In my earlier comment, I mentioned that if you insist on a commodity standard, an electricity standard is better than a gold standard. Did you give that a thought?

See how quickly new Silk Roads are popping back up?

> China killed Bitcoin in their territory in a week.

This statement is simply false, given that bitcoin exchanges are still operating in China legally.

Even if a particular government does take the drastic actions you propose, that does not “kill Bitcoin”. Unless every nation on earth does this in a coordinated fashion, there will still be places where bitcoin can be traded and it will still retain value.

Aside from this type of coordination being totally unfeasible, there is a tremendous economic incentive for nations to break ranks and keep bitcoin activity legal while it is made illegal elsewhere.

Governments also have incentives to keep it legal as well — primarily tax revenue from currency appreciation and increased economic activity.

Admin is 100% right on Bitcoin inevitably killing fiat because of the hard vs soft currency savings incentive. If you look at what Bitcoin actually is and how it’s developed and combine that with the basic laws of economics it becomes clear that a stampede out of fiat is the only way this can play out.

“A hard monetary system would channel an immense amount of energy from the economy into the industry that produces the monetary commodity.”

In any fiat monetary system all assets are owned by whoever has the authority to print money because they can at will print the money to buy those assets, print money and give it to their friends and allies – their friends and allies can then purchase valuable productive assets or the goods and services from the people who weren’t given fiat money.

This channels an immense amount of energy from the economy to influencing whoever has the authority to print money.

That’s the alternative.

At least gold is nice to look at – nothing that wins the favor of the USG is even pleasant.

But even Scott Sumner is willing to consider a gradual move to low growth NGDP-LT , provided people have to adjust slowly. The following blog post can be very informative.

http://www.themoneyillusion.com/?p=3059

It is referring to making unsupported claims about the effectiveness of something.

The true solution is low tax rates plus fairly stiff capital requirements on banks

And yet in another post you discuss the breakdown of the nuclear family as being a prime economic cause of many “troubles.”

The italicized line indicates your position is the correct mix of fiscal and monetary policy can “solve” what you perceive as something in need of fixing. This would appear to mean that you do not think the breakdown of the nuclear family (the relations among people) is of first importance, rather it can be corrected thru policy and your desired outcome can be maintained thru the correct prescription.

By the way, the notion that printing to keep prices from collapsing leads to hyperinflation has been completely disproven — by Hurlock’s own FRED chart of monetary base. The base exploded, yet CPI is quiescent. You could quibble that this price or that has gone up a few percent, but we’ve had a tripling of monetary base and basically nothing happened. It’s as close to a perfectly controlled experiment of the hyperinflationists’ claims as you’re going to get, and it failed.

What are you talking about if NOT a 100%-gold-backed system? And are you really proposing an economy where the total number of currency units is fixed at the outset, yet the economy triples (or whatever) in size?

I do not understand the need to make claims like these:

“When credibility is established after QE, then announcement of the NGDP-LT path is enough. The markets will self adjust without the CB having to step in again and again. Bailouts are not needed, protectionism is not needed. In an NGDP-LT polity, inflation will occur if either the polity has met with a natural disaster or the government’s policies are not good. Every round of inflation, not caused by a natural disaster will result in people protesting against government spending and regulations. ”

“The true solution is low tax rates plus fairly stiff capital requirements on banks so you don’t get in the sorts of crashes that lead to the need to do QE in the first place.”

It all appears very “Austrian-like.”

A super hard monetary system would have a fixed supply.

A hard monetary system would be very tough.

A super hard monetary system would completely change the face of the world.

Living in a super hard monetary system
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Money illusion cannot be entertained, hence nearly everyone has a variable component in their salaries. This continues until the variable drops to zero one day and people have to take a base salary cut. A few more iterations of these and soon everyone’s salary is purely variable. The most successful people having the maximum leverage would probably be the only ones to have fixed salaries.

Almost every saving instrument would be supplanted by saving of the money. After all, the money acts as an automatic index fund of everything with no charges. There will be many attempts to counterfeit the currency.

The price of everything keeps dropping. Except for the occasional blip when a rich man comes spending.
http://en.wikipedia.org/wiki/Musa_I_of_Mali#Islam_and_pilgrimage_to_Mecca

So it can be said that prices would be volatile with a downward bias. A number of commodities would be produced from plant that was created in the pre-hard money era. As and when these shut down, it will take a much longer time for a new one to come up due to the high opportunity cost of giving up “the automatic index fund of everything”.

Due to the unduly large importance of big spenders, media attention would be totally focused on how and where are the rich spending, to a much greater extent than today.

Long lasting corporations would not exist, since almost no one will be able to persistently beat the market. Almost all collaborations with other people will be for short projects, since it would mostly be utilizing an arbitrage opportunity that will be extremely short lived.

Governments would mostly tax the only wealth there is, the monetary standard. Hence either transactions tax or demurrage will become the tax of choice.

With every recession, a number of people will enter receivership, which will either be resolved by bankruptcy or slavery, depending on the polity’s rules. My guess is that polities that allow bankruptcy will do better.

It’s not an impossible world, which is envisaged here. It is weird and very tough on people who don’t own assets. It is not friendly to intelligence amplification as the simple heuristic – save money – beats 99.9% of all other strategies and people don’t form long term corporations.