Not every hour of labour (even doing the same task)
is equal, and not everything laborious is valuable.
Agreed. The worth of a given hour put in by a knowledge worker (e.g. programmer) can vary wildly, and is almost entirely subjective.
I might spend two-to-three hours writing code only to scrap it all. The next hour I may spend pacing, drawing on the whiteboard and staring at the ceiling. Then, in fifteen short minutes I can write something that is functionally correct and shorter than my original attempt.
Does that mean only the last fifteen minutes are worth anything? I think not.
Which is why you will find many of us advocate free market money. If gold is not feasible, people will use silver. Or copper. Or sheepskin. Or marbles. Or diamonds. Or pizza crusts.
These discussions can be confusing because for so many years “money” has been detached from the commodities that were formerly used in that function. Just substitute a gold coin for a dollar bill and the answers should be pretty clear.
Gold coins/dollar bills cannot be eaten, woven, used to build houses, etc. That is why Bill Gates doesn’t have $5 billion in cash stuffed in his matress. Instead, he spends and invests them and keeps only a certain amount in his mattress. This is why there is no such thing as some elite group controlling all the worlds’ gold coin/dollar bills.
Demand for money is always limitless, and demand creates its own supply. But the awful thing about paper money is that it can be printed at will, devaluing all current dollars in the process. Gold coin is different. It requires money itself to extract, refine and mint. Thus, the money supply remains generally stable.
Funny as it may be, this is the same kind of argument FDR made for stealing people’s gold back in the 1930s because he said those who were “hording gold” were hurting the economy.
The truth is that it’s a totally absurd argument. Think about it. If I held all the gold that is dug up out of the ground, then the market is going to create a demand for a different precious metal and the value of my gold will plummet since no one uses gold, and instead use silver or whatever else. Also, I would have to find some thing worth value to keep selling beside gold to purchase up more every time it gets dug out of the ground. Besides the impossibility of achieving this(without the use of government force), it would never be maintainable.
When people have liberty, no one can stop them from accomplishing their wishes. Not even if someone held all the gold in the world.
Also, for me to even obtain that much of the gold in a society where justice prevails would require that I do every single service imaginable cheaper then everyone else and provide every single good in society cheaper then everyone else. No human being can possibly do this.
To be more specific about what a gold standard is, one needs to understand a little bit about the history involved. The whole purpose of the government having mints to mint gold, silver, copper, and nickel coin was so that the government had an internationally acceptable means to pay for things needed for securing justice for it’s citizens, such as court houses. Also, in the case of lawsuits there needed to be a standard means that was acceptable for making restitution to the victim in a case of injustice. Minted coin was the tool for recompensing injustice. So if someone damaged your property and you took them to court and won restitution, they had to make restitution in minted coin.
This had NOTHING to do with whatever people chose to use for exchange. People chose to use this and to use the weights and balance measurements of the govt so they had a consistent means of ensuring just compensation for their goods or services. They didn’t have to. It was voluntary. They would take their raw precious metal to the nearest US mint and exchange it for minted coinage minus the fee for the service. They would do likewise with their scales and balances. The only enforceable requirement for ‘legal tender’ was upon the government and upon the aggressor of a crime. That’s what legal tender means. It is ‘tender’ or money used in ‘legal’ issues.
I didn’t ask these questions as an argument per se, after all there are more important issues. I was just wondering what kind of answers i would get. Well, If FDR stole people’s gold then what’s to stop anyone else from doing it again?
I know what you mean but, I don’t think anyone will just sit on all the stockpiles of gold. I asked the questions as if we where to adopt the gold standard today and in the worst case scenario. hey could circulate the gold backed greenbacks indiscriminately or Issue Currency that is not backed by gold or whatever when they say it was
That’s true for a value producing Citizen, but not for a power hungry politician, bureaucrat, big business and Institutions like the FED.
I get it, hence the name: gold standard.
Didn’t know that. You learn something new everyday
I personally like the hours unit like they use in Ithaca, NY
found here. Money that is based on labor, I think is better
then fiat and precious metals combined.
Economics for Real People responds with:
The attempt to use labor as the common unit of value, as
did Marx and the British classical economists, doesn’t succeed.
The cost of Rich’s labor is his subjective evaluation of what he
had to give up in order to perform the work in question. The
value to Helena of Rich’s labor is her subjective valuation of
the fruits of his efforts. To attempt to calculate profit and loss
in terms of the ticking of a clock or the expenditure of energy
is to miss entirely the economic aspect of what is occurring.
I am very confused about the question of where the gold is for small investors. I am finding it very difficult to find any bullion coins any more. Why would that be? With this very strained economy the demand is huge. Where is the supply? Why are the mints pumping out coins as fast as they can? Why aren’t new mints opening? Is it government action behind the disappearance of coins? Are owners of coins hoarding what they have? Is the supply from mines too unstable? Is Comex delivering?
And what about the price? Around $800 today in the face of low supply (at least of coins and small bars) and high demand. What accounts for that? How can even “the Cartel” knock the price down like that in these conditions. I really don’t get it. Any good explanations here?