We need central banks to reduce short term volatility. Obviously this comes at the expense of much-greater long-term volatility (ie, tail-risk, Taleb's negative Black Swan events). But the long-term doesn't matter; election cycles are only a few years.
I can't believe some of the comments in this thread. Wah wah the poor countries with no gold. Oh no how are they ever going to survive without a central bank to print some money for them? It really buggs me when commie dogooding idiots get on this buzz. NO we DON'T need central banks. How much "short term volitility" was there when currency was backed by money? How can a centralised bank fairly smooth out short term volitility? Where does this short term volitility come from? Would it be less if we didnt have trillions of unbacked dollars flooding into the hands of big banks to use as they please? Would this volitility be more or less without these bankers pumping and dumping stocks to their own benefit with this new money? How about machines making high speed trades? Hows that affect volitility? As to the "poor" countries, are they getting a good deal from central banks? Yeah im sure the Rothchilds are running the central banks for all but 3 countries under humanitarian motivation. Look at the way the first world plunders the third world at the moment. Every country has something to trade (even if its only labour or tech supprt) and could start at zero and grow a stack. Without central banks lending and charging intrest these countries would be freed from the debt slave ownership model thats currently keeping them down. Without central bank funding the US military couldn't affort to keep bombing everyone - thats another wee headstart to those countries with no economy left thanks to the US "war on terror". How can anyone on this forum claim there is not enough gold in existance to use if as money? Are you saying there is a maximum value that can be placed on an ounce of gold? An ounce of gold is worth 1/all the ounces in existance it doesn't matter if that ounce buys a loaf of bread or a farm as long as the value is honest the rest of the details can be worked out. Its such a shame you commies cant understand that to give the little guys a fair go you need to STOP interfering. Its all good in theory to promote central banks lending to poor countries to kick start their economies. The reality is this just becomes a way for the rich to take advantage of the poor. The best way to actually effect change and help is to dismantle the machine and let them play on a level field and allow everyone the same right to earn and build financial/economic security.
I realise I'm a bit late to this conversation but I just wanted to point out one thing regarding this volume fallacy. What is the amount of gold that is required? ie what amount of gold is not enough and then what amount is enough? Where do you draw the line? If you think about it you'll realise that no such line exists because as pointed out, the actual amount required is irrelevant. The actual amount you have IN RELATION to other people/countries is obviously important. Everything is relative.
That's very true and very Zen. Edit: And, what the heck's the point of a central bank in a world of "Bail-Ins" where it is the people that support the failed banks?
So one country can have ten kilos of gold & another has 10000kilos can they both print the same amount of money ?....NO So the actual amount IS relevant .How can you do a multi billion dollar trade deal with another country if you havent got the currency to pay for it ? I dont care how much you guys talk in circles & riddles .You dont believe in FRB but you seem to want to have FRB with gold ......what ? lol i give up . You geniuses can surmise how to save the world much to the amusement of anybody reading that has half a brain.
@ rinchin you posted An ounce of gold is worth 1/all the ounces in existance it doesn't matter if that ounce buys a loaf of bread or a farm as long as the value is honest the rest of the details can be worked out. ^^^^^^^ What is a fair price a loaf of bread or a farm ? & who would set that price ? Who would agree if it wasnt fair ? how would you enforce it ? What do you do when most people dont agree ? Which camp do you join the haves or the have nots ?. Will it be pegged with cpi ?Is there a set ratio that can be borrowed against say 1 to 1 .or will you just be another frb in disguise .Does every country participate ? or just the ones with gold & the rest have to work their way up to being in the big boys club of real money ? or will the big boys lend them some gold backed money charging interest ?How will you value another country's dollar thats not backed by gold ? thats just the start of the can of worms i can think of in a minute.
A fair price for anything is what the buyer is prepared to pay and a seller is prepared to accept. No one has to participate in anything thats the point. What really bugs me about your opinions is that you defend the current model despite the way it basically hands control to those running the central banks. You criticise others ideas with pathetic reasons but clearly its just your closed mind isn't looking for solutions. The examples above could all be solved differently by different countries if we did somehow remove all the central banks. E.g. Some countries could trade physical pieses of gold. Some could use paper certificates backed by gold in vaults while others started with gold and run a domestic fractional reserve system. The way they trade and interact with each other would be governed by the physical gold they have available and the trust they have with other countries.
i didnt say we needed central banks did i ?you wont find anywhere ive said that .Nobody can give a good enough plan to replace it . You call them pathetic reasons i call them questions that need to be answered ....& i notice u didnt answer them
just admit you thought you had the answers but you dont ...what you have is an idea thats so far from reality that its :lol: ok the cpi one was a joke just wanted to see someone give an answer :
Ok I think I answered most of your question when I stated a fair price is what seller is willing to accept and buyer willing to pay. I'm not promoting a gold standard as a forced replacement world reserve currency. Simply saying we don't need central banks. I do think if we could magic away all the worlds central banks tomorrow gold would naturally start to fill this role in a healthy way. Its really hard to answer your questions when you continue to apply the faluty logic the current system has programed into you. You chalenge the idea of sound moneys capeability to replace central banks while completely missing the paradime shift that would actually be. The thinkings in your how would this, that and the other work are simply looking at gold as a replacement for the USD as a reserve currency. There is no need with sound money to legislate the crap out of it. The price is what someones willing to pay and someones willing to sell for. If you havent got gold in stock go trade some guns and blankets, who cares as long as both parties like the deal. Gold by virtue of its history and tradion would have a big advantage as a medium of exchange. The fact it is so value dense is a great advantage. The problems you bring up are problems with the current system. They come from over regulation and too many opinions having input and altering the rules everyone plays by. Its like deciding what politican to vote for when the whole system is beyond repair. All I'm suggesting is that if you let people trade in intrinsic value you don't need the regulation.
