/sci/ - Science & Math » Thread #11545279

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Questions?

Anonymous Wed 08 Apr 19:03:24 2020 No.11545279 View Reply Original Report

Quoted By: >>11545401 >>11545429 >>11545438 >>11545476 >>11545506 >>11547165 >>11548621

(I) If a central bank decided to issue a currency that is backed with a substance/element/compound/material/asset/object/art that is rarer and/or more expensive than gold, what will be the consequences of this policy?

(II) If a bank decided to offer smart contracts (derivatives certificates) that are equivalent to a set percentage of the value of rare substances/elements/compounds/materials/assets/objects/arts in exchange for cash or other payment (tangible or intangible assets). Also the derivatives certificates could be redeemed as cash if the things mentioned above are sold or the derivatives could be exchanged for type C shares of that particular bank. What would be the consequences of such policy?

https://youtu.be/VBGYQ51my5c

https://youtu.be/KGQTkWJ5mU4

https://youtu.be/h66rScoVEhI

https://youtu.be/-4iFy6AvJnw

https://youtu.be/j8qwb6IHrZk

Anonymous

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Anonymous Wed 08 Apr 2020 19:55:09 No.11545401 Report

Quoted By:

>>11545279
>what will be the consequences
The country the bank is a central bank for would (((get invaded and bombed to shit by the US military))).

Ever heard of World War 2?

Anonymous

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Anonymous Wed 08 Apr 2020 20:07:23 No.11545429 Report

Quoted By: >>11548325

>>11545279
(I) A Currency that is not backed by something in abundance cannot allow true economic growth that a currency allows if its backed by something in abundance. It does not matter what you back it with, the most important thing is that money is an efficient medium of exchange for the economy.

I personally always thought energy should back a currency, not so much a petrodollar, but that national economics should instead focus on being energy surplus providers, because this should be considered a variable as having a greater influence in the economy, perhaps in total productivity factor (z), in a new model for an energy based economic theory.

(II) Makes sense given the reasons stated in (I)

Anonymous

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Anonymous Wed 08 Apr 2020 20:10:15 No.11545438 Report

Quoted By:

>>11545279
>(I) If a central bank decided to issue a currency that is backed with a substance/element/compound/material/asset/object/art that is rarer and/or more expensive than gold, what will be the consequences of this policy?
The effects would be the same as under the gold standard. It would serve as a way to control inflation at the expense of surrendering active monetary policy, meaning an economy more prone to panics and more radical boom and bust cycles. (Stronger economic growth during the booms, but more frequent recessions as well). Keynesian monetary policy's purpose is to flatten the boom and bust cycles, which would be impossible under a gold standard analogue.

Initially, the commodity to which the currency is fixed, is ultimately irrelevant. It could be gold, or salt, or antimatter, as long as it preserves its value over time it doesn't matter. The rate at which the currency is fixed, is more revelant than the commodity to which is fixed to. Say, gold is more valuable than table salt, but if we fixed one gold ounce to $1,000 USD (when its actual price is $1,669.25) we would have an undervalued currency, more growth but also more inflation, but if the commodity is salt, and we fixed the USD to $100 per metric ton (actual price is $90) we would have an overvalued dollar, resulting in more imports, less growth, less inflation or even deflation.

Long-term, the commodity starts to matter more because the growth in its supply would need to keep up with the needs of the economy for monetary expansion. If the supply doesn't grow, then the monetary base expansion would choke, and it could constrain economic growth.

Anonymous

Anonymous Wed 08 Apr 2020 20:16:26 No.11545457 Report

Quoted By:

Only 2 things of value left.

Blood and Soil.

Anonymous

Anonymous Wed 08 Apr 2020 20:22:25 No.11545474 Report

Quoted By:

Currency right now based on made up feelings, it hasn't been based on gold for years. Currency based on made up feelings is the optimal currency for banks and governments to manage the economy.

Anonymous

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Anonymous Wed 08 Apr 2020 20:23:18 No.11545476 Report

Quoted By: >>11545506 >>11548307

>>11545279
>(I) If a central bank decided to issue a currency that is backed with a substance/element/compound/material/asset/object/art that is rarer and/or more expensive than gold, what will be the consequences of this policy?
It would work in a similar fashion as the gold standard, restraining inflation but at the expense of surrendering an active monetary policy. This would result in an economy more prone to boom and bust cycles, with stronger economic growth during the boom periods, but more frequent recessions and panics as well. The role of keynesian or neokeynesian monetary policy is to "flatten" the boom and bust cycle in order to prevent recessions and provide more stable growth. See pic.

