Best system of weights for a gold currency

Assuming a collapse of the current monetary system and a switchover to a gold currency system.  Assume for practical purposes that the alloy throughout the currency system is the same alloy that is currently used on U.S. Gold coins.

A possible proposal would be a standard based on a unit to be named "American Gold Ounce" which would be a troy ounce.  The sub units would be "American Gold Penny" which would be an actual troy pennyweight and would be 1/20th of the gold ounce.  The bottom sub unit would be the "American Gold Grain" which would be an actual troy grain and would be 1/24th of the gold penny or 1/480th of the gold ounce.

There would be one hell of a learning curve going from a decimal system to a more traditional weight based system, but in the long run, I think it would work better.

Isn't one grain of gold worth almost two fedreal reserve notes today?  I think with computers we can afford to stretch the bottom point to an imaginary 1/1000th ounce or even less if needed.  The problem with any system that needs a learning curve is that it would also need market confidence.  People tend to feel safer working with a system they can count on thier fingers (base 10/decimal).  Stores could price thier wares independently in gT (gold thousandths) and st/sh (silver tenths/hundreths).

ChristopherEarly:

Isn't one grain of gold worth almost two fedreal reserve notes today?  I think with computers we can afford to stretch the bottom point to an imaginary 1/1000th ounce or even less if needed.  The problem with any system that needs a learning curve is that it would also need market confidence.  People tend to feel safer working with a system they can count on thier fingers (base 10/decimal).  Stores could price thier wares independently in gT (gold thousandths) and st/sh (silver tenths/hundreths).

A gold grain has been recently varying between $1.90 and $2.00.  However, that is based on a badly depreciated dollar.  My feeling that as gold got established, it would settle in at very close to $1.00 = grain.  That would make a gold penny about $24.00 and a troy ounce about $480.00.

We deal every day in miles, feet, inches, yards, acres and many other non decimal measures.  Initially it would be a problem.  But in a way it would help break the public of thinking in dollars and cents.  Part of what Rothbard recommends is that the money be denominated in weight, not an arbitrary name.  Non decimal units would probably be better for this purpose.  I think people would get used to it faster than they think.  You would pay four grains for a gallon of milk.  Two pennys for a good quality shirt.  Forty ounces for an economy car.

I didn't mention silver.  Obviously it would need to circulate alongside for use as "change".  It could not be fixed to gold for the reasons explained by the Austrian School, which I will not go into here, so it would float in relation to gold, although once the system was firmly in place, probably not by much.

Again with the old monetary system out of the way and silver established.  Probably would settle in at somewhere around $8.00 - $10.00 equivalency for an "American Silver Ounce", $0.40 - $0.50 for an "American Silver Penny" with an "American Silver Grain" coming in around 1 or 2 cents.  As with gold, these are "troy" units.

With the increased reliance on electronic transactions, very little of the gold currency would actually be expected to circulate.  Even for non electronic transactions, warehouse receipts would almost certainly be circulating in lieu of the gold itself, for the simple reason that notes can be denominated more usefully than the coins themselves, <i.e. notes could issue in 1oz, 5oz, 10oz, 20oz, or pennies or grains>.  The silver, on the other hand, would likely be circulating mostly as the coin itself, in its role as "pocket change".

ChristopherEarly:

People tend to feel safer working with a system they can count on thier fingers (base 10/decimal).

What people?  People who've grown up knowing nothing else?  Non-decimal systems were preferred for thousands of years by far less educated people...and for good reason; it's easier to calculate fractions in base 12.

And I don't quite understand the point of naming things like "American Gold Ounce" - why not just "troy ounce", if that's what it is.  The former is prone to political interference (redefinition) 

 

Paul:

ChristopherEarly:

People tend to feel safer working with a system they can count on thier fingers (base 10/decimal).

What people?  People who've grown up knowing nothing else?  Non-decimal systems were preferred for thousands of years by far less educated people...and for good reason; it's easier to calculate fractions in base 12.

And I don't quite understand the point of naming things like "American Gold Ounce" - why not just "troy ounce", if that's what it is.  The former is prone to political interference (redefinition) 

I have a shirt that reads "5 out of 4 people can't do fractions."  Where I live 2 out of 3 people don't understand my shirt.  One of my friends can testify that his mother never cooked a decent meal until he bought her a metric cookbook with metric measuring cups.  In Kentucky we may be educated, but we are certainly not learned.  I personally find duodecimal quite easy to comprehend and I work in hexadecimal every day, the people in this town though... they have to use thier fingers when working with single digit numbers.  It's horrible and it sickens me, but mostly it just makes me sad.  The case for using a base 10 system is purely short-term humanitarianism.  I know people who would simply not 'get it' - many of them falsely believing that they perfectly understood how to count in base 12.  Have you ever seen a con artist do 'change for a twently' and walk away with 25 or 30 dollars?  I can only imagine what kind of steals would happen with gold and silver non-decimal bartering.

A true anarcho-capitolist would possibly note that If somebody allows themself to get screwed then that is a shame, but the rest of us are certainly not to blame and only the involved should sort it out.  It isn't up to us to protect the ignorant - It is probably best that those who are too stupid to manage money lose it and die homeless, starving and without children.  Such is the consequence - and the world badly needs consequence I think.  That is as I said, how I think.  I feel that the people we have now would be safer in decimal.

I was thinking as I read replies to this thread, that the U.S. Government, has been trying, in total futility, to ram the metric system down our throats since 1975.  I don't think we are any more metric in 2008 than we were in 1975.  Officially, the U.S. is one of only three non metric countries, along with Myanmar and Liberia.  However, even in all the metric nations, precious metals continue to trade and be coined in Troy units, not grams.  If you want a base 10 coinage in Gold and Silver, essentially you are going to have to demand that the entire world abandon the Troy system and switch to metric for precious metals and coinage.  That is a pretty tall order.  Without a change to metric, you are pretty much stuck with the Troy ounce, pennyweight and grain and for larger measures with the Troy pound and mark.  These units are not base ten units.

Base unit is the Troy Ounce.

Troy Pennyweight = 1/20th of a Troy Ounce.

Troy Grain = 1/24th of a Troy Pennyweight or 1/480th of a Troy Ounce.

Troy Mark = 8 Troy Ounces.

Troy Pound = 12 Troy Ounces.

You could abandon the grain unit and instead use 1/5th Pennyweight units.  A 1/5th Pennyweight would be 1/100 of a Troy Ounce, giving a quasi base 10 system.

The best system of weights for a gold currency will be whichever the market decides to use. Personally, I'm a fan of the metric system (spending several excruciating hours doing dimensional analysis in non-SI units has diabused me of all non-decimal systems) but that's just me; in a truly free market, people could just use whatever system they liked best. There doesn't have to be only one system.

While a base-12 number system would be better overall, the fact that we have a base-10 number system makes it a lot easier to have base-10 units of measure.

I agree that the market should make its own selection.  However, it could get dicey if you have the Rothbard Mint issuing Troy system coins, the Mises Mint issuing Avoirdupois system coins and the Hayek Mint issuing Metric system coins.  Yes, eventually one system will become dominant, but it is likely to be a messy process.