Hey Robert, thank you for this wonderful article. It helped me understand several things, mainly why the US gov't is supporting Ukraine that much. Thanks.
Great write up, Robert. Thank you. I wonder what your estimation is of a "basket of commodities" currency. Like, say, gold silver wheat and corn. Might it be more solid than gold alone?
Hi Erin, good question. F.A. Hayek proposed such a system in his book titled, "Denationalisation of Money" which I highly recommend reading. He goes through the idea of privately issued currencies which are backed by the basket of commodities. There are some difficulties around that system including the fact that the issuing body would need to actually own either the commodities physically or through futures contracts. You can see how this gets difficult with non-durable goods such as corn and wheat. This is why I think precious metals are the most qualified for being money, but I most certainly see the validity and value of a commodities backed currency especially with the current environment around food stability etc. I general I think it is a good idea, and would have to be executed in a way which would make sense and be stable for the long term.
I'll have to find the book, thanks. I am not so much concerned about denationalizing money, as fraud-proofing it. Seems money in both public and private hands are too much temptation to devalue "in a pinch." Some have suggested money ought to be a public utility, but I have no idea if that is good advice, and what would be the pros and cons. But a basket of commodities seems like a step in the right direction. Grain lasts a very long time. But it could be palladium, whatever. :-)
Erin, I have to comment that the purpose of Hayek's book is just that: to prevent devaluation of the money. He claims that governments are inherently inflationary and have been for all of history. The main argument he makes is that the only way to maintain the value of money is to have private entities create money in a competitive environment where the prospect of loosing market share would incentivize them to create a stable money. If it is fraud for private individuals to print money in their basements, then what makes it different when the government does it? This is why money, just like any good such as shoes, should be made in the private market, and not by government where it is affected by politics. Hayek argues that a basket of commodities would work, but the point is that it would work specifically in the private sector. I highly recommend reading it. Here is a free copy. https://cdn.mises.org/Denationalisation%20of%20Money%20The%20Argument%20Refined_5.pdf
Hey Robert, thank you for this wonderful article. It helped me understand several things, mainly why the US gov't is supporting Ukraine that much. Thanks.
Please feel free to share thoughts here
Great write up, Robert. Thank you. I wonder what your estimation is of a "basket of commodities" currency. Like, say, gold silver wheat and corn. Might it be more solid than gold alone?
Hi Erin, good question. F.A. Hayek proposed such a system in his book titled, "Denationalisation of Money" which I highly recommend reading. He goes through the idea of privately issued currencies which are backed by the basket of commodities. There are some difficulties around that system including the fact that the issuing body would need to actually own either the commodities physically or through futures contracts. You can see how this gets difficult with non-durable goods such as corn and wheat. This is why I think precious metals are the most qualified for being money, but I most certainly see the validity and value of a commodities backed currency especially with the current environment around food stability etc. I general I think it is a good idea, and would have to be executed in a way which would make sense and be stable for the long term.
I'll have to find the book, thanks. I am not so much concerned about denationalizing money, as fraud-proofing it. Seems money in both public and private hands are too much temptation to devalue "in a pinch." Some have suggested money ought to be a public utility, but I have no idea if that is good advice, and what would be the pros and cons. But a basket of commodities seems like a step in the right direction. Grain lasts a very long time. But it could be palladium, whatever. :-)
Erin, I have to comment that the purpose of Hayek's book is just that: to prevent devaluation of the money. He claims that governments are inherently inflationary and have been for all of history. The main argument he makes is that the only way to maintain the value of money is to have private entities create money in a competitive environment where the prospect of loosing market share would incentivize them to create a stable money. If it is fraud for private individuals to print money in their basements, then what makes it different when the government does it? This is why money, just like any good such as shoes, should be made in the private market, and not by government where it is affected by politics. Hayek argues that a basket of commodities would work, but the point is that it would work specifically in the private sector. I highly recommend reading it. Here is a free copy. https://cdn.mises.org/Denationalisation%20of%20Money%20The%20Argument%20Refined_5.pdf