Quote from: deisik on December 12, 2013, 04:24:32 PM

Quote from: tacotime on December 12, 2013, 04:12:11 PM

Quote from: deisik on December 12, 2013, 04:04:43 PM

Yes, I consider this as a central problem for Bitcoin and gold standard. If "Bitcoin itself simply becomes more valuable", everything else becomes not that simple for producers in the first place, and you won't get away with it by just saying "and everyone moves on with their day". It has already been proven so many times that if you claim otherwise, it can be considered that you don't actually understand the issue at hand...

http://www.bloomberg.com/news/2013-04-03/the-gold-standard-wasn-t-so-bad.html

Quote

The gold standard wasn't bad for growth, either. The most reliable information comes from an annual index of industrial production from 1790 to 1915. We can compare that index against the monthly industrial production data collected by the Federal Reserve since 1919 to get a sense of how rapidly the economy grew under different monetary arrangements. It turns out that industrial production grew much more rapidly under the gold standard than in the years since. This doesn't change even if you exclude the world wars and the Great Depression.

It has a very simple explanation. The rapid economic growth and ever increasing industrial production of the 19th century was due to tremendous scientific and technological advances (electricity, chemistry, internal combustion engine, etc) back then which partly compensated for the deficiencies of gold standard but still couldn't prevent the train of economic crises in the second half of that century as well as the war in Europe and the Great Depression in the 20th century...

That is true. But the simple difference has nothing to do with gold per se.

In the 1800s we had private banks doing fractional reserve lending and so when they failed all depositors were wiped out. Which caused frequent mini-depressions.

That was actually better, because it meant debt write downs and readjustments were more frequent so the economy annealed and was more efficient. But those failures lead to the need for a Central Bank (remember JP Morgan had to bail out the country).

Whereas since 1913, we've had a central bank that prevents write-downs, and that is why global debt is now $150 trillion, misallocation has never ceased/corrected, and we are headed to the apocalyptic implosion and confiscation of all wealth.