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Frédéric Bastiat's Views on the Nature of Money
Mises.org ^ | 23 June 2003 | Mark Thornton

Posted on 06/24/2003 9:52:44 AM PDT by sourcery

What is money? This is a question for the ages. Humanity has risen into complex society and experienced tremendous economic development and high cultural achievement through the use of money. It has foundered or even been destroyed when money has been undermined. Ignorance of the nature of money should therefore be the central economic issue for society.

Frédéric Bastiat was a French businessman who lived during the first half of the nineteenth century (1801?1850). In the last few years of his life he was elected to the national assembly and began a prolific career as a writer on topics of economics, public policy, and political issues of the day. His highly effective writing style includes the use of humor, ridicule, dialogue, irony, exaggeration and, most important, logical deduction and the process of elimination. He is like a mystery sleuth in search of economic truth and this style has made him the undisputed champion in economic polemics. He continues to earn high praise from journalists, economists, and most important, from educated readers more than 150 years after his death.[1]

In contrast to the universal respect and admiration for his literary skills, Bastiat has not been admired as an economic theorist. His efforts at economic theory have been roundly criticized and characterized as the efforts of an amateur or even a crank. We can list the eminent economist Joseph Schumpeter and Nobel Laureate F.A. Hayek, two outstanding economists, among the critics of Bastiat as an economic theorist.

I have re-examined Bastiat's contributions to economic theory and have found the charges against him to be unsubstantiated. In terms of economic theory, Bastiat is widely knowledgeable, keenly discerning, highly competent, and very creative. Furthermore, I have concluded that the central criticisms of his detractors are unjustified because they are based on an interpretation of Bastiat's theories that is at odds with the large body of Bastiat's views on economics.

These critics place Bastiat in a camp that believes that people do not benefit from trade (zero sum theory of exchange) and that the value of a good actually resides within the good itself (intrinsic value). It is simply preposterous to believe that Bastiat held such beliefs and to interpret his theory in this manner. Bastiat was arguably the most consistent economist of all time, an achievement that was nurtured by many years of serious study before embarking on his political and publishing career a few years before his death. There may be something wrong in Bastiat's theoretical framework, but these critics have not identified it (Thornton 2001, pp. 387?98).

Had Bastiat lived to see the publication of his theoretical treatise, he would no doubt have defended and clarified his views, possibly modifying those views or their presentation. Bastiat certainly loved intellectual debate, and few people of his day or ours would relish going to battle with him.

Bastiat has received criticism in the area of monetary theory. Hayek wrote in the introduction to an edition of Bastiat's Selected Essays on Political Economy that Bastiat should not be blamed for his failure to address the important problems of monetary economics because Bastiat lived during the heyday of the international gold standard. With so many other problems in his day, why should Bastiat search for a solution where no problem existed?

The attentive reader will notice that, while Bastiat grapples with so many economic panaceas which are familiar to us, one of the main dangers of our time does not appear in his pages. Though he has to deal with various queer proposals for using credit which were current in his time, straight inflation through a government deficit seemed in his age not a major danger. An increase of expenditure means for him necessarily and immediately an increase in taxation. The reason is that, as among all people who have gone through a major inflation within living memory, a continuous depreciation of money was not a thing with which people would have put up with in his day. So if the reader should be inclined to feel superior to the rather simple fallacies that Bastiat often finds it necessary to refute, he should remember that in some other respects his compatriots of more than a hundred years ago were considerably wiser than our generation. (Hayek 1964, pp. xi?xii)

Many writers have appealed to Bastiat's writings on other subjects to analyze monetary problems and to offer monetary solutions. For example, appeal has been made to his views of the nature of government or trade to illuminate monetary issues. Others have tried to reconstruct what Bastiat would believe about money and some of these attempts can be judged quite successful.

I have searched through Bastiat's writings for something?anything?on monetary economics and have finally found an essay, "Maudit Argent" (1849)2. A translation of the essay appeared in English, in a long lost volume[2] of Bastiat's essays, by the great American economist David Wells in 1877. We are now able to see clearly if Bastiat has any economic lessons for us in the area of monetary economics.

