not one person has been able to answer these questions
1. If gold were money, how would countries that lacked it function domestically?
2. since some gold is in central banks, how do we make the transition, who will get the first gold money to use?
i'm not for fiat money either
i just want some answers to my questions
why should countries that have gold have the initial advantage over countries that don't?
and countries first neeed to be able to function domestically before they can start trade, it is impractical to suggest otherwise
1)there is no 'lack of gold' anymore than a lack of shoes or food. if any 'country' 'lacks' gold they can buy gold at a price paid in real goods. trade.
2)http://georgereisman.com/blog/2008/03/our-financial-house-of-cards-and-how-to.html
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
I do wonder how a transition would go.
If it was obvious that legal tender was being repealed, the demand for money would collapse, and confidence in the currency also. Lots of people would lose out. But then the "steady" transition requires coercion, so I tolerate that much less. Anyone got a better answer?
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.
on inquisitiveteenager,
Doesn't anybody else think inquisitiveteenager needs to quit posting about gold in what is now about 7 different posts on pretty much the same questions? Inquisitiveteenager, have you read through all the "Gold Standard" threads in the archives here on the mises? There have been many posts/threads that discuss this issue. I would read over all of them first since this seems to be a hot topic for you. Then you might be able to come back and post more specific questions or even add a post to the existing threads on this gold topic. Adding a post on past threads will bring those posts back to the top of the list for all to see. Just a suggestion.
Thedesolateone:If it was obvious that legal tender was being repealed, the demand for money would collapse, and confidence in the currency also. Lots of people would lose out.
But then the "steady" transition requires coercion, so I tolerate that much less. Anyone got a better answer?
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."
Juan:Well, if legal tender laws are repealed (in our dreams) then people would be free to choose any money they wished, including gov't paper (haha), so theoretically there would be no coercion ?
No of course I see this
There would be an instant collapse of confidence in the currency, and plenty of honest, hardworking people with their savings in paper will lose everything they have worked for.
as Reisman explains the transition could be very simple and painless. as well as repealling legal tender; the fed will simply peg the federal reserve dollar to a fixed weight of gold that at the time of the scheme launch would allow all the dollars in circulation to be an equivalent claim to the full weight of gold stored by the fed/treasury/government. and the scheme would involve an obligation on the above institutions to pay out the gold when any note holders request redemption.
nirgrahamUK: the fed will simply peg the federal reserve dollar to a fixed weight of gold
But how do they get this gold?
Direct coercion? Coercive legal tender?
they have gold already. its in fort knox and other places. the government would be allowing holders of dollars to have claim on fractions of the gold in storage.
nigrahamuk answered #1 to my satisfaction. #2 is a tougher question, since obviously the crooks in government have first dibs on these stockpiles, which I clearly oppose. But I think that's a short-lived problem...
Government is an unproductive class, as a rule. In order to do anything, therefore, it has to pay out of its reserves. As long as it spends money, those reserves dwindle, and are divvied up in the rest of the economy. Sure, there will be some cronyism, which is also regrettable, but there's no way around it which doesn't involve a La Terreur-esque reign of blood.
Plus, there are always other forms of indirect exchange, all the way back to Cave-man barter. What I, as an advocate for commodity standards am really in favor of, is not so much a "Gold" standard, as I am for removing all of the restrictions that make other forms of indirect exchange impractical/illegal.
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David Z
"The issue is always the same, the government or the market. There is no third solution."
Juan:That would be true only for people who have all their assets in cash ?
Agreed. The fact of the matter is that only a small fraction of the world's wealth consists of money. Most of the world's wealth consists of other assets - your iPod, basketball shoes, bicycle, herd of goats, lawnmower... All of these things are material wealth. Take away all of the money in the world, tomorrow, and we'd be no less wealthy.
Sure, there would be a short-term adjustment due to the illiquidity of most people's assets (i.e., your lawnmower isn't very marketable, probably) but we'd adjust, and we'd adjust pretty quickly, I think.
"Peg" is probably the wrong word. Whatever they do, they'd have to make it 100% convertible, which is to say that every claim to a FRN dollar would be an aliquot claim to a certain weight of gold. What that weight is, I have no idea. Maybe it's 1g, maybe it's .0001g. Foreverafter, as long as the Fed abstained from inflating, they'd never need to worry about getting gold from anywhere, because their obligations would never exceed their reserves.
you are right about my terminology. i meant what you said about guaranteed 100% demandably convertable.
I would hope all the libertarians would demand their fed notes in gold, and then since legal tender laws were repealed entrepeneurs could found their own bailment banks for the gold.