Presented by Douglas E. French at the 2009 Mises University. Recorded 27 July 2009 at the Ludwig von Mises Institute; Auburn, Alabama.
Money and Banking | Douglas E. French
Posted by admin on June 1st, 2010
Insure Your Future!!
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@Kingery4:
The simple fact is that geographical monopoly on money provision service is the Holy Grail of politics. It allows you pork barrel spending, limited only by the desired longevity of your currency and the guile and brutality with which you can conceal its decline.
The state is an answer to the problems of social organization in the same way as a god is an answer to the origin of life, and nowhere is this more apparent than in the sordid, bloody history of fiat money monopolies.
Then you create “snacks”, what would snacks be without salt?
“salty snacks” the answer to mans needs!
This video is just too good to pass!
This guy is insulting.
Until that occurs, silver and Gold remain and shall remain the best monetary unit for the markets and the world as well.
At the rate Science Fiction becomes Science Fact, it will not be long before we are able to manipulate matter into whatever we desire; into items such as as silver and gold.
To think this cannot happen… well… I think the Three Stooges went to the moon not many years before Science Fact made the trip.
Sure, today gold and silver enjoyed its security in its difficulty of reproduction without mining.
Sorry about the SiFi side trip.
Well, how many people use salt as unit of exchange in the 21st centuries? Because salt has lost is monetary properties. It is easily accessible, cheap and plentiful…etc! The same reasons why nobody uses tallysticks, feathers, animal skin…etc! That’s why Gold and silver have always been the best monetary unit since they have managed, despite 5000 years of human advance to maintain those essential property that allow them to remain as such. And no government decided that fact for the matter!
Well said.
What happens when the salt is not longer accepted as a unit f exchange?
What happen to the excess savings of salt that may no longer buy anything of value, or that it just takes so much of it that it becomes undesirable?
Indeed all exchanges are barter; however, people soon realize the limited scope of pure bartering thus the development of a good-money medium of exchange. Therefore when people use “salt” as unit of exchange, they only accept salt because they can use the same “salt” to access to other desirable goods at a later time. Salt is therefore the unit of exchange! That doesn’t mean that its basic function in cooking is distorted or abandoned!
Exactly, it’s therefore the market that decides which good is valuable as money and which good isn’t. People sooner or later realize the changes taking place and adjust their interactions accordingly since they are always looking out for they own best interests. That’s why nobody uses cowries or feathers as money anywhere in the world nowadays. Technology has developed enough to render “salt” an irrelevant item to the point no one even consider its vital importance a few centuries ago!
The currency is the name given to a monetary unit. For example: The dollar is the US currency but FIAT paper is the US monetary unit. Back in 1913, the dollar was still the US currency but Gold and Silver were the monies. That’s what I mean! So, in so far as money is concerned, its origin is always the result of society’s preference. The government therefore hijacks a normal market process by intervening in the monetary process through banking regulations and laws and what not!
Perhaps I am confused.
What do you mean by “currency”? Is this the item(s) of exchange?
What do you mean by “monetary unit”? Is this the personal value an individual connects to that item of exchange?
Others might as well refer to other countries as happens within our oil situation. There still has to be an agreement as to value given and value received. That value changes as with scarcity as you noted earlier. I think we agree. However, when technology changes and oil, no matter how scarce, is no longer needed, its value drops greatly.
I reread it wrong twice and still thought I had it correct… sorry.
All exchanges are “Barter”. It matters little what the items of exchange are. The only importance is the agreed upon value of the items by those involved in the exchange.
“If one has lots of gold but no salt –and needs salt; and another has no gold but plenty of salt –and needs salt…
exchange is likely!”
Did you mean “and need gold?” Reread your own statements once in a while!
The exchange you just MISREPRESENTED is called “Barter”! Be careful!!
We are talking about the “rise of the monetary unit good” as a medium of exchange between others goods. As much as people might need salt for their food, they might also use it for MONETARY exchange for other goods
Continuing on your position: You state that “the item used must be needed and desired by others.” Others is a plural pronoun; thus you are stating “individual citizens”! Where is the function of the government in your own statement? You are contradicting yourself once more! There are particular reasons why a unit good might be applied as unit of exchange rather than another. Salt was much precious in ancient Timbuktu circa 16th century, in the mande empire due to the empire desertic location!
I will correct you a bit! “Scarcity alone doesn’t make an item good for “Money”! Let’s be specific here and I hope we are talking about monetary unit! The government can issue the currency but the money unit is always and has always been a creation of the market, society, environment…etc. Throughout the US history, gold and silver were the money that were distributed through the currency “DOLLAR”!
Agreement seems present. Scarcity alone doesn’t make an item good for currency. The item used must be needed (or at least desired) by others.
If one has lots of gold but no salt –and needs salt; and another has no gold but plenty of salt –and needs salt… exchange is likely.
The only item necessary for salt or gold to have more value for the holder of the excess of either is the knowledge of the holder about how badly the other needs the item.
Sorry but I must disagree! The function of the money is to facilitate monetary exchanges. If feather rises as monetary unit in a society, it might be for a specific reason! Not all feathers are used as unit of exchange. Maybe it is those of a particular bird ( Thus the aspect of scarcity is there in place to keep the unit of exchange from exploding at any time). Salt was used in Sahara and Sahel Africa while Gold was ABUNDANT! Scarcity again! It is no accident!
This month the market says that feathers of a particular kind is the currency. You save all those feathers and only spend what you have to. You collect an abundance of feathers.
Next month, the markets are flooded with feathers and they are now worthless; but now salt is the currency. You have no salt; but you have many feathers: Now you cannot buy anything.
Government has become a necessary “evil” that those placed within it often become corrupted by the power of it.
That’s where you get it a bit wrong my friend. Society is formed out of cooperation while government develop through coercion or upright tyranny. The issue here is to limit the extent of the tyrannical function of the government within the frame of legal and external protection. Give your money over to the gov and you are willingly abandoning your Liberty. The best way to limit the growth of the government is to allow the market to decide which form of money to be used.
Mostly, I think we agree.
Government involvement, when properly exercised, is not the control of the value of exchange but to serve as guardian –protector against counterfeiting. As societies grew, it became more difficult to carry that block of salt to the market for a loaf of bread or enough of it to buy a car.
The government role is toward standardization of currency so it is readily accepted at the grocer and the auto dealer (who might not have use for any salt or feathers)..
Nonsense! The government has no role whatsoever in monetary creation! The medium “Money” of exchange has existed since man began to trade with others for goods and services. Money need not to be a piece of paper or even a coin. Historically, feathers, cowries and salt in Africa had been monetary unit. That medium is voted within a specific society. Money is therefore a product of the market. Government interaction is nothing but disguised violation of private property.
nice tie Doug!
As for the first problem of how much to print: The People, not politicians MUST approve the expenditures/budget. This is the maximum amount to print.
As for the second problem of how to tax: The People, not the politicians decide the form of taxation.
By “The People”, I do not mean through the present MOB-Rule we now have at the pole where the small 10%-15% ballot-casting mob make the decisions. I MEAN, that no less than 2/3 of qualified, registered voters must approve.