The False Authority
In order to further illustrate the difference between the informal fallacy of ad hominem and a proper use of an attack on a person's character we will delve into the meta-conspiracy of the end of civilization. This will not require us to get into anything specific, so pick your poison: Illuminati has destroyed civilization, the satanic/atheist/homosexual agenda has finally won, the Federal Reserve Bank has crashed the dollar for some reason. Which ever version is most appealing to you let's pretend we're already there. A popular mantra for people (like Alex Jones and Glenn Beck) claiming that the end of the world is near unless X is done is that gold is the only currency that will be accepted in the post-Calamity Mad Max world that is to come. You need to buy gold, and their food buckets, or else it's just a Hobbesian state of nature with some cannibalism to throw in there as well.
The first question we want to ask is: do they have a point?
Well it depends, and predicting the future is not possible yet they seem so sure of it. So sure, that for the last ten years they have been repeatedly trying to sell gold coins, bullion, or various other products that they claim will be the only currency in the future. Next to the near universal creation of alcohol, most societies valued gold in some way. This would imply that gold has some sort of innate quality that humans desire.
The first thing we want to examine is whether or not gold could withstand a financial apocalypse and what exactly that looks like. However, prior to that we must reflect on what is known as the "bullshit asymmetry principle." Initially formulated by Italian programmer Alberto Brandolini on Twitter the principle states that the amount of information needed to refute a piece of bullshit is an order of magnitude more than the bullshit itself. When Jones tweets something about gold using 240 characters, it will take 57,600 characters to refute it (240 x 240). The point of this is that being a skeptic is hard work and sometimes frustratingly so.
Can gold withstand a financial apocalypse? A financial apocalypse would be something much worse than we saw in 07-08 when the financial markets began to collapse. If it were not for the combined actions of the outgoing Bush and incoming Obama administrations, things would have been a lot worse. The type of financial apocalypse that we are talking is a total economic melt down. To understand that we need to know what a financial standard is and how that effects an economy.
A financial system is backed by something, this is what we call a "standard." So currencies are backed by standards, in the case of most world powers the financial standards are not back by things but by the GDP of the countries they are issued by. What that usually means is that a country's currency is backed by the productive output of that country's economy. That output can be related to a thing, for example Australia's dollar is closely related to it's iron exports simply because Australia's trade relies on it. I must be clear, Australia does not run on an "Iron Standard" just that its GDP is closely tied to Iron. Russia, for all it's posturing, has a severe weakness in that it's entire economy is based on its natural gas exports, when the EU or the US puts sanctions on Natural Gas from Russia, the economy of the country begins to slide. Both countries have other economic factors, it would be foolish to rely on merely one thing to back up an economy.
This is, however, what people are claiming when they lobby and argue for a return to the gold standard. Their position is that an economy completely backed by gold cannot suffer the type of hyper-inflation that Hungary did in 1946 (the prices there tripled every 15.6 day). The reasons that cause hyperinflation are complex but the short of it is that the government merely issues more currency in order to meet its obligations, the result is that a flooded market of currency means that the individual currency artifacts become less valuable. This was actually a plan that the British used against the Colonies during the American Revolution, devaluing the currency of the American dollar to economically starve the revolution.
Their claim is that since the dollar is based on fiat (edict of government), if the government collapses the dollar becomes worthless. Gold though, has that intrinsic quality that is immune to such cataclysmic situations. This position, sometimes endorsed by Libertarians, has some benefits. A gold standard does guard against hyper-inflation, it can boost economies that have a GDP too low to back a meaningful currency, it provides a fixed economic trade standard that would prevent a nation from purposefully adjusting its economy (e.g. China), and it's anonymous--gold is gold, it doesn't matter where it comes from. However, the cons outweigh the pros. The first is that a nation's economy does not depend on output but merely on hoarding. The US currently possesses the largest gold reserves, but China is the largest gold producing country, essentially a resource war (whether cold or hot) would erupt as countries vied for alliances with gold producing countries (China, Australia, US, Russia, South Africa, Peru, Ghana, Canada, Indonesia, and Uzbekistan are the top ten gold producers). It also restricts economic growth as the currency cannot be quickly expanded, punishes debt holders, restricts the ability of the government to make decisions that halt economic crises, currency trade would be impractical, wars would be economically much more difficult to recover from, and sudden discoveries of the material would devalue the world economy.
Those making the argument for either a return to the gold standard or just gold itself do not have the economic familiarity to understand those drawbacks. They claim that gold has an intrinsic value and is useful in a collapsed society, but they neglect that hunter-gatherer societies and those in only the first generation of what may be called a society used barter systems if anything at all. Later civilizations adopted currency as it is easier than dragging chickens to the market in order to buy a wheel barrow. It's also worth pointing out that gold was only valid currency if it was stamped, and most nation states used silver anyway.
Jones isn't an economist, neither is Glenn Beck, or David Icke. They have no business or economic or even historical credentials. Yet they hold some sway over a number of people that think ending the federal reserve and returning to the Gold standard would be the way toward prosperity and holding the line against economic collapse which, again, they are sure is coming.
