Posted 10 years ago on Nov. 30, 2011, 1:27 p.m. EST by JesseHeffran
This content is user submitted and not an official statement
A Resource based economy is better than a fed governed fiat system. But the Fed is always better than gold or silver backed currencies.
Fiat money exists because it allows for easier trade with other nations. Say Japan makes Blue Ray Players, and America grows corn. The fiat money supply allows for one Blue ray to equal x bushels of corn. Or what ever Japan is willing to trade as their goods, is how many of our goods we will sell to them. This is what governs the exchange rate. But this configuration has allowed speculators to devalue and manipulate money. And special interests have been allowed to capture the Fed. I find these to be problems. Can I get a whup, whup! Therefore, if our money is tied to all of our production, not just gold or silver, and not susceptible to regulatory capturing, then speculators would be forced to create value in our economy, instead of betting high or low and fidgeting with the machinery. A Resource based economy is better than a fed governed fiat system. But the Fed is always better than a gold or silver backed currency.
I believe the dollar should be pegged to the GDP of units sold, divided by the number of the population between 16 and retirement age. If the GDP is 365,000 units sold per year, and the population has a workforce of a 100, then the value of a credit is 365. The credit is then divided by allocation to the most productive industries. Say we have fifteen industries, (or fifty states), we divide them by 365, which equal twenty one. From this point, you make a graduated line graph with fifteen points and twenty one being the median. a straight line from 1.1 to 15.15 The affluence ladder would still be intact, leaving its demise for another generation. It would also incentivize industries to out produce and sell, in order to be at the top. Therefore, the market can allocate responsibly. If we attach our currency to just precious metals, than someone, ant namin’ names, can hoard them, or corner the market. Having the money pegged to production, ensures that if someone corners a service or product, the market can invest elsewhere, without the whole system stagnating. The fiat system has reached the point of hording and has left the FED with no alternative but to devalue wealth. If wealth was a function of efficiency and not money, then the motivation in each industry becomes selling stuff more efficiently. This would also stifle management and labor disagreement, diverting shutdowns in the factories. Industries become the unions, industries become the community and they become the political arm of the people. Those that are smart and hard working get more of the credit allocation than those that enjoy life and are not so down with hard work and over thinking.
The fiat paradigm allows speculators to devalue and manipulate money, but if our money is tied to all of our production, not just gold or silver, then speculators would be forced to create value in our economy. Venture capitalists would find it in their interests to create more sustaining ventures. Instead of betting low and selling high, Wall Street would be interested in raising GDP units sold.
I just know from history that having wealth dependent on one product is a recipe for disaster. In economics it is called the resource curse.
I believe that gold as the only decider of wealth is the same as the resource curse that has plagued many nations. If you put all your eggs in one basket and the basket's bottom falls out, then you go without eggs. Also, if you allow the wolf to guard the basket, he is going to eat the eggs.