Money rules versus Objectivism

Posted by davidmcnab 5 years, 5 months ago to Economics
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Where do today's objectivists stand on the issue of deregulated money systems?

I'm thinking of where communities have the freedom to mint and issue their own currencies with their own rules of initial issue, and set up free exchanges where one currency can be freely converted into others, according to supply and demand.

Governments tend not to like it. But to me, it represents an essential freedom, whereas governmental monopoly on currency issue severely abridges liberty.

Your thoughts?


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  • Posted by woodlema 5 years, 5 months ago
    There needs to be NO regulation at all. that is what the civil courts system is for, dealing with the harm one puts on another by taking advantage.

    Only via Government does any form of monopoly exist anyhow...
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  • Posted by $ MichaelAarethun 5 years, 5 months ago
    Just to provide a time out for laughter same thing was asked by a different group some decades ago....

    Wizard Of Oz or Wizzadaboz?

    In a 1964 article,[5] educator and historian Henry Littlefield outlined an allegory in the book of the late 19th-century debate regarding monetary policy. According to this view, for instance, the "Yellow Brick Road" represents the gold standard, and the silver slippers (ruby in the 1939 film version) represent the Silverite sixteen to one silver ratio (dancing down the road).

    The thesis achieved considerable popular interest and elaboration by many scholars in history, economics and other fields,[6] but is not universally accepted.[7][8] Certainly the 1901 musical version of "Oz", written by Baum, was for an adult audience and had numerous explicit references to contemporary politics,[2] though in these references Baum seems just to have been "playing for laughs."[9] The 1902 stage adaptation mentioned, by name, President Theodore Roosevelt and other political celebrities.[10] For example, the Tin Woodman wonders what he would do if he ran out of oil. "You wouldn't be as badly off as John D. Rockefeller," the Scarecrow responds, "He'd lose six thousand dollars a minute if that happened."[2]

    Littlefield's knowledge of the 1890s was thin, and he made numerous errors, but since his article was published, scholars in history,[7] political science[1] and economics[11] have asserted that the images and characters used by Baum closely resemble political images that were well known in the 1890s. Quentin Taylor, for example, claimed that many of the events and characters of the book resemble the actual political personalities, events and ideas of the 1890s.[10] Dorothy—naïve, young and simple—represents the American people. She is Everyman, led astray and seeking the way back home.[10] Moreover, following the road of gold leads eventually only to the Emerald City, which may symbolize the fraudulent world of greenback paper money that only pretends to have value.[10] It is ruled by a scheming politician (the Wizard) who uses publicity devices and tricks to fool the people (and even the Good Witches) into believing he is benevolent, wise, and powerful when really he is selfish and cruel. He sends Dorothy into severe danger hoping she will rid him of his enemy the Wicked Witch of the West. He is powerless and, as he admits to Dorothy, "I'm a very bad Wizard."[12]

    Historian Quentin Taylor sees additional metaphors, including:

    The Scarecrow as a representation of American farmers and their troubles in the late 19th century.
    The Tin Man representing the industrial workers, especially those of American steel industries.
    The Cowardly Lion as a metaphor for William Jennings Bryan.
    Taylor also claimed a sort of iconography for the cyclone: it was used in the 1890s as a metaphor for a political revolution that would transform the drab country into a land of color and unlimited prosperity. It was also used by editorial cartoonists of the 1890s to represent political upheaval.[10]
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    • Posted by mccannon01 5 years, 5 months ago
      Amazing, MichaelAarethun. I never knew or realized this, but it makes sense. Thanks. It is a more modern nursery rhyme with a hidden meaning like "Ring Around The Rosy" is a plague song and "The Pied Piper" is based on the Muslim invasion into Eastern Europe and Austria where European children were stolen and sold into slavery (the latter was explained to me by an octogenarian who grew up in the region).
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  • Posted by term2 5 years, 5 months ago
    I think that banks should be able to freely circulate their own "money". If its backed and it keeps its value- people will use it. If not, they wont. Forget federal reserve protections- they have stolen from me more than any conceivable bank run ever could.
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    • Posted by 5 years, 5 months ago
      Users of boutique "money" should be clearly informed about how the money is minted, its monetary policy, and the chain of accountability whereby users can seek legal remedies in case of fraud, and make their own risk assessment.
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  • Posted by radical 5 years, 5 months ago
    Money backed by gold and silver and other tangibles of measurable value. Along with this we would need laws to make banks liable for revealing personal accounts to the IRS, FTB, etc.
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  • Posted by jdg 5 years, 5 months ago
    I'm all in favor of them, though I don't think they accomplish much except to deter governments from too much inflation.

    The big problem is the so-called money laundering rules, which are really there to enable the State to monitor everybody's private affairs. I find it astoundingly wrong that those haven't been overturned as fourth amendment violations all the way back during Prohibition, when the first ones were enacted.

