The point I am trying to make is that eventually even gold backed money would become functionally unbacked. In theory, the money supply would be interchangeable for gold, but if everyone all at once demanded gold there would not be enough gold to give them.
>>What is not generally realized is that there is NO possibility, even in theory, of any monetary system having the property of stable purchasing power, or even being able to measure it.<<
Why does this matter? Everyone knows, whether instinctively or objectively, that price is subjective. The same item may be desperately desired by one person, who will pay any price for it, e.g., water in the desert, and of so little value to another than he won't bother to repair a leaky faucet.
As long as the population of the world keeps growing, there will be increasing demand for some things like food, and if supply is inelastic then the price will go up. As technology keeps advancing there will be increasing supply of some things, like computers, and decreasing demand for some things, like buggy whips.
I seriously doubt that anyone does not act according to these principles, they are consistent with the behavior of all living things. |