Modern economists would probably scoff at the notion of using the dialogue method to present economic theory, but Galileo used it to describe the nature of the universe, and Plato certainly used it to good effect. Bastiat used dialogue to address the question, "What is money?" It is a dialogue between an economist who represents Bastiat's views and who begins the dialogue by shouting "Hateful money! hateful money!" (p. 174) after leaving a Committee of Finance meeting where a project of paper money has been discussed. His discussant is an acquaintance and an educated layman willing to learn how a failure to understand monetary theory "is to be found at the root of all economical errors" (p. 177).

Bastiat begins his detailed analysis of the nature of money with a stunning statement when he calls "drafts on the Bank of Exchange" a "deceitful substitute" for money. This clearly implies that banknotes and deposit accounts are fraudulent when they do not represent commodity money in the same way warehouse receipts represent the titles to nonmonetary commodities. Bastiat therefore begins his dialogue by labeling fractional reserve banking practices as a fraud on the general public.

Bastiat goes on to explain that the confusion of money and riches or wealth is the "cause of errors and calamities without number" (p. 176). Money is genuinely beneficial?indeed, it plays a critical role as the medium of exchange?but people confuse money with wealth. This is not a problem for the deluded individual who readily ignores this mistaken belief every time he gets hungry or thirsty and converts money into goods. However, when this mistaken belief becomes acceptable public policy all manner of destruction can be unleashed:

Because, when a man, instead of acting for himself, decides for others, personal interest, that ever watchful and sensible sentinel, is no longer present to cry out, "Stop! the responsibility is misplaced." It is Peter who is deceived, and John suffers; the false system of the legislator necessarily becomes the rule of action of whole populations. (p. 179)

When government concludes that money is wealth and enacts policies to draw money away from other nations, it accepts the doctrine that an individual and a nation can only prosper at the expense of others. In order to increase wealth, people must be prevented from spending their money on imports even if they are hungry, and must also be compelled to export their goods in order to increase the amount of money in society. An expensive system of customhouses will be necessary to prohibit imports and an expensive system of export subsidies will be necessary to encourage exports and all of this will require a large tax to be laid on the people. If other governments adopt the same view, then you must raise armies and navies to establish colonies and conquests that will then serve as customers for your goods and sources of money. If they in turn raise armies to contest your colonies and conquests, the process?"universal war" (p. 187)?becomes self-defeating and very expensive.

And, tell me, are not these custom-house officers, soldiers, and vessels, these oppressive taxes, this perpetual struggle towards an impossible result, this permanent state of open or secret war with the whole world, are they not the logical and inevitable consequence of the legislators having adopted an idea, which you admit is acted upon by no man who is his own master, that "wealth is money; and to increase the amount of money is to increase wealth?" (p. 186)

Of course, universal war is not the only result of the idea that increasing the supply of money can make us richer. Along with protectionism, colonialism (imperialism), heavy taxes, and the hatred of capital comes "the last and worst, paper money" (p. 188).

When legislators, after having ruined men by war and taxes, persevere in their idea, they say to themselves, "If the people suffer, it is because there is not money enough. We must make some." And as it is not easy to multiply the precious metals, especially when the pretended resources of prohibition have been exhausted, they add, "We will make fictitious money, nothing is more easy, and then every citizen will have his pocket-book full of it, and they will all be rich." (p. 188)

Bastiat then goes on to show that the notion of money as the source of wealth is incorrect, that trading goods and services is mutually beneficial, and that trade is merely facilitated by the use of commodity money as the medium of exchange. He then reinforces this point by noting that any rare metal can serve as money and that any quantity will be sufficient to serve as money. The policymaker need not increase the money supply at all:

Money serves only to facilitate the transmission of these useful things from one to another, which may be done equally well with an ounce of rare metal like gold, with a pound of more abundant material as silver, or with a hundredweight of still more abundant metal, as copper. According to that, if a country like the United States had at its disposal as much again of all these useful things, its people would be twice as rich, although the quantity of money remained the same; but it would not be the same if there were double the money, for in that case the amount of useful things would not increase. (p. 191)

Bastiat is adamant that any increase in the supply of money does not benefit society and does not increase satisfaction. You simply do not make the citizenry better off by forcing them to give up useful things in return for newly created money. What is good for the individual (more money) is not good for the nation as a whole, and Bastiat invents an ingenious game to explain inflation and debasement. He then explains that money represents value that the holder has provided to someone else in society either by goods or labor, and the holder can take money and exchange it with others for goods or labor of a similar value.

Bastiat laments: "It is impossible for society to render more services than it receives, and yet a belief to the contrary is the chimera which is being pursued by means of the multiplication of coins, of paper money, etc." (pp. 200?01). You cannot solve the problems of society, nor raise the standard of living simply by increasing the supply of money.

