The short answer is whatever the market decides on as the medium of exchange, with absolutely no involvement at all on the part of the government, either State of Federal in "chartering" banks or exchanges, regulating them, etc. Nothing beyond their proper government role of protectors against fraud.

It's been a few years since I've studied the subject intensively, although I have been getting back to it lately. My current thoughts as for what the medium might be, as a producer and consumer, i.e., trader, my preference as expressed in the market would be gold.

I have done some reading in the past, in particular Hayek, on a commodity reserve currency, but I also recall some good arguments against it. Until I refresh my memory, I will reserve judgement. But then as I've said, the market should be the final arbiter.

The same for new ideas like Bitcoin. As a life-long techie, is sounds "cool", but I'd need to study it more before offering an opinion on whether it is a viable "money".

I think you're saying the FOMC is corrupt and even if it weren't it wouldn't be able to manage monetary policy.
Can you point me to a book or website about the first claim (corruption) since the entire explanation probably wouldn't fit here.

Government has convinced the great unwashed that DEFLATION=BAD. Why? Because with deflation, prices and wages go down, roughly commensurate with each other. "What's wrong with that?" You ask. Well, if you're a consumer, nothing at all. If you're a consumer with a few bucks tucked away somewhere, your dollars would buy much more. So that's even better! If, on the other hand, you're a leech sucking the lifeblood out of people and businesses, in other words if you're a government of some description, you may very soon find yourself without a job as significantly less revenue will be generated and it will be exacerbated by our graduated tax structure.
Keep in mind as well, when the Fed reports on inflation, there's a little footnote that's usually said sotto voce that goes, " ex food and energy". So if you're like me, those are your biggest expenses, and anyone who doesn't think that inflation in those two sectors has been anything BUT tame and benign these last 6 or 8 years, hasn't been in a gas station or a grocery store.

"why in the name of reason would you have expected a return to [normalcy], or put another way, a cessation of massive, wasteful deficit spending and a return to any remotely reasonable monetary policy under this Administration and this Fed?"
They briefly stopped the borrowing in the mid 90s, and I hoped something similar would happen.
Regarding rates and inflation, I still do not understand why they're this low.

Once persons have made an emotional commitment to support BO, carbon change alarmism, Keynesian stimulation and multipliers, and do-goodism generally, selecting evidence, and lying to themselves becomes normal.

Not that simple? Apparently you have bribed the wrong people (sold your vote?) and now you are unhappy with the results.

Who is this "they" that you speak of? Who are these benevolent, selfless, all knowing beings with their hands at the controls of the largest economy on the planet with only our nations best interest in mind? Able to outmaneuver the random decisions of millions of people and create policy that is fair and beneficial to all while never allowing the temptation of all that power to influence their decisions?

It's not about whether or not "they" can "tweak" here and "adjust" there and guide the economy in a positive direction. It's about the idea that "guiding" the economy means that "they" know where and how the economy should be going and anybody who disagrees is wrong.It's about a corruptible system that attracts corrupt participants and cannot be expected to benefit anybody except those corrupt participants except by pure coincidence. It's about the fact that someone who defends and promotes a corrupt system and it's participants is trying to profit, himself, from that system and is, therefore, one of those corrupt participants.

This "they" that you speak of are not benevolent angels here to help us. They are the devil and it appears that you are not just "playing" as his advocate.

I've already disagreed about your inflation point, but even if I accepted the other points as "normal", why in the name of reason would you have expected a return to it, or put another way, a cessation of massive, wasteful deficit spending and a return to any remotely reasonable monetary policy under this Administration and this Fed?

In this model, what would people use for a medium of exchange? Maybe they'd use precious metals or some derivative based on hypothetical delivery of a basket of various commodities, maybe metals or other raw materials. It would be a basket of them, so that sudden demand for any one material wouldn't affect prices in unrelated industries.

