If he was really clever, he would not be dropping anchor text for Agorism, but rather trying to rank for socialism. That would allow the message to spread.
There is an irony to someone who works so hard to rank #1 for Agorism in the search engines, but hasn't tried it himself.
If you find something evil that wobbles, push it. - Gary North
I have a question concerning the gold standard that a friend of mine brought to my attention. First a comment. I feel returning to the gold standard is the only true way to restore a sound economy. Having said that, is it realistic to think it could be done with the growing population? Is it feasible or logical considering the amount of gold we have? I don't think there is enough gold to cover the amount of people that work and save in this country? Looking at it this way, isn't it necessary to have to print up extra money to make up for the amount of gold we don't have so money can be allocated to all of the working families/people in our economy? I realize that the Fed goes beyond this by printing up money whenever they need it, there by benefiting off of the producers, while not producing any goods or services themselves, and as a result undermining the economy. So I feel they have no place in this economy. But someone explain the logistics of going on the gold standard, because unfortunately I don't believe that is possible anymore.
The fallacy here is the idea that an economy needs more money to grow. This is sure wrong. The only effect of adding new money into the economy is debasement of the buying power, which we call inflation, because it inflates the money floating around.
A perfect money would be always constant, so that the buying power could rise with the wealth accumulated. For example: If we can buy 10 eggs for a buck today, and eggs are going to be produced cheaper every year by 10% than the next year you can get 11 eggs for your one buck. So the price adjusts to the wealth not the amount of money. If you had saved $ 10,000 and you could have bought, say a nice car with that money 30 years ago, now you might be able to buy with the very same $ 10.000 five cars or whatever is equivalent. It does not matter how much gold there is, the important thing is not the medium of exchange itself, but what people ar willing to sell and buy for a certain fraction of it. Now agreed gold also has a bit of a fluctuation, mines extract it every year, and a good deal of it is used for other things than as a money, like jewelry or technical applikations etc. But that fluctuation is miniscule compared to the inflating of the fiat money. And it is not unter the control of a single entity like the state.
The way to make the switch could look like that. First, allow gold to become a medium of exchange, i.e. allow contracts on services and products to be paid in gold. Second stop enforcing people to accept fiat money for whatever purpose. So for a while there will be two moneys floating in the economy, gold and FED dollars. Eventually the FED bucks will not be used by anyone anymore, because there is no incentive to do so and, gradualy the gold standard will be reestablished.
Hope that helps
In the begining there was nothing, and it exploded.
Terry Pratchett (on the big bang theory)
Yes, that helps. Thanks for your response. I think I see what you're saying. You're saying an existing money supply, is just that; a medium of exchange that is obtained by us through earning it. You're saying it doesn't need to be added to and if it is, inflation will occur, hence it's unnecessary. So no matter what the amount of the existing money supply is, it will accommodate the variety of earnings within our economy even for a growing population. And I think you mentioned a very important thing about gold being not only a medium of exchange but also a commodity. The commodity element of money has been virtually stripped away due to fiat money. Supposedly the free market determined gold to be the medium of exchange and along with that gold was and still is a commodity like butter. But now gold is not our medium of exchange.
Exactly. I think it is the fact, that the commodity element has been stripped away from fiat money that makes it so hard to understand its function to a great extend.
Have a great time
Anonymous Coward: Mr Karla, what do you propose, more central planning to fix the problems caused by the last batch of central planning?
Mr Karla, what do you propose, more central planning to fix the problems caused by the last batch of central planning?
I didn't propose anything yet, I'm just wondering if there is anybody else here, that considers himfself an austrian, but thinks that "pulling the plug" will have dramatic consequences, that could have been some way avoided. The transition can have many different faces. I'd say the problem is mostly ethical - from an economical point of view we should just abolish everything this minute, and the market will take care of it (or not exactly, but thats a different topic). But is it ok to create all those winners and losers of run-on-banks induced deflation? It's as unethical as inflationary winners and losers, isn't it?
Pardon my english, not my mother tongue obviously.
Since the current money system is debt-based (money are created out of debt), all outstanding debts would have to be cancelled. The debts CAN'T BE PAID. Banks would go bankrupt. My randomly guessed solution is nothing short of a complete overhaul. I might be wrong.
nhaag: The way to make the switch could look like that. First, allow gold to become a medium of exchange, i.e. allow contracts on services and products to be paid in gold. Second stop enforcing people to accept fiat money for whatever purpose. So for a while there will be two moneys floating in the economy, gold and FED dollars. Eventually the FED bucks will not be used by anyone anymore, because there is no incentive to do so and, gradualy the gold standard will be reestablished.
Agreed, legalizing other forms of tender is the best solution. Perhaps I am skeptical, but would Gresham's Law not apply here? If not fiat currency, there is definitely some risk of a fractional/non-reserve currency taking favor. I am referring to the assumption that there would be multiple competing private coiners and possibly government hard asset providers. Just a general inquiry, all responses welcome.
I think Gresham's Law only applies to legally mandated currencies, not ones which one is free to switch away from.
