From: whg@inel.gov (Bill Gray)
Subject: Re: Gold Standard? No!
Keywords: Gold, zealot, oil
Organization: Idaho National Engineering Laboratory, Idaho Falls, Idaho
Distribution: usa
Date: Wed, 16 Dec 92 00:54:21 GMT

In article <liqedgINNra@jethro.Corp.Sun.COM>, kris@bsg8.Corp.Sun.COM (Kris Skrinak) writes:
|> 
|> The Gold Standard is to the Libertarian party what abortion is to the
|> republicans; an albatross with no understandable defense.
|> 
|> The liberatarian party places a childlike, religious faith in gold as
|> an economic cure-all. I find it especially astonishing that
|> net-liberatarians support it!

Not so!  There is considerable argument among libertarians about monetary
standards.  I doubt that the party would anathemize anyone for espousing
a different currency regime (not being a member,  I couldn't say definitely).
Many "libertarian friendly" economists are not gold standard bigots.
 
|> The value of any commodity, including currency, is the value that we
|> collectively place in it. This is true of gold and currency. When the
|> two are tied together the value of both will still fluctuate in the
|> market as the supply and demand for each fluctuates. ...

No libertarian I know of,  or anyone else for that matter,  would deny this.
|> ... 
|> Why don't liberatarians advocate the binding of pork bellies to corn?
|> The price and production of corn actually is related to the price of
|> the meat that it produces!

I believe that,  at one time,  F. A. Hayek proposed a commodity standard.
As did Irving Fisher before him.  There were certainly other proponents of
commodity standards thruout history.  The idea isn't terribly original.
Land was even proposed as a backing to currency.
|> 
|> The reason is simple: It doesn't make any sense. ...

To doubt that something will work is different from saying that it doesn't
make sense.  Why don't you like commodity standards?  Why don't they make
sense?
|> 
|> We in the computer community should be naturally adept in dealing in
|> symbols and abstractions. Why then is it so difficult to deal with
|> currency as an abstraction, that has no inherent value.
|> 
It isn't difficult,  we do it every day.  The concern is with the lack of
discipline against a hyperinflation.  I believe (on alternate Thursdays)
that,  so long as capital flows are relatively free,  there is enough
incentive in the current fiat regime to adequately rein in inflation (
the famous "bond market vigilantes").   However this situation is historically
unprecedented,  and my belief is certainly open to substantial objection.
I decline to declare worthy opponents "fanatics",  or "child-like".

|> ...
|> The assignment of a value to the dollar, in gold or any other commodity
|> (oil), would be arbitrary. This arbitrary assignment would place
|> restrictions on the free flow of other commondities on which it
|> depends, namely interest rates and other currencies, and would interupt
|> the market just as all other government-imposed restriction do.
|> 
This is not patently obvious to me.  How did world trade work in the latter
third of the nineteenth century and the first decade + of this,  with most
major players on a fixed exchange rate gold standard?

|> Are we interpretting the constitution as _we_ see fit? Are the
|> liberatarians saying that 'All men are created equal' ...

Where in the constitution does it say that?
|> 
|> The gold standard should be dropped from the Liberatarian Party
|> platform.  No one can defend it. Everyone who tries to sounds like a
|> zealot.
|> 
You are probably right here;  I have no strong feelings about the LP
platform,  but in the present international trade arena,  it would likely
be most unwise to return to a specie standard.  As long as we're all watch-
ing one another's inflationary tendencies,  there is an effective standoff.
It may even turn out to be stable.  In the meantime,  anyone who likes
gold is free to acquire as much of it as they can afford.


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