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Author Topic: Re: Competetive currencies: gold vs contract law  (Read 7465 times)

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Alex Libman 14

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Re: Competetive currencies: gold vs contract law
« on: June 19, 2009, 06:17:27 PM »

I'm still pissed off about this.  GOLD is a four-letter word that makes a lot of libertarians look stupid when they overuse it!

Imagine you have a choice of two currencies backed by two banks:


  • The first is backed by gold, which means it gets at least around 2% inflation per year as more gold is produced, which is ever more as mining technology improves - maybe 5% if they find a way to extract gold from the oceans (where a huge amount of it exists at low concentrations), maybe 100% or more as asteroid mining becomes viable - you just don't know.  Nanotechnology advances will also lead to gold being less useful in manufacturing, thus also reducing the demand.  Etc.

  • The second bank issues currency backed by contractual obligation, which in turn is backed by people who are the stakeholders in those contracts: bank executives / employees, stockholders, currency subscribers, etc.  Those can number in millions, even billions of people!  The printing press (or whatever other mechanism that can be used to inflate the supply of that currency) would have to be protected through "open source security" - anyone who's concerned can audit it at any time.  If that process is breached the multi-billion-dollar bank that's issuing this currency would go kabluey, as would its stakeholders' savings, so it is in their interest to do everything possible to prevent that from happening.  Competition will provide market pressure for ever-more-convincing ways for a bank to prove that nothing can possibly go wrong.  Heck, all company employees may be required to carry grenade launchers and fire at anyone who even looks at the printing press funny.  You get the idea.

Which bank would you trust?
« Last Edit: June 19, 2009, 08:10:34 PM by Alex Libman 2012 »
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digitalfour

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Re: Competetive currencies: gold vs contract law
« Reply #1 on: June 19, 2009, 06:24:01 PM »

Why would it just be gold?
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Alex Libman 14

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Re: Competetive currencies: gold vs contract law
« Reply #2 on: June 19, 2009, 06:41:47 PM »

I've explained why - because the gold supply inflates at significant and potentially devastating rates as new gold is brought into the human economy.  The human civilization has barely scratched the surface of the earth.  And plus there's gold in them thar oceans!  And asteroids.  Etc.  Potentially millions of times more gold than there is in circulation today!  On a long-enough time-line, the price of gold is dropping toward the price of copper!

But a legal agreement is a legal agreement, it doesn't inflate unless someone breaks it, and it's easy enough to monitor the mechanisms of currency issuance so as to prevent that.  Given enough eyeballs, all bugs are shallow!
« Last Edit: June 19, 2009, 06:44:48 PM by Alex Libman 2012 »
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digitalfour

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Re: Competetive currencies: gold vs contract law
« Reply #3 on: June 19, 2009, 06:56:22 PM »

Why would gold be the only precious metal used at once?
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Alex Libman 14

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Re: Competetive currencies: gold vs contract law
« Reply #4 on: June 19, 2009, 07:56:17 PM »

Hmmm, let's see how many times each metal is mentioned on this BBS:

Code: [Select]
#!/usr/bin/python


import urllib
import httplib
import re


def GetGoogleHitCount (Keyword, Site = ''):
Headers = {'User-Agent' : 'Mozilla/4.0 (compatible; MSIE 5.5; Windows NT'}
GetPath = '/search?q=' + Keyword
if Site: GetPath += '+site:' + Site
Conn = httplib.HTTPConnection ('www.google.com')
Conn.request ('GET', GetPath, {}, Headers)
Resp = Conn.getresponse()
if Resp.status != 200: return 'ERROR: %s %s' % (str(Resp.status), str(Resp.reason))
HTML  = Resp.read()
HTML = HTML.decode ('ascii', 'ignore')
Matches = re.search ('Results .* about <b>(.*)</b> from', HTML)
if Matches and len (Matches.groups()) > 0: Count = Matches.groups()[0]
else: Count = '0'
FormatStr = '[url=http://en.wikipedia.org/wiki/%s]%s[/url] [url=http://www.google.com%s]x%s[/url],'
return FormatStr % (Keyword, Keyword, GetPath, Count)