Bastiat's companion asks, why not give an increase in the supply of money a try, even if it will not work. At least it will not cause any harm and will give people some hope that social problems can be addressed. Beginning with a fictitious construction similar to what is now referred to as the helicopter model, Bastiat replies "after the issue of paper money and its depreciation, the equilibrium of values should instantly and simultaneously take place in all things and in every part of the country" then "the best thing we could do would be to look at one another and laugh" (p. 205).

But this is not how it works in the real world. When you force people to take false money in return for real goods and services, the alteration of money creates real changes in the world, and, rather than providing a mechanism for solving real-world problems or even of just providing hope to the poor and the downtrodden, inflation actually creates real problems and injustices for the least advantaged members of society.

I must inform you, that this depreciation, which, with paper, might go on till it came to nothing, is effected by continually making dupes; and of these, poor people, simple persons, workmen and countrymen are the chief. (p. 206)

During inflation the ability to calculate is blurred and this is especially so among the average working class people who are unable to identify the reason for their impoverishment. Bastiat notes that a "day's pay of a country laborer will remain for a long time at a dollar while the salable price of all the articles of consumption around him will be rising" (p. 211). He goes on to note that, because the rise in prices cannot be "instantaneous and equal for all things" (p. 212), inflation also contributes to the chief problem of those who wish to use money to solve social problems, the inequality of wealth in society.[3]

Sharp men, brokers, and men of business, will not suffer by it; for it is their trade to watch the fluctuations of prices, to observe the cause, and even to speculate upon it. But little tradesmen, countrymen, and workmen will bear the whole weight of it. (p. 212)[4]

There are many more problems with inflation, but the discussants grow weary. Bastiat tries to summarize his conclusions by noting that "these questions are of the highest importance; for peace or war, order or anarchy, the union or antagonism of citizens, are at the root of the answer to them" (p. 217), and goes on to question, how can all civilized nations avoid the study of such critical information. Bastiat's companion replies that the state fills men's minds with prejudices and sentiments "favorable to the spirit of anarchy, war, and hatred" (p. 218), because the state takes us at an early age and:

It puts a bandage over our eyes, takes us gently from the midst of the social circle which surrounds us, to plunge us, with our susceptible faculties, our impressionable hearts, into the midst of Roman society. . . . How can you expect them to take the slightest interest in the mechanism of our social order? (pp. 218?19)

Bastiat ends the dialogue with his recommendation for reform:

The most urgent necessity is, not that the State should teach, but that it should allow education. All monopolies are detestable, but the worst of all is the monopoly of education. (p. 220)

Clearly, rumors of Bastiat's lack of interest in monetary theory have not only been exaggerated, they are patently untrue. Indeed, Bastiat places the role of money at the center of the economy and portrays ignorance of its nature as one of its greatest dangers. Not only does he explain the nature of money, but he also very cogently explains the inevitable results of a failure to understand that nature.

Bastiat's analysis is so advanced that it is prophetic. Not only does he explain the inevitable consequences of mercantilist monetary policy, but he also goes on to explain the critical weaknesses of modern equilibrium approaches to monetary theory and monetarism. As one views the world and sees global economic chaos, growing class conflict, widely divergent economic opportunity, and perpetual war, Bastiat provides a clear and concise guide to its cause. Bastiat's solution no doubt rests in the true understanding of the nature of money by the citizens, the abolition of fiat money and central banks, and a return to commodity money such as gold and silver coins.

-----

Mark Thornton is senior fellow of the Mises Institute. This essay is reprinted from the Quarterly Journal of Austrian Economics, Volume 5, Number 3 (Fall 2002), pp. 81?86. The full Bastiat essay is also available. mthornton@mises.org


[1] Even the president of the Federal Reserve Bank of Dallas, Dr. Robert McTeer, has heaped high praise on Bastiat's writings.

[2]

Translation is "What is Money?" It was translated and published into English by David Wells in 1877. All page references here are to this translation unless otherwise noted.

[3] Bastiat addresses the problems of credit in other articles and therefore does not consider the problems of inflation induced credit expansion and the business cycle.

[4] Wells then provides an extensive footnote that documents a real-world case in which inflation contributes to the inequality of wealth.

