-- On 18 Nov 2001, at 14:17, Neil Johnson wrote:
It would seem to me that digital cash would be better off not being tied either of these trust systems, but somehow develop it's own.
James A. Donald:
That is a really dumb idea.
It took governments a generation and the vigorous and frequent application of bayonets and batons to render their money independent of precious metals.
Anonymous:
but why did governments engage in the vigorous and frequent application of bayonets and batons to render their money independent of precious metals?
Because they could. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG e14ZjXqdjvPhGbY7gUaOBA42wTiDnGWfnEJ2q84q 4dPLVHJB12eAfQgOC1preE0ABpS1HIjeAfHn/qQN8
Well (jamesd's "because they can" comment not withstanding) the stated reason for uncoupling money from precious metal was to allow the government greater flexibility in controlling the supply of money. Supposedly they could increase the amount of money available when times were bad (to make things better) or decrease it during good times (to prevent inflation). Of course it also allowed them (the government) to buy things without raising taxes (just print more money), but they got burned when it led to inflation in the 70's. Check out Menard Keynes (sp?). Although I'm pretty sure most people on this list consider his ideas blasphemy :) . There are still a lot people that believe the U.S. should return to the "Gold Standard" meaning the amount of money in circulation should equal the amount of gold held by the U.S. government. That's what Fort Knox was originally for. Seesh 3:00 AM better get to bed. -Neil ----- Original Message ----- From: <jamesd@echeque.com> To: <cpunks_anon@EINSTEIN.ssz.com>; <cypherpunks@EINSTEIN.ssz.com> Sent: Sunday, November 18, 2001 10:29 PM Subject: Re: The Crypto Winter
-- On 18 Nov 2001, at 14:17, Neil Johnson wrote:
It would seem to me that digital cash would be better off not being tied either of these trust systems, but somehow develop it's own.
James A. Donald:
That is a really dumb idea.
It took governments a generation and the vigorous and frequent application of bayonets and batons to render their money independent of precious metals.
Anonymous:
but why did governments engage in the vigorous and frequent application of bayonets and batons to render their money independent of precious metals?
Because they could.
--digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG e14ZjXqdjvPhGbY7gUaOBA42wTiDnGWfnEJ2q84q 4dPLVHJB12eAfQgOC1preE0ABpS1HIjeAfHn/qQN8
On 19 Nov 2001, at 2:54, Neil Johnson wrote:
There are still a lot people that believe the U.S. should return to the "Gold Standard" meaning the amount of money in circulation should equal the amount of gold held by the U.S. government. That's what Fort Knox was originally for.
It's amazing how many people assert this, even though it's clearly wrong. A gold standard does NOT mean that the amount of currency in circulation equals the amount of gold in the vaults, it means that the currency is exchangeable for gold at a fixed rate. Obviously, there can be more gold in the vaults than you need to actually exchange every dollar for the correct amount of gold. Less obviously, there can be less. George
on Mon, Nov 19, 2001 at 10:14:01AM -0800, georgemw@speakeasy.net (georgemw@speakeasy.net) wrote:
On 19 Nov 2001, at 2:54, Neil Johnson wrote:
There are still a lot people that believe the U.S. should return to the "Gold Standard" meaning the amount of money in circulation should equal the amount of gold held by the U.S. government. That's what Fort Knox was originally for.
It's amazing how many people assert this, even though it's clearly wrong. A gold standard does NOT mean that the amount of currency in circulation equals the amount of gold in the vaults, it means that the currency is exchangeable for gold at a fixed rate. Obviously, there can be more gold in the vaults than you need to actually exchange every dollar for the correct amount of gold. Less obviously, there can be less.
You can't have it both ways. You either have a gold standard, or you don't. A fixed exchange either means you have a government-retulated market for precious metals, or your currency floats against the current valuation of metal. Either option raises concerns. Any meaningful standard requires a linking of currency to gold. You've either got a standard or you don't. If the requirement is for minimum guaranteed reserves, then you can clearly hold more gold than is required for floating currency (but why would you?). However, as with margin calls, fluctuations on either side of the equation could result in a sudden harsh dealing with reality. Prior to the abandonment of the gold standard by the US, the price, and amount an individual could own, of gold were both set by the government. There are those who argue that the US dollar is backed not by gold, but by its real purchasing power. This is composed of several things, three among them being: - "The full faith and credit of the United States Government". Not in its direct backing of the value of a dollar, but its managment of both government and money supply. - Industrial power. Gold isn't itself directly useful (in most cases), it's an exchange medium. As is money. Backing one exchange medium with another seems like it perverts the principle of reducing intermediaries. Gold values themselves can be adjusted by multiple actors, introducing another area of possible instability (though holders of east Asian currencies in the late 1990s will tell you the same holds for currency). - Faith. Ultimately the value of an exchange medium is a widely-held faith that it is worth what it says it's worth, whatever that may be. This is one of the more difficult aspects of currency to replicate in another system. There are other rare and valuable things (metals, stones, grand-master paintings, stamps). There are localized networks in with other media are accepted: POs in a business context, checks, scrip, Mojo. But acceptence outside the small group is limited. There's also the nagging Art. 8, Sec. 8 powers. For a strong argument agaist the gold standard, see Brad DeLong's essay on the topic: http://www.j-bradford-delong.net/Politics/ Peace. -- Karsten M. Self <kmself@ix.netcom.com> http://kmself.home.netcom.com/ What part of "Gestalt" don't you understand? Home of the brave http://gestalt-system.sourceforge.net/ Land of the free Free Dmitry! Boycott Adobe! Repeal the DMCA! http://www.freesklyarov.org Geek for Hire http://kmself.home.netcom.com/resume.html
On Mon, 19 Nov 2001 georgemw@speakeasy.net wrote:
It's amazing how many people assert this, even though it's clearly wrong. A gold standard does NOT mean that the amount of currency in circulation equals the amount of gold in the vaults, it means that the currency is exchangeable for gold at a fixed rate. Obviously, there can be more gold in the vaults than you need to actually exchange every dollar for the correct amount of gold. Less obviously, there can be less.
Of course, the system also exposes the currency to fluctuations in world wide supply of gold. It's not sane policy to tie one's unit of currency to any particular good -- think about what it would mean if the chosen good was unrefined oil, a particular crop or electrical power. One'll get the picture fairly soon. It's not really sane to opt for a tie-in to the supply of a particular currency, either -- that's actually even worse, since the people printing the bills can cause fluctuations in the exchange rate even easier than they could if they were just digging up precious metals up from the crust. Hence, private, floating currency, which, again, is old news on the list. Sampo Syreeni, aka decoy - mailto:decoy@iki.fi, tel:+358-50-5756111 student/math+cs/helsinki university, http://www.iki.fi/~decoy/front openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2
participants (5)
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georgemw＠speakeasy.net -
jamesd＠echeque.com -
Karsten M. Self -
Neil Johnson -
Sampo Syreeni