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Rather than refuting all of the points above, I'd like to take the discussion in a different direction. You are against allowing people to use gold as money. I

Rather than refuting all of the points above, I'd like to take the discussion in a different direction. You are against allowing people to use gold as money. Is it because you are trying to save people from themselves? Perhaps it's because you are concerned about what it might do to the dollar. If that's your concern, is that not an admission that the dollar is fragile? Is it wise to run the economy with the Federal Reserve as a single point of failure? We are suffering greatly from the failures of the Federal Reserve now. They will make mistakes in the future. Edit because site will not let me comment on reply below: The Federal Reserve failed us by stoking the housing boom with low interest rates. The subsequent bust has caused many people to suffer through lost jobs, lost homes and ruined credit ratings. The Federal Reserve is a single point of failure because it controls the one currency that we are forced to use under the boot of the government. Because the dollar is used as the world's reserve currency, the Federal Reserve is in some sense a single point of failure for the entire world economy.

eftpotrm 15y ago
That's a straw man version of my argument. My concern is that the observed history shows that commodity-backed currencies lead to economic problems. I'm not in the least against people choosing to operate their personal economies around barter based on commodities, but the data is clear; it's not good for any of us to use commodities as the primary means of store and exchange of value. Just as the invention of the limited company allowed entrepreneurs to start companies that benefit us all at less risk to themselves, fiat currency's greater flexibility allows us to better control both the money supply and inflation to our collective benefit. Besides, calling the Federal Reserve a single point of failure is at best over-dramatic. Should we also have a free market in governments? It's not really a single point of failure by any realistic definition though. The world economy is significantly interlinked and managed by the co-ordinated action of several central banks. The dollar's value is as much backed by its use as the primary international trading currency as anything, so short of Ron Paul's proposed disowning of the dollar its value is guaranteed by a large network of individual actors, all of whom have sufficient dollar holdings that they have no interest in seeing its value collapse; while it retains its status as the only payment means for the world's single largest economy, it's fine. I'm curious what mistakes you think the Federal Reserve is making now that are causing you to suffer greatly. Inflation? Low, and (while it remains low and somewhat controlled) A Good Thing as I said before. General economic malaise? No, the FR's action on quantitative easing ensured any degree of market liquidity remained in a situation where it would otherwise have dried up almost entirely through fear of unknown and unknwable liabilities. Why would the ideal remedy to a crisis caused significantly by a loss of market liquidity be to move to a medium of exchange with little or no liquidity and what there was being outside of your control? It's madness.

eftpotrm 15y ago

That's a straw man version of my argument. My concern is that the observed history shows that commodity-backed currencies lead to economic problems. I'm not in the least against people choosing to operate their personal economies around barter based on commodities, but the data is clear; it's not good for any of us to use commodities as the primary means of store and exchange of value. Just as the invention of the limited company allowed entrepreneurs to start companies that benefit us all at less risk to themselves, fiat currency's greater flexibility allows us to better control both the money supply and inflation to our collective benefit. Besides, calling the Federal Reserve a single point of failure is at best over-dramatic. Should we also have a free market in governments? It's not really a single point of failure by any realistic definition though. The world economy is significantly interlinked and managed by the co-ordinated action of several central banks. The dollar's value is as much backed by its use as the primary international trading currency as anything, so short of Ron Paul's proposed disowning of the dollar its value is guaranteed by a large network of individual actors, all of whom have sufficient dollar holdings that they have no interest in seeing its value collapse; while it retains its status as the only payment means for the world's single largest economy, it's fine. I'm curious what mistakes you think the Federal Reserve is making now that are causing you to suffer greatly. Inflation? Low, and (while it remains low and somewhat controlled) A Good Thing as I said before. General economic malaise? No, the FR's action on quantitative easing ensured any degree of market liquidity remained in a situation where it would otherwise have dried up almost entirely through fear of unknown and unknwable liabilities. Why would the ideal remedy to a crisis caused significantly by a loss of market liquidity be to move to a medium of exchange with little or no liquidity and what there was being outside of your control? It's madness.