diametrics

[jonathankaplan]

in thinking about all the recent events politically in the US, in some sense, it comes down to two different themes. Centralism v. Federalism. ,Monetarists v. "Keynesians. So, on the second of those two themes, I was just curious where you all fall, simplistically.
Here's an easy poll.

Poll Monetarism v. Keynesians.

Comments appreciated.

Comments

[jonathankaplan]

when I look up "currency" HERE, I don't know that I have said anything wrong, in fact, it looks to me like gold might have a much longer and deeper definition as currency than anything else the world has endured.

Perhaps there are few individuals who managed to own gold from the time Nixon closed the gold window until now, but then again, I am sure there are some family, religious, and other types of trust funds that did it for sure. You aren't willing to say that the Ford Foundation has had a time in that 40 years when they didn't own some gold, in some form?

I don't disagree with anything else you say, actually. I dont say that gold shouldnt change in value, perhaps i am not a classical monetarist then. I DO say that currency, if it wants to be a more stable form of currency/exchange, should have more of a backing than just words from far away, that the medium of exchange should be connected in some way to something difficult to produce, limited in supply, and of value to many people. At the moment, and throughout history, that something has traditionally be gold. I think free-floating our currency is a problem now.
But then I also see it is true, if we had remained on a gold standard all the way back to when it mattered, FDR's time (cause Nixon's closing the gold window was aftermath), anyway, if we had kept our currency tied more directly to gold like the gold certificates from before FDR, then our economy would have grown MUCH MUCH slower, with much less of all the positives we accrued during that long period, particularly after the credit boom you reference. So now, we are going to have to pay for all that growth, imo, instead of having a much lesser percentage of it in the first place.
You talk directly about the issue, 2.5 cents "backing" to each current USD? That IS absurd. But that same USD, only 100 years ago however, was backed with approx. 1/20 an ounce of gold. Would we better or worse off if we had left it that way? I don't know, probably there would be far less consumables, the economy would be much smaller, many lives would be much different.
And I wouldnt know how to tie the USD to something tangible at this point, it is too late to try.
One thing I am saying. I would rather own precious metals (that have millenia of being useful currency) than pieces of paper that really only have a few centuries. And that is a different question than I originally posed.
Thanks, as always.

[prock]

"I DO say that currency, if it wants to be a more stable form of currency/exchange, should have more of a backing than just words from far away"

Given that value is subjective, fashion is whimsy, and needs are changing, stability will always be ephemeral. Sure you could back a dollar with a dollar's worth of gold. But what backs the gold? What guarantees that gold will remain stable and will neither become so scarce as to make backing impossible (as it has), or become so plentiful that it's value drops to less than water (all we need is a modern midas to perfect fusion).

In the end it doesn't matter if a currency is backed. It's just turtles all the way down.

"One thing I am saying. I would rather own precious metals (that have millenia of being useful currency) than pieces of paper that really only have a few centuries. And that is a different question than I originally posed."

True enough. That is not a monetarist position at all. In fact, it shows a rational distrust of the premise that currencies should be stable over the long term.