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To: Hawkmoon who wrote (36573)	7/5/1999 8:44:00 PM
From: donald martin	Read Replies (1) \| Respond to of 116815

<<And the fact that farm advocates are clamoring for a gold-backed security in order to boost overall commodity prices indicates how risky a gold standard really is.>> I wouldn't go quite that far. I'm in agreement with you, sort of, about your argument that any kind of "fixing" amounts to a subsidy. However, if "fixing" a currency to a basket of commodities gives the market the confidence it needs that currency won't be inflated, so be it. Somewhere in that basket, I would add, you have to weave in labor and technology/productivity. I think the problem with a gold standard right now is that it would be a fundamental change in the ground rules. And we can predict what many of the effects would be, but not all of them. (Dem's da wuns I's worried about.) As far as the anti-subsidy argument goes, going back to the cries from the farmers to prop up agricultural product prices... If we find ourselves saying, ok, we're going to run monetary policy now with the goal of stabilizing these products 20% than they are right now, what happens when the cost of fertilizer, tractors, fuel, and construction materials rise 30%? Will we then see farmers asking the monetary authorities to run the peg another 10%? (Rhetorical question. Of course they will.) That's not a slope I want to end up on. I think that it's not too unreasonable to tie monetary policy to a basket of goods and services. So long as that fix remains static. We've been led to believe that the CPI as reported by DOL represents a big ass basket of goods and services. Wish I knew more about their calculations. I'll tell you though, my instincts are that they're fudging.

To: Hawkmoon who wrote (36573)	7/6/1999 8:02:00 AM
From: long-gone	Read Replies (1) \| Respond to of 116815

<<When people start calling for money to be tied to various commodities indexes, gold, silver, soy beans, oil... what have you, it is a subsidy.>> Not necessarily, over the last several weeks the Government of Japan has intervened (outside market forces) to weaken the Yen. Currency trade with China is closed in such a way as to assure them a favorable exchange rate. There are many "fixed exchange rates" through-out the world. All agricultural commodities are heavily subsidized in Europe and Japan. Now, consider these for just one moment? If people are demanding a free market are they asking for a subsidy? If people are petitioning their government for protection from actions outside the free market process by foreign powers are they asking for a "support payment or only equal treatment inside the global economy? Is assurance of a free market (in this global economy) to their own citizens with-in the purview of the powers which should be exercised by a government? Do farmers from Iowa need to get their own shotguns and attack Denmark or Italy to prevent the import of subsidised hams from Europe to assure a free market in the US? When does protection FROM subsidies to other commodity producers become a subsidy?