The God of the Machine - Tranche 38

Posted by mshupe 8 months, 2 weeks ago to Economics
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Chapter XVIII, Excerpt 2 of 3
Why Real Money is Indispensable

The government never owned any gold; but was permitted to hold it until called for. The government has no assets with which to meet its debts; government property would not bring much even if it were sold because it is non-productive; and besides, the creditor has no recourse in law. The contingency of the suspension of gold payments is unavoidable as long as governments are permitted to issue paper currency and borrow money. These are intrinsically dangerous powers.

Even in Russia, at the time the Communists said gold was merely a convention, they took care to seize gold, nevertheless. The modern despots do not wish to be poor themselves. They wish to grab every luxury and industrial economy can supply. What they want is to keep the producers poor. Aside from the immediate loss, the worker is deprived of a repository of value if it is in depreciable paper currency. Real money is the only means by which the worker can have any independence.

In a free enterprise economy, the products first put on the market as luxuries tend to come within reach of everyone and are then regarded as necessities. Wealthy purchasers paid for the period of experiment, first putting up the capital (sunk without return) and buying. Private fortunes, which must be invested, means increased production. The manufacturer raised wages voluntarily. In such a sequence, would any government have had the same inducement?


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  • Posted by VetteGuy 8 months, 2 weeks ago
    Hi mshupe.

    I'm still here and following. I just can't think of anything to add to this one. IP (and you) covered it pretty well.

    By the way, thanks for leading this discussion. It's been interesting and very revealing to learn how long some of this stuff has been going on.
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    • Posted by 8 months, 2 weeks ago
      Thank you for the acknowledgement! To me, this discussion may be the most useful series of posts ever on this forum. I've been a member since the beginning, but not a frequent contributor. The success of this series is the continued interest and participation of you and a handful of others. Of course, credit goes to Ms. Paterson. This is an amazing book of economics, philosophy, and historical perspective. For me, it's be a real fun challenge to try to essentialize each chapter.
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  • Posted by 8 months, 2 weeks ago
    Counterfeit currency and government debt are the natural consequence of the removal of gold-backed currency.

    2. The hoarding of wealth by force is the natural consequence of the removal of gold-backed currency.

    3. Mass prosperity is the natural consequence of private fortune's wealth by trade which is the natural consequence of gold-backed currency.
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