From: cmk@athena.mit.edu (Charles M Kozierok)
Subject: Re: The Larger Picture (was Re: Gold Standard? No!)
Keywords: Gold, zealot, oil
Organization: Massachusetts Institute of Technology
Date: Tue, 15 Dec 1992 15:05:14 GMT

In article <BzA4Fr.20r@newsserver.technet.sg> ipser@solomon.technet.sg (Ed Ipser) writes:
>In article <liqedgINNra@jethro.Corp.Sun.COM> kris@bsg8.Corp.Sun.COM writes:
>>
>>The Gold Standard is to the Libertarian party what abortion is to the
>>republicans; an albatross with no understandable defense.
>
>A gold standard makes sense as a reasonable tactic under particular 
>circumstances but it does not deserve to be a part of the Libertarian Party
>platform. The reason is simple. It detracts from the real issues.
>
>The gold standard is offered, primarily, as a means of preventing the
>government from taxing through inflation (or otherwise manipulating the
>economy through monetary "policies"). But what is the REAL source of that
>manipulation? 
>
>Consider, for example, the case of competing currencies. If First Interstate
>offers Interstate Dollars for circulations (either in the form of
>printed money or electronic debits/credits) the first question anyone
>who is offered these in exchange for goods and services will ask is: what
>are these worth? Backing Interstate Dollars with Gold would be ONE possible
>MEANS of establishing the worth of Interstate Dollars. Faith and credit would
>be another. It may well be the case that First Interstate is such a reliable
>and well respected bank that people would accept Insterstate dollars in the
>belief that they can then turn around and buy other goods and services with
>them. If the Interstate Dollar were floated in this manner, we could expect
>a market in Dollar trading to come about (perhaps, but not necessarily, 
>involving First Insterstate). This market would have an exchange rate of
>First Interstate dollars for gold, US Dollars, Yen, pork bellies, etc.
>
>Now, if First Interstate were to start issuing Interstate Dollars, say, to
>cover losses in its loan divisions, the value of the Interstate Dollar
>would drop correspondingly. The result would, at first, be that people would
>devalue the Frirst Interstate dollar and . Ultimately, in a competitive
>envirnment if people began to distrust the value of the Interstate Dollar they
>would probably start refusing to accept it and, especially, to hold it.
>Ultimately, First Interstate would be out of the money issuing business.
>
>Where is the coercion? Where is the fraud? We might find fraud in the
>wanton printing of new money by First Interstate but that would depend, of
>course, on the sort of promise that First Interstate made in the first place.
>Since we originally postulated a floating Interstate dollar, there was no
>promise as to a value. The value depended entirely upon people's trust in
>the bank.
>
>In conclusion, the LP should drop the gold standard. If some statement is
>required in this area, it should be one of favoring competing currencies.
>Competition, not regulation, is the solution to this problem.

i can't say i really disagree with you. i don't know about the LP, but
i feel that if uncle sam didn't give itself a monopoly on currency
(monopoly currency? :^) we probably wouldn't have all the problems we
do. because people would have told the gov to shove long ago.

but then, competing currencies can have its problems too.
and you'd really have to shut the government out completely, because
it's hard to have competition when one of the competitors has the
power to tax and expropriate the other.

--
charles
Newsgroups: alt.politics.libertarian