I have seen the gold standard being referred to quite frequently in Austrian economics, but somehow i don't see how it is any more productive or ethical than fiat money. Ultimately gold is just another arbitrary stock that does not produce wealth. In making the aim of a society to horde or obtain gold is bound to lead to the same conflicts of scarcity that we are faced with now. By stating that gold=value we transform human beings into "gold-getters", and motivate human action towards obtaining an arbitrary element, spurring irrational behavior. Again just as in fiat money, gold's value mostly represents our belief in it having value, but in the end it does not produce any real value to our society.
In my opinion largely the reason why we are where we are right now, is due to the lack of a true human purpose. We figured out how to shuffle numbers around quite well, how to create complex derivatives and stock options, but as a means to what end? There is no outlet for growth. Economic growth comes from innovations of the human mind (the automobile, appliances, the internet etc...). In the beginning an innovation always takes the form of improving our lives, it creates excitement and energizes the human spirit. However, i ask again what is the aim of our civilization? Because without understanding that, our inventions are turned into symbols of status, pornography machines and tools of war.
I think then that it is important for us to clearly define "what is value?". Why do we link scarcity to value, when it leads to over production, concentration of wealth, and wasteful spending anyways. I channel Ayn Rand in stating that the human mind IS the most valuable commodity that we have. Perhaps i am begging the question when i restate that we misconstrue the idea of value whenever we assign it to an arbitrary metal or paper.
Ultimately the most ethical system would be one of bartering, where there is no dictated notion of value and hence everyone is capable of being self-autonomous of how they wish to live and contribute. I think at this point of time there is no real conception of possibility on how that could be accomplished, but then again we haven't had any evolutionary pressure forcing us to adapt into any other system.
OK, well have fun engaging in barter.
Freedom of markets is positively correlated with the degree of evolution in any society...
No, it isn't more ethical. But what's unethical about the current money system is that you're forced to use that money in transactions. Since you're coerced to do that, the state can happily inflate the money supply without worrying too much.
Inherently? No, not inherently. But it is convenient, malleable, fairly rare and useful enough to work. Different societies have chosen different currency instruments such as silver and salt. In some prisons cigarettes are used. In a free society it is quite possible that some new currency instrument would develop. But, for the reasons I state above gold is a good and durable choice. It also has the advantage of not oxidizing (under normal Earth-like conditions at least). In any case it is far better than Federal Reserve Notes.
I am an eklektarchist not an anarchist.
Educational Pamphlet Mises Group
ngoldovsky: I have seen the gold standard being referred to quite frequently in Austrian economics, but somehow i don't see how it is any more productive or ethical than fiat money. Ultimately gold is just another arbitrary stock that does not produce wealth. In making the aim of a society to horde or obtain gold is bound to lead to the same conflicts of scarcity that we are faced with now. By stating that gold=value we transform human beings into "gold-getters", and motivate human action towards obtaining an arbitrary element, spurring irrational behavior. Again just as in fiat money, gold's value mostly represents our belief in it having value, but in the end it does not produce any real value to our society. In my opinion largely the reason why we are where we are right now, is due to the lack of a true human purpose. We figured out how to shuffle numbers around quite well, how to create complex derivatives and stock options, but as a means to what end? There is no outlet for growth. Economic growth comes from innovations of the human mind (the automobile, appliances, the internet etc...). In the beginning an innovation always takes the form of improving our lives, it creates excitement and energizes the human spirit. However, i ask again what is the aim of our civilization? Because without understanding that, our inventions are turned into symbols of status, pornography machines and tools of war. I think then that it is important for us to clearly define "what is value?". Why do we link scarcity to value, when it leads to over production, concentration of wealth, and wasteful spending anyways. I channel Ayn Rand in stating that the human mind IS the most valuable commodity that we have. Perhaps i am begging the question when i restate that we misconstrue the idea of value whenever we assign it to an arbitrary metal or paper. Ultimately the most ethical system would be one of bartering, where there is no dictated notion of value and hence everyone is capable of being self-autonomous of how they wish to live and contribute. I think at this point of time there is no real conception of possibility on how that could be accomplished, but then again we haven't had any evolutionary pressure forcing us to adapt into any other system.
