Re: Is Money Credit?

["W. Curtiss Priest" <bmslib@xxxxxxx>]

John Gelles wrote:
>
> A friend of Gunnar Tomasson ...

It was "The Creature from Jekyll Island" by G. Edward Griffin
that aptly addressed this issue of money and credit.

What Griffin aptly notes is that, currently, the labor
to mine gold is approximately equal to the cost of gold.

Griffin, thereby, suggests that basing money on gold is
not unreasonable.

***

In contrast, money by fiat is only as valuable as the
governments that back money by fiat.

This does not make fiat money worthless, but, fiat money
is a bit of an illusion.

Most "modern industrialized nations" understand that they
may not just "print money" -- as this undermines all
outstanding monies, pensions, etc.

Those that argue for a "gold standard" are simply arguing
for a basis that requires "manual effort" and, thereby,
requires that the money basis be grounded in "effort."
(the effort of mining more gold)

Only by this, can one be assured that a government does
not print money into a state of hyperinflation.

I have written in CITS debt watches, that debts can be
ameliorated by hyperinflation, but, any country that has
tried a course that leads to hyperinflation has led to
a travesty.

As I have also said in various CITS debt watches:

http://groups.google.com/groups?hl=en&lr=&ie=ISO-8859-1&scoring=d&q=%22cits+debt+watch%22

[please rejoin this line with no space if split]

that booms cannot escape busts.  And that the best solution
to escaping busts, is to eliminate booms.  (I often cite
Kindelberger, a Sr. colleague of mine at MIT.)

This author is not completely convinced that a set of
"guiding principles" can be established (far beyond what
the U.S. SEC requires) to accomplish the further continuance
of booms.

But, this author is convinced that all booms are followed
by the requisite bust, to tidy up the whole affair.

Regards,

W. Curtiss Priest,
Editor, CITS Debt Watch
Member, AEA

--


	   W. Curtiss Priest, Director, CITS
   Research Affiliate, Comparative Media Studies, MIT
      Center for Information, Technology & Society
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