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To: TobagoJack who wrote (40159)	10/25/2003 7:50:13 AM
From: macavity	Read Replies (2) \| Respond to of 74559

Macavity's Currency Laws. I am not an really an advocate of either fiat or non-fiat systems. I consider that there are many false arguments made by both sides of this argument. Unbacked currency systems are the direct result of popular democracies. The two are synonomous. Politicians and their People just cant get enough of waging wars and making promises that they cant, or do not intend to keep. You need an unbacked currency to meet your promises, or at the very least slavery if you do not believe in free and accessible markets for all to determine the price of labour, goods, and services. Macavity's First Currency Law (of Counterfeiting): All currencies will tend (in the limit) downwards towards their commodity values. I actually will say that this statement is honestly my law, as I have not heard it, or seen it anywhere before. I do not care if you want paper, gold, cigarettes, nylon tights or seashells. I have not found an instance when this does not hold. This is why in the Weimar Republic they ended up wheeling around wheelbarrows of the stuff. The commodity, or barter value, of wood pulp paper is probably equivalent to turnips on a weight-for-weight basis. The benefit of non-fiat currencies leads to my second law. This is basic value arbitrage. Macavity's Second Currency Law (of Counterfeiting) The premium of a currency over its commodity (or manufacture) value is directly related to its attraction to being counterfeited. The benefit of commodity currencies is that the currency premium over the manufacture (PoM) - or commodity value - is very small (proportionally). We have to weigh the Premium over Manufacture (PoM) with the Portability, Fungibility and Divisibility Issues (PFDI) of money. The catch with paper is that we have accepted, or had forced upon us, an exceedingly large PoM as we have been told that we need the PFDI of paper or else the world will stop rotating. This is a false argument and it is the argument that most Goldbugs use. They are correct. The very same people who have forced us to use this system are now merrily counterfeiting to their hearts content. The ideal currency (for the preservation of value) has high PFDI and low PoM and an exceedingly small supply rate to market. You makes the trade-off, you gets the currency you deserve. Hence my gag about making Gold really and practically portable. This is a manufacturing problem which I believe can be solved, and then as long as we can verify the quantity and quality of the commodity we are all go! The catch is that a lot of Goldbugs reckon that there needs to be a single basis - Gold, or two Gold and silver. The problem with a single (or an effectively single) monetary measure is that this can, and does, lead to that particular commodity market being cornered. Liberterians hark on about Gold equalling true freedom but they should accept that we should have many currency systems in competition. You can trade in Gold if you want but it will be highly inconvenient and the market puts a cost on this inconvenience to make it ineffective in a lot of instances. We can all be our own micro-central bankers and convert our savings to whatever commodity or asset we choose at the click of a mouse. We should all stop blaming Mr GreenEggsAndSpam and the other Central Bankers. They are counterfeiters. It is their job, what is yours! Long Dec E-mini Gold -macavity