Inflation Inferno I

Mises ^ | April 28, 2011 | George F. Smith

[GregoryFul]

I like that image!

[GregoryFul]

Hardly any perfect system exists - the relative scarcity or plenty of gold throughout history did cause booms and busts. Along the way gold discoveries, thefts, etc. have benefited the dishonest and unworthy, like anything of value.

It would be great to have some wise and powerful, but disinterested, Oz deflecting asteroids, tornadoes, floods and famine - maintaining the gram weight, time second, and meter length, and keeping an honest money. In lieu of such keeper, gold has worked pretty well, maintaining a constant "value" over the centuries - that is, a constant attraction to possess by useful agents.

The gold miners produce this something of value, like other participants in the economy, and freely exchange their product for other stuff. Anyone is free to compete in this or other ventures that produce desired stuff (in a free economy, that is).

Printing currency is an activity prohibited to but a few (cloaked private citizens), and those few apparently are given the right to issue this currency in infinite quantities without legal or moral restraint at any time - making their "product" ultimately worthless (giggle). Useful to them, but useless to the receiver. And the receiver is under legal obligation to accept.

Over the past 10 years, people who have, on receipt, converted the forced upon script into real money have done well - others, not so well. The only thing that might change the picture is if/when the dictator declares gold/silver to be illegal to hold and/or exchange (national emergency holdup of the provident - a significant probability to contend with).

[HiTech RedNeck]

The point is that soundness of money is an incurably relative thing, whether it’s a hunk of paper or a pure gold coin. The constitution does call for Uncle Sam to coin money, so Uncle Sam can spit out as many paper or metal IOUs as he pleases and do so as long as those whom Uncle Sam pays or hires accept the IOUs. It is the nature of the beast. It’s a noble thing to sock away as much gold as the value of outstanding money, but the modern world of derivatives has made it possible for far more virtual money to “sit” in bank accounts than has been issued by the government. The great counter to abuse of this capability is that unlike a natural family, We The People do have the right to choose a new Uncle. The give-a-damn factor has much room to grow. Is it not astonishing that in the highest turnout presidential election to date (the one that brought us Obama), a full 40% of Americans who could in principle have voted for some presidential candidate did not vote for any, not even a write-in? True this includes people who did not bother to register or attend a poll this time around, but that’s a LOT of room for the give-a-damn factor to grow. The figures were even more dismal for congressional ballots.

Hire the right people to be in charge of governmental affairs, and many abuses will simply vanish.