Which currency system do you think is best?

[pvn]

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but can you (or anybody) explain to me how a free market system would be instituted from where we are today and how it would work.

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What kind of an answer are you expecting here? The whole idea behind letting the market work it out is that I don't have the answer of what the solution should look like.

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what would prevent an organization or institution from altering the free market system?

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Some market-emergent security system.

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additionally, the gold standard (assuming it is as phrased in zygote's OP) would be managed by the govt. this also reduces "freedom" does it not?

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If the "government" is a voluntary one, and its management of a gold standard is based on voluntary free-market transactions, then it can't be freedom-reducing. DUCY?

Your micromanaging questions are impossible to answer. It's like asking a supporter of evolution to predict what species will evolve in the next ten million years. Anyone who thinks he can answer such a question is either trying to [censored] with you or doesn't understand evolution. Do you consider this inability to predict an indication that evolution "can't work"? Do you expect evolutionists to provide descriptions of how extinction would be prevented?

[pvn]

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also, a flexible money supply isn't necessarily a fiat currency. increased supplies of gold would increase the money supply. EDIT: distribution of gold also could imply a flexible money supply. so whoever controls the supply and/or the storage distribution fo gold controls the change in the money supply

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This isn't anywhere close to the same thing, and you know it. This is like saying that the fact that free market actors can choose when to produce more cheese, increasing the cheese supply means that a free market in cheese is pretty similar to a centrally planned cheese market.

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my question is then who controls gold production (or maintenance/storage)? whoever controls gold supply thus controls the money supply.

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Who owns gold mines right now? This isn't very hard.

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does that not also restrict freedoms even though it is in absolutely no way a fiat currency system?

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What freedoms are being restricted? Does the fact that farmers own farms restrict freedoms? To use your terminology, "i have no idea what you're point is. can you rephrase this into a clear sentence?"

[DcifrThs]

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but can you (or anybody) explain to me how a free market system would be instituted from where we are today and how it would work.

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What kind of an answer are you expecting here? The whole idea behind letting the market work it out is that I don't have the answer of what the solution should look like.

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what would prevent an organization or institution from altering the free market system?

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Some market-emergent security system.

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additionally, the gold standard (assuming it is as phrased in zygote's OP) would be managed by the govt. this also reduces "freedom" does it not?

[/ QUOTE ]

If the "government" is a voluntary one, and its management of a gold standard is based on voluntary free-market transactions, then it can't be freedom-reducing. DUCY?

Your micromanaging questions are impossible to answer. It's like asking a supporter of evolution to predict what species will evolve in the next ten million years. Anyone who thinks he can answer such a question is either trying to [censored] with you or doesn't understand evolution. Do you consider this inability to predict an indication that evolution "can't work"? Do you expect evolutionists to provide descriptions of how extinction would be prevented?

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ok. i see what you are saying. i am just very skeptical that humans, as i've seen them act, can create free market systems that no individual or organization/institution could hamper/affect.

also, i don't think your evolution analogy is correct. i'm not asking for the next species, i'm asking how we would get there. the evolutionary biologist would answer my analagous question by providing an example, say that the introduction of nile perch to lake Victoria caused the highly specialized furu to get eaten while almost all other species in the lake adapted to the entrance of the nile perch. the evolutionary process occures "like this" and i'm simply asking how the free market result would be obtained given where we all now.

human nature, in my mind, is quite hobbesian. people do what is best for them and not all people agree what is best. those whose interest would be aligned with increased gold production or money however you phrase it, would find a way to alter it.

one problem i see is that the world is "too big" so to speak. as in the big stone wheel currency that milton freidman relayed, that society was very small. with so many complicated things going on in the world, i don't see how all market participants would agree on 1 methodology from which to operate in an economic relationship...i.e. the "foundation" of the economy. the market does great when finding other things like exchanges and the like...but i am having trouble envisioning how the foundation of the economy could move to a free market from where we are now.

i'm just asking for an example, made up or otherwise as to how we would transition from the world we have today, to the ideal free market society you envision.

it isn't like asking "what hte next species would be" so much as it is asking "how would the next species evolve"...a question which i believe any evolutionary biologist worth his salt could readily answer.