I obviously can see these comments. All the value of this site is in figuring things is in figuring things out, including things that apparently follow logically but a fallacies or things that are apparent contradictions that can be resolved.

I liked your point that if the economy works around inflation, it could do the same thing with deflation. We need more of that and less of just saying people are wrong without saying why or sometimes even about which claims.

""Aggressively loose monetary policy" is exactly what should be growing the economy, under their theories."
Yes. And it's not happening. As I said, I keep thinking this year we'll return to normalcy. That's been for the past four years.

Seriously? I hadn't noticed... ;-)

Contradictions abound with cg

Unless you left out a few key words, your statement "growing but not that fast given the aggressively loose monetary policy" contradicts pro-inflationary theory itself. "Aggressively loose monetary policy" is exactly what should be growing the economy, under their theories.

Freedom: Took the words...well you know...

Indeed, Z. There really are no valid reasons for inflation, and I was just relaxing and re-reading Mises demolish various classic pro-Inflation theories as I sat waiting in the local DMV. (Where time has its own inflationary meaning: "you'll be waiting about 30 minutes" always turns into 2 hours, and it did...)...

In a truly Capitalist economy, with sound money based in gold, economic theory proves without question, and just plain common sense dictates, that the normal state would be a gently falling price level. Markets for existing goods would be expanding, and new products would be constantly being invented and brought to market. With a fixed or virtually fixed money supply, all prices, including wages would have to fall due to competition. Everyone would know this, and would rationally factor this into their plans and budgets with no problem whatsoever.

Even the pro-Capitalist Monetarist school of Friedman et. al. was wrong in advocating a "gently expanding" money supply, even if politicians and central bankers could be trusted to keep it gentle. In the long run it would have the same negative effects of any inflationary policy, except not as pronounced as a radical inflationist policy

I don't believe it's that simple. They're pushing all the way on the gas and the economy is growing but not that fast given the aggressively loose monetary policy.

I don't see what the problem is here. All you have to do to "return to a stable 3% inflation" is bribe the right people with the enormous amounts of profit you are going to make from it. Of course you have to out bid the last high bidder but that's how the system works with central planning. I can't imagine why you are so amazed that, for some unknown reason, we have managed to "stay in this bizarre zone of tepid expansion and loose monetary policy year after year".
Unless your comment was meant to be as sarcastic as mine.

I remember when I was younger and I visited my sister in Switzerland that she mentioned that some Swiss banks charged you for keeping your money safe and secure...and secret and paid no interest. I did not think of that as a 'negative interest rate' but as a transaction where you paid the bank for aspects of money storage that you were not able to achieve by yourself.

I had assumed that this was a traditional model for people with lots of money that they did not want traced or which they wanted to be 'still there' when they got out of prison/ escaped from the country they were in.

Jan

If you're trading something that does have value, its value may fluctuate unpredictably while you hold it.

The good thing about trading something of intrinsic value is that the fluctuations aren't masterminded by a central bank and the medium of exchange doesn't depreciate by design.

The bad thing is that the intrinsic value is tied up in exchange of other products/service and not being put to use. It's also bad that the fluctuations are unpredictable. Also, when it goes up, it encourages people to hold it even when other means of production are unused because people are holding their money. When it goes down, it encourages people to invest/consume.

The counter-argument to the things on my list of "bad things" is that human-controlled fiat money is subject to human foibles. Even if the humans were paragons of virtue, the argument goes, you still are turning over too much power to them. (There are certainly other counter-arguments I don't know of.)

Theft yes. It allows government to take advantage of the deflated value of money before it hits the consumer. As kh says, its theft.

Indeed!!

A medium of exchange SHOULD have intrinsic value. Why would I want to trade my product for something that has no value? All I can see for 'no intrinsic value money' is ledger entries, keeping score.

Do you actually believe this bullshit, or are you just trying to waste our valuable time, again?

I'll never understand arguments for inflation. I much prefer to see deflation. Costs of goods go down measured in an actual dollar.

GHBS!!!!