    Propose allowing anonymous digital money systems (which Bitcoin is not) and they'll scream scare stories about terrorism and drugs. The real biggest danger it would pose is that they might become unable to tax some kinds of trade. In which case, government might need to shift from taxing income to taxing property. I don't see that as a problem.
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    • Posted by blackswan 5 years, 5 months ago
      government already taxes property; just ask any homeowner.
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      • Posted by $ MichaelAarethun 5 years, 5 months ago
        Utah didn't for a long long time but has switched. Hawaii is the lowest but the cost of living is over 60% higher than the national average and all fuel is brought in by ships.

        New Hampshire is the lowest but it has no income tax and no sales tax. Great place to visit with a motor home.

        Georgia is 25th and Florida 29th on property tax but has a homestead exemption

        Zero states have no property tax
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  • Posted by $ blarman 5 years, 5 months ago
    In the 1800's there were plenty of regional banks (backed by gold for the most part). The ones who were run well (didn't loan out more than they could collect, etc.) were stable and used. These were pretty few and far between. The ones who got really powerful got in on the making of the Federal Reserve - the rest died.

    I personally support regional competitive banks backed by hard assets. I like the competition it brings to the system - especially the elimination of the "too big to fail" nonsense.
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  • Posted by $ MichaelAarethun 5 years, 5 months ago
    Within a small enough community with a large enough selection of items it can easily be done with the barter system. Some attempts have been made to set this up on a nation wide basis however if your barter credits (what you sent out) didn't match up to your barter debits (what was sent to you) within a time period there was a charge. with all the usual wagging it's tail behind.

    Barter usually works with excess items such as zuchinni when no one else has the excess Works somewhat depending on availability and need but not as well if a business licensed store or service is involved. too much emphasis on raising money to pay COG and COB

    If done too openly it of course attracts attention.

    Neighbor to neighbor works fine. Somewhere in the 60 foot tall stack of IRS "codes it's addressed and listed as income according to value therefore taxable ; Your first job is how to get around that which leads to only dealing with people you know and remember ...how many people working for the IRS"publicly admit that to their neighbors?

    .
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  • Posted by $ MichaelAarethun 5 years, 5 months ago
    A comment in reverse I don't mind regulated money as long as it is honestly regulated. Since that is no longer the case is it unregulated, deregulated or just misregulated.

    Fact I know what it cost to live in 1988 and 1998 and 2008 and now in 2015.

    I know the price of fuel is up 300% and was higher. I know the price of a best seller hard back hasd gone from 7.95 to 29.95 that list is endless.

    I also know that my beginning retirement pay has doubled in the same time period. What's wrong with that picture? Prices tripled or more. Cola increases doubled. Something missing there.

    I know in the past seven years the increase was 30 or so percent. What was COLA 1% maybe 2 at best per year? About half of the true cost of living increase. I hear percent of GDP but nothing about percent of NDP. Could it be the misregulators are manipulating just a little?

    Could it be they are not passing on true COLA much of which was caused by inflationary spending and debt service increases and dollar devaluation and intentionally crashing the housing market and intentionally raising food prices for both live stock and people with this ethanol scam.and sticking it to the elderly and retirees (which I am fast approaching or are one)

    Could it be regulating honestly No. So deregulate? Why not? Or why not try regulating since intentional misregulating has been a complete failure. Sort of like governing without the Constitution.

    Thank God and Greyhound for south of the border. It's turning into a pretty good sanctuary.financially speaking.

    I'm here to tell you. The Emperor has no clothes...
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  • Posted by $ Olduglycarl 5 years, 5 months ago
    I think it is necessary in the coming times...like bitcoin -which is more international but out of the control of governments but dependent upon the internet and the Berkshire, except it is not available to anyone outside the area but is in fact a real coin.
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  • Posted by BradA 5 years, 5 months ago
    I see money or currency as a red herring that conspiracy theorists love to use as a basis for demonstrating that society is being controlled by some invisible hand. Ultimately, money is an abstraction representing value. The value of an hour's labor. The value of a pound of potatoes. Its existence simplifies commerce and makes barter less, well, bartery. When I go to the store to buy steak and they want to charge me $10, I make the subconscious conversion that the steak is worth say, 15 minutes of my time. If I am satisfied that I am willing to trade that much of my productive capacity for the steak, then I am satisfied that the exchange is fair. If not, then I find something else that I consider more equitable. This works whether we're talking dollars, Yen or gold. With inflation or deflation. Ditto for loans. It's all about perceived value and faith that the currency of your choice is going to continue to be a fair representation of the amount of productive capacity you expended to obtain it.
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    • Posted by $ MichaelAarethun 5 years, 5 months ago
      Money is an accepted representation of wealth. Wealth is anything accrued in excess of present need. Work hard to day. Get credit for the work. Spend it when you retiire The rest is just a matter of what is or isn't acceptable. Today we use paper and clad tokens. No intrinsic value. No problem as long as the store will trade you food,shoes and first row theater tickets.
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  • Posted by LibertyBelle 5 years, 5 months ago
    I thought of that years and years ago. As long as
    there was no fraud, it should work well enough. Of
    course, in the case of the military, there would prob
    ably have to be some government scrip, payable
    in whatever the local currency was.
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  • Posted by $ Temlakos 5 years, 5 months ago
    I would prefer not to use a fiat currency. The problem is, everyone else does, with whom I wish to deal. That's one reason I'm glad I did not attend Cornell University in Ithaca, N.Y. I would have had to make an exchange for Ithaca Hours, to buy anything in town.