Barron

[DcifrThs]

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also, a flexible money supply isn't necessarily a fiat currency. increased supplies of gold would increase the money supply. EDIT: distribution of gold also could imply a flexible money supply. so whoever controls the supply and/or the storage distribution fo gold controls the change in the money supply

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This isn't anywhere close to the same thing, and you know it. This is like saying that the fact that free market actors can choose when to produce more cheese, increasing the cheese supply means that a free market in cheese is pretty similar to a centrally planned cheese market.

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my question is then who controls gold production (or maintenance/storage)? whoever controls gold supply thus controls the money supply.

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Who owns gold mines right now? This isn't very hard.

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does that not also restrict freedoms even though it is in absolutely no way a fiat currency system?

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What freedoms are being restricted? Does the fact that farmers own farms restrict freedoms? To use your terminology, "i have no idea what you're point is. can you rephrase this into a clear sentence?"

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so how would gold mines not act in their interest and produce marginally more gold? i.e. what would restrain them.

that is what i'm after...
Barron

[utopy]

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If the "government" is a voluntary one, and its management of a gold standard is based on voluntary free-market transactions, then it can't be freedom-reducing. DUCY?

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Forceful claims of ownership are not freedom.

[Zygote]

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i think innovation not productivity caused the fall in prices as old products become obsolete so quickly in the tech sector that prices are forced to fall in order to keep up sales.

productivity is labor hours to produce goods. innovation is increased quality of goods. innovation makes previously produced goods much less attractive and reduces the demand for them. this reduced demand mandates price reductions in order to keep up sales.

i'm not 100% sure of these definitions as productivity may be measured in per unit of memory or something like that in which case it is obviously increasing, but if not, then the above case definitely holds.

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Throughout the range of definitions listed here the same case still applies. This type of price deflation is not something to be combated or feared.

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further, i don't think money supply is a good measure within individual sectors.

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I disagree. There are clear indications that can be drawn. Anything that is priced in money is a reflection of something to do with the money's supply and demand dynamics.


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what? can you rephrase that b/c i don't think i understand that last part.


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Assume the money supply is fixed. New goods enter the economy or productivity increases or whatever. Since the supply of goods in the economy is now larger than the supply of money the purchase power per unit of money will rise. This is a reflection of the society become wealthier. More goods means more wealth means increased societal purchasing power.

Your fears im sure relate to the health of borrowing and consumer spending. First questions is why would people spend if they're always enticed to be saving?

The fact is people dont save for no reason. I could keep getting a better computer every year i hold off but i still want and need a computer now so i get one. Then i'll upgrade every once a while. Main thing is i gain nothing by saving indefinitely.

Regarding investment. If people start building up cash balances and increasing saving/hoarding then the demand for cash will go up and the value of money will rise. If people choose to do this there is no reason to see this as bad. The demand for money most often rises during periods of enhanced uncertainty with regards to business, for example. People should be allowed to take this "flight to safety" should they choose. Forcing them to spend would be to force to take on unwanted risk that is expected to result in a net loss of resources.

If you're worried about labor wages this is not a concern under either type of deflation. From the first case wage will remain nominally same but purchasing power will increase - society is wealthier, remember. Under the other circumstance nominal wages will decrease as well but this is not of concern since nominal prices fall as well and real wages remain stable.

Regarding borrowing, more is demanded of borrowers and less demanded of savers which causes a disincentive to borrow and an incentive to save and invest. The fact that businesses that borrow money need to be more successful than the savings rate is a natural barrier to prevent investments that make society poorer and cannot be sustained. New business should be able to beat the natural economic increases of society to make them a high enough order investment to deserve a share of the world's limited capital. All savings is done for some later consumption and to risk one's capital through investment must compare one's potential future consumption now versus the potential future consumption with the new risk.

Remember, the savings rate is determined by free acting individuals and allows for a genuine increase in real investment. To distort this rate is to distort the time preference under whatever economic conditions the society assessed them to be so and initiate the dreaded business cycle. Why make society think the world is ending sooner than is really true?

[Zygote]

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all else equal, economic growth is a good thing. it increases overall employment, improves per capita GDP and generally is termed as the "rising tide" that "lifts all boats."

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You are talking about nominal statistics, not economic growth. Massive inflation will cause increase in employment and GDP but the economy hasn't "grown". We can have all goods being produced by cheap robots and we'll have virtually no employment and other fancy stats, but society is much wealthier economically.

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so a marginal increase in the amount of borrowing in a society results in a marginal increase in growth.

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This isn't necessarily "growth". Society will consume and squander more resources now producing apparent growth, but growth is only what is sustained. If more borrowing meant more absolute growth no society would save, ever.

