Hi Ron: Such a spirited discussion. As usual, yours in <<>>'s and mine in ***'s.
<< Then Bob, you are basically saying that future monetary expanision should be dependent upon the ability of the world to find, extract, and deliver more gold to the marketplace??
And those countries possessing the largest reserves of gold will decide which currency is utilized as the global reserve. So if we find ourselves running short of gold here in the US, we can justify a colonialist imperialism for the sake of sound money backed by that shiny metal. >>
*** I'm not saying it "should be dependent upon ...", I'm saying that as the best compromise, a gold standard offers far more than a fiat one does. As I stated before, the drawbacks we both acknowledge, like minimal economic expenditure of mining resources and a 1-3% fluctuation in mining supply each year is far and away a small price to pay for stable, honest money, backed by assets, one which does not fall easy prey to hidden, vested interests in an effective confiscation of the assets of the general populace.
I'm clearly not justifying colonial interventionalism, just as I wouldn't advocate foreign adventures into Middle East oil fields.
So what if South Africa makes a few more dollars, will they make any more then Saudi Arabia? I don't think so. We import hundreds of billions of dollars worth of oil into the US each year. How would $15 Billion of the world's supply of gold going far and wide affect the world balance of power? It's not as if the US doesn't have much gold either. We're the world's #2 producer, after SA.
<< You, by advocating a gold standard for currency, are now declaring that enourmous economic resources must now be diverted to the purpose of locating and mining that shiny metal so necessary for the backing of your proposed currency. >>
*** I don't understand. Did you read and understand my last reply 26946? It now costs the world $15 Billion to mine the world's gold. That's chicken feed. It doesn't necessarily follow that under a gold standard, the world would require enormous quantities per year to support it. Under the gold standards of the last century, was there a enormous amount of activity diverted to mining the metal as a percentage of GDP for instance, as compared to today? No. ***
<< Who are you to decide that Silver should have no value that would be in competition with gold? That's somewhat snobbish and arbitrary, isn't it?? <VBG>
I also believe that is the same analogy I made when I asked why Fiat money, backed by Gov'ts FF&C, should have to be challenged by a shiny metal mined from the ground?? >>
*** Well, I wouldn't necessarily decide silver not be used. It could be silver but I suggest gold because it has, on the whole, more desirable properties, and has been used more widely and successfully as the monetary basis of choice. Again, the argument against fiat is that it is too easily abused by governments and vested interests, and that throughout history its value has gone to ZERO. Have we cleared up that point up yet? ***
<< Should a gov't fiat money fail, holder's of that currency will sell it and buy currency from another gov't they consider more credible.
Should that currency also fail, they will then transfer their wealth to the next currency of strength (hopefully the Dollar).
When that fails, they will transfer to gold.
When that fails, they will transfer to actual commodities and foodstuff and "Katie bar the door".
When that fails we will lie, cheat, steal, and kill from those who have what we desire. (and don't tell me that if it was a choice between your family and someone else's we wouldn't all take care of our own first. It's human nature that goes back farther the the history of gold.) >>
*** The "stepping stone" approach is ridiculous. Why would anyone advocate a system of "frying pans" when you can have a monetary basis that keeps everyone cool, all the time?
The argument that in a nuclear disaster scenario, why would we need gold, has also been brought up, but it's irrelevant, another straw man. At that point, there's no need of talking about fiat either, because it too will be worthless.
There's the perfect scenario in which government is benign and benevolent and in which fiat will work for everyone without a confiscation or any ills (impossible given human nature).
Then there's a middle ground - in a normal, functioning economy with a division of labor, capital, etc, the choice is simple - either fiat or asset (gold-silver) based. I choose asset-based, honest money. ***
Thanks. Bob |
