----- Original Message -----
From: Bob <[EMAIL PROTECTED]>
To: e-gold Discussion <[EMAIL PROTECTED]>
Sent: Tuesday, May 29, 2001 5:27 AM
Subject: [e-gold-list] The Free Market Not Mentioned
> That's strange. Milton Friedman says we don't need a central
> bank. Mentions a computer to take it's place while admitting
> it wouldn't always be able to do the job, but nevers says a
> free market for money could do the job, according to Deroy
> Murdock.
>
> And this guy is known as a free marketeer? Follow his money trail
> for the answer. Look for tax payers money that he gets or has got
> somehow.
>
> > The Friedmans, up close
> > ----------
> > by Deroy Murdock
> > An interview with Rose and Milton Friedman. (05/11/01)
> > http://www.nationalreview.com/murdock/murdock051101.shtml
>
> Bob
Its hard to believe that, Friedman, and his monetary theory, are still
kicking around. I would have thought he would have figured out his policy
was unworkable and irrational, and adopted inflation targeting or something
like it. Targeting the rate of growth of the monetary base a strange idea
because the monetary base has a near perfect substitute -- bank money. The
ratio of bank money to monetary base can vary greatly as does velocity.
Currency pegged to the value of gold, and free banking, provide for an
entirely unfettered financial system and a perfectly elastic money supply.
The money supply is perfectly elastic at the price of gold, and the price of
gold should be reasonably stable in terms of global goods and services,
based on the reletively stable economics of gold production and industrial
gold demand.
The current vouge of hard currency pegs and currency union implies that
policy makers are happy to force their economies to adjust via reletive
inflation and deflation. My reading of various monetary theories gives me
that idea that this method of adjustment tends to be viewed as the most
expensive and painful, with most monetary theory focusing on macro-economic
management. By contrast monetary union or pegging is, from a national
perspective, a laissez faire policy.
So if so many policy makers seem so comfortable with having no control over
their interest rates and exchange rates, and forcing their economies into
inflation and deflation, why not peg the currency to gold and go for free
banking?
David Hillary
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