Hugo Chavez, cryptocapitalist

[maradydd]

I am not the world's biggest fan of Hugo Chavez, but sometimes, the dude comes up with some really good ideas. I don't agree with his blanket-condemnation sentiments about capitalism -- they make more sense interpreted as a slam against mercantilism, the belief that a nation's power depends on its supply of capital -- but bartering goods and

Comments

[maradydd]

Note that I'm in no way advocating a complete return to the barter system, or (as nibor thought) getting rid of the notion of money. Having a consistent form of value as a medium of exchange is the greatest thing that's ever happened to civilisation; throwing that out the window would set us back thousands of years, quite literally.

My objection, as I said above, is to fiat currency -- a medium of exchange that can be debased by the actions of one man, in the system we have right now. The Fed has injected over $64 billion into the US money supply over the last couple of months, which means that the money in your bank account right now is worth that much less than it was three months ago. If the Fed continues to expand the money supply in response to the enormous amount of bad debt generated by the subprime mortgage fiasco, the money you have will continue to be worth less and less. Did the value of the work you did three months ago somehow become less? In terms of absolute value, of course not, but in terms of the medium of exchange we're using, it has, and I don't like that.

I wish I had a good answer to the question of "well, what should money be based on?" It's something I've been wrestling with for about ten years now. Standardising on a particular commodity, such as gold, is tantamount to superstition -- the blind belief that the supply of that commodity will never change. But fiat currency is just as superstitious, and more dangerously so, because its valuation is far more subject to arbitrary change, and the effects of that change are just as far-reaching, and nobody seems to be paying attention.

Our legal system is founded on the principle of checks and balances for the purpose of stability. I've been giving a lot of thought to whether a monetary system could be founded on a similar principle, but I haven't come up with anything I find acceptable yet.

[songblaze]

...er, well, yes, but at the moment I have a lot more debt than anything else, so really for the next couple of years reducing the value of a dollar is better for me, sadly. By the time I've got my law degree, I'll be (at a rough estimate) in the neighborhood of $140k in the hole. As long as entry-level positions in the law field keep pace with the devaluation, I'll be in a better position (though I'm rather chagrinned to look at it this way).

On a grander scheme, I agree, it is a dreadful thing that the way things are set up allows the government to use irresponsible means to bail folks out, especially when their suffering is a result of their own predatory business practices. I know that the result would likely be somewhat catastrophic, but there is some part of me that says 'they took advantage of people's naivite, the lending market is responsible for a lot of people overbuying and losing their homes when their higher payments came due and ruining the credit of lots of people...why /shouldn't/ the people who engineered this crisis pay for it?

I know, it's impractical and would have far-reaching, devastating effects, but...I'd like a little bit of responsibility injected here. The companies that caused this crisis should pay for it, not the world as a whole (because, after all, the US dollar is one of the most widely traded currencies, so if you devalue it you're hurting a lot more than the US, as you noted in your comments about the European injection of 'new' money).

But let's face it, the US is not a country of corporate responsibility, much as some of us would like it to be.

It seems sadly unusual to me that the general public is paying for a failed attempt by large businesses to make more money.

~Blaze