REFERENCES

Bastiat, Frédéric. 1849. "Publié dans le numéro d'avril." Journal des économistes. (Note de l'éditeur de l'édition originale.)

_____________. 1877. Essays on Political Economy. David A. Wells, trans. New York: G.P. Putnam's Sons.

______________. 1964. Selected Essays on Political Economy. Seymour Cain, trans. George B. de

Huszar, ed. Princeton, N.J.: D. Van Nostrand.

Hayek, F.A. 1964. "Introduction." See Bastiat 1964.

Thornton, Mark. 2001. "Frédéric Bastiat was an Austrian Economist." Journal of Economics and Humane Studies11, no. 2/3 (June/September): 387?98.



TOPICS: Business/Economy
KEYWORDS: bastiat
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1 posted on 06/24/2003 9:52:44 AM PDT by sourcery
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To: Tauzero; Starwind; AntiGuv; arete; David; Soren; Fractal Trader; Libertarianize the GOP; ...
FYI
2 posted on 06/24/2003 9:53:16 AM PDT by sourcery (The Evil Party thinks their opponents are stupid. The Stupid Party thinks their opponents are evil.)
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To: sourcery
mises.org ROCKS.

I subscribe to all their email newsletters and check the various parts of their site daily.

Highly recommended.

3 posted on 06/24/2003 9:54:34 AM PDT by NativeNewYorker (Freepin' Jew Boy)
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To: sourcery
Bastiat - possibly the greatest French thinker ever!

(apologies to Cartesians) ;^)
4 posted on 06/24/2003 10:26:05 AM PDT by headsonpikes
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To: headsonpikes
they deserve pity, not apologies.

He was a good mathematician, but a bad philosopher.
5 posted on 06/24/2003 11:05:28 AM PDT by Tauzero
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To: sourcery
Bastiat rocks.

He's not quite right about trade facilitating peace though. It is not always so.
6 posted on 06/24/2003 11:07:27 AM PDT by Tauzero
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To: headsonpikes
Bastiat - possibly the greatest French thinker ever!

One of the fundamental revolutionaries.

7 posted on 06/24/2003 11:13:30 AM PDT by RightWhale (gazing at shadows)
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To: sourcery
Bastiat explains what must happen when nations are on the Gold Standard. Hoarding, war to keep gold, economic war to restrict imports and push exports all must result from the GS. He is, of course, wrong when he claims governments create the view that money is Wealth. Governments didn't create that view, it goes with the gold standard.

Our nation's use of paper currency has not impeded its progress in the slightest. How much stronger could we have become had we been on metallic standards? Probably no stronger and quite likely weaker due to the inability of gold supplies to increase at a sufficient rate.

Bastiat is wrong if he believes the economy is served by a money supply incapable of growth at least at the rate of population and to keep pace with productivity growth. Otherwise, deflation sets in and that is destructive to an economy. Plus, it would be impossible for a democracy to accept since it would tend to crush borrowers and make the wealthy even more wealthy.
8 posted on 06/24/2003 11:33:59 AM PDT by justshutupandtakeit (RATS will use any means to denigrate George Bush's Victory.)
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To: justshutupandtakeit
DESTROY THE DOLLAR--CREATE PROSPERITY
9 posted on 06/24/2003 2:32:23 PM PDT by sourcery (The Evil Party thinks their opponents are stupid. The Stupid Party thinks their opponents are evil.)
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To: sourcery
bttt
10 posted on 06/24/2003 5:20:12 PM PDT by SuperLuminal
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To: sourcery; justshutupandtakeit
Excellent article, Sourcery.

However, Justshutupandtakeit believes that scraps of paper and electronic blips created out of thin air do create economic growth. In fact, he believes economic growth can not occur without an increase in the money supply. Unfortunately, the entire establishment (Keynsians, monetarists, and supply siders) either agree with this position or pretend to do so (I am actually convinced that at least some of them recognize the validity of the Austrian School's position but prefer, for reasons of self interest, to deny it).

11 posted on 06/25/2003 7:48:41 AM PDT by Deuce
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To: Deuce
That is false, I do not believe growth CANNOT occur without and increase in the money supply. I DO believe that a money supply which does not gradually increase to accommodate economic and population growth WILL reduce the rate of growth below what it could have been without the OPTIMAL rate of growth of the MS. How anyone can believe that arbitrary and unpredictable surges and spurts in the supply of metals can achieve that opitmal rate is beyond me.

