Return to BSD News archive
Xref: sserve gnu.misc.discuss:6297 comp.org.eff.talk:9087 comp.unix.bsd:5241 comp.os.mach:2164 misc.int-property:528 Path: sserve!manuel!munnari.oz.au!constellation!mimbres.cs.unm.edu!ncar!zaphod.mps.ohio-state.edu!caen!uflorida!reef.cis.ufl.edu!jfh From: jfh@reef.cis.ufl.edu (James F. Hranicky) Newsgroups: gnu.misc.discuss,comp.org.eff.talk,comp.unix.bsd,comp.os.mach,misc.int-property,alt.suit.att-bsdi Subject: Money Message-ID: <37081@uflorida.cis.ufl.edu> Date: 18 Sep 92 03:38:22 GMT References: <BZS.92Sep11185233@ussr.std.com> <farrow.716341761@fido.Colorado.EDU> <BZS.92Sep13195404@ussr.std.com> Sender: news@uflorida.cis.ufl.edu Followup-To: gnu.misc.discuss Distribution: inet Organization: Univ. of Florida CIS Dept. Lines: 84 Nntp-Posting-Host: reef.cis.ufl.edu Newsgroups: comp.org.eff.talk Subject: Re: taxes, theft, police, etc. Summary: Expires: References: <13646@kgnaix11.aix.kingston.ibm.com> <1992Sep7.151610.11902@tijc02.uucp> <1992Sep9.123903@bk-kgnaix11.aix.kingston.ibm.com> Sender: Followup-To: Distribution: Organization: Univ. of Florida CIS Dept. Keywords: >You say this, of course, in the face of overwhelming evidence to the >contrary. What does hyper-inflation have to do with the great depression? >There was no hyper-inflation before it. Besides, in the vast majority of >cases, where governments are operating reasonably normally, government does >in fact give legitimacy to money. Were it not so, the entire modern economy >as we know it would be impossible. Certainly there are pathological cases, >but holding up, say Germany c. 1944, to prove that governments can cause >hyperinflation is the purest sort of strawman. >I claimed that one reason governments were established was to give >legitimacy to money. It did this primarily not be establishing a gold >standard, but by establishing a form of exchange and ensuring that everyone >in the society would accept it. This type of action is independent of >inflation. Governments cannot give legitamacy to money...money can only gain legitamacy if the currency either had value before it's use or could be exchanged for something that already had value. If the U.S. governent decided tomorrow to scrap the dollar for the "credit" (or whatever), and did not tie it in any way to the dollar, it would have no legitamacy, not matter how hard they tried. (e.g., "Tomorrow there will be no more dollars--citizens will now use credits, which now have no value but will tomorrow, however not in terms of dollars---here are the credits, go and buy goods." The overriding question in this situation is "what is the credit worth in terms of dollars?" Answer: "Nothing--go use them, they are guaranteed by the US government.") People would continue to use dollars if allowed to keep them. The reason the dollar has value is that it was once backed by gold, and the reason gold had value was because of its scarcity, use in jewelry, etc. The gold standard evolved apart from governments, but governments often took it over. Hyperinflation has everything to do with governments. The boom of the 20's was caused by inflation of the quantity of money by approximately 68%. The corresponding depression was the natural result of an artifical boom caused by inflation. The German hyperinflation of the early 20's was caused by the issue of the equivalent of over a QUINTILLION marks by the Reichsbank. The post-Civil War inflation was caused by the issue of $400 million in fiat money (greenbacks). >OK. I'll go along with this. On the other hand, the typical net.libertarian >argument runs along the lines you yourself present above concerning money. >Hyperinflation is not the rule. Bad money is not the rule. By and large, >governments do guarantee money, and by and large, people do accept it (and, >it may be argued, benefit from it). Your argument is basically that since >governments can, and in some cases have, caused hyperinflation, then we >should not trust them with money. You provide no evidence that a >non-governmental money system would be immune to the same problems or would >not have other problems that would be at least as bad. When the basic >libertarian position is "governments do X. X is bad. Therefore we should >have Libertarianism instead", it seems clear that the implication is that >embracing Libertarianism will solve all our problems. That's exactly the >sort of argument, in various forms, that can be seen here, in sci.econ, in >several of the alt.politics groups, and periodically in other places on the >net. Governments don't provide Utopia. That's not, ipso facto, a reason to >think we should get rid of them. There is evidence that non-governmental money systems would be immune to inflation. When the US was on the gold standard, the only inflation occurred when the government issued its fiat money. The solution is not eliminating government, as some libertarians would say, but having a government whose sole duty is to protect individual rights. The market is not the place for government rule. This is also not a guarantee of Utopia, but will nevertheless be the best system possible. Unfortunately, with the exception of Britain from the 1697 (?) to 1915, when its central Bank was on a strict gold standard, governments have done an exceptionally lousy job with money, and yes bad money has been the result. Jim Hranicky (jfh@reef.cis.ufl.edu)