Actually you can use competing currencies or the gold standard right now. You can open a brokerage account and buy ETF’s. You want a gold standard put all your money in GLD. To pay your monthly bills simply convert your money to dollars and pay them. You want competing currencies you can put your money in euros, or loonies , pound silver, Swiss francs pesos or whatever convert enough to pay your bills and go on. Problem is the market has some wild mood swings. You might have problems sleeping at night.
"When Ron Paul has talked about monetary policy, he talks about competing currencies. Basically, letting the free market handle money.
Are you in favor of a gold standard (US paper dollars tied to an amount of gold) or competing currencies?"
Bow bow. He’s for a gold standard, which is a free market in money. It is called a gold standard, because over the last 2,000 years - gold has generally been the preferred medium of exchange chosen by the market when allowed. Hence, “good as gold”. It can be anything else though, that is fine.
What you have explained is a GOLD EXCHANGE STANDARD, that is what the US has historically been on. Where govt sets the rates etc.
Do NOT make the basic mistake so many people do and that is to conflate the two.
To my knowledge, gold has never not co-circulated with silver, wherever it has been used for money. I don’t know if this is a consequence of its natural scarcity or not. But there’s plenty of silver to go around. If silver is too precious, you could use copper. An ounce of copper is worth about 25 cents on the COMEX. The hand-wringing about whether there’s “enough” gold in the world or whether everyone would strike out to gold mines instead of growing crops is silly and completely misses the point. It’s not about the chemical element Au, as if it has been divinely chosen to be THE money. It’s about competition (no barriers to entry) in the production of money. No one would ever except a fiat token in payment when there are commodity coins or commodity-backed notes available. Fiat money is impossible without the monopolization of currency issue by the government. The only strong claim I make is that, absent this monopoly, there will be no fiat money. I also think a good argument can be made that, in such a situation, gold would again become the King of money but I could be wrong. Perhaps it would be silver or copper. Since diversification is all the rage nowadays, perhaps you would have corporations that do nothing but hold a basket of commodities and issue their shares as “volatility-resistant money.” If people started accepting such notes in payment, you’d effectively have a Keynes-esque bancor. But we won’t know until we have currency competition and we won’t have currency competition until the government no longer has the power to micromanage every detail of the economy so they can tax it.
competitive currencies because you can use other commodities besides gold to back things up…
[/quote]
I’ve seen this on TV as well, and I don’t get it. Will there be some storehouse where, if you want, you take your dollar bill and get a loaf of bread or a bottle of gasoline? And will this not make the prices of valuable commodities go through the roof, because instead of being used they have to be stashed away as a backup for trillions of dollars?
I was under the impression that “competing currencies” simply means that, if for some reason the market decides that gold is no longer the best money (because it becomes too common or too scarce, or whatever) there are no artificial barriers in place to prevent the market from moving to an alternate money (e.g. silver, platinum, etc…) Is this wrong?
If the money is silver, platinum, whatever, I have no problem with that. What I don’t understand is “commodity backed currency”, which I think means paper money redeemable in some commodity. And what I don’t get about that is in the earlier post.
I’ve seen this on TV as well, and I don’t get it. Will there be some storehouse where, if you want, you take your dollar bill and get a loaf of bread or a bottle of gasoline? And will this not make the prices of valuable commodities go through the roof, because instead of being used they have to be stashed away as a backup for trillions of dollars?
The price of the commodity chosen as money always goes through the roof, at least compared to whatever price it commanded prior to its monetization. Should gold be selected anew as money tomorrow, you can forget about prices such as 2000.
Now, whether monetary use is too burdensome, in the sense that the commodity selected is more urgently needed elsewhere, that again is to be selected by market forces. But we might all agree that bread, or the cure for cancer are not going to function as money as they will probably be more urgently needed elsewhere. That’s part of the reason why gold was selected as money back in the days: it was good for almost nothing else, beside female vanity (nothing against that, god forbid…).
It’s about competition (no barriers to entry) in the production of money. No one would ever except a fiat token in payment when there are commodity coins or commodity-backed notes available. Fiat money is impossible without the monopolization of currency issue by the government. The only strong claim I make is that, absent this monopoly, there will be no fiat money.
I actually have to disagree here. Theres no reason there couldnt be privately-issued fiat money, That is, where a company ‘issues’ points or some other form of ‘currency’ electronicly, which people willingly use as a medium of exchange based on the good reputation of the compnay. The compnay in turn knows that if they debase their currency too much, people will abandon their currency in favor of some other form of money(either a competor or commedity money). Listia provides one model for how this might work.
Such private fiat monies might actually better suit a modern economy where most transactions take place electornically. The real issue isnt fiat money per se, but government monopoly on the creation of money, and artifical barriors to alternitive forms of money. Although ultimately thats something the market has to decide.
I agree. There is nothing keeping a private, competing issuer of fiat paper from limiting their production to an even less hasty pace that that of the gold, making them even more worthwhile. The same goes for e-money. Eventually it might all come down to a matter of reputation among credit card companies.
