Which currency system do you think is best?

[pvn]

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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.

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What does that have to do with what you responded to?

[Zygote]

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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.

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The cost of mining and the lack of gold supply. In the long run mining is no more profitable than any other industry.

[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.

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What does that have to do with what you responded to?

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I think you will never find freedom in the market even if you put a "free" in front. My apologies for I see that this is off topic for this thread.

[pvn]

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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.

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What does that have to do with what you responded to?

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I think you will never find freedom in the market even if you put a "free" in front. My apologies for I see that this is off topic for this thread.

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Perhaps I won't. That doesn't give anyone else license to stop me from trying.

[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.

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What does that have to do with what you responded to?

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I think you will never find freedom in the market even if you put a "free" in front. My apologies for I see that this is off topic for this thread.

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Perhaps I won't. That doesn't give anyone else license to stop me from trying.

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Well said. As long as the market does not impose over voluntary communes like the state does today, it is okay by me.

[DcifrThs]

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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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once formed i totally agree. look at exchanges as i mentioned earlier. but exchanges don't drive the underlying economy. i have less faith that we could *establish* a free market system from where we are now.

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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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i understand how it *works* ... what i don't understand nor see clearly is how we'd get there given where we are.

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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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point taken, but the incentive for manipulation here is so great that i don't think individual mining companies would abide by any "market" prescribed rule.

the way im' thinking about it is as follows: mining companies (lets assume they are the only cog and also distribute/store etc. just for simplicity) operate in order to maximize their profits.

specifically, mining firms produce free cash flow in a competitive industry and increases in FCF result in rising share prices which (and i'm giving a general example here) benefit the owners and the managers (who likely get paid bonuses based in some part off of earnings & share price).

so gold mining firms would have to, in this free market, agree for some externality type arguement (at least how i see it) to forgo short term profits for the long run benefit of the economy of *just* the united states. seeing as how a likely small % of overall gold capacity is produced in the US and/or by US firms, i again don't see how in a free market, the US would be able to stick to a gold standard like the one we've been talking about.

i'm not pretending to not understand how this works. i litereally don't see how the actors would act in that way.

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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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look at my above example. anything they do short of and including producing at full capacity will affect the foundation of the economy.

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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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pvn,

i'm not advocating a continuation of where we are today. ideally we wouldn't have the system we have today.

but if we move from the system we have today, i want to know how it would happen. if i had to choose between an *unknown* manipulative and possibly negative outcome and the *known* manipulative and definitely negative outcome we have today, i'd choose the latter until i was comfortable w/ the switch.

i don't think i'm unique in that either.

human nature favors the familiar, which makes it, in my mind, even more unlikely that we could acheive a switch to a free market in any kind of orderly fashion.

i'm just being realistic here.

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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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but thats all i was asking for. so basically, and logically, the only thing stopping the free market is enough people do the analysis i did directly above and conclude that it is better to go with the unknown future than the known negative present.

another issue is: power abhors a vacuum. there likely needs to be a transitory order established. the market, accordingly, would be tasked with that. THEN that market established order would have to not act in its own short term interest. ...EDIT: to be fair, it would if it thought that the short term best interest of itself was aligned properly. if so then how would the market align those interests.

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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.

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pvn,

i'm not pretending to not understand something. i'm asking questions to learn dude, not to patronize. i'm pretty shocked that you came to that conclusion. why is it so hard to believe that i don't think that a gold mining company would produce the "right" amount of gold for the benefit of the economy rather htan itself?

read my above responses and if you really think i'm pretending here then i have no clue what to tell you other than you're crazy.

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

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

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thats fairly disingenuous. i think you know via reading what we've been talking about here the issue is both producing MORE gold and NOT TOO MUCH gold. i.e. running at below optimal profit inducing capacity in order to maintain a fixed money supply...or even a marginally slowly growing one.

Barron

[DcifrThs]

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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.

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The cost of mining and the lack of gold supply. In the long run mining is no more profitable than any other industry.

