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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: d:oug who wrote (6572)	6/19/1999 7:56:00 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 82007

Doug, wild and "Ayn Randish", alright. It would be nice since a country like that will never go to war (VBG). Of course, if it has greedy neighbors, it will not survive. On the other hand, such a system, by definition must have ingrained greed, so you have a contradiction. What do you postulate is the system that "concentrates" wealth? Zeev

To: d:oug who wrote (6572)	6/19/1999 8:50:00 AM
From: Hawkmoon	Read Replies (2) \| Respond to of 82007

.......Under a pure commodity money, the money-supply process is totally privatized: The mining, minting, certification, and storage of the money commodity as well as the issuance of fully covered, i.e., 100-percent gold-backed, bank notes and deposits are carried out by private firms operating in a free market. Doug, I believe this is very much like the state of the banking industry in the 1800s, where they were heavily invested in gold/silver mining(I read that somewhere years ago). Early US banks printed their own money and varied in appearance all across the land. It also was only as sound as the bank that issued it. The more gold/silver they could mine, the more silver/gold certificates they could issue, the more loans they could support, ultimately deciding the speed at which the economy could grow. The problem was that some banks were less conservative than others and did not hold enough liquidity or bank reserves, and thus had to be bailed out or face collapse and loss of deposits. Such a privatization of money growth, by default, would create an industry that would hold far more power than any industry should (Shades of the military industrial complex... :0). I don't know if I feel so comfortable with that or the amount of economic resources that would be forced to redirect to the pursuit of mining gold/silver. The virtue of a genuine, 100-percent gold standard is precisely that it establishes a free market in the supply of money and, in doing so, brings about a complete abolition of the governmental monopoly in this most sensitive and vital area of the market economy. But that free market mentality also opens up the financial system to sudden shocks that distort price equilibriums. As an example, let's say that one of your private gold companies suddenly makes a major find. By default, that untapped reserve is assayed and assessed and added to the exploitable reserves for determining the price of gold. So all of a sudden you have a serious increase in money supply since there exists this huge find of gold and that company has every reason to exploit and sell it all. That by necessity makes the money backed by gold less valuable until that new supply of money/gold is absorbed or accomodated in the economy. You would need some agency to come in and take that additional supply off the market and store it until was needed or until equilibrium returned to the marketplace. That someone sounds a lot like the Federal Reserve Board. Regards, Ron