* decide to redeem their dollars at the same time because the dollar was seriously undervalued with respect to its nominal value in gold (and this was the result of Johnson administration deficit funding for Vietnam and the Great Society).
- more than that - there was the counterfeiting and Eurodollar problems there in the background too - but all grist for the mill. Those were causes of a balance of trade problem.
As such the Bretton Woods system broke down.
- yup. Except the also-broken Bank for International Settlements was never fixed, nor the IMF...
24, the fact that you don't seem to know what the gold standard (and for that matter what commodity money is) makes it very difficult for me to take anything you have to say regarding economics seriously.
- and, the fact that you don't use "is" the way I do makes it hard for me to believe you understand how money itself works. I find it very hard to believe that I would understand the ultra-complex arguments around flags, brands and labels, and simultaneously not understand the simple silly ones around gold. but, it's always possible, certainly the article as it is has benefitted from your rewrite, and from my bringing up the issue of non-convertibility and insolvency. 24
Currently the first paragraph reads as follows:
- The gold standard was a monetary system in which paper money was convertible on demand into gold. Under such a system money represents gold: coins are made of the corresponding amount of gold, and/or coins and notes represent an amount of gold held in a vault somewhere. Banknotes were issued fractionally backed by gold (i.e. gold reserves were a fixed proportion of the value of the notes in circulation). Rates of exchange between countries were fixed by their currency values in gold. Most financially important countries were on the gold standard from 1900 until its suspension during World War I because of the problems of transporting gold. It was reintroduced in 1925 but finally abandoned in 1931.
Several issues with this:
- With regard to "Banknotes were issued fractionally backed by gold" etc. This is inappropriate. It is not part of the "Gold Standard" but part of the Fractional reserve banking system and therefore does not belong on this page.
- Regarding "Rates of exchange between countries were fixed by their currency values in gold" This issue is handled further down the page. The repeat, in this sentence should be removed since it does not need double treatment when it covered properly further down.
- With regard to "gold standard from 1900 until its suspension during World War I because of the problems of transporting gold" This is simply not true. Gold is transported even now, and often gold does not need to be transported, but simply becomes reallocated in the COMEX vaults et. al. More to the point, it is a silly thing to say on the face of it. If transporting live cattle, copper, aluminium, rice, corn, and wheat by ship is economically viable, then why not gold? If User:172 has reason for this comment, then I would be interested in reading about it.
- With regard to "It was reintroduced in 1925 but finally abandoned in 1931." This is untrue on the face of it. There is no mention where "it" was reintroduced in 1925. In fact what was "introduced" was the Gold Exchange Standard in Britain and parts of Europe, not the gold standard per se, and I believe that was in 1926, not 1925.
Here is my suggested replacement for the currently rather muddled and inaccurate first paragraph:
- The gold standard was a monetary system in which paper money was convertible on demand into gold. Under such a system money represents gold: coins are made of the corresponding amount of gold, and/or coins and notes represent an amount of gold held in a vault somewhere.
- When banknotes were issued fractionally backed by gold (i.e. gold reserves were a fixed proportion of the value of the notes in circulation) this was the Fractional reserve banking system, and should not be mistaken for a true Gold Standard.
I suggest User:172 cease attempting to revert this page to eliminate these changes. -- Octothorn 20:09, 17 Aug 2003 (UTC)
Quit trying to get away with pushing an agenda. So far you've been able to do it because the articles dealing with economics have always gotten a low degree of interest around here. Articulate the distinctions between the prewar "classical gold standard" and the postwar "gold exchange standard" in this article, if you want. Please review the NPOV guidelines so that you'd realize that it is inappropriate to try to sneak in your advocacy piece and veiled theses. The Gold Exchange Standard was a gold standard, just not a restoration of the classical prewar system per se. I added a good deal to the article since, and it should clarify what set the classical gold standard and the Gold Exchange Standard apart. 172 07:29, 18 Aug 2003 (UTC)
Volunteer to make it less UK-US centered? --Ann O'nyme 21:15, 31 Aug 2003 (UTC)
- Sure, go for it. I would've done it much earlier had I had time. 172's been fairly inactive for the past few weeks. Next week, however, I'll make my presence known once again. 172 22:26, 31 Aug 2003 (UTC)
The History section has a rather large chronological jump from the Sumerians directly to the year 1824. Volunteer for some history in between, particularly with regards to the large Spanish movements of gold and silver from the New World to the Old and what effect that had? Tempshill 06:25, 23 Oct 2003 (UTC)
Move here for discussion
- Nixon's move to cease allowing foreign Governments to redeem dollars for precious metal was the final act in a 150-year-long 'transfer' of the citizen's gold and silver to the Federal Government's vault. This allowed the U.S. Government to have much more freedom in determining the rate of printing and volume in circulation of its fiat currency.