In the short term, it doesn't really matter which commodity you fix the currency to, as long as this commodity retains its value over time. The rate at which you fix the currency is more important than the currency itself. For instance, gold is more valuable than table salt, but if you fixed the USD to a rate of $2000 USD per gold ounce (when the actual price of gold is $1,669.25 per ounce) it would result in an undervalued currency, leading to stronger economic growth, more exports, but also more inflation. Likewise, if you fixed the USD to $70 per metric tonne of table salt (when its actual price is $90 per metric tonne) it would result in an overvalued dollar, with more imports, less economic growth, and very little inflation or even deflation.

In the long term, the commodity you are using is more relevant, because you would need the world supply of this commodity to grow at a steady rate in order to allow steady monetary expansion according to the needs of the economy. A commodity with a stagnant or falling supply would choke monetary expansion and result in massive deflation, constraining economic growth.

Anonymous

Anonymous Wed 08 Apr 2020 20:30:46 No.11545506 Report

Quoted By:

>>11545476
>>11545279
>(II) If a bank decided to offer smart contracts (derivatives certificates) that are equivalent to a set percentage of the value of rare substances/elements/compounds/materials/assets/objects/arts in exchange for cash or other payment (tangible or intangible assets). Also the derivatives certificates could be redeemed as cash if the things mentioned above are sold or the derivatives could be exchanged for type C shares of that particular bank. What would be the consequences of such policy?
This sounds similar to the Rentenmark introduced in 1923 in Weimar Germany to stem hyperinflation, in practice it would also serve a similar role as the gold standard. These derivates, in effect, would act as a form of commodity-backed currency.

Anonymous

Anonymous Thu 09 Apr 2020 07:25:58 No.11547146 Report

Quoted By:

Bump

Anonymous

Anonymous Thu 09 Apr 2020 07:40:30 No.11547165 Report

Quoted By:

>>11545279
1. They would never do any backed currencies again. If gold is king, fiat is god.
2. It doesn't matter what they choose to back the currency with, it's the supply of the material backing it that matters. If the currency is backed by a commodity with a very volatile supply then the value of the currency will be volatile as well.
3. What would happen would largely depend on the policies enacted surrounding the banks' handling of the backed currency. If the laws don't change, the banks will do as they've always done and print more money regardless of how much gold is in their vaults.

Anonymous

Anonymous Thu 09 Apr 2020 16:42:26 No.11548307 Report

Quoted By: >>11548350

>>11545476
That's interesting, I've heard many times that central bank policy has been the cause of boom/bust cycles.

Anonymous

Anonymous Thu 09 Apr 2020 16:45:42 No.11548325 Report

Quoted By:

>>11545429
I've always liked the idea of a depreciating currency.

Anonymous

Anonymous Thu 09 Apr 2020 16:52:02 No.11548350 Report

Quoted By: >>11548575

>>11548307
Nah, that is gold bug nonsense.

Anonymous

Anonymous Thu 09 Apr 2020 18:07:24 No.11548575 Report

Quoted By: >>11548615

>>11548350
So what's your opinion on where things are currently heading? Will all the money printing eventually lead to high levels of inflation? Is the monetary system anywhere near as screwed up as goldbugs believe or will we see a nice V or U shaped recovery and keep on truckin'?

Anonymous

Anonymous Thu 09 Apr 2020 18:23:30 No.11548615 Report

Quoted By: >>11548632

>>11548575
If a cure was somehow found in the next two months everything would slowly start returning to normal. Otherwise the world economy is fucked.

Debt burdens are too high worldwide, regardless. That's going to be the origin of the next depression. Inflation could spiral out of control if the debt bubbles burst.

Anonymous

Anonymous Thu 09 Apr 2020 18:28:41 No.11548621 Report

Quoted By:

Anonymous

Anonymous Thu 09 Apr 2020 18:35:33 No.11548632 Report

Quoted By: >>11548666 >>11548676

>>11548615
Why not just declare all existing global debts null and void? Push a year zero switch. Adapt policy to get back to making the economy mirror production value more closely.

Anonymous

Anonymous Thu 09 Apr 2020 18:49:49 No.11548666 Report

Quoted By:

>>11548632
Because the entire economic system is predicated on debt.

Anonymous

Anonymous Thu 09 Apr 2020 18:53:05 No.11548676 Report

Quoted By:

>>11548632
That would lead to WW3. Creditor nations want to collect their denbts.

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