Well, if you could go back in time and “take out” a genocidal dictator as a child, would you? “Good” and “bad” are sometimes labels and narrative we apply to events after they happen. They’re not good or bad, in the sense that it was good for the 1918 Flu virus and his family!
A better question might be “If you could stop the genocidal act(s) just in time would you?”
Killing a (then innocent) human being because you knew they would commit a future atrocious act would duplicate the problem you want to avoid.
A good read, if you want to consider viruses from an anthropomorphic perspective is the book “The Selfish Gene,” by Richard Dawkins.
If you start with “so” and follow up with a ridiculous characterization of the other person’s position, you aren’t arguing in good faith.
Evidently you missed this:
“I take that back. The problem was mounting surpluses after the war that turned into severe deflation. Were the people that died from the virus still living, the surpluses would have been less, and the depression not as severe. The deaths caused the oversupply problem to be worse than it would have been.”
America had ramped up production in WW1. It was a bonanza for American industry. Suddenly the war was over and European production resumed. To top it off, a good part of the population died in the pandemic, reducing demand. Increased productive capacity + decreased demand was catastrophic. Prices dropped precipitously. The result was the “forgotten depression” almost no one remembers. James Grant wrote a good book on it.
An interesting fact- Harry Truman had his clothing store clobbered by the 1921 Depression. He sought a federal judgeship to protect him from bankruptcy. Were it not for the Depression, Truman likely would have remained a retailer, and never have become president.
So in your opinion, it is inflation that motivates entrepreneurs and increases standard of living? You haven’t by any chance been studying under Paul Krugman, have you?
Well Hungary and Zimbabwe should have been the champions of entrepreneurship and have very high productivity as a result. Those two countries win the #1 and #2 prizes in all-time inflation rates.
Most any product, when first introduced in the marketplace, has a high price- automobiles, radios, computers, HD TVs to name a few. The first purchasers are the wealthy and enthusiasts. As time goes on, production costs are drecreased and the unit cost goes down, resulting in widespread adoption of the new technology.
It has nothing to do with the inflation rate.
Incidentally, high rates of inflation makes planning production very difficult. It is hard to estimate what one will charge for an item when one cannot predict future costs of production. I have this problem in a vineyard project in Argentina.
It is hard to believe, but US politicians once campaigned under the promise of “sound money” because citizens believed it was a prerequisite to a healthy economy.
My opinion is that cycles of inflation/deflation, with a slight bias toward inflation are signs of a healthy national economy. Extremes in those cycles are usually harmful to the economy. I agree with the opinion of many present-day experts that a modest one-to-three-percent average inflation rate is desirable.
Citing extreme examples, like very high inflation rates or extreme deflation rates is not a valid argument. It’s like discussing the merits of what a comfortable room temperature is and suggesting your opponent is claiming that 200 deg is desirable because they think 55 deg is too cold.
The purpose of a currency is to measure the relative value of goods and services by a widely accepted standard.
The purpose of a tape measure to accurately record linear measurements by a widely accepted standard.
A carpenter bought an elastic tape measure. Its dimensions were not static, but varied with time. Some months the tape measure contracted quite a bit, throwing the carpenter’s cuts off. However, with time, the carpenter found that a monthly contraction in length of the tape measure of between 1% and 3% gave him the best results for accurate cuts in his carpentry.
Make sense?
Gold moves 1% to 3% in a day, easily!
The purpose of currency is to provide a medium of exchange to facilitate the movement of goods and services among people who agree upon the validity of the currency.
The absolute value of the agreed-upon currency is, at it’s most elemental level, a measure of human endeavor, (work.) Some examples of human endeavor are mining, manufacturing, farming, teaching, selling, consulting and just about any human effort that results in a benefit to the worker that can be exchanged for other goods or, an agreed-upon medium of exchange, most commonly that is the coin of the realm, the common currency.
A change in the value of a currency is inevitable because the real and perceived value of the goods and services that constitute trade are continually changing. The bigger picture of that dynamic is the individual output of the many players in global commerce, one indication is the GNP of the countries with their individual currencies. The agreed-upon exchange rates are indicative of the relative value of the individual currencies compared to one another.
There are many reasons that things like the gold standard or the pinning of a currency supply and value to anything but human endeavor will not work for very long.
To an extent, yes. However, you COMPLETELY leave out the confidence of the public in the currency, which is destroyed by debasing the currency.
Don’t fall into the trap of assuming the currency is stable just because its value holds in relation to other currencies. Other countries may be simultaneously debasing their currencies. Variance in exchange rates are merely a function of differing levels of confidence in other currencies.
When a currency is debased due to excessive creation, it ceases to be an accurate measure of value. If the price of a candy bar rises, it probably does not mean that the public values candy bars dearer, it most likely means there is either a shortage or raw materials, or the currency in which it is valued is being debased.
Currencies are unique in that they are measuring tools AND a store of value. They cease to function as either well when issuance of the currency is rapidly increased.
How do you know it is the price of gold that is moving, and not the confidence in the currency you value it in? The only way to tell is to compare the quantities of other commodities (crude oil, soybeans, gasoline, pork bellies, etc.) an ounce of gold will buy. It it buys more of a basket of other commodities, you can conclude that is is the value of gold that has increased. If not, the value of paper money has decreased.
I was using this silly analogy to poke fun of Woody’s argument of an “ideal” level of currency debasement. Although it should spur some thinking about the wisdom of a so-called “elastic” currency.
Gold Price vs Stock Market - 100 Year Chart | MacroTrends
I found this chart comparing gold (orange) to the stock market (blue). If you are investing for the long term, gold does not look like the way to go.
Buying physical gold seems to make very little sense. Unless you are John Wick, buying things using physical gold would be very difficult. You would first have to get someone to buy it from you so you could have the cash. I have also seen articles indicating that physical gold loses about 5% of its value immediately when purchased.
Rerun the chart from 1973 or so. The price of gold was controlled before then. No one who owns gold should think of it as a stock substitute, they should think of it as a US dollar cash substitute.
EDIT:
Returns since 01/01/1972 to 04/30/2024
Cash (T-Bills) 4.54%
Gold 7.69%
Compelling past results. Gold has done about 7% annually the past 10 years. What a way to go though if you bet the whole house on it. Diversify.
I like Clark’s advice about just going with the ETFs for gold or silver. I just let some PSLV in my Roth get sold this past week with limit orders being triggered. But, yeah, I think it is a musical chairs game owning the paper versions in the event that the underlying company goes bust. So, you look sometimes how fast you can get your annualized 7% return with some holdings and move on. I like T-bills in the 5.3% range for sleep at night money.
When Vietnam fell, a lot of immigrants were processed in Hawaii into the US. Many had gold stitched into secret compartments in their clothing. Many others had South Vietnamese paper currency stitched into secret compartments in their clothing. Guess which group arrived in their new country with a financial head start?
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