Galt's Gulch

An Objectivist Case for Government-Issued Paper Money

Posted by starlisa 11 years, 10 months ago to Economics
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I hope people will (a) keep an open mind, and (b) if you disagree with my conclusions, at least try and keep it civil.
SOURCE URL: http://end.starways.net/objcase.html

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  • Posted by starlisa 11 years, 10 months ago
    With all due respect, khalling, at the end of Atlas Shrugged, the language of the amendment was that Congress shall make no law infringing on the right of free trade. The example Rand gives of why we need courts is precisely so that the government can determine which side in a contract dispute is correct. By your argument, this would be invalid as well.
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    • Posted by khalling 11 years, 10 months ago
      so we are talking about the same passage:
      "Congress shall make no law abridging the freedom of production and trade." I was paraphrasing earlier, but if Congress decides what legal tender is, it is directly interfering with trade, because it is saying what i have to accept as payment.
      In the case of contracts, the court enforces YOUR contract. You wrote it, you decided its terms, you signed it.
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      • Posted by starlisa 11 years, 10 months ago
        Suppose it was only declared legal tender for payment of taxes. Since taxes are something we want to phase out anyway, why would that be an issue.

        In any case, the issue of legal tender or not is separate from the issue of where the money comes from in the first place. If we don't have an objective money supply, free trade is hampered. Badly.
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        • Posted by khalling 11 years, 10 months ago
          If we phase out taxation, this would not be an issue. correct.
          In fact, the govt defining what currency you use to pay your taxes, is technically not a legal tender law either.
          "we have to have an objective money supply":
          Money. is a medium of exchange and a store of value. Many things can function as money and have. Money supply is the total amount of money in the economy, and it varies even in a free market. Since almost anything can function as "money", it is very hard to define the exact amount of supply.
          If by objective money supply, you mean a currency that is created by the market, not govt, I would agree with. If you mean the govt should define what money is, I disagree with you. As did the Supreme Court in the first legal tender laws.
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  • Posted by flanap 11 years, 10 months ago
    Concerning monetary policy, I boil it down to this: person A wants to transact with person B and before money there was only barter using material or services. If person A or B seeks to use money to exchange vs. the material or service, then it is assumed that the issuer of the money to A or B received A or B's material or service. At any point where money is issued without value being received in return, the system is broken and inflation is inevitable; thus, fiat.

    Money isn't the problem, ever, it is the issuance of money for nothing in return. If you say that the money will be paid back with interest, the problem with that is the interest creates a need for creation of value that wasn't present and a cycle that never ends; thus, you still end up with inflation.
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    • Posted by starlisa 11 years, 10 months ago
      Right now, money is being issued, both by the government and the banks (mostly by the banks), not only without value being received in return, but with a negative value being incurred in the form of interest charges on the newly created money.
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  • Posted by khalling 11 years, 10 months ago
    starlisa,
    1.money is just a medium of exchange.
    2. If bankers were able to monopolize all the gold (which I disagree with your premise there) then in a Free society, people are able to switch to other mediums of exchange, ex: see bitcoin.
    3. govts cannot and should not should not be in the business of determining what money is, and Rand, at the end of AS, the Constitution was being rewritten so that there was a separation of state and economy. which is impossible, if the govt can determine the medium of exchange. Legal tender laws. btw, the US did not have such until the 1860s.
    I completely disagree with most of your points.
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