AllMetals = [
'Gold', 'Actinium', 'Aluminium', 'Americium', 'Barium', 'Berkelium',
'Beryllium', 'Bismuth', 'Bohrium,', 'Cadmium', 'Caesium', 'Calcium',
'Californium', 'Cerium', 'Chromium', 'Cobalt', 'Copper', 'Curium',
'Darmstadtium', 'Dubnium', 'Dysprosium', 'Einsteinium', 'Erbium',
'Europium', 'Fermium', 'Francium', 'Gadolinium', 'Gallium',
'Hafnium', 'Hassium', 'Holmium', 'Indium', 'Iridium', 'Iron',
'Lanthanum', 'Lawrencium', 'Lead', 'Lithium', 'Lutetium', 'Magnesium',
'Manganese', 'Meitnerium,', 'Mendelevium', 'Mercury', 'Molybdenum',
'Neodymium', 'Neptunium', 'Nickel', 'Niobium', 'Nobelium', 'Osmium',
'Palladium', 'Platinum', 'Plutonium', 'Potassium', 'Praseodymium',
'Promethium', 'Protactinium', 'Radium', 'Rhenium', 'Rhodium',
'Roentgenium', 'Rubidium', 'Ruthenium', 'Rutherfordium', 'Samarium',
'Scandium', 'Seaborgium', 'Silver', 'Sodium', 'Strontium', 'Tantalum',
'Technetium', 'Terbium', 'Thallium', 'Thorium', 'Thulium', 'Tin',
'Titanium', 'Tungsten', 'Ununbium', 'Ununhexium', 'Ununpentium',
'Ununquadium', 'Ununtrium', 'Uranium', 'Vanadium', 'Ytterbium',
'Yttrium', 'Zinc', 'Zirconium'
]

for Metal in AllMetals:
print GetGoogleHitCount (Metal, 'bbs.freetalklive.com')


The results, sorted first by hit count and then alphabetically (the word hyperlinks to Wikipedia, the number to Google resupts):

    Platinum x1,670, Gold x1,260, Silver x565, Lead x544, Copper x438, Tin x422, Mercury x373, Uranium x319, Iron x303, Zinc x262, Nickel x175, Sodium x137, Calcium x122, Titanium x103, Plutonium x85, Cobalt x81, Lithium x64, Potassium x62, Palladium x40, Barium x33, Magnesium x32, Actinium x0, Aluminium x0, Americium x0, Berkelium x0, Beryllium x0, Bismuth x0, Bohrium, x0, Cadmium x0, Caesium x0, Californium x0, Cerium x0, Chromium x0, Curium x0, Darmstadtium x0, Dubnium x0, Dysprosium x0, Einsteinium x0, Erbium x0, Europium x0, Fermium x0, Francium x0, Gadolinium x0, Gallium x0, Hafnium x0, Hassium x0, Holmium x0, Indium x0, Iridium x0, Lanthanum x0, Lawrencium x0, Lutetium x0, Manganese x0, Meitnerium, x0, Mendelevium x0, Molybdenum x0, Neodymium x0, Neptunium x0, Niobium x0, Nobelium x0, Osmium x0, Praseodymium x0, Promethium x0, Protactinium x0, Radium x0, Rhenium x0, Rhodium x0, Roentgenium x0, Rubidium x0, Ruthenium x0, Rutherfordium x0, Samarium x0, Scandium x0, Seaborgium x0, Strontium x0, Tantalum x0, Technetium x0, Terbium x0, Thallium x0, Thorium x0, Thulium x0, Tungsten x0, Ununbium x0, Ununhexium x0, Ununpentium x0, Ununquadium x0, Ununtrium x0, Vanadium x0, Ytterbium x0, Yttrium x0, and Zirconium x0.

Hmm, that's weird, Google is probably refusing to dig for gold as hard as it digs for platinum, but I think it's accurate about other metals not being mentioned here very often.