We need a medium of exchange and batering doesn't help us create civilization beyond a certain point. You can argue how much human imagination is neccessary for innovation but without money we can't coordinate the effort of innovation.
And I don't find pornography evil. Status symbols are for losers who don't want to accumlate wealth. Tools fpr wars are useless except for destroying wealth and maybe scrap metals.
http://libregamewiki.org - The world's only encyclopedia on free(as in freedom) gaming.
Well i see your point, but i think using gold or salt or silver etc... would undermine the human potential. It restricts our ability of wealth production to an arbitrary amount of gold that we find. Why would we wish to correlate what we can produce to how much gold we find? India became wealthy because of demand for spices. England for the industrial revolution. United states' work ethic led and liberatarianism led to further technological achievement and prosperity. Im not so sure that in our modern world resorting back to gold would solve much. Okay so governments would not be able to inflate the money supply, but there would still be unnecessary presuppositions of scarcity in the world, and a constant battle over this arbitrary element.
Also suppose we find a way to create gold out of lead. (which the gold standard directly implies to be an invention of importance) then we are to become poor?
I understand that bartering has major issues with it, i think what i was advocating was a more localized form of money. I think i would feel most comfortable if our wealth was directly tied to our well being; to how efficient are our corporations, how just the government, how adequate is the education system and health care. Gold, just like fiat currency will set up all sorts of frivolous institutions that would distort our wealth and expend human capital towards their own useless cause which is bound to bust on the grounds of it's own irrationality.
It restricts our ability of wealth production to an arbitrary amount of gold that we find.
I understand that bartering has major issues with it, i think what i was advocating was a more localized form of money.
February 17 - 1600 - Giordano Bruno is burnt alive by the catholic church. Aquinas : "much more reason is there for heretics, as soon as they are convicted of heresy, to be not only excommunicated but even put to death."
ngoldovsky: Well i see your point, but i think using gold or salt or silver etc... would undermine the human potential. It restricts our ability of wealth production to an arbitrary amount of gold that we find. Why would we wish to correlate what we can produce to how much gold we find? India became wealthy because of demand for spices. England for the industrial revolution. United states' work ethic led and liberatarianism led to further technological achievement and prosperity. Im not so sure that in our modern world resorting back to gold would solve much. Okay so governments would not be able to inflate the money supply, but there would still be unnecessary presuppositions of scarcity in the world, and a constant battle over this arbitrary element. Also suppose we find a way to create gold out of lead. (which the gold standard directly implies to be an invention of importance) then we are to become poor? I understand that bartering has major issues with it, i think what i was advocating was a more localized form of money. I think i would feel most comfortable if our wealth was directly tied to our well being; to how efficient are our corporations, how just the government, how adequate is the education system and health care. Gold, just like fiat currency will set up all sorts of frivolous institutions that would distort our wealth and expend human capital towards their own useless cause which is bound to bust on the grounds of it's own irrationality.
Nonesense. Wealth production is not limited by how much gold we have. If anything, if we produced lot of wealth, gold will simply have more purchasing power since the production of gold is rather limited. If neccesary we can shifit to other currencies if gold no longer fit our needs.
Austrians (at least the vast majority of us) do not wish to set gold by legal fiat as the one and only currency that you must use to trade with. In other words there would be competition. If you do not value gold as much as your neighbors you would be free to not accept it. This is your choice in a free society.
Let us assume, per your scenario, that an alchemist learns how to successfully turn lead into gold. This process will not instantly turn ALL lead into gold overnight. In other words, there will be time for owners of gold to gradually move their wealth into other instruments before gold becomes basically worthless. A similar scenario might be if an enormous new mine were discovered that, once exploited, would double the amount of gold on Earth. Also, something else to consider; just because Lamborghinis can be reproduced does not make Lamborghinis worthless. It would take labor and possibly skill to turn lead into gold.
