From: positron@engin.umich.edu (Jonathan Scott Haas)
Subject: Re: Gold Standard? No!
Date: Tue, 15 Dec 92 20:00:20 EST
Organization: University of Michigan Engineering, Ann Arbor

In article <lisg0fINN27u@jethro.Corp.Sun.COM> kris@bsg8.Corp.Sun.COM writes:

>Here is the mistake made by most Liberatarians. The value placed on the
>US Dollar is influenced by many factors, mostly the ability to obtain
>goods or services with it. While it is true that the bureaucrats of
>Washington DC have the greatest opportunity to temporarily influence
>this value, the greatest influence remains the ability to obtain goods
>or services with that dollar.
>
>There is no relationship between putting faith in the President and
>Congress and the value of the dollar. That is a practical, not a
>theoretical reality.
>
>The dollar is simply a commodity. Like gold or pork bellies. It's value
>will remain relative to other commodities, regardless of any
>Liberatarian government dictum. All discussion about the various merits
>of binding the value of the dollar to any commodity are rendered void
>by this simple economic truth.
>

As someone who's played the commodity markets for years, I can tell you
that there's a very, very important difference between dollars as a
commodity and gold or bellies as a commodity.

The government can, at any time, print as many dollars as it wants,
driving the price down. Farmers can't slaughter as many hogs as they
want, and miners can't mine as much gold as they want... because there
is a limited supply of hogs and gold, but not a limited supply of
dollars. That is both a practical and a theoretical reality.

Incidentally, that's also what is meant by having faith in the dollar
being equivalent to having faith in the President and Congress. You're
having faith that the government won't decide to devalue your dollars
by doubling the supply. You don't need to worry about the supply of
gold suddenly doubling.

Consider this! The government not only _can_, but _does_ inflate the dollar
by printing more currency. Inflation of 5% / year is considered _good_.
Think about it! Your dollar today is worth 95c next year! It's worth 91c
the year after that! In a decade, it's worth 61c! The loaf of bread that
costs $1.00 in 1992 will cost a staggering $131.50 in 2092. And that's if things
are going well! With a Democrat in office, we could easily see double-digit
inflation again.

>The reason that Liberatarians want a gold standard is because it's in
>the consititution.

Are you the same guy I criticized a couple of days ago for making sweeping,
all-encompassing statements like this one with absolutely no evidence to
back them up? Until this discussion started on alt.politics.libertarian, I
didn't even _know_ that the gold standard was in the Constitution, and I
have always been very much in favor of the gold standard.

>Perhaps it is the simplicity of my argument that confuses you. Currency
>is a commodity. Supply and demand determine the value of all commodities.

...and the government controls the supply of currency with an iron fist.
The supply is theirs to manipulate as they see fit.

-- 
__/\__  Jonathan S. Haas         | Jake liked his women the way he liked
\    /  University of Michigan   | his kiwi fruit: sweet yet tart, firm-
/_  _\  positron@engin.umich.edu | fleshed yet yielding to the touch, and
  \/                             | covered with short brown fuzzy hair.
Newsgroups: alt.politics.libertarian