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ok. i think we have to separate what we're talking about here.

for the most part i've been thinking that we've been talking about the US economy shifting to a free market or free market oreinted gold standard currency system.

if this is the case, then clearly the US doesn't produce all the gold in the world. but lets just concentrate on US owned gold capacity and ignore the rest of the world for now.

say we have cummulatively produced, as an economy (i.e. the gold industry) some amount of gold G. G is now the total money supply. every year the economy grows by Y and productivity increases by P so G should grow by Y-P. so lets let g=Y-P.

the US company(ies) producing (storing / distributing) this gold are, by default, and assigned by the free market, the "managers" of the economy. they should be producing about g every year. their economic incentives though, are to produce some other amount of gold, say g*. what is to keep the free market mining companies from producing at g* and instead, produce at g.

again, pvn, if you choose to jump in here, i'm not being a dick here. i'm seriously asking. this is how we learn, by asking quesitons. i'm not feigning knowledge in order to be a condescending ass.

zygote, your responses have been appreciated since it seems like you've studied this and thought about it a good deal.

thanks,
Barron

[Zygote]

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point taken, but the incentive for manipulation here is so great that i don't think individual mining companies would abide by any "market" prescribed rule.

the way im' thinking about it is as follows: mining companies (lets assume they are the only cog and also distribute/store etc. just for simplicity) operate in order to maximize their profits.

specifically, mining firms produce free cash flow in a competitive industry and increases in FCF result in rising share prices which (and i'm giving a general example here) benefit the owners and the managers (who likely get paid bonuses based in some part off of earnings & share price).

so gold mining firms would have to, in this free market, agree for some externality type arguement (at least how i see it) to forgo short term profits for the long run benefit of the economy of *just* the united states. seeing as how a likely small % of overall gold capacity is produced in the US and/or by US firms, i again don't see how in a free market, the US would be able to stick to a gold standard like the one we've been talking about.

i'm not pretending to not understand how this works. i litereally don't see how the actors would act in that way.


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the gold supply hasn't grown by more than ~5% in a year despite something like 4000 years of effort (quoting figure from memory, hope its accurate)

Getting the gold out is not like putting on the printing press. The gold supply is very limited and property, geological surveys/searches and mining cost a lot money. Further there are many competing firms going for this money. The more lucrative the more competition and lesser margins. The business return of mining gold "cash" is not more lucrative than any other business in principle.

edit: shouldve mentioned gold mining also requires a lot of risk.

[DcifrThs]

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point taken, but the incentive for manipulation here is so great that i don't think individual mining companies would abide by any "market" prescribed rule.

the way im' thinking about it is as follows: mining companies (lets assume they are the only cog and also distribute/store etc. just for simplicity) operate in order to maximize their profits.

specifically, mining firms produce free cash flow in a competitive industry and increases in FCF result in rising share prices which (and i'm giving a general example here) benefit the owners and the managers (who likely get paid bonuses based in some part off of earnings & share price).

so gold mining firms would have to, in this free market, agree for some externality type arguement (at least how i see it) to forgo short term profits for the long run benefit of the economy of *just* the united states. seeing as how a likely small % of overall gold capacity is produced in the US and/or by US firms, i again don't see how in a free market, the US would be able to stick to a gold standard like the one we've been talking about.

i'm not pretending to not understand how this works. i litereally don't see how the actors would act in that way.


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the gold supply hasn't grown by more than ~5% a year despite something like 4000 years of effort (quoting figure from memory, hope its accurate)

Getting the gold out is not like putting on the printing press. The gold supply is very limited and property, geological surveys/searches and mining cost a lot money. Further there are many competing firms going for this money. The more lucrative the more competition and lesser margins. The business return of mining gold "cash" is not more lucrative than any other business in principle.

edit: shouldve mentioned gold mining also requires a lot of risk.

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now we're getting somewhere [img]/images/graemlins/smile.gif[/img]

sorry i had to have you derive that all from first principles. so i'm convinced that gold could work...but not when controlled by anything other than the market price for gold due to incentives to move that price around.

so what about extending my argument about "g" vs. "g*" to a commodity, or anything that is not so tough to produce?

w/ gold at least it seems like the natural contraints would do the economy well since overall it would be expanding maybe just a touch faster than trend growth minus trend productivity.

Barron