'@rphb' 1) "If we switch to a gold standard and full reserve banking as I said, then M, money supply, will more or less be determined by Q"
First of all I don't see how output of gold mines correlates with overall industrial production. Then you essentially admit that you have a problem on your hands: your monetary mass M is more or less constant and you do not control money velocity V. That means that given constant output Q the only way that this equation holds is that price index P oscillates to reflect changes in V. That means that you have no practical way of avoiding swings between inflation and deflation without either diluting gold standard or controlling production. Anyone hoping to save money for future use will curse your name.
"Like the archive meter we need achieve money, something that are based on a natural constant and not susceptible to human manipulation."
When supply and demand are involved there are no constant values. Even more, values of most things vary wildly across different regions.
"I imagine that the role of banks change to something closer to that of a real estate broker."
So example that you've provided means that individual lender faces much greater risk than in existing scheme, while not much changes for every other party involved. Sure, there is no risk in run on the bank, but significant financial disturbance will instead completely wipe out investments by individual lenders. Advantage of this arrangement is not obvious.
2) "Deflation is a good thing, it means we can get more for less, it is a sign of a growing economy, and it is temporary as it slows down growth, preventing it from becoming overheated."
Deflation is good when you're not in debt, do not require credit and your business can survive a few months or even years of depressed sales. For everyone else deflation sucks. Especially for businesses that depend on ability to raise money in order to exploit market opportunities or survive seasonal downturns. On top of that, anyone who works for a wage is at risk of either suffering from a wage cut that can easily last through following inflation or losing the job altogether if employer is unable to pay less for some reason.
You seem to like farmers, now imagine what will happen to them when a poor harvest coincides with deflation.
imagine that some firm captured and successfully mined asteroid that contains large amounts of precious metals. Over the course of one year, amount of available gold increased by 20%. How are you going to avoid inflation?
"But that is a rare occurrence"
Given time it will be regular occurrence. And, unlike with inflation targeting by central bank, you have no option to remove excess monetary mass from circulation, you've stuck with increase in M. "It could have been worse" is an argument that works for existing system as well.
"A discovery of such an asteroid would only happen thanks to a massive real investment"
No, not really. Any number of viable targets can be discovered by a single observation satellite in Earth's orbit, total budget of that program may be within 0.5-1 billion dollars. Estimates of extraction and logistics are difficult to estimate given huge amount of possible options, but let's say that mining hardware costs 10 billion dollars, about as much as new nuclear aircraft carrier. Each trip to asteroid and back with 100 tons of cargo would cost about 120 million (that's twice over what SpaceX expects to spend on each trip of it's Interplanetary Transport System to Mars). Cost of entire ITS development is expected to be around 10 billion dollars. Make it 20, just because. Entire development, deployment and first mission of this system will cost less than 20% of Apple's cash money reserve or about ten nuclear power stations, or GDP of Albania. Not so massive, and most of investment will go towards R&D.
"That is what the monetarist expanded the US base currency with in the last financial crisis"
That graph has dips. Not going to happen with gold, line will steadily go up and up.
"Nobody worked for these fred money, it was just created out of thin air"
M adjusted to match PQ given current V, works as intended, will be sequestered as needed further.
Better than having a death spiral of major recession.
"Okay the thing about thy desert and forest example is that both gold and water have intrinsic value.
Water is just more immediately useful. ...
This is especially true for the desert example, for the forest example where I am close to a river. I don’t need to carry water with me, I am staying with the river and follow it downstream.
I have little reason to dump the gold, but if it is too much for me to comfortably carry I would bury some of it, again near a prominent landmark."
So what you're saying is that "end-user value" of gold in desert scenario is vastly lower than that of the water, and in forest scenario reverse is true. It shows that intrinsic value exists only in your estimation, in reality value will depend on changing circumstances like scarcity and utility. QED.
4) "I got news for thee: SCARCITY IS BAD."
Your entire argument in favor of gold depends on it's scarcity, immutability and predictable emission. If scarcity is bad then gold standard is bad as well.
"bitcoins scarcity is arbitrary, it is not natural like gold and there is an unlimited supply of potential cryptocurrencies"
Nope, scarcity of bitcoin is set in it's code and it's not very likely that it will be changed under anything but most extreme circumstances. Even then the blockchain will likely split and option with previous emission settings will remain active. Happened to Ethereum already.
Also, you can spike gold with tungsten, can't do the same with bitcoin. In it's uniformity and immutability it's more real than gold.
"I am sorry if thou hast fallen for it, but it is very obviously a scam."
That scam performed better than AMD's stock after news about Ryzen thanks to utility of smart contracts and fast transactions. At this point anyone who bought sufficiently early and has strong nerves is unlikely to lose more than invested. Insider trading is a problem, but to a lesser extent than four or five years ago. Also spikes and dips are fun and weed out weak, timid and oblivious.
5) "But if thou want to make industrial investment thou also need capital. If thou cannot raise it theeself thou can sell part of thy company to others or borrow money in the form of a bond. "
So, essentially we're back to banks and stock markets, maybe under different name. Failing companies are not an issue as long as they are able to liquidate more or less efficiently. For a developing company borrowing is not just risk, it's necessity.
