Hi Robert,
> What both Jim and you seem to ignore in the argument is the fact that the > Caliphate flourished not only because(or in your case, despite) of > Gold/Silver currency, but because of (1) NO INTEREST OF ANY KIND OR FORM > and (2) low taxes, if any. Well, interestingly Jim first brought up the examples of Byzantine and Italian Renaissance, so I have not been talking about Caliphate. After I pointed out that Byzantine was mostly a rather lousy time of economic decline for everybody except the king and the church, and that the Italian Renaissance blossomed on debt and bills of exchange instead of 'gold only', Byzantine and Italian Renaissance are convenienttly forgotten and now we find ourselves discussing the Caliphate as example of a great properous culture based on gold only. I guess had the great Roman Empire and Italian Renaissance been built on 'gold only', Jim and a few others would be raving about it. Quite amusing. Obviously none of us lived in this period, so we are all relying on what we find in the history books. I will just throw in some observations, which as far as I know are sufficiently documented. 1) In the Roman Empire a slave could accumulate enough money to buy himself free. In the Byzantine Empire many free people could not earn enough gold to pay their taxes and were forced to abandon their land and work on the big estates of the king or church, becoming de facto slaves. Guess in which empire it was better to live. Before you put all the blame on the taxes, let me point out that there were taxes in Roma too. 2) Europe defeated these caliphs as soon as it abandoned the 'gold only' system inspired by the results in renaissance Italy 3) The islamic countries who have more or less continued the system based on these rules of the Caliphate, have all remained very poor, except for those countries who were lucky enough to find oil on their territory. And even in these islamic countries with oil, 95% of the population is still poor despite a continuous influx of wealth from abroad. What to say about the Caliphate? I really don't know much about it. That period seems to have been so culturally interesting that it was barely mentioned in the history lessons. Your point about "no interest of any kind or form" seems to me a logical extension of their "no debt / borrowing" principle. How there can be any interest if there is no borrowing? > Your argument that people would hoard gold gets somewhat weak when there > is no benefit from doing so. Stagnant prices would lead to people > investing their gold into items and venture that generate revenue, such as > rent, trade and manufacturing. The economy would thrive on the simple > concept that hoarding money in any form brings no revenue, while investing > does. You seem to assume that investing is always profitable. What you say is true as long as the economy is expanding and investments are likely to be profitable. Then it will indeed be wiser to invest the gold in some business. And in that case the gold will keep floating through the economy. But , in those days major innovations did not come along every year. Also population was not always going up. When a town had all the shops and businesses of these days, there was little or no opportunity for extra investment that would be profitable. The existing businesses made money, and just saved gold if possible so they could restart the business in case of calamity. While the existing businesses (and the king) were saving their nest-egg, obviously less gold was available circulating in the economy causing it to stagnate. The problem solved itself when war came along and forced the king to use some of his gold to pay the soldiers, while also the businesses had to take out their savings to rebuild the shop. At that moment the stored up liquidity was released and you got a new period of economic expansion till the economy ran dry on cash again... It was a continuous cycle: war(destruction) - rebuilding (investment - growth) - saving (stagnation - decline) - war ... In current days there are arguably more investment opportunities, but still it is possible that on a given moment little or no profitable investment opportunities are there and it is wiser to stick to the gold inorder not to loose. In that case hoarding gold is beneficial compared to loosing money in improfitable ventures. That's when the liquidity problems will occur, during an economic downturn. If you don't believe that an economy using a fixed amount of money tends to run dry very quickly, just try to play the classic monopoly game without adding money on every round. > Where is the free market when a board agrees to pay a CEO more than the > combined profits of his entire tenure? The free market is there because you are not forced to buy stocks in this company. > Where indeed is the free market > when a private institution prints papers (money?) and uses it to buy other > papers (bonds?) and then uses those bonds as backing to print more paper, > while the interest of the bonds can only come from taxation and the only > way to redeem the bonds on maturity is by rolling them over into more > bonds? The free market is there if you are not forced to stay in this currency and not forced to buy these bonds. > While I am not trying to promote Islamic ideals, I am indeed pointing out > what I consider an equitable way for economic activity. The fact that it > is part of the teachings of Islam is merely coincidence. Yeah, but the countries functioning along these Islamic principles have not been that succesful. > Whenever someone gets something for nothing, something is going awfully > wrong. And earning interest is getting something for nothing. The argument > that one is being rewarded for making his money available to others is in > so far nonsense that if he had spent it, it would have benefitted the > economy as a whole. I think borrowing (debt) is not a bad idea. Maybe you are sick and have no money to pay the doctor and also no family to help you out. In our current system you can just take out a little loan against your house and pay back when you are cured, while in the 'no debt, no interest' system you have to sell your house. How wonderful this no debt system.. If person A agrees to loan money to person B at a certain interest rate, then this is a business between them. Where is our laissez-faire gone?? It is funny that Jim is singing praises on the Caliphate system, while that system is about as far away from laissez-faire as you can probably go. Why not emigrate to Iran if this system is so great? And with debt/interest made illegal, what will happen? You will get loan sharks where you can borrow at very high interest rates, just like now you have people making tons of money dealing in illegal drugs. > There is another item to consider about your argument about America being > wealthier in 'real' items than ever before (more houses, more factories, > etc.). I disagree because of two things you did not mention: > > (1) The durability of construction is amongst the lowest ever and the > quality of housing is not much better; point in case, how many of the > buildings constructed 30 years ago are still considered livable and worth > owning? I don't know about the quality of housing there. Never been in the usa, and no plans to go because I consider it a very superficial culture. Here in Europe solid houses are built that will last really long time, so the low quality housing in America is not a result of the fiat money system. A fiat money economy can crank out low quality products just as well as high quality products. I guess it depends what people choose to buy. If they buy only good stuff then only good stuff will be produced. Danny --- You are currently subscribed to e-gold-list as: [EMAIL PROTECTED] To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
