-----BEGIN PGP SIGNED MESSAGE-----
Hash: SHA1

On Sun, Mar 30, 2008 at 11:58:21PM -0400, Rich wrote:
> You are right on, IMHO about the problems with gold. If a person or agency 
> holds dollar-denominated assets and the dollar rests on speculation and 
> moving trends that person or agency is not secure.  But gold is not 
> necessarily the answer.  But if a nation has natural resources, even 
> commodities like copper, grain and so on that is fairly stable, is that 
> something that can work?  For example, suppose a nation produces petroleum, 
> refined petroleum products such as gasoline, and petrochemicals.  Is there 
> some universality of utility and demand that values the petroleum and 
> byproducts so as to provide a basis for currency?  Just a thought.

I'd argue no. If anything, resources tend to be one of the least stable
economic metrics out there. If the basket of goods that $1 was equal too
was fixed you'd see huge changes in the value of money, changes that in
the long run will likely have very little to do with the rest of the
economy. If you are selling long distance networking equipment, why
would you want to conduct business with a currency based on copper
prices? (well, unless you *really* dislike photons...) Give it a decade
or two, and for all we know we'll be using aluminum and silver almost
exclusively, and someone is going to have to update the weightings on
the basket of commodities. But, if that basket is getting updated, it's
open to manipulation, so why not just go back to a fiat currentcy in the
first place?

At least with gold the historical nature of it meant that new gold
production is a small percentage of world gold stocks; so much is hidden
away in vaults. It sort of approximates the "ideal" of a fixed money
supply, which is anything but ideal anyway. Commodities give you either
a supply almost exclusively dominated by short term events, or with a
basket system they still requiring government interference and are open
to government manipulation.

- -- 
peter[:-1]@petertodd.org http://petertodd.org
-----BEGIN PGP SIGNATURE-----
Version: GnuPG v1.4.6 (GNU/Linux)

iD8DBQFH8GwR3bMhDbI9xWQRAqXAAKCbBCCWcZ6tq92w7S8uywgSzuMZ7QCgotON
5mNGgt5m1E8nPRkUhjL1DX8=
=NDIM
-----END PGP SIGNATURE-----
-- 
http://www.piclist.com PIC/SX FAQ & list archive
View/change your membership options at
http://mailman.mit.edu/mailman/listinfo/piclist