Need source
- Tantalum is also suggested as an alternative money supply standard, since even in an economy based on molecular engineering it would remain extremely difficult to forge - and remain quite easy to hide.
Roadrunner 00:48, 30 Apr 2004 (UTC)
A proposal was floated to stabilize exchange rates between France, Great Britain and the United Kingdom based on a system of drawing rights, but this too collapsed. I have changed Kingdom to read States as I assume that was what was originally intended. --Spencer BOOTH 07:17, 15 Jul 2004 (UTC)
The picture at the top is far too large and doesn't really add much to the article. Could someone reduce it to a smaller png and put it in a more appropriate place? Lisiate 00:09, 28 Jul 2004 (UTC)
"a questionable assumption in light of the spending binge of George W. Bush" removed from the Washington concensus secion. It just seemed too POV. I am, however, not sure how to word it better. -Vina 20:30, 3 Aug 2004 (UTC)
cited source of the contention - namely the International Monetary Fund. That Bush has run up massive deficits, that those deficits are structural and that they are destabilizing the international currency system are matters beyond dispute, and are not disputed by anyone not employed by the RNC or its subsidiaries. So sorry, facts are stubborn things here. Stirling Newberry 23:23, 3 Aug 2004 (UTC)
- ahem, try debt vs. GDP (or debt as % of GDP). Plenty of sources. The US debt currently is lower than it is in the early 1990's. The rate of increase is high, that is not disputed, but neither is it higher than the rate of increase in the late 1980's and early 1990's. So sorry, facts are stubborn things here. -Vina 23:31, 3 Aug 2004 (UTC)
- Did some more research on the IMF site. Included a summary in that section. Note that they are concerned about trends exhibited since 1999, and that they are also concerned about household spending. Hopefully this is more acceptable to you? -Vina 00:25, 4 Aug 2004 (UTC)
I will not be editing this page any more as I do not believe in getting to edit wars. In closing, I will mentioned that I still think what you wish to add is POV, not extremely, but still POV. -Vina 05:11, 4 Aug 2004 (UTC)
I'm reporting what the IMF has said about the need for a stable anchor currency and current US fiscal policy. "Tax increases will be needed to maintain the stability of the US dollar". It's also what comes straight out of the Fleming-Mundell model, namely that running a consistent budget deficit will continue to negatively impact the balance of trade, and therefore devalue the dollar. Find a model that says otherwise, and report on what it says. Stirling Newberry 08:31, 4 Aug 2004 (UTC)
- Sigh, I never objected to the model, merely the personal attack. In all my research, I've only seen the comment on Jan 7, 04 about Bush, and that was 1 paper published by 1 analyst. In no other statement does the IMF come across so harshly, not even when it criticised the tax cuts 2 years ago did it comment that harshly (incidentally, the IMF now acknowledges the role the tax cuts did in bringing the world out of recession.) The papers that you refer to, those released July 30th, and accessible from the IMF front page, do not mention Bush by name (At least, what I (did not) find via an Acrobat Reader search.) Statements like the foreign debt being an "unprecedented" 40% of GDP is without base (the unprecedented part, not the 40% part) as Japan has one above 100%, and many euro nations are hovering around 70%. I have not seen the IMF follow up on the Collyns paper all that much. They have valid concerns, and writing about them is perfectly fine with me. it's the personal attack part that I feel is POV. -Vina 16:39, 4 Aug 2004 (UTC)
Sigh again - someone else proposed the tax packages? They were submitted to congress by Bush, who in fact wanted larger revenue reductions in 2003 than were finally passed. Again, "attacks" and what people wanted to be said are all well and good, but the documentable facts at hand are: 1. The tax policy is driven by the current US executive 2. Every economic model I have seen - including the ones from OMB and CBO - indicate structural deficits and continued devaluation of the US dollar. If you feel someone else is responsible for the tax reductions, I am sure we'd all be fascinated to know who that is. If you have a model which indicates that the IMF is wrong - and they've been wrong before - then by all means present it. I simply haven't found one. Stirling Newberry 00:44, 5 Aug 2004 (UTC)