Growth can occur through technological change but without a proper increase (Friedman links it to the growth rate) in the MS it means deflationary pressure on all sectors not undergoing the tech change, even sectors totally separated from the sector undergoing change.

Price stability, a laudable goal, is unattainable if the growth rate of the MS is less than the growth rate of the economy. Since the long term growth rate of gold supplies is only about 1.5% and that of the American economy is about 3% the latter rate would have been lower under a metal standard and the American people would have suffered thereby.
12 posted on 06/25/2003 8:42:44 AM PDT by justshutupandtakeit (RATS will use any means to denigrate George Bush's Victory.)
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To: justshutupandtakeit
How anyone can believe that arbitrary and unpredictable surges and spurts in the supply of metals can achieve that optimal rate is beyond me.

There is no optimal rate of growth in the money supply to achieve growth in the real economy. Real growth occurs as a result of real investment, not money creation.

Growth can occur through technological change but without [an] …increase… in the MS it means [the overall price level will decline].

The above comment is certainly true. I merely took the loaded terms out of your comment. The decline in the price level is the natural way that growth is reflected in an honest monetary system. By honest system, I mean any precious metal based system or fiat system that maintains the “scarcity integrity” of the monetary unit.” That means banks can’t lend it into existence and governments can’t spend it into existence.

13 posted on 06/25/2003 9:08:33 AM PDT by Deuce
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To: Deuce
Money creation facilitates growth. Without money growing at the same rate as the economy disinflation and deflation shuts back on the investment process. Investment is only made in anticipation of sufficient demand to make it profitable. When the money supply is shrinking in per capita or per transaction unit terms it causes demand to grow too slowly.

The entire mechanism of capitalism is short-circuited by insufficient money. Demand should pick up when prices fall yet, when there is too little money it can't. Supply is only increased when it is presumed profitable to do so. When prices are falling there is no incentive to invest, merely hoard. Gold/metals are the perfect monetary mechanism for hoarding.

Money is not ONLY a means of value storage but is a tool for development and transactions. Your view limits it to value storage and indeed causes it to increase in value since prices must fall. The misery caused by this view is exactly why metals were abandoned and why they will never again be more than a pretty decoration.

Money is a form of capital, at times, it provides the Wage Fund for example. Reducing it to what can be supplied by the mines of the world reduces the amount of capital available for investment.

You essentially made the statement you mutilated meaningless. Declining price levels reduce incentive for technological change, investment and growth. Inflation is accually a greater spur for all those things.

Gold standard- a prescription for stagnation.
14 posted on 06/25/2003 9:35:42 AM PDT by justshutupandtakeit (RATS will use any means to denigrate George Bush's Victory.)
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To: justshutupandtakeit
Investment is only made in anticipation of sufficient demand to make it profitable. When the money supply is shrinking in per capita or per transaction unit terms it causes demand to grow too slowly.

You fail to distinguish between real demand and nominal demand and continue from there. Real future demand and real future returns are independent of the quantity of money (as long as the MS is sufficiently divisible).

If you wish, periodically declare "money stock dividends" to increase the number of “money shares” however you'd like vis a vis real production because people do confuse nominal and real. As long as the increase is given proportional to the ownership of existing dollars, no harm is done. If it is done, in any other wayyou inappropriately benefit those who receive it first or early at the expense of those who receive it late or never.

15 posted on 06/25/2003 10:06:38 AM PDT by Deuce
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To: Deuce
No, I don't fail to distinguish between those terms. However, businesses never forecast prices in any but nominal terms since that is how all their inputs prices are measured. "Real" terms are used only in academic circles and for most of economic history were not even spoken of.

Since Friedman made the distinction clear it became useful for analytic purposes and to properly establish theory but it has no use in the everyday world of business.

Money's true economic function is as a flow not a stock thus, your solution to slow growth is not sufficient and would create more problems than it would solve. We don't want money to be withdrawn from circulation as a store of value. It must circulate and facilitate transactions, that is its chief aim. Want to store value-buy land.
16 posted on 06/25/2003 10:39:20 AM PDT by justshutupandtakeit (RATS will use any means to denigrate George Bush's Victory.)
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To: justshutupandtakeit
We don't want money to be withdrawn from circulation as a store of value.