You're getting pretty philosophical here. If you're trying to determine a "true human purpose" higher than material wealth, where moth and rust do not corrupt and thieves do not break in and steal, and you don't like porn, I suggest you find God. He's waiting.
If you are just trying to find a more reliable store of value than gold, I would suggest silver, or maybe platinum. Silver (and platinum) have more industrial uses than gold, and are in shorter supply.
"As long as there are sovereign nations possessing great power, war is inevitable."
I think a common theme amongst what you are all saying is that you don't necessarily advocate the gold standard as much as having a system that represents wealth by a tangible resource. Then question that arises in my mind then is if you consider wood, silver, platinum etc... all forms of money, in a free market would this definition not just continue ad infinitum to the point that it is not distinguishable from barter? How could this take form in our world?
I guess i am speaking from some out of a philosophical stand point, but ultimately what i am talking about is praxeology and human action. I would ascribe boom bust cycles as larger than just monetary phenomenas. It is curious how humanity goes through periods of intellectual enlightenment and dark ages. Think of the Renaissance or the industrial revolution, when there was a boom in people who were multi talented; who had knowledge of painting, mathematics invention, chemistry etc... Then there are those times of barbarianism and blinding specialization. What i mean when i say the goal of society needs to be defined is because without it liberalism will utilize resources towards breast implants and Paris Hilton paper weights. I think it is important to understand the presuppositions we set out on which we base our economies. What does attributing a high value to gold presuppose about the direction an economy will head towards?
ngoldovsky: I think a common theme amongst what you are all saying is that you don't necessarily advocate the gold standard as much as having a system that represents wealth by a tangible resource. Then question that arises in my mind then is if you consider wood, silver, platinum etc... all forms of money, in a free market would this definition not just continue ad infinitum to the point that it is not distinguishable from barter? How could this take form in our world?
Yes, there's no difference between barter and money. Good money will arise from barter, not from legal tender.
ngoldovsky: What i mean when i say the goal of society needs to be defined is because without it liberalism will utilize resources towards breast implants and Paris Hilton paper weights. I think it is important to understand the presuppositions we set out on which we base our economies. What does attributing a high value to gold presuppose about the direction an economy will head towards?
What i mean when i say the goal of society needs to be defined is because without it liberalism will utilize resources towards breast implants and Paris Hilton paper weights. I think it is important to understand the presuppositions we set out on which we base our economies. What does attributing a high value to gold presuppose about the direction an economy will head towards?
Who is anybody to say what we should spend our money on? Is a history book better than a breast implant? We would only know that people want more breast implants than history books. They have needs they want to satisfy. Making any sort of statist economic ("base our economies") plan goes against satisfying needs, because somebody thinks some things are more important than others, up to the point where those needs aren't optimally satisfied anymore.
paper money is a commodity just like gold. it is just an artificial commodity that people are legally forced to accept in payment.
nazgulnarsil: paper money is a commodity just like gold. it is just an artificial commodity that people are legally forced to accept in payment.
exactly
gold standard = free market in money.
It's simply that gold has pretty much always been chosen by the market. Who knows, it might be silver next time.
Conza88: gold standard = free market in money. It's simply that gold has pretty much always been chosen by the market. Who knows, it might be silver next time.
or bottle caps
Bottle caps aren't very scarce.
'Men do not change, they unmask themselves' - Germaine de Stael
Laughing Man: Bottle caps aren't very scarce.
They are in a post-apocalyptic wasteland!
Market anarchist, Linux geek, aspiring Perl hacker, and student of the neo-Aristotelians, the classical individualist anarchists, and the Austrian school.
wombatron:They are in a post-apocalyptic wasteland!
That's something about Fallout 3 that always annoyed me without end. How could any monetary system, with any prayer of being functional, be supported by bottlecaps!
Abstract liberty, like other mere abstractions, is not to be found.
