a.ashfield <a.ashfi...@verizon.net> wrote: > > Thanks for the link. A most interesting criticism of current economic > theory. Clearly our fiat money system has high risk but I'm not so sure > that Gilders has the answer. >
I know little about economics, but limiting the amount of money based on the amount gold we have -- or the number of bitcoins -- seems like utter lunacy to me. It never worked in the past. There are two reasons: 1. The money supply has to increase when there is more economic activity and more people, or you get severe deflation. This happened in the U.S. and other countries on the gold standard. Severe deflation is a bad thing. 2. The supply of bitcoins is actually limited, by the algorithm. That straitjacket will work. The supply of gold is not limited in any practical sense. The ocean is filled with the stuff. Mountains on earth and probably meteors and other planets are too. There are probably billions of tons of gold in the solar system and I am pretty sure we could soon find a way to transmute other elements into it, or convert energy (sunlight) into it. Put it this way: If we had 100 years to come up with a trillion tons of gold to escape from the sun going supernova, I expect we could do it. If gold becomes the standard of money, people will put enormous effort into mining gold, extracting it from ocean water, or transmuting other elements into it. This effort will be an terrific waste of time, talent and money. There are many things more useful than gold such as purified silicon, wheat, or clean water. We should be putting our efforts into making things that people need, not soft metal that will sit in vaults unused. It would make a lot more sense to base the money supply on sand (silicon) or kilowatt hours of generating capacity, or some other useful commodity. Heck, it would make more sense to base it on soybeans, because they are good for you and they have many practical uses. There is no material thing on earth on in the solar system with any permanent value, or any intrinsic value. Anything and everything we want -- materially -- can be made available to us in unimaginably large quantities. I mean billions of tons per person, if we have a use for it. We could eventually pave the highways of the Earth and Mars and other planets with gold -- if gold happens to be a good paving material, which I doubt is the case. The only thing standing between the human race and unlimited wealth is ignorance, foolishness and lack of imagination. As Arthur Clarke wrote: In this inconceivably enormous universe, we can never run out of energy or matter. But we can all too easily run out of brains. > I touched on the problem, together with a lot of other problems, in a > piece I wrote *Advances in technology that will change your life*. See > attached Word file. > I like it! I agree. See also Martin Ford's first book and website, both here: http://www.thelightsinthetunnel.com/ - Jed