Why were the sections "Post-War International Gold Standard (1946-1971)" and "The Washington Consensus" removed? They were acting as summaries of main articles. 172 01:01, 5 Aug 2004 (UTC)
Space considerations, and because as the author of the history section, it was better and more consistent to refer to the more extensive Bretton Woods article, so that issues could be resolved once, rather than multiple times. I've removed the Washington Consensus section because it is clear there are issues that need to be resolved which are not germane to the question of a gold standard per se. Stirling Newberry 01:15, 5 Aug 2004 (UTC)
- And as the author of the more extensive Bretton Woods article, I think that there ought to be condensed summaries of that article available in entries on broader, encompassing topics. Some readers like detail while other types of readers want the most important facts in a condensed format. Space considerations are not a major concern; there are plenty of articles on important, broad, and complex subjects that take up well over 32K. 172 01:29, 5 Aug 2004 (UTC)
- Just to add to the above, I'm not saying that a summary of the Washington Consensus article belongs here. However, at least a few concluding remarks on the Washington Consensus that are germane to the question of the gold standard will be helpful. 172 01:40, 5 Aug 2004 (UTC)
With regard to the following paragraph in the text:
- "After the collapse of the empire in the West, and the decline of the mines in Europe which were largely played out, the Byzantine empire continued to mint successor coins to the solidus, called the nomisma or bezant. They were forced to mix more and more base metals with gold, until by the turn of the millennium the coins in circulation were only 25% gold by weight, a tremendous drop from the 95% pure old Roman coins. Increasingly trade was conducted in a coin struck in the Arabic world using gold from Africa: the dinar."
In the first sentence, whiile the Bezant was the successor coin to the Solidus, they became two names for the same coin [1]. The Greeks of the Byzantine Empire now called the old circulating Solidus by the name of the new Byzantine issues of the old coin, the Bezant [2].
The second sentence beginnning with the words "They were forced..." is inappropriate. "They" - the Byzantine Empire - were not forced to degrade the purity of the coin. If they were, someone ought to provide the text with some indication of what it was that "forced" them, otherwise the use of the word "forced" should be removed.
The reason for the degradation of the coin is simple, and nobody was forced do do so - "they" just wanted to be able to mint more coins for themselves using the same amount of gold. This is the same reason any government has ever had for degrading the purity of gold coins, a form of embezzlement - they get something for nothing.
More importantly, however, that sentence is inaccurate. The Bezant was not degraded as quickly as indicated. It circulated from the early fourth century, continuing until Emperor Michael IV (1034 - 1041) began to degrade it's purity. Prior to that tiime the Bezant circulated at it's full weight and purity. The Bezant was therefore stable for a period of about 700 years [2].
The final sentence is also inaccurate. The Dinar was modelled on the Bezant and the earlier Solidus [1][2]. Essentially it was the same coin, just minted by the Arab Empire. Consequently both the Dinar and Bezant circulated alongside one another. The text should also draw attention to the fact that the Dinar circulated for about 450 years unchanged, from the late 7th century to the mid-12th century, during which time the Saracen Arab civilisation flourished until it callapsed in religious turmoil.
The Solidus the Bezant and then the Dinar were all gold coins of the same gold content (4.4 grams at 22 carats) which at times circulated alongside one another. In this way a gold standard based on a single form of gold coin was maintained for a thousand years, surviving three empires.
References:
- [1]"Trade Coins" http://www.cyberussr.com/hcunn/gold-co.html, by Hugo S. Cunningham -- Valid as at 2004-09-06T11:00:20+10:00
- [2]"Gold Wars", by Ferdinand Lips, 2001, Pages 3-6.
