[ExI] Money and Human Nature (was Re: Capitalism, anti capitalism, emotional arousal)

Mirco Romanato painlord2k at libero.it
Fri Nov 18 16:17:22 UTC 2011


Il 18/11/2011 08:30, The Avantguardian ha scritto:

> Gold backed currency is not any better than the currency we have now.

I would have use for the yellow metal and for the silver metal. As
door-stopper they work much better than paper.

Seriously, a gold backed and convertible (if it is only backed but not
convertible it is a joke) currency would be a limit to the power of the
government to meddle in the economy and spend.

> All returning to the gold standard would do is effectively act as a
> government fixing of the price of gold. See how that is less economic
> freedom than what fiat currency, bits, and bytes gives us?

Fixing prices in a free market is always a losing proposition.
Too high no one would buy, too low they would be unable to satisfy all
the requests.
They tried to fix and rig the market before and after Bretton Wood. They
failed in the past, they are failing today.

> It's actually quite well explained by Gresham's Law which is a
> consequence of the fact that the symbolic value of money is
> completely independent of the cost of the substrate that encodes it.

This is false.
If the substrate value in greater than the facial value, the substrate
will be used and the money destroyed. This happened with coins in Italy
(and I suppose in other places) when the value of the metal was higher
than the value of the coin. Someone simply melted them.

> Therefore most value is preserved by selfishly interested individuals
> by hoarding gold and circulating government IOUs than in actually
> circulating their gold. Of course this is why the government wanted
> to switch. Because it didn't want to circulate its hoard of gold.

This is because the government IOUs are considered of lower value of the
real gold. And this is right, as an IOU have a counterpart risk that the
actual metal have not.

> Besides gold itself is not wealth.
Wealth is subjective to the owner.

> It the value of the time, expense,
> and effort to mine the gold, refine it, cast it into coins or draw it
> into wire or what not wherein the value of the gold lay.

Just simply wrong.
The value of gold mined with spoons is not greater of the value of gold
mined with mechanical shovels.
The value is in the eye of the buyer and the seller. And the price is
fixed when they exchange the goods.

> Just like
> the economic value of water lay in the fact that it is from known
> clean source at a distant location and had to be packaged and shipped
> to your region. All that is man hours compounded by man-hours the
> very stuff of which our lives are made.

This is not value, but cost.
Mixing the two show a basic misunderstanding of economic concepts.

> Than how do you justify Taq polymerase enzyme being so many times
> more valuable per gram than your precious gold?

Because people use it for some purpose they foresee will give them some
profit. But not all people, only people that know how to use it.
In fact, if you take the total stock of Taq polymerase enzyme available
in all the world, you will see that it is small relative to the annual
production. So the price could go up and down if the production or the
use change. Production can easily be increased if the price rise. So taq
Polymerase is not a good way to keep purchasing power.
Gold and partially silver have a large stock available. For gold it is
enough for something like 70 years at actual consumption rates and
production rates are similar. Essentially the quantity of gold is fixed.
This prevent large change of it value to people interested in buying or
selling it. If you want gold, you must buy it from someone that have
produced it or bought it before. And the producers are unable raise the
production to meet the demand in any significant way.

You must give real value if you want someone give you their gold and
they must do the same for you.

> Why not base all
> economic value on my #$&$% since after all there are only two in the
> whole universe?

Your whatever is not fungible, durable, divisible, can not be used for
anything useful apart you and few others ...

Anyway, gold is only the commodity chosen by the market in the last
5.000 years. Maybe the market will choose something different in future.
To know, just leave it the freedom to do so.

> No... Ben Franklin said time was money not gold was
> money.

> How in the hell would you handle interest with a gold
> standard?

Just as they handle them today when the Central banks lease gold.
They ask a 0.1% interest every 30 days or something like.
You receive 1 kg of gold and accept to pay back after 30 days, 1kg + 1
gram of gold. If you have invested the 1 kg of gold well, you will find
someone willing to separate from 1 g of gold. Currently 1 g of gold have
the same price to eat at a sushi restaurant.

> Hope that gold coins multiplied like rabbits?

Hoping to buy it from someone else in exchange for goods or services.
Exactly like I would hope to repay any debt I have incurred.

If you #$&$% have any commercial value, you could sell it or rent it in
exchange of gold.

Mirco





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