From: cmk@athena.mit.edu (Charles M Kozierok)
Subject: Re: Views? :
Organization: Massachusetts Institute of Technology
Date: Mon, 14 Dec 1992 01:50:19 GMT

In article <1992Dec14.011315.21886@samba.oit.unc.edu> bolden@beta.math.unc.edu (Jeffrey Bolden) writes:
>In article <!SS=bp+@engin.umich.edu> positron@engin.umich.edu (Jonathan Scott Haas) writes:
>>In article <1992Dec13.134148.26485@samba.oit.unc.edu> bolden@beta.math.unc.edu (Jeffrey Bolden) writes:
>>>In article <a0R=Lv_@engin.umich.edu> positron@engin.umich.edu (Jonathan Scott Haas) writes:
>>>>
>>>>Look at the free market, pal, look at the free market. It doesn't really
>>>>matter what gold is *used* for, what matters is that there is a demand
>>>>for it, and that there is a supply of it.
>>>>[text deleted for space reasons]
>>>>something like that. Without any backing, the government can just print
>>>>more currency, causing inflation.
>>>>
>>>
>>>	I think your discription of gold is slightly off.  The demand for
>>>gold is relativly small.  The supply is huge, the major holders of gold
>>>[text deleted]
>>
>>Horsepucky. You think my discription [sic] of gold is slightly off. You
>>think wrong. If you think that the price of gold is limited by people
>>choking off supply, I invite you to visit COMEX and watch the gold
>>trading pits. MILLIONS of ounces of gold trade hands EVERY DAY. There
>>is no shortage of a free market in gold.
>>
>>Oil as a store of value?? Have you SEEN the price of oil flunctuate over
>>the past decade? What you want for a medium of exchange is something
>>*stable*... otherwise, the price of EVERYTHING flunctuates with the price
>>of your store of value. Oil varies widely in price, has an extremely
>>limited supply, gets USED UP, and is primarily supplied by foreign
>>powers. Do you want the economy of the U.S. to sit firmly in the palms
>>of Arabian sheiks? (bear in mind, all they'd have to do is embargo to
>>cause mass deflation here in the U.S.)
>
>	Ok, if the price of gold isn't artificial, then why can't we sell
>of Fort Knox and end our annual budget deficit now.

oh boy. i'm trying to stay with you, Jeffrey, but you are making it hard with
statements like that. as many other people will probably tell you in a
much less gentle way, you can't end an *annual* problem with a *one-shot*
sell-off of anything. i'd get that flameproof suit on quick... :^)


>In the early 60's the
>value of the holding in Fort Know was around 50 billion, and the price of
>gold was what $50- ounce.  Then on today's market that's worth at least
>400 billion, or larger than the annual deficit.

for '92. what about next year? sorry...


>	Finally on the issue of price fluctiations, fixing the value of
>the dollar to oil would do several things:
>1)  Guarentee a level of return for oil production, thus increasing supply
>to the level of maximum demand.

but what should that level be? and what if the owners of the oil
all tell the US to shove it? that may be the biggest problem with
putting in place a backed currency now, compared to before. we are no
longer the big, dominant economy. the rest of the world just doesn't
care as much as it used to about what we think things are worth.

>2)  Encourage the maintance of large hords of oil, by giving them a cash
>value.

but who has the biggest hordes now?

>3)  Stablize prices further on oil, by making bidding the price of oil up
>hundreds of times more expensive than it is now.

i don't understand that. please explain.

>4)  All of the above would lead much more stable oil prics ->  much more
>stable energy prices ->  better profits for industry.

but don't you see the problem? let's suppose we say "from now on,
oil is worth $20 a barrel". if OPEC starts pumping oil and sells to
germany for DM30 per barrel, that sets our exchange rate at $1 = DM1.5.
if either OPEC or germany changes the price, they change our exchange rate.
we lose control over it. if OPEC floods the world with oil, our dollar
becomes worthless. if they shut off the pipes, our money supply disappears.

note: the above argument would be true of gold as well. i'd like
to hear how those who support a gold standard would deal with this
problem. i realize off the bat that it wouldn't be as bad because gold
is not really controlled by any kind of a cartel, but the control issue
is still there.

>
>	Finally unlike gold, oil is usable in large quantity.  Now gold is
>pretty and in some industries is useful in small quantities, but no way is
>all the gold in the world worth the current quantity of American currency.
> Contrast this with oil where there is plenty of surplus value to go around.

doesn't have to be useful. it just has to be wanted. how useful are gem-quality
diamonds? not very, but pretty damn valuable.

--
charles
Newsgroups: alt.politics.libertarian