Comments: A Lengthy Saturday Ramble...

It seems that the accomplished Mister King, try as he may in the soaring apex of his skill, remains mired in the genre that made him a famous multi-millionaire apologetic capitalist.

Posted by johngalt at November 13, 2011 9:54 AM

"This book is an important work in monetary theory." If he does say so himself! I can't wait to read it and, so to speak, compare notes with him.

The very problem with modern currencies is that they're forced upon people. (Fundamentally, the very problem with governments is that they are forced upon people. A dictatorship is the few forcing the many. Even a supermajority is forcing at least one individual. If everyone agreed, if every man were free of his neighbors forcing him into paying taxes for something he didn't wish, then there would be no need for a government.) Nothing holds any government from basing it on whatever it chooses, which today is faith in future taxpayers (funding present spending as well as paying off previously incurred debt). But allow people to trade with what currency they'd like, and governments go out of the deficit spending business, and consequently they lose their power.

A friend asked me several years ago about a scenario, an economy of three individuals. Peter always trades a lot with Paul, but somehow Bob can't get a hold of any money to trade with Paul. Let's say Peter has a personal grudge and wants to isolate Bob. But this is logistically impossible if Bob wants to trade with Paul, because Bob would certainly have money sometime. It's all a matter of Bob offering goods and services that Paul wants. And if Peter somehow has so much economic control that he trades with Bob such that Bob has only enough money to trade with Peter, that still doesn't matter. First, Peter is only hurting himself by limiting trade. Second, if Paul and Bob want to trade, they will find a way. In the end, if a free people want to trade, they'll find their own medium of exchange, or resort to bartering if they have to (normally an inefficient system but nonetheless usable as a last resort while a currency is worked out).

Something I've been meaning to blog about for a long time is Bretton Woods. It may seem paradoxical, but it was the antithesis of free trade. Arbitrary decisions by politicians and central bankers, not free market participants, were what declared country X's currency at a certain ratio to Y's. Governments can only declare; free individuals are who determine what's truly correct.

Even a gold standard isn't intrinsically free market. Again, it's a government declaring something, rather than individuals saying, "I offer you this quantity of gold in payment," or, "Here's an electronic credit based on gold held for me." I might not trust government coins' purity, thinking the mint will pull a Septimius Severus (one of the Roman emperors notorious for debasing the denarius). I might have information about dramatic increases or decreases in the supply of gold, or knowledge of a nuclear breakthrough that could manufacture gold cheaply (the reverse of Goldfinger's nefarious plan). If I don't trust the government, I, and whoever among my trading partners share the sentiment, might sooner trust a bank's paper notes as a promise to pay.

Posted by Perry Eidelbus at November 13, 2011 2:49 PM

I thing you'd dig the Selgin book, Perry. It is the most free market approach I've seen.

You can grab it free, if you have an eReader or want to read it on computer.

Posted by jk at November 13, 2011 3:21 PM

Yes indeed. The HTML version is quite nicely formatted.

Posted by Perry Eidelbus at November 13, 2011 10:36 PM

Anna Nicole pictures! Where are the damn Anna Nicole pictures?

Posted by Boulder Refugee at November 14, 2011 5:34 PM

Heh. -- we really do need a "Like" button...

Posted by jk at November 14, 2011 7:45 PM
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