From: tcox@ssrl01.slac.stanford.edu (Tony Cox - (415)926-3105)
Subject: Re: gold standard
Organization: SSRL, Stanford Synchrotron Radiation Lab
Date: Sat, 17 Oct 1992 02:18:17 GMT

In article <1683@hsvaic.boeing.com>, eder@hsvaic.boeing.com (Dani Eder) writes:
> tcox@ssrl01.slac.stanford.edu (Tony Cox - (415)926-3105) writes:
> 
>>   I believe (and noone has contradicted me so far) that the promise
>>   of todays money is _merely_ that it can be used to settle accounts with
>>   the government.

   {Dani. I think you made an earlier reply on this subject, but by the
   time I tried to reply, it had disappeard off the newsserver. If you
   e-mail, I'll try to answer the points, as they were also good - tc}

> 
> Reaching into my pocket and pulling out a Federal Reserve Note, I find no
> promises on it whatsoever.  I find a statement that reads: "This note is
> legal tender for all debts, public and private".  What is public debt?
> It is money that the government owes the public.  If a note is legal 
> tender for PUBLIC debt, then the government can pay off it's debts
> (treasury bonds) with them.  You have no choice but to accept these
> as payment if you hold government debt.  The PRIVATE debt portion
> of the statement says that the holders of private debt can be paid off
> in these notes and they have to accept them.  
> 
> Thus there are no promises, only compulsions.
> 

   Well, I think that there are both promises and compulsions here.

   The promises come from the government deciding to denominate its
   transactions in FRN's. "Full faith and credit of the US
   government", for what it is worth, implies that the government
   requires payment from you in $$$'s, and settles its debts with you
   in the same manner. This, together with the enormous volume of the
   trade that is compelled between the individual and the state, is
   the backing for the currency.

   The government does, after all, promise not to come for you with
   guns if you pay them their tribute in dollars. They certainly
   promise to come for you if you dont!

   The private debt part is rather more complex. If I establish a
   barter trade with someone, dollars dont enter the picture. In the
   final analysis, however, were I to welsh on the deal, a court could
   force me to make recompense in dollars. The promise here is that I
   can stop continuing legal sanction by getting my hands on sufficient
   greenbacks to calm the beast.

   The compulsion aspect of trade with the government is not related
   to what backing (or not) is used for the currency. The government
   could, after all, bring substantial substance to the paper hat
   industry by demanding them in payment! And it is a fact that the
   compulsion would remain even if we were on the gold standard.

> 
>>> How can the size of the economy be measured without a commodity-based
>>> monetary standard?  I don't think it can be.  If this is impossible, then
>>> your whole scheme falls through.
> 
>>   You are right. If the size of the economy cannot be quantified,
>>   then the proposal fails. My argument hinges upon this, and so I'd
>>   better do a good job of convincing you, so here goes.
> 
>>   It remains an imprecise measure, as it is denominated in that
>>   wretched dollar. So you cannot then say that, if next year 500,000
>>   cars sell for $12K each (and so on across all the other sectors)
>>   that your economy has grown by 20% - of course not.
> 
>>   What you would do (and what is done now), is to look at what
>>   comparable cars sell for next year (and for all sectors,
>>   naturally). If there are 550,000 such cars, your economy has grown
>>   by 10% in that area. You use that worthless $ to keep the RELATIVE
>>   score on how the different sectors are contributing to the whole.
> 
> The problem in using cars as a measure of economic activity is that
> they change from year to year, so you can't really compare one year's
> model to the next year's.  This is the advantage of a commodity standard
> of value, since an ounce of gold, or 10,000 lb of orange juice
> concentrate, or 76 lb flasks of mercury will mean the same thing next
> year as this year.

   But you are wrong! Commodities vary in price all the time.
   Cars (which are of course commodities) do go in and out of style,
   and new models come along. However, it is certainly
   possible to bootstrap yourself along in a consistent manner. If
   Ford Prunts get phased out, you can always `normalize' them to
   Honda Tappens and assess the overall size of the car market one year 
   compared to the last.

> 
> The only non-commodity I can think of that has a constant identity over
> time is an hour of unskilled labor.  You would establish a bank by
> people doing work, and contributing their products to a pool, and
> receiving credits on account for their contributions.  Then they can
> withdraw the set of products of their choice from the pool, using
> up their credits.  

   Only in so far as minimum wage laws mandate it. Surely the price of
   unskilled labour is oue of the most variable non-commodities.

> 
> 
> -- 
> Dani Eder/Boeing/Advanced Civil Space/(205)464-2697(w)/232-7467(h)/
> Rt.1, Box 188-2, Athens AL 35611/Member: Space Studies Institute
> Physical Location: 34deg 37' N 86deg 43' W +100m alt.
> ***THE ABOVE IS NOT THE OPINION OF THE BOEING COMPANY OR ITS MANAGEMENT.***
From: daq@hpfcso.FC.HP.COM (Doug Quarnstrom)
Date: Tue, 6 Oct 1992 15:00:44 GMT
Subject: Re: Re: Stability of Libertaria (was Free market stuff)
Organization: Hewlett-Packard, Fort Collins, CO, USA