tag:blogger.com,1999:blog-7200179567576095727.post4238207090754910872..comments2023-10-30T09:14:55.251+01:00Comments on Exit Economics: Money Series: Origins of inequalityExitEconomicshttp://www.blogger.com/profile/00870626723726087531noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7200179567576095727.post-24887573701354120222016-07-04T10:18:47.657+02:002016-07-04T10:18:47.657+02:00I am not an expert in building science. Actually, ...I am not an expert in building science. Actually, I am an electronics engineer, but I see your point. <br /><br />I partly share your opinion, in that if you use the wrong models to foresee the consequences of your decisions, you end up with completely wrong outcomes. <br /><br />I think that the the abandonement of the "gold standard" under the Bretton Woods system (and it was not a real Gold Standard, it was a Dollar Standard backed by gold) was driven by two main forces in USA:<br />1. The expensive welfare policy<br />2. The super expensive Vietnam war<br /><br />In such a contest, they <b>had</b> to exit the parity of dollar with gold. The consequence of this choice was the hyperinflation of the early Seventies. <br />Later, the USA discovered that they could print how much money they wanted. The Dollar Standard was born. <br /><br />Each systems has strenghts and weaknesses: of course the world we are living in was shaped by the fiat money. And western central banks have largely abused of the flexibility granted by running large deficits for decades.<br /><br />I will cover this topic in one of my next posts. ExitEconomicshttps://www.blogger.com/profile/00870626723726087531noreply@blogger.comtag:blogger.com,1999:blog-7200179567576095727.post-81412488236307491152016-07-04T09:22:38.035+02:002016-07-04T09:22:38.035+02:00There is a point that you should take into conside...There is a point that you should take into consideration. You observe that imbalances occurred since the gold standard was abandoned.<br />Well, that is correct but at the same time it is not correct.<br />What do I mean? That both gold standard and fiat money could work, provided that people know how to make them work.<br />You are an engineer, I am too. So, I believe, you have studied Building Science (scienza delle Costruzioni). You will likely remember that to solve hyperstatic systems there are two ways, the flexibility method (metodo delle forze) and the displacement method (metodo degli spostamenti). The flexibility method is much more intuitive, i.e. it is the gold standard, but it has a limit; it is very difficult to use it when the number of variable is high. I am about 15 years older than you, when I was studying computer era was still at the beginning, so we were studying both methods. Likely you have studied the flexibility method just as a historical curiosity; nowadays, using an Excel spreadsheet and the displacement method, you may solve an hyperstatic system with 100 unknowns in a matter of minutes (I still needed hours at the time of my studies).<br />So what? Most of the people that today, or till few years ago, are on the top levels of governments, companies, banks and so on, have studied in an environment that was based on the gold standard, at least mentally. They are (were) simply not ready to develop solutions under the new system.<br />Gold standard, as well as the flexibility method, was good in a "small" world. In a global context it was becoming too complex to be managed. But we still need the "Excel spreadsheet" to manage quickly the new systemVincenzohttps://www.blogger.com/profile/00038775981617496935noreply@blogger.com