... the difference is the disparity in work energy required to perform the two tasks...
Really? So the value of a thing is independent of demand? So the reason NFL season tickets go up nearly every year is because the cost to produce players has risen?
... and the effect that disparity has on currency value and stability...
You’re asserting a relationship between the cost of production and economic stability? I’d like to hear your arguments. Currency value is simply the price level, so in essence you are asserting that price level as determined by one nominal money stock is better than one as determined by a different money stock. That is actually pretty close to what Keynes was saying, as in Keynesian economics the price level is determined by the whims of human beings – so why not match the money stock to those whims.
That was the whole point of Keynes’s statement above. When he proposed such an idea his critics argued that only gold backed money had value, so Keynes’s countered with, “would burying it first make you feel better.” Indeed, it probably would have, since many of his critiques of the time were mired in the cost of production theories of value, i.e. a theory, derived from a poor understanding of Ricardo’s political economy, which sought the explanation of the economic attributes of a thing in the forces embodied in it. But, except as a source of knowledge, the actual history of a particular thing, i.e. the way in which it has acquired its qualities, is entirely irrelevant --> and thus the motivation for Keynes’s quip.
I think what you really want to say is that since the cost of printing bank notes is essentially zero how could we have economic stability? One must realize the real cost of producing bank notes is the costs related to ensuring it stays in circulation (thus both gold and bank notes are subject to marginal costs of production constraints). As for stability, if one believes that stability is promoted by having a stable or fixed money supply, then what is more stable: burying a fixed amount of bank notes or a gold stock that is continuously and suddenly augmented by new gold discoveries and production techniques. |