- [3]"Roman Imperial Coinage" http://www.roman-britain.org/coinage.htm -- Valid as at 2004-09-06T11:00:20+10:00
Octothorn 01:06, 6 Sep 2004 (UTC)
Even your own references contradict you - the solidus was debased repeatedly over time, and was, in itself, an attempt to debase the aureus. Stirling Newberry 20:11, 27 Dec 2004 (UTC)
- Um... Where? And, how in the world would one coin be used to debase another? Coins don't debase coins, people debase coins. The Aureus was already very much reduced in size by the time the soludus was produced. The solidus replaced the aureus. Perhaps you are confusing "replaced" with "debased". Octothorn 07:33, 6 Jan 2005 (UTC)
The following paragraph near the beginnning of the text appears to be silly, and wording should be reconsidered:
- "Typically under a gold standard, the physical transport of gold becomes cumbersome for popular use, and so promissory notes? (which may be either issued privately or by government) to pay in gold at a later date, circulate. These note are convertible into physical gold on demand. Also known as demand notes?, (see paper money)."
The idea that "physical transport of gold becomes cumbersome for popular use" is amusing. An 8 gram gold coin (nominal value of $5) carries US$100 worth of gold. Notes larger than $100 are seldom used. While a $100 note may not be quite as "cumbersome" as such a coin, the coin is certainly more durable. One may also suggest that if a single 8 gram coin representing $100 is "cumbersome for popular use", then the quarter, currently in "popular use", must then be over 400 times more cumbersome than a gold coin.
- Originally large volumes of gold were required to make large purchases. While carrying 100 dollars worth of gold is not a problem, the volume of gold required for the annual wheat import of Rome would run a great deal more. The cost in silver of a chest of opium weighed thirty times as much as the chest itself. And in the present, larger bills are less common because of checks, credit cards and other instruments. That is to say, because even paper money is too cumbersome for popular use. Stirling Newberry 20:11, 27 Dec 2004 (UTC)
- Surely you haven't forgotten that checks are claims on bank deposits, not money. Also, credit is credit, not money. Neither can circulate as currency. The text suggests that gold is more cumbersome than cash, but that is not true. Notes, originally issued as claims on a quantity of gold, are now so devalued that they are about as cumbersome as gold. Suggestions that gold is more cumbersome than fed reserve notes are not relevent or constructive to the issue, and the comment as it stands lacks NPOV ansd should be removed. Octothorn 07:58, 6 Jan 2005 (UTC)
The subject of notes should still be raised, since the page carries an image of one. What follows is a possible replacement:
- The use of gold coins in large transactions is time consuming and prone to error. Centuries ago the market found a solution to this problem. Goldsmiths would issue notes of claim on gold coins deposited with them. Those coins were not spent, but were held in reserve to cover the notes that were issued. Each transaction involving a large amount of gold was easier with a note. Many consecutive transactions using one note could proceed smoothly. Coins would not need to be counted or transported until the note was redeemed, and each note could be exchanged for goods over and over.
- This has also been true in more recent times, as with the 1922 U.S. Gold Certificate shown on this page. This $100 note was a claim on about five ounces of gold coins, or $2000 worth of gold in the year 2004. Notes similar to that pictured were issued to the depositor as a claim on gold coins.
The benefit of using something like the replacement above is that it outlines the need for notes in large transactions and the function of gold certificates. It also links the text to the image, giving the reader some perspective on what the note is worth.
Octothorn 04:29, 6 Sep 2004 (UTC)
graf was replaced with a graf on the general advantages of paper money within the context of a specie based monetary system Stirling Newberry 20:11, 27 Dec 2004 (UTC)
Needs more pictures
For a featured article, especially now highlighted on the main page, this article needs more pictures. I added one of gold ingots held by the Bank of Sweden, but I'm sure others could be found. Curiously, I could not find one image of a gold coin on Wikipedia. Perhaps you may have better luck than I, or find other relevant images.--Pharos 20:22, 21 Jan 2005 (UTC)
Britain was almost immediately forced to gradually end its gold standard
Immediate and gradual at the same time? Ubermonkey 21:16, 21 Jan 2005 (UTC)
too long..
Interesting, but too long and often redundant. The proponats' and oponents' viewpoints are presented over and over again, this needs to be made more compact.