[LINK] We live in interesting times.... Or - is the gold standard really extinct.

Birch Jim Jim.Birch at dhhs.tas.gov.au
Mon Oct 20 17:59:30 EST 2008


-----Original Message-----
From: Tom Koltai 
Sent: Monday, 20 October 2008 4:13 PM

>Regulation is fine thing, if we want to build a more top-heavy govt
infrustructure. My own slightly cynical experience is that Regulation is
written by lawyers with deliberate loopholes so that other lawyers can
find the loopholes.

Regulation - and law in general - is always a battle between the
lawmakers and the evaders.  But if the alternative is no law... 

>eventually the winner will call on the iou.

Yes, but if he has to get his gold through eleven layers of contacts
that may include bankrupt parties it still not work.  Anyone can
overestimate the value of an asset and go bankrupt; gold isn't going to
stop that.  Unfortunately we had a situation where everyone was doing
just that.
 
>A consequence of the departure from the gold standard is that the price
of gold is trading approxiuately 1600(USD) per ounce under its real
value.

Alternately, arbitrarily choice of gold as the basis for currency might
cause the price of gold to escalate beyond it real value.
 
>...Therefore, whilst I am not against mortgages per se, I am against
the
concept of securitising the (future value)or basically the cause of the
cpi index rise and calling it capital to justify higher lending.

Isn't this what accounting rules are all about?
 
>Real wealth can only be made by manufacture/construction.

Healthcare is not wealth?  Education is not wealth?  The wealthier we
get the higher the proportion of "intangibles" in our wealth.

>Any system that allows for the markets to calculate security based on a
probable future value is bound to lose.

Yes, and this is entirely possible under the gold standard, or the Mars
Bar standard for that matter.

I'm not an economist but I do read a bit and I certainly haven't heard
the clarion call for the gold standard from the economists I respect.
The gold standard does induce a certain level of KTBH from governments
but it has its' own significant structure problems too.  Not the road to
utopia.

We're off topic.

Jim



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