Anyway, the point is - why focus on "gold", just focus on "currency competition".
« Last Edit: June 19, 2009, 08:07:24 PM by Alex Libman 2012 »
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BobRobertson

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Re: Competetive currencies: gold vs contract law
« Reply #5 on: June 20, 2009, 01:25:16 PM »

The problem here is the lack of imagination.

It doesn't have to be gold. It's very good if it's not just gold. That's why people with a clue talk about a commodity standard, not a gold standard.

"Gold standard" is simply a short-hand phrase, in place of the much longer phrase "Generally accepted commodity standard".
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"I regret that I am now to die in the belief that the useless sacrifice of themselves by the generation of 1776 to acquire self-government and happiness to their country is to be thrown away by the unwise and unworthy passions of their sons, and that my only consolation is to be that I live not to weep over it."
-- Thomas Jefferson, April 26th 1820

theodorelogan

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Re: Competetive currencies: gold vs contract law
« Reply #6 on: June 20, 2009, 04:22:35 PM »

Point of clarification:

There will of course be gold inflation.  However, the price of gold relative to other goods and services typically increases, since the amount of gold added to circulation each year is typically of less value than the value of the increased production of the world in a year.  Which is why it's value is, over long periods of time, so stable.

I'm assuming that you aren't suggesting that gold's value would decrease by 2% per year...as this would suggest that gold will lose 87% of it's value over the course of 100 years.  Looking back through history, I can't find an example of a 100 year period in which gold's value declined by anything near that.

Have you ever notices how fiat monies on any sort of wide scale always need to be enforced via legal tender laws?  Why do you think that is Alex?

Backed by contractual obligations=backed by nothing=fiat money.
« Last Edit: June 20, 2009, 04:34:09 PM by theodorelogan »
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BobRobertson

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Re: Competetive currencies: gold vs contract law
« Reply #7 on: June 21, 2009, 01:27:55 PM »

Point of clarification:

There will of course be gold inflation.

Agreed, the quantity of gold will increase, because it is profitable to mine it.

Also, gold has industrial uses. Gold is great as a plating on electrical contacts, and as radiation shielding.

There has been one historical major gold inflation: Spain in the 1500 and 1600s. So much gold flowed into Spain from central and south America that they suffered all the same economic destruction that inflation always causes. But we now KNOW that that can happen, and knowing it we can ensure that we have diverse investments.

Even gold is not and should not be considered perfect. It's simply one commodity, commonly accepted.
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"I regret that I am now to die in the belief that the useless sacrifice of themselves by the generation of 1776 to acquire self-government and happiness to their country is to be thrown away by the unwise and unworthy passions of their sons, and that my only consolation is to be that I live not to weep over it."
-- Thomas Jefferson, April 26th 1820

atomiccat

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Re: Competetive currencies: gold vs contract law
« Reply #8 on: June 21, 2009, 01:40:34 PM »

the problem with the 2nd bank is that, the auditing thing and letting the government borrow money, if people don't want to loan the government money then maybe it should fail, the best way is let the people decide Get rid of the legal tender laws, maybe 1 bank will make paper money, and not get corrupted, but people can use gold, silver whatever as a secondary or vice verse

Alex Libman 14

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Re: Re: Competetive currencies: gold vs contract law
« Reply #9 on: June 21, 2009, 06:00:25 PM »

[...]  It doesn't have to be gold. It's very good if it's not just gold. That's why people with a clue talk about a commodity standard, not a gold standard.  [...]

I agree, but having one clue does not make one immune from still being wrong.  The capacity to enforce a contract can be as good as a commodity, but the free market will of course be the ultimate judge.


There will of course be gold inflation.  However, the price of gold relative to other goods and services typically increases, since the amount of gold added to circulation each year is typically of less value than the value of the increased production of the world in a year.  Which is why it's value is, over long periods of time, so stable.

The rate of new commodity production is unpredictable for the long-term, but human ingenuity is likely to accelerate, especially as space becomes more accessible.  It's kind of like saying that "computing power hasn't increased much in the first millennium AD so it probably won't increase much in the second"!