- Edmund Burke
ngoldovsky, I think you're reading too much into the notion of a gold-"based" economy. Gold being a society's currency does not mean that gold is what that society is "about" or what it's "for". It has a certain amount of importance for its use-value in industry and ornament. But it's greatest importance to society is simply as a medium of exchange. A gold-based economy doesn't make people a bunch of gold-hoarding gnomes. As a medium, it is not the "ends" of society that you seem to fear it will be: it's only a means. A society's predominant ends can still be the things you favor (justice, education, health, etc.) with a gold currency. In fact with the efficiency and clarity that a sound currency brings to a market, you're MORE likely to achieve these things.
Austrian Theory of the Business Cycle in 9 steps (Soliciting comments)
laminustacitus: That's something about Fallout 3 that always annoyed me without end. How could any monetary system, with any prayer of being functional, be supported by bottlecaps!
A non-inflatable resource (at least in the short term), small, easily carried - yup, fits the bill perfectly. Of course, I wouldn't expect a single currency to be used so uniformly as bottlecaps are in Fallout 3, but as far as having value as a currency, I see nothing wrong with it. ;)
I think the Austrians / Libertarians usage of "gold standard" confuses ALOT of people. Even those of the wannabe free market origin (chicago).
I think when explaining alot of people fall short of stating that = it is a free market in money.
Ah well, maybe that was just me. I'd assume the other person knew that. Instead you get clowns debating against a "gold standard", who have somehow come to the conclusion we're adovcating government be used to coercively force the market to use it. (rolleyes!)
Twilight: laminustacitus: That's something about Fallout 3 that always annoyed me without end. How could any monetary system, with any prayer of being functional, be supported by bottlecaps! A non-inflatable resource (at least in the short term), small, easily carried - yup, fits the bill perfectly. Of course, I wouldn't expect a single currency to be used so uniformly as bottlecaps are in Fallout 3, but as far as having value as a currency, I see nothing wrong with it. ;)
Before coming onto the mises forum, i was playing Fallout 3 - that game is amazing.
But i always wonder how bottle caps came to be used as a currency - I thought barter would be more likely.
The difference between libertarianism and socialism is that libertarians will tolerate the existence of a socialist community, but socialists can't tolerate a libertarian community.
ngoldovsky:I think a common theme amongst what you are all saying is that you don't necessarily advocate the gold standard as much as having a system that represents wealth by a tangible resource. Then question that arises in my mind then is if you consider wood, silver, platinum etc... all forms of money, in a free market would this definition not just continue ad infinitum to the point that it is not distinguishable from barter? How could this take form in our world?
Money is barter, we call money to the commodity that is most widely accept in exchange for goods an services. For example, the Aztecs engaged in all forms of bartering for example trading food for clothes.To them, the cacao seed (the thing that is used to make chocolate) had a religious importance but it was also consumed as a form of drinkable chocolate.Because of its properties,the cacao seed became widely accept in bartering, people accepted in most cases not because they wanted to consume it themselves but because the knew some on else wold accept it in exchange for the thing that they did wanted to consume,so the cacao seeds became money for them.Gold has been historically chosen as money because its properties, its properties,its scarcity,its beauty etc.The "text book" characteristics of good money are: 1. General acceptability 2. Stability of value 3. Divisibility 4. Homogeneity (i.e. an ounce of gold is equal to any other ounce of gold)The markets usually chose commodities that have this characteristics, as money.
ngoldovsky: Think of the Renaissance or the industrial revolution, when there was a boom in people who were multi talented; who had knowledge of painting, mathematics invention, chemistry etc... Then there are those times of barbarianism and blinding specialization.
The achievements of the renaissance and especially the industrial revolution were obtained thanks to specialization and the division of labor.
The goal of society can't be defined because society is compose by many different individuals, each on with its own goals. The point of liberalism is that everyone should be free to pursue their own interests.If an individual wants breast implants and/or Paris Hilton paper weights (whatever that is) who are you to decide what he/she should do his/her own life?
I want to thank those with value added posts, but they would just probably tell me that i am not omniscient enough to decide what constitutes a value added post, and that perhaps someones dismissive two sentence fragment led someone else to a brilliant discovery; but that just widens the scope yet again.
CorporateGhost:Gold has been historically chosen as money because its properties, its properties,its scarcity,its beauty etc.