    That said, any community who managed to set up a medium of exchange, with appropriate intrinsic value, is welcome to do so. But: if you face a transfer to a community that issues a *fiat* currency, that would be *valueless* outside that community, remember: you go in there at your own risk.
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  • Posted by Herb7734 5 years, 5 months ago
    When purchasing something, I would be bothered to have to figure out what printed money I had was worth as against the worth of the product I was buying. Gold, silver and platinum are the only money that makes sense, but a system of representing those items would be needed unless people and merchants want putz around with cutting and weighing metal, not to mention checking its actuality. A certificate that shows the value of the buyers stash, would only be as good as the name behind it, which could lead to many problems, not the least of which is counterfeiting. If one central authority is used, we're right back where we started from. I once met Alan Greenspan. Do you think he'd answer my call and give me his opinion? (Laugh Very Out Loud)
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  • Posted by Zenphamy 5 years, 5 months ago
    Gold, but no money changers. Some agreed upon standard on content per coin and ratio to silver. Bills without gold/silver backing banned. Local financial institutions OK to issue bonds backed by real property and investment accounts.
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    • Posted by 5 years, 5 months ago
      To ban a community from minting its own fiat currency and freely choosing to trade with it - is that not an infringement on their civil liberties?
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      • Posted by broskjold22 5 years, 5 months ago
        You're being funny, right? I'll trade you monopoly money for a cigarette...
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        • Posted by 5 years, 5 months ago
          No - I'm being deadly serious. We're not talking about monopoly money here anyway - we're talking about the right of a community to agree, by contract, for certain items to represent value.

          With your example, broskjold22, I don't smoke. But if you wanted a beer, and I had spare beers, and I knew that your piece of monopoly money would be recognised as having value amongst people who were offering things that I see as valuable, then I'd be glad to trade :)
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          • Posted by broskjold22 5 years, 5 months ago
            OK... but if you had a choice between an equivalent amount of gold and monopoly money, assuming there was an exchange rate between them in said community, what would you choose? Even based on the premise that it "would be recognized as having value amongst people offering things that [you] see as valuable", would you not choose gold? The reason you should choose gold is because it has an objective value and because we know the alternative (fiat) is subject to confiscation through inflation.

            "Money cannot function as money, i.e., as a medium of exchange, unless it is backed by actual, unconsumed goods."

            Thus, fiat money is backed by nothing... other than the work of those from whom it is subsequently looted. In your example, it would be absolutely necessary to have a currency backed by something else - an "actual, unconsumed good" - for the money to have value. Beer, cigarettes, some commodity.

            To be fair, I used US cash today. Funny money. Fiat. Etc. It bought me dinner. I suppose I should thank someone somewhere for the system where others are forced to accept my money on the basis that its the only money thats legal. Thanks FDR.

            Now a beer would be refreshing!
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          • Posted by Zenphamy 5 years, 5 months ago
            That's called barter. I don't see a problem with that. But fiat money implies 'out of thin air'.
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            • Posted by $ WilliamShipley 5 years, 5 months ago
              The essence of money is that it is something that people can exchange with each other for goods and services. While gold and other precious metals have often been used, the money itself need not have any intrinsic value. It gets its value from the fact that it can be exchanged for goods and services.

              The island of Yap used an amusing form of money based on giant carved rocks. You didn't exchange the rocks, just kept track of who owned which rock at the moment. This meant that when one sank during transport, all was not lost - they just kept track of who currently owned the one on the ocean floor.

              The important thing about money is that the supply needs to be kept in proportion to the available goods and services or you have inflation or deflation. Ideally, the value of money should remains stable. If money is not tied to physical objects, there is a temptation to acquire wealth by making more money than is appropriate.

              This is why people are attracted to precious metals. However, in an expanding economy you will have serious deflationary problems unless your mining operations keep up with the rest of your economy. During the conquest of the New World, Spain experienced inflation in gold based money due to it arriving faster than the economy could grow.
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              • Posted by Zenphamy 5 years, 5 months ago
                I think the Yaps only had so many large carved rocks and probably had someone (Chief) that was allowed to find and carve big rocks.

