GRUNHERZ: Stop trying to push your ridiculous gold standard crap miko.
I do not know where you got the idea that I am pushing the gold standard. True - it is one of the tried ways that worked and many notable economists propose adopting it. They do not think it ridiculous. Neither did US for the most of it's history.
Pusing a standard is certainly not the libertarian view - and not mine. I would consider using gold but not "pushing" it on anyone. In order to push any standard on anyone - even good standard - you would need government running economy and monetary system. I am against that. Money issue should be left in private hands, like it was before 1913. The free market will discover the best way and the optimal valuation.
The virtues of gold as money is a complex issue and requires a lot of room to explain. It is covered very well in books, so I refer you to them.
Alternatively, the state may expand the money supply by the same percentage every year and let the market adjust it's value naturally - removing unpredictable and unbalansing arbitrary intervention, as some economists propose.
plese join the modern world.
Where we do not have inflation, stagnation and monetary crises.. Yeh, right.
If not please care to explain why the total money supply of modern techonologial and information service industry economises should be tied the to the availabity of a soft shiny metal...
I will discuss it hypothetically if you promise not to lie that I support or "push" that particular system of money. Maybe I would but I am not knowlegeable enough yet to make a decision.
First, the supply you referring to is bogus - the new production of gold compared to the accumulated stocks is miniscule to affect the value of money much. One can generally disregard that. That is one of the reasons itw as used as money.
The same with availability - it does not matter how many tonns are there. All the mass of money is available to buy the mass of products, period. If you reduce the gold supply or paper money to 1/10, each unit will just be worth 10 times more. Issue "new dollar" that is worth 10 "old dollars" and nothing will change except the price labels.
Huge short-term changes of supply may cause short-term problems - like discovery of america caused inflation in Spain for a while. Not likely that any huge deposits would be discovered and not much harm if they would. Instead of counting gold by the ounce, we would just count it by a tonn. We would still be carrying paper in our wallets - except gold certificates backed by X ounces of gold instead of "faith" and fiat.
Any currency/commodity that cannot be arbitrarily issued can serve as money - if there is not enough money it just means that the same money buys more products and vice versa. The market adjusts. Issuing fiat printed money just prevents the natural market self-correction mechanisms from operating.
Anyway, I feel you do not know what money is because you frame questions that do not make much sense - about things that are not even relevant to the function of money.
Iraq is such a small economy that there is absolutely nothing they scould do to affect the US dollar on foreign currency markets.
And even if it were large, since it was selling the oil for dollars not to US but to other countries, it would still not affect our economy, right? Wrong.
It's not the size of their economy that matters - it is their example and their call to arab and muslim world to stop accepting dollar in favor of Euro.
You are too smart not to understand the distinction, so I assume the observers of our discussion are too dumb to do so.
Once the dollar stop being accepted by many countries, then it will drop - not because of Iraq or other countries but because of our $500 billion a year trade imbalance. All that free stuff coming in wil stop.
Your insults are not bothering me, so come up with argumets.
miko