People were more superstitious back then, and gold seemed more like a symbol of vanity; because its rare and shiny, if you have it you are better, so lets utilize resources and mobilize armies to get more of it. You have gold you feel good, you don't you feel bad, maybe even turn against the law to get it. If the reward system in the brain is using this algorithm, it is bound to create irrational and subversive behavior.
shit, i feel a dead end.
CorporateGhost:The achievements of the renaissance and especially the industrial revolution were obtained thanks to specialization and the division of labor.
I am not so sure how true that is. If you look at great men from great periods, they were capable at many things, not specialized. Plato and Socrates, spoke of many subjects quite profoundly to this day. Michel de Montaigne, spoke of no one thing but of his own experience. Moving to the Renaissance, what does the term Renaissance man mean; a man who could do many things well. Da Vinci; inventor, story teller, artist. What was Newton? Was he a one-narrow-subject-ist? He spoke of physics, mathematics, policy, geography, astronomy, philosophy. Cultivating themselves was their value, how does one emulate a form of money from that? It's not a rhetorical question i ask i just seem to want a practical answer to a non-practical question.
excuse me if it offends
CorporateGhost:The goal of society can't be defined because society is compose by many different individuals, each on with its own goals. The point of liberalism is that everyone should be free to pursue their own interests.If an individual wants breast implants and/or Paris Hilton paper weights (whatever that is) who are you to decide what he/she should do his/her own life?
Yes, you and Eduard are right, i was a bit too hasty in making that assertion, but to every civilization is there not a basic set of a priori axioms that largely influence human behavior?
Thedesolateone: Before coming onto the mises forum, i was playing Fallout 3 - that game is amazing.But i always wonder how bottle caps came to be used as a currency - I thought barter would be more likely.
Before coming onto the mises forum, i was playing Fallout 3 - that game is amazing.But i always wonder how bottle caps came to be used as a currency - I thought barter would be more likely.
The OP should read Rothbard's "What has government done to our money," as he seems to have a really convoluted idea of what money is.
ngoldovsky:Cultivating themselves was their value, how does one emulate a form of money from that?
Well you can't create a form of money based only on the intellect itself because you can not give a material value to thing like the intellect, love, life and other abstract and subjective concepts,but just because the can't have a material value doesn't mean that they are not important to society, in fact is quite the opposite.The question of why people assign value to things like gold is a psychological/philosophical question rather than an economical one.From an economical point of view I could only tell you that based on their action people consider gold to be something of value.Praxiology doesn't try to change men, it deals with men as they are.
ngoldovsky:I am not so sure how true that is. If you look at great men from great periods, they were capable at many things, not specialized.
Plato,Da Vinci and Newton were not representative of the average men of their times,but regardless of that, we have to understand what permitted this men to dedicate their lives to the intellectual achievements.Scientific investigation doesn't produce any immediate wealth, research and experimentation require a lot of resources and can years before it actually produce anything tangible. During those periods scientist need resources(witch they do not produce themselves) not only for their works but also to support themselves.The division of labor increases the production of wealth in a way that it alouds some people to dedicate exclusively to intellectual tasks.
Marko: Thedesolateone: Before coming onto the mises forum, i was playing Fallout 3 - that game is amazing.But i always wonder how bottle caps came to be used as a currency - I thought barter would be more likely. Fallout 3 is a horrible game, an enormous let down for any old Fallout fans. Its writting is shockingly poor and has none of the trademark Fallout feel, not surprising since it was made by corporate robots and masters of dumbing down - Bethesda, rather than by the original authors (just another way how we get screwed by IP).Bottle caps are a remnant from Fallout 1. You can read all about it on Fallout Wikia. Here is an excerpt: "Bottle caps are backed by The Hub merchants. The reasoning for their support is that the technology to manufacture bottle caps and paint the surface has been lost in the Great War, which would greatly limit any counterfeiting efforts. Secondly, there is a limited number of bottle caps, which would serve to preserve their value to some degree."http://fallout.wikia.com/wiki/Bottle_capsBut to really get it you`d have to experience the real Fallout games. The real reason was rather that original Fallouts got a kick from being slightly eccentric.
