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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Bilow who wrote (93281)	11/27/2001 4:26:19 PM
From: Knighty Tin	Respond to of 132070

Carl, Thanks. In one swell foop you just murderated all of my drug stocks that make birth control pills. <G> I do have a problem with setting a standard on a commodity that would make South Africa and Russia the richest countries on Earth.

To: Bilow who wrote (93281)	11/27/2001 4:26:20 PM
From: Ahda	Read Replies (1) \| Respond to of 132070

This is a pretty difficult set of requirements to meet. My suggestion is that we return to a monetary standard using first born sons. You have solved the FEDs dilemma. You did it! Now we are taking the case of where it takes eight daughters to be born before the first son is delivered. Productivity has just increased ninefold. vbg

To: Bilow who wrote (93281)	11/27/2001 5:57:03 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 132070

Carl - Obviously gold is insufficiently stable, and too easily mined to be used as a standard of wealth. Here's my short list of requirements for a monetary standard: (1) It should be present all over the world, so no one can easily monopolize the manufacture. (2) It should be proportional to the population, so that as the world grows the monetary supply remains constant. (3) It should require difficulty in manufacturing and it should be something that people hold valuable even outside of its monetary use. (4) It shouldn't have any major use other than as a monetary standard. Otherwise we end up perverting our economy by not using it where it's needed. This is a pretty difficult set of requirements to meet. My suggestion is that we return to a monetary standard using first born sons. There is no need for a standard of wealth, unless you're a government that wants to tax it. A medium of exchange, OTOH, is indispensable to a complex, division of labor, economy. Your qualifications (1), (3) and (4) have some validity, even though (3) and (4) may have a degree of contradiction. Qualification (2) is not valid for a number of reasons, first of all because a medium of exchange is the result of a long term natural selection of the most marketable economic good, not an engineered choice. Money must evolve from a real economic good with a value of its own, to something that acquires a much increased monetary value, overwhelming the non-monetary value. Secondly, this qualification is obviously an attempt to stabilize the value of money. However, this is an entirely futile attempt. All economic values, for money as well as for all other economic goods, are subjective to individuals and obey the law of diminishing marginal utility. For example, the value that you place on a dollar depends on how many of them you have, and the degree of loss you would suffer from the loss of one dollar. If you have a single dollar, and need it to acquire a life-sustaining cup of water, then the value of a dollar is that of life itself. If, OTOH, you have a larger number of dollars, then the value of a dollar is associated with the value of the least important thing that you could choose to forego if you lose a marginal dollar, maybe a package of birdseed. With so wide a variation just for a single person, depending on quantity, time and even whim, it should be clear that any serious attempt to stabilize the value of the dollar over the whole population is a fool's errand. However, that is not to say that sharp fluctuations in supply should not be avoided to the limited degree possible. But there is no reason to try to track supply with population, or level of economic activity, etc., in spite of what Milton Friedman may say. If something has evolved into money, more of it has no value to society as all money is optimally employed (as money, not as an investment) and variations are just another input to the dynamic balancing of the multiplicity of factors to value money that include the subjective marginal utilities of individuals. Regards, Don