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'@rphb' 1) "If we switch to a gold standard and full reserve banking as I said, then M, money supply, will more or less be determined by Q"
First of all I don't see how output of gold mines correlates with overall industrial production. Then you essentially admit that you have a problem on your hands: your monetary mass M is more or less constant and you do not control money velocity V. That means that given constant output Q the only way that this equation holds is that price index P oscillates to reflect changes in V. That means that you have no practical way of avoiding swings between inflation and deflation without either diluting gold standard or controlling production. Anyone hoping to save money for future use will curse your name.
"Like the archive meter we need achieve money, something that are based on a natural constant and not susceptible to human manipulation."
When supply and demand are involved there are no constant values. Even more, values of most things vary wildly across different regions.
"I imagine that the role of banks change to something closer to that of a real estate broker."
So example that you've provided means that individual lender faces much greater risk than in existing scheme, while not much changes for every other party involved. Sure, there is no risk in run on the bank, but significant financial disturbance will instead completely wipe out investments by individual lenders. Advantage of this arrangement is not obvious.
2) "Deflation is a good thing, it means we can get more for less, it is a sign of a growing economy, and it is temporary as it slows down growth, preventing it from becoming overheated."
Deflation is good when you're not in debt, do not require credit and your business can survive a few months or even years of depressed sales. For everyone else deflation sucks. Especially for businesses that depend on ability to raise money in order to exploit market opportunities or survive seasonal downturns. On top of that, anyone who works for a wage is at risk of either suffering from a wage cut that can easily last through following inflation or losing the job altogether if employer is unable to pay less for some reason.
You seem to like farmers, now imagine what will happen to them when a poor harvest coincides with deflation.
imagine that some firm captured and successfully mined asteroid that contains large amounts of precious metals. Over the course of one year, amount of available gold increased by 20%. How are you going to avoid inflation?
"But that is a rare occurrence"
Given time it will be regular occurrence. And, unlike with inflation targeting by central bank, you have no option to remove excess monetary mass from circulation, you've stuck with increase in M. "It could have been worse" is an argument that works for existing system as well.
"A discovery of such an asteroid would only happen thanks to a massive real investment"
No, not really. Any number of viable targets can be discovered by a single observation satellite in Earth's orbit, total budget of that program may be within 0.5-1 billion dollars. Estimates of extraction and logistics are difficult to estimate given huge amount of possible options, but let's say that mining hardware costs 10 billion dollars, about as much as new nuclear aircraft carrier. Each trip to asteroid and back with 100 tons of cargo would cost about 120 million (that's twice over what SpaceX expects to spend on each trip of it's Interplanetary Transport System to Mars). Cost of entire ITS development is expected to be around 10 billion dollars. Make it 20, just because. Entire development, deployment and first mission of this system will cost less than 20% of Apple's cash money reserve or about ten nuclear power stations, or GDP of Albania. Not so massive, and most of investment will go towards R&D.
"That is what the monetarist expanded the US base currency with in the last financial crisis"
That graph has dips. Not going to happen with gold, line will steadily go up and up.
"Nobody worked for these fred money, it was just created out of thin air"
M adjusted to match PQ given current V, works as intended, will be sequestered as needed further.
Better than having a death spiral of major recession.
"Okay the thing about thy desert and forest example is that both gold and water have intrinsic value.
Water is just more immediately useful. ...
This is especially true for the desert example, for the forest example where I am close to a river. I don’t need to carry water with me, I am staying with the river and follow it downstream.
I have little reason to dump the gold, but if it is too much for me to comfortably carry I would bury some of it, again near a prominent landmark."
So what you're saying is that "end-user value" of gold in desert scenario is vastly lower than that of the water, and in forest scenario reverse is true. It shows that intrinsic value exists only in your estimation, in reality value will depend on changing circumstances like scarcity and utility. QED.
4) "I got news for thee: SCARCITY IS BAD."
Your entire argument in favor of gold depends on it's scarcity, immutability and predictable emission. If scarcity is bad then gold standard is bad as well.
"bitcoins scarcity is arbitrary, it is not natural like gold and there is an unlimited supply of potential cryptocurrencies"
Nope, scarcity of bitcoin is set in it's code and it's not very likely that it will be changed under anything but most extreme circumstances. Even then the blockchain will likely split and option with previous emission settings will remain active. Happened to Ethereum already.
Also, you can spike gold with tungsten, can't do the same with bitcoin. In it's uniformity and immutability it's more real than gold.
"I am sorry if thou hast fallen for it, but it is very obviously a scam."
That scam performed better than AMD's stock after news about Ryzen thanks to utility of smart contracts and fast transactions. At this point anyone who bought sufficiently early and has strong nerves is unlikely to lose more than invested. Insider trading is a problem, but to a lesser extent than four or five years ago. Also spikes and dips are fun and weed out weak, timid and oblivious.
5) "But if thou want to make industrial investment thou also need capital. If thou cannot raise it theeself thou can sell part of thy company to others or borrow money in the form of a bond. "
So, essentially we're back to banks and stock markets, maybe under different name. Failing companies are not an issue as long as they are able to liquidate more or less efficiently. For a developing company borrowing is not just risk, it's necessity.