This despite the nearly monolithic disagreement among all professional business and economic experts who are against them. In these debates it is not an incorrect use of the ad hominem to claim that in an economic debate with Alex Jones, his opinions are less credible simply because he lacks the education and knowledge. Just as we would not accept the story of a known liar because of their reputation. The point is that it the person making the claim is just as important as the claim itself, all other things being equal.
The first question we want to ask is: do they have a point?
Well it depends, and predicting the future is not possible yet they seem so sure of it. So sure, that for the last ten years they have been repeatedly trying to sell gold coins, bullion, or various other products that they claim will be the only currency in the future. Next to the near universal creation of alcohol, most societies valued gold in some way. This would imply that gold has some sort of innate quality that humans desire.
The first thing we want to examine is whether or not gold could withstand a financial apocalypse and what exactly that looks like. However, prior to that we must reflect on what is known as the "bullshit asymmetry principle." Initially formulated by Italian programmer Alberto Brandolini on Twitter the principle states that the amount of information needed to refute a piece of bullshit is an order of magnitude more than the bullshit itself. When Jones tweets something about gold using 240 characters, it will take 57,600 characters to refute it (240 x 240). The point of this is that being a skeptic is hard work and sometimes frustratingly so.
Can gold withstand a financial apocalypse? A financial apocalypse would be something much worse than we saw in 07-08 when the financial markets began to collapse. If it were not for the combined actions of the outgoing Bush and incoming Obama administrations, things would have been a lot worse. The type of financial apocalypse that we are talking is a total economic melt down. To understand that we need to know what a financial standard is and how that effects an economy.
A financial system is backed by something, this is what we call a "standard." So currencies are backed by standards, in the case of most world powers the financial standards are not back by things but by the GDP of the countries they are issued by. What that usually means is that a country's currency is backed by the productive output of that country's economy. That output can be related to a thing, for example Australia's dollar is closely related to it's iron exports simply because Australia's trade relies on it. I must be clear, Australia does not run on an "Iron Standard" just that its GDP is closely tied to Iron. Russia, for all it's posturing, has a severe weakness in that it's entire economy is based on its natural gas exports, when the EU or the US puts sanctions on Natural Gas from Russia, the economy of the country begins to slide. Both countries have other economic factors, it would be foolish to rely on merely one thing to back up an economy.
This is, however, what people are claiming when they lobby and argue for a return to the gold standard. Their position is that an economy completely backed by gold cannot suffer the type of hyper-inflation that Hungary did in 1946 (the prices there tripled every 15.6 day). The reasons that cause hyperinflation are complex but the short of it is that the government merely issues more currency in order to meet its obligations, the result is that a flooded market of currency means that the individual currency artifacts become less valuable. This was actually a plan that the British used against the Colonies during the American Revolution, devaluing the currency of the American dollar to economically starve the revolution.
Their claim is that since the dollar is based on fiat (edict of government), if the government collapses the dollar becomes worthless. Gold though, has that intrinsic quality that is immune to such cataclysmic situations. This position, sometimes endorsed by Libertarians, has some benefits. A gold standard does guard against hyper-inflation, it can boost economies that have a GDP too low to back a meaningful currency, it provides a fixed economic trade standard that would prevent a nation from purposefully adjusting its economy (e.g. China), and it's anonymous--gold is gold, it doesn't matter where it comes from. However, the cons outweigh the pros. The first is that a nation's economy does not depend on output but merely on hoarding. The US currently possesses the largest gold reserves, but China is the largest gold producing country, essentially a resource war (whether cold or hot) would erupt as countries vied for alliances with gold producing countries (China, Australia, US, Russia, South Africa, Peru, Ghana, Canada, Indonesia, and Uzbekistan are the top ten gold producers). It also restricts economic growth as the currency cannot be quickly expanded, punishes debt holders, restricts the ability of the government to make decisions that halt economic crises, currency trade would be impractical, wars would be economically much more difficult to recover from, and sudden discoveries of the material would devalue the world economy.
Those making the argument for either a return to the gold standard or just gold itself do not have the economic familiarity to understand those drawbacks. They claim that gold has an intrinsic value and is useful in a collapsed society, but they neglect that hunter-gatherer societies and those in only the first generation of what may be called a society used barter systems if anything at all. Later civilizations adopted currency as it is easier than dragging chickens to the market in order to buy a wheel barrow. It's also worth pointing out that gold was only valid currency if it was stamped, and most nation states used silver anyway.
Jones isn't an economist, neither is Glenn Beck, or David Icke. They have no business or economic or even historical credentials. Yet they hold some sway over a number of people that think ending the federal reserve and returning to the Gold standard would be the way toward prosperity and holding the line against economic collapse which, again, they are sure is coming.
This despite the nearly monolithic disagreement among all professional business and economic experts who are against them. In these debates it is not an incorrect use of the ad hominem to claim that in an economic debate with Alex Jones, his opinions are less credible simply because he lacks the education and knowledge. Just as we would not accept the story of a known liar because of their reputation. The point is that it the person making the claim is just as important as the claim itself, all other things being equal.
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