Fallout 3 is a pro game - although I may try the old ones out if they're PS2 and cheap.
How come competitive money has so far led to legal tender?
Also how come the gold standard became unworkable in the end?
"They are in a post-apocalyptic wasteland!"
....Touche sir...
Thedesolateone: Marko: Thedesolateone: Before coming onto the mises forum, i was playing Fallout 3 - that game is amazing.But i always wonder how bottle caps came to be used as a currency - I thought barter would be more likely. Fallout 3 is a horrible game, an enormous let down for any old Fallout fans. Its writting is shockingly poor and has none of the trademark Fallout feel, not surprising since it was made by corporate robots and masters of dumbing down - Bethesda, rather than by the original authors (just another way how we get screwed by IP).Bottle caps are a remnant from Fallout 1. You can read all about it on Fallout Wikia. Here is an excerpt:"Bottle caps are backed by The Hub merchants. The reasoning for their support is that the technology to manufacture bottle caps and paint the surface has been lost in the Great War, which would greatly limit any counterfeiting efforts. Secondly, there is a limited number of bottle caps, which would serve to preserve their value to some degree."http://fallout.wikia.com/wiki/Bottle_capsBut to really get it you`d have to experience the real Fallout games. The real reason was rather that original Fallouts got a kick from being slightly eccentric. Fallout 3 is a pro game - although I may try the old ones out if they're PS2 and cheap.
Marko: Thedesolateone: Before coming onto the mises forum, i was playing Fallout 3 - that game is amazing.But i always wonder how bottle caps came to be used as a currency - I thought barter would be more likely. Fallout 3 is a horrible game, an enormous let down for any old Fallout fans. Its writting is shockingly poor and has none of the trademark Fallout feel, not surprising since it was made by corporate robots and masters of dumbing down - Bethesda, rather than by the original authors (just another way how we get screwed by IP).Bottle caps are a remnant from Fallout 1. You can read all about it on Fallout Wikia. Here is an excerpt:"Bottle caps are backed by The Hub merchants. The reasoning for their support is that the technology to manufacture bottle caps and paint the surface has been lost in the Great War, which would greatly limit any counterfeiting efforts. Secondly, there is a limited number of bottle caps, which would serve to preserve their value to some degree."http://fallout.wikia.com/wiki/Bottle_capsBut to really get it you`d have to experience the real Fallout games. The real reason was rather that original Fallouts got a kick from being slightly eccentric.
Just to totally digress from economics, you can buy them at http://www.gog.com/en/gamecard/fallout because they sell most old famous games their (not a HACKER, and no I didn't write that because I am a hacker).
Competitive money did not lead to legal tender. The exercise of government power led to legal tender. The US Government declared Federal Reserve Notes legal tender so that the supply of money and credit could be expanded, allowing the government to steal the purchasing power of your existing money and spend it themselves. They did this at the direct request and in partnership with the large banking players, who benefit as the first recipients of the new money and also because fiat money allows a much higher degree of fractional reserve (meaning low reserve ratios), which drives up banking profits.
The gold (coin) standard became unworkable (from the perspective of the State and banking interests) because it served as a check on the inflation of money and credit. People like you and me could redeem the circulating notes for frickin' gold. Something that no one can just make more of. A coin standard of a scarce resource is the ultimate check on government spending and power. It makes the State be up front in their theft, by levying taxes directly, and not quietly stealing your real wealth (purchasing power) via monetary inflation. A coin standard also keeps the banks honest, because they can't make more of the commodity any more than the State can.
Put basically, fiat paper money allows the State and the banks to steal the purchasing power of your savings via inflation of money and credit. A coin standard puts severe checks on the ability of the State and the banks to do these things, which is why they hate them and propagandize against them.
One hundred trillion Zimbabwe dollar note
ngoldovsky:the human mind IS the most valuable commodity that we have
Geez! I am glad I read on because I thought you were advocating the use of human minds as money!
wombatron: Laughing Man: Bottle caps aren't very scarce. They are in a post-apocalyptic wasteland!
I laughed out loud.