[Zygote]

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but can you (or anybody) explain to me how a free market system would be instituted from where we are today and how it would work.

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First you abolish federal open market operations. Then you stop the legislative barriers to currency competition and cramp down on other relevant financial and monetary regulations. The market will figure everything out from there.

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further, in having a gold standard, would there still be fractional reserve banking?

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If gold is the commodity that most often backs money and we're in a free market, there is no reason fraction reserve banking cannot arise. This type of situation would be very different than today's bureaucratically managed reserve requirements.

Bank customers can pay a storage fee if the want a gurantee their items will remain in tact. If bank customers choose to take risks on this there is nothing to prevent them from doing so, and nothing bad so long as the bank does not in engage in fraud. A customer may be persuaded to do this from high enough interest, but now the bank is more of a loans and finance firm than a bank.

This doesn't effect the money supply the way fractional reserve banks do today with the multiplier effect, lack of consumer controlled standards, among other things...

[pvn]

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ok. i see what you are saying. i am just very skeptical that humans, as i've seen them act, can create free market systems that no individual or organization/institution could hamper/affect.

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I'm skeptical too. But free market systems are less vulnerable to such "hampering" than coercive systems, which are in fact designed from the ground up explictly for hampering/affectation by an individual or organization/institution.

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also, i don't think your evolution analogy is correct. i'm not asking for the next species, i'm asking how we would get there. the evolutionary biologist would answer my analagous question by providing an example, say that the introduction of nile perch to lake Victoria caused the highly specialized furu to get eaten while almost all other species in the lake adapted to the entrance of the nile perch. the evolutionary process occures "like this" and i'm simply asking how the free market result would be obtained given where we all now.

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You understand M3, but don't understand "how the free market works"? Come on.

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human nature, in my mind, is quite hobbesian. people do what is best for them and not all people agree what is best. those whose interest would be aligned with increased gold production or money however you phrase it, would find a way to alter it.

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So why do anything that makes manipulation easier?

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one problem i see is that the world is "too big" so to speak. as in the big stone wheel currency that milton freidman relayed, that society was very small. with so many complicated things going on in the world, i don't see how all market participants would agree on 1 methodology from which to operate in an economic relationship...i.e. the "foundation" of the economy.

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Who says they need to?

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the market does great when finding other things like exchanges and the like...but i am having trouble envisioning how the foundation of the economy could move to a free market from where we are now.

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Huh? Money is a commodity just like anything else that is exchanged. And your personal inability to imagine freedom isn't a very convincing argument to continue intervention.

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i'm just asking for an example, made up or otherwise as to how we would transition from the world we have today, to the ideal free market society you envision.

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People ask questions.
People figure out that government intervention is not as great as they thought it was.
People get sick of it.
Private alternatives fill demand.
Eventually, government fades away as more and more people stop believing in it.

I can't get any more specific than that.

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it isn't like asking "what hte next species would be" so much as it is asking "how would the next species evolve"...a question which i believe any evolutionary biologist worth his salt could readily answer.

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Again, this pretending that you don't understand how market allocation works is pretty condescending.

[pvn]

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also, a flexible money supply isn't necessarily a fiat currency. increased supplies of gold would increase the money supply. EDIT: distribution of gold also could imply a flexible money supply. so whoever controls the supply and/or the storage distribution fo gold controls the change in the money supply

[/ QUOTE ]

This isn't anywhere close to the same thing, and you know it. This is like saying that the fact that free market actors can choose when to produce more cheese, increasing the cheese supply means that a free market in cheese is pretty similar to a centrally planned cheese market.

[ QUOTE ]
my question is then who controls gold production (or maintenance/storage)? whoever controls gold supply thus controls the money supply.

[/ QUOTE ]

Who owns gold mines right now? This isn't very hard.

[ QUOTE ]
does that not also restrict freedoms even though it is in absolutely no way a fiat currency system?

[/ QUOTE ]

What freedoms are being restricted? Does the fact that farmers own farms restrict freedoms? To use your terminology, "i have no idea what you're point is. can you rephrase this into a clear sentence?"

[/ QUOTE ]

so how would gold mines not act in their interest and produce marginally more gold? i.e. what would restrain them.

that is what i'm after...
Barron

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Why would I care? According to your previous arguments, we should want them to produce more gold, shouldn't we?