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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (91063)	10/2/2007 11:27:17 AM
From: neolib	Read Replies (1) \| Respond to of 306849

The entire appeal of gold is that it makes it difficult and expensive to increase the money supply. So much so that normally the money supply remains constant since there is usually little incentive to mine gold. You have made reference to money needing to grow at the following rates: 1) GDP 2) Savings 3) Kept constant IIRC that is. Most recently your posts have zero'ed in on the keep constant rate. I'm pretty sure you don't actually mean zero growth in the money supply, assuming a growing economy, do you? If you do, simply work backwards to when the economy started from near zero. If the Pilgrims landed with 1 lb of gold, should that suffice for 300M people and our current economy? So what rate, of growth do you actually think is optimal. Please note of course that gold is not ideal in the sense you refer to above. You still need some decrees to make it work that way. It has attractions and uses which are not monetary, and despite declaring it to have a fixed value, market forces have something to say about how much gets mined. I suppose you could try to split the properties into orthogonal basis vectors, and claim that gold is 80% ideal and 20% fait, or something like that, and that this vector split change with various market forces, but at least it is closer to 100% than any other approach. Through the long history of humankind gold, or something similar, is the only method of economic discipline which has been found to be effective with humans. That is at variance with the fact that no modern thriving economy is based on it. I would think you could offer one example of a gold based economy which could compete with a non-gold based economy if that were true. AFAIK, no modern economy period uses it, thriving or not. Since it is not used by any economy attempting to compete in the modern world, I can only assume that very few people think such a system is competitive. If this is not true, why has not some nation reverted to this system, and outpaced the competition? Gold is not an investment, gold merely provides discipline to human designed monetary systems which time has proven cannot find discipline in any other way. I'll agree that this is the perception. I don't agree that it is factually correct. Instead, my view is that a gold based, low money growth system, is uncompetitive in the modern world. I suppose you might be correct if you accepted the notion that discipline == noncompetitive, but I don't find that definition very useful, however semantically pleasing it may be. Perception plays a significant part in this as well. You are fixated on the human component of discipline being weak in a non-gold based system, but you ignore the intrinsic human attraction of "growth" which is meet by a modestly inflating economy system.