                But your explanation of the supply of money being in relation to the available goods and services matches my thoughts.

                the issue with an expansion of the economy causing deflationary problems, I don't see that as a problem because all that's happening is that the value of the unit of exchange increases. If the unit of exchange increases faster than the expansion of goods and services, the the value of each unit of exchange decreases. I don't see that as a problem either since over time, those differences will balance out. The only problem that occurs is that an economy built on long term debt won't work as well, and I personally think that's a good thing.
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                • Posted by $ WilliamShipley 5 years, 5 months ago
                  I suspect the Yap stones use the same principle as bitcoin -- it takes a lot of effort to carve a stone.

                  The problem with deflation is that it makes hanging on to money more profitable than investing it -- unless you are going to get a really big return. If you had 10% deflation you would have to get more than a 10% increase in value to be willing to invest. This hampers growth.

                  There may be a benefit to a small amount of inflation as an incentive to invest since sitting on the money becomes a disadvantage. I'm not so confident of that.

                  The overall economic goal is to encourage production which, in the end, can provide everyone with more. The mechanism you use for money should facilitate that.
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                  • Posted by Zenphamy 5 years, 5 months ago
                    William; you say:
                    'The overall economic goal is to encourage production which, in the end, can provide everyone with more. The mechanism you use for money should facilitate that'

                    And I think that's a big part of the problem. Science attempts to study and learn the how and why of what exists in nature and from that learn how to utilize what is to our benefit, but an economy is the interaction of human beings--not what exists in nature separate from humans. Therefor the only ability or effort available for an economy is to attempt to control humans--which then inevitably leads to control or elimination of the natural individual rights of humans.

                    The only economy that has ever worked for the benefit of humans is that of laissez faire--leave it alone. The concept being that the economy will regulate itself as each human works to better himself, and until the early 1900's it led to the greatest growth and betterment of humans in all of recorded history, where it existed--the US. And that included money--gold and silver backed currencies.

                    It's only when men attempting to influence, control, or apply encouragements and mechanisms to our economy that everything went to hell. In order to gain the greatest benefit and the greatest freedom for man, the economy must be left alone to rely on the natural interactions of humans.
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                    • Posted by $ WilliamShipley 5 years, 5 months ago
                      I would argue that if you are deciding what the group is going to use for money you are making a decision which will influence all economic decisions the group makes. You are not leaving it alone so you should avoid unfortunate side effects.

                      Each person in the economy will work to optimize their results within the rules that they operate under. Some of these rules will be directly objective: one must eat, others are designed by man, hopefully around objective goals.

                      I would argue that setting up the rules such that someone can be personally rewarded by being more productive is objectively a good way to set up a system.
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              • Posted by paulnathan2000 5 years, 5 months ago
                Let's not forget that we live in a world economy. A community can use anything they want as money as far as I'm concerned, but the real question is what will others accept.

                Because states and countries posses different resources, in order to have maximum trade, which will raise the standard of living of all, you must have a medium exchange that everyone will accept.

                Over 5000 years that has mainly been gold and silver. It is not arbitrary. It is the verdict of the market. Today, both are outlawed as money between individuals, but notice that many governments continue to accumulate it and hold it as reserves.

                So should we all.
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            • Posted by 5 years, 5 months ago
              I've seen fiat currencies used by communities in Australia to lift themselves out of poverty. When you have a bunch of people with productive skill but no money, then no amount of gold-backed currency is going to help them. They'll still be sitting around broke and under-employed.

              But when they join the community trading scheme, they start to get productively employed. The mechanic fixes a car for someone who has no spare food, then buys food from someone else whose vehicles aren't needing servicing.

              There was a landmark case where the Australian Tax Office sued this community, claiming that what they were exchanging was a form of currency which should be assessed for taxation, but the tax office lost.
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              • Posted by Zenphamy 5 years, 5 months ago
                But what happens when the community wishes to engage in business transactions with other outside areas or countries?
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                • Posted by 5 years, 5 months ago
                  Then they'll be in a much better position to competitively market a range of offerings to the outside world, since they've been occupied trading amongst themselves, rather than sitting on their asses feeling broke.
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            • Posted by $ jlc 5 years, 5 months ago
              ClubMed used bead money, as I recall. I do not know if you purchased this money with US dollars or if you were 'given' an initial string of beads (and then bought additional beads). ClubMed found that people spent more if they used bead-money than they did when they purchased goods or services in dollars.

              I assume that chips in gambling work the same way.

              So, the two examples of fiat money I can think of are both due to trying to 'fool' people into behaving less rationally by changing money that they perceive as 'real' into money that they think of as 'Monopoly money'.

              This does not speak well for rational behavior if a variety of different coinages were available.

              Jan
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