-Jon
To darkness I condemn you...
Yes, Gresham's law applies, but it is usually interpreted the wrong way. What Gresham said was, that bad money drives out good money under the assumption, that the good and the bad money both are provided by the same entity (the king's mint for example). When rulers began to clip coins and forced the people to use them at face value, than the "bad" money will force out the "good" coins of the market. The reason is, that the "good" coins will be hoarded for savings, wheeras the bad coins will be used in every day transactions as everyone is coerced to use them at face value. Remember those coins actually where no tokens, but had a certain amount of gold etc., which is why the names for the coins (Taler, Florin, Dollars) where nothing but names for weights.
The risk of fractional/non-reserve money substitutes (hence the piece of paper issued by the bank is not the money but a promise to pay the money you put into it on demand) is as high as the risk of fraud is in any society. So, maybe some individuals with a preference for fraudelent actions would start such a thing, but, in spite of being backed by the state, they would be risking to be sued for fraud. I think that is a much better status than today. Those kind of banking behaviors would vanish because they would be driven out of the market by lack of customers very quick, even quicker than any other fraudulent firm, as trust is a major component in the banking business.
nhaag:What Gresham said was, that bad money drives out good money under the assumption, that the good and the bad money both are provided by the same entity (the king's mint for example). When rulers began to clip coins and forced the people to use them at face value, than the "bad" money will force out the "good" coins of the market.
You said it. Gresham's Law is wrong. Or, at least, the application of Gresham's law as an objection to specie-backed currency.
============================
David Z
"The issue is always the same, the government or the market. There is no third solution."
Yes.
The law is right, the common interpretation to back the mainstream think on currencies is wrong.
Hi Steve,
Since I first read Human Action and Rothbards Mystery of Banking I have been sold on the Austrian belief in sound money ideally based on gold. But lately I have become concerned with the fact that the IMF holds such a large proportion of the worlds gold. I have a concern that returning to gold as money might give the holders of most of the gold the opportunity to control most of the economy. That is the only reason I think that a fiat government currency, like Lincoln's greenbacks might be a way to eliminate our debt money without giving too big an advantage to thoes who control most of the worlds gold.
I am not an economist, and I do want to believe gold is the solution, but since the US gold reserve is now supposedly zero, gowing to gold now seems impractical.
Maybe there is someone out there who can explain this better? I really hope my fears are wrong because entrusting money creation to government is almost as frightening as private bankers creating money.
Allow a free market in money. If gold is not the commodity of choice, another will be (e.g. silver). Austrians are for freedom in banking (barring fraud), not a gold fetish.
Your last sentence is interesting, because I believe government and private bankers to be related. i.e. 6 of one, half dozen of another. In Rothbard's "The Case for the Fed", I seem to remember reading that the Fed although a private banking cartel, is in some ways an arm of the government. Either way your concerns are warranted. I believe the Austrian ideal of going back to the gold standard is also a call for the money commodity to be placed back in the hands of the people via a free market system. So you can't do one without the other. Or you wouldn't want to go back to gold without having the individual in control of his and her money. I don't know what the IMF is? I'm going to look since you mentioned it.
Hello again. Seeing a quick look at the International Monetary Fund, makes me think that Austrian economics would be against it? I say this because as you know, Austrian economics seems to loathe any type of centralized regulation. So just as they advise against the Fed's existence, so to would they probably not support any participation among the world countries in the IMF? But I guess you're saying that our country or any country's participation could not be anything but mandatory due to the IMF holding so much influence due to possessing so much gold? I see your point. Perhaps Austrian economics strives to eliminate the IMF as much as they desire to due without the Fed? I seem to recall Rothbard's "What government has done to our money" book in part saying that throughout the decades the US sold much of it's gold to other countries as we gradually left the gold standard. The process of eliminating the IMF may prove irreversible unless wide spread countries would find a way to control the IMF by acquiring control of their own gold?
Thanks for responding.
You might check out the book : The Creature from Jekyll Island or the website The Money Masters. The solution in the Creature book is in the Austrian tradition. Money Masters takes more the Freedman Chicago school approach but regardless of the solution they both give good insight into the problem of private central banks controlling money creation.
I have the same concerns you do about the mechanics of returning to commodity money.
You might want to check out Rothbard's books What Has Government Done to Our Money and The Mystery of Banking they both have suggestions on how to return to sound money. There is also a suggestion on how to do this in The Creature from Jekyll. I think the key thing is to take money creation out of the hands of governments or bank cartels and somehow return it to a function of the free market. A first step might be for congress to take back money creation fron the Fed then figure out how to return to market based connodity money.
There is also more of a Friedman Chichago School solution presented in the Money Masters Video.
Ron:I am not an economist, and I do want to believe gold is the solution, but since the US gold reserve is now supposedly zero, gowing to gold now seems impractical.
Makes no difference to me how much gold there is (or is not, as the case may be) in the vaults at Fort Knox.
Really, if the government has no more gold, we're that much better off.
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