I'm assuming that you aren't suggesting that gold's value would decrease by 2% per year...as this would suggest that gold will lose 87% of it's value over the course of 100 years.  Looking back through history, I can't find an example of a 100 year period in which gold's value declined by anything near that.

No, I've said that the gold supply increases by around that rate, sometimes more, sometimes less.  Demand has been increasing too, but much of that has to do with political and cultural biases, including all the fair-weather libertarians exploiting your otherwise-rational anti-government feelings to sell you their shiny metal at a profit.


Have you ever notices how fiat monies on any sort of wide scale always need to be enforced via legal tender laws?  Why do you think that is Alex?

Um, because there has never been an Anarcho-Capitalist society before?  Government force has always won out because individual property owners were not able to defend themselves due to ignorance, but that can change in the future, which is what the libertarian movement is all about.  Have you noticed how there were no airplanes before the Wright brothers got the design right?  That didn't mean airplanes were a bad idea in theory, their time just simply didn't come yet.


Backed by contractual obligations=backed by nothing=fiat money.

No, backed by contractual obligations = backed by a billion (possibly trillions) dollar corporation, with millions (possibly billions) of stakeholders.  That'll buy you a lot of guns to shoot contract violators with!
« Last Edit: June 21, 2009, 06:04:25 PM by Alex Libman 2012 »
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BobRobertson

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Re: Re: Competetive currencies: gold vs contract law
« Reply #10 on: June 21, 2009, 06:12:06 PM »

The capacity to enforce a contract can be as good as a commodity, but the free market will of course be the ultimate judge.

Certainly, people buy and sell judgements, liens and awards every day. Back to Anarchic Iceland, a weak person who won a judgement against a strong one could sell that judgement to someone who was strong enough to collect it.

For that matter, collection agencies make profits from performing exactly that service.

Yet people also use commodity currencies, shares of stock, and other mediums of trade.

So the one and only thing we all agree on is to repeal Legal Tender laws. That way, the free market can be the judge.
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"I regret that I am now to die in the belief that the useless sacrifice of themselves by the generation of 1776 to acquire self-government and happiness to their country is to be thrown away by the unwise and unworthy passions of their sons, and that my only consolation is to be that I live not to weep over it."
-- Thomas Jefferson, April 26th 1820

theodorelogan

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Re: Competetive currencies: gold vs contract law
« Reply #11 on: June 21, 2009, 11:50:06 PM »

Quote
I agree, but having one clue does not make one immune from still being wrong.  The capacity to enforce a contract can be as good as a commodity, but the free market will of course be the ultimate judge.

No it can't, because it is not

Fungible (different contracts will have different costs)
Divisible
Durable (what happens when the person or organization contracted to enforce it ceases to exist?)
Rare (relatively speaking)

These are qualities that a money must have in order to be widely accepted.  Gold has these qualities to an exceptional degree, which is why it is so highly regarded as a money.  Your ephemeral "contractual obligations" have none of these.  Your "contractual obligations" don't even exist.  I may as well issue a money backed by "honor" or "wisdom".
« Last Edit: June 21, 2009, 11:52:33 PM by theodorelogan »
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Alex Libman 14

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Re: Re: Competetive currencies: gold vs contract law
« Reply #12 on: June 22, 2009, 01:26:18 AM »

Ignorance and repetition - a winning combination.
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theodorelogan

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Re: Competetive currencies: gold vs contract law
« Reply #13 on: June 22, 2009, 02:57:49 PM »

I hope you have better answers for the people you try to sell your paper to than you've given in this thread.
« Last Edit: June 22, 2009, 07:19:40 PM by theodorelogan »
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Alex Libman 14

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Re: Re: Competetive currencies: gold vs contract law
« Reply #14 on: June 27, 2009, 04:27:39 PM »

They'll ask better questions, like the specific means by which the contracts are to be enforced, risk management studies, and so on.
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