In a free society, each person decides for himself. It is not society's decision to make. Unless money is also a valid store of liquid value and a predictable standard of value not subject to the whims of "decision makers" it fails to adequately perform even the medium of exchange value to which you want to restrict it. The relationship of the Euro to the dollar since 1999 is more conducive to a global lottery than it is to global business. Fixed standards are essential to rational thought.

17 posted on 06/25/2003 11:15:16 AM PDT by Deuce
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To: Deuce
Please, international trade is able to hedge value loses in foreign exchange transactions so that it is NOT a "global lottery." This is elementary.

You are dreaming if you believe money is EVER outside the whims of "decision makers." You seem to ignore the "society" part of "free society." Society got rid of the metal standards and will never allow it to be returned. Monetary values have NEVER been constant over the long run even using metal. What could be less predictable than a huge gold or silver strike? They never provided a "fixed" standard except in the imaginations of anti-paper crusaders.

A medium of exchange must be capable of expansion to meet the needs of trade if that means a slight inflation, so be it. P*Q= M*V which means P must fall unless V continually rises when Q increases. An appreciation of M in real terms means big trouble for an economy and can be easily shown to generate huge political unrest and uncertainty.

Since the wealthy's losses through inflation are compensated for through the nominal interest rate they are not harmed by slight inflations. Yet, the poor and debtors are crushed by deflations. Your ideas would hamstring any economy and that is why they have no following of note. Didn't you ever wonder why?
18 posted on 06/25/2003 12:05:59 PM PDT by justshutupandtakeit (RATS will use any means to denigrate George Bush's Victory.)
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To: justshutupandtakeit
Please, international trade is able to hedge value loses in foreign exchange transactions so that it is NOT a "global lottery." This is elementary.

Oh, I see. The international bankers create currencies that are ridiculously volatile but then sell your currency derivatives to protect yourself. Something like the protection rackets of gangland Chicago circa 1930s.

You are dreaming if you believe money is EVER outside the whims of "decision makers."

It can be and should be the goal an honest system strives for. BTW, I favor laws against murder, too, even though it will never be wiped out entirely.

Monetary values have NEVER been constant over the long run even using metal.

There is a difference between standards and values. Inch, pound, year, are standards. A pound of something has changing value---but not changing weight.

What could be less predictable than a huge gold or silver strike?

I said I favored any honest system, not only commodity money---and commodity money, alone, would not be satisfactory with fractional reserve banking. But, you fail to recognize that “big strikes” relative to above ground supply have NEVER occurred AND, much more importantly, it takes work to get it out of the ground. The latter aspect alone demonstrates the difference between an honest system and one in which governments or banks create thin air magic.

Your ideas would hamstring any economy and that is why they have no following of note. Didn't you ever wonder why?

My ideas would not hamstring an economy and I know why they have not been put in place! Those who are close to the money creation process benefit too much from the system they have devised. They have expended much effort convincing people like you, who cheerlead, for a system that is only in the best interest of the handful of elites who have (unjustly) gotten special privileges through government force at everyone else’s expense.

19 posted on 06/25/2003 3:09:19 PM PDT by Deuce
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To: justshutupandtakeit
Please, international trade is able to hedge value loses in foreign exchange transactions so that it is NOT a "global lottery." This is elementary.

Let's say U.S. Company A sells substantial amounts of product to U.S. companies B, C, and D. Let's say Company A does no business in Europe. Companies B, C, and D, however, have substantial sales in Europe where they were very competitive in Jan, 1999 with European companies in the same industry. Because of the strengthening dollar in 1999-2001 against the Euro, Companies B, C, and D could no longer sell at a competitive price in Europe by 2001 and, therefore, cut their purchases from Company A substantially. Company A’s stock price declines, executive stock options are under water, and Company A executives are, understandably, upset. Unfortunately, Company A was unable to establish an effective business plan because of decisions by European bankers and central bankers, the Fed, and individual U.S. banks that company A could neither control nor foretell.

Do you find that conducive to global business? Here's what Paul Volcker has to say on the subject:

A global economy needs a global currency

Within 50 years (probably much sooner) a sensible international clearing mechanism will be instituted. My bet is gold will be the mechanism of choice. 5000 years of history has found nothing even marginally comparable to the monetary characteristics of gold. How else do you explain the fact that over 80% of all gold that was ever mined currently exists in the form of inert bars in vaults---usually the vaults of the very people who disparage it. Do you think, maybe, they know something they are not telling you?

20 posted on 06/26/2003 6:09:51 AM PDT by Deuce
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