> Hah! Money is no longer on the gold standard and is completely and > totally a social contract dependent on the whims of societies and > markets and the fiat of governments.
Yup. And, if you looked at gold, it has bounced up and down, like all the other commodities. In 2008 dollars here are some sample values, which indicate the volatility 1977 368 1981 1600 2001 342 early July, 2008 970 now 780 Can you imagine the deflationary/inflationary rollercoaster we'd be on if we were on the gold standard. And, if you look at all the gold in the world, in 2001 the amount of money in the US alone (M2) was about 5 trillion. With a total world supply of 142,000 metric tons, that translated into slightly less than 900 billion worth of money in 2001..in the whole world. Assuming that the US has 25% of the money as well as 25% of the GDP, we'd be talking about reducing the amount of money more than 20-fold from what it was. And, I know you recall that 2001 was near the middle of a low inflation span of almost 20 years. So, clearly the gold standard would have required tremendous deflation, which historically has been tied to depressions (e.g. Freeman's arguments). Even the most stringent Kensyian would cringe at the effects of that type of deflation. Libertarians pretend that all would be well when money under the mattress is the best investment. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
