# Think Tank > Austrian Economics / Economic Theory >  Better than Gold? Theoretically Ideal Monetary Standards

## Ecolibertarian

On this site, even those of us who don't wholeheartedly embrace some implementation of a gold standard are somewhat familiar with the arguments advanced in favor of gold as money, as a unit of value, as a bulwark against inflation and hidden taxation, etc. Historically, even those who have agreed that pure fiat monetary regimes are unacceptable have differed on specific policies when it comes to sound money (bimetallic standards, for example). Is gold an ideal store of value? Or could we imagine a better substance on which to build a currency regime? I'd like to see what criteria people would set for an ideal non-fiat system. Here's what I've come up with so far:

1. Durable; 
2. Limited in natural supply, all natural reserves discovered, and impossible to produce artificially;
3. Following on (2), widely perceived as valuable or even essential for reasons not dependent on the current state of technology (other than the technology to theoretically create it, which per (2) should be impossible;
4. Distinguishable from other substances;
5. Easily transported, yet difficult to confiscate.

Would anyone else disagree with or add anything to the above? I'm wondering whether cryptocurrencies are not superior to gold.

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## CaptUSA

You have durability, portability, limited supply, inherit value, and uniformity, but you're missing divisibility.  Acceptability is another, but I think you have that.

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## acptulsa

I still like Ron Paul's idea--competing currencies.  Those with real world merit will be accepted widely, and anything can be used between consenting adults.  No throwing people in jail for doing business in any efficient yet harmless way, and an end to the Petrodollar Wars.

We don't need no stinking gold standard, or any other standard.  Let the market pick the winners, because when that happens people are using what works best, and their lives are improved to that degree.

Why should people listen to our opinions of what would work best?  Let us all try them all and see.

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## kfarnan

In many ways CC is better than precious metal.  The planet isn't being raped for everything it has.  Divisibility, portable, security; for now nothing else can come close.

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## H. E. Panqui

_I still like Ron Paul's idea--competing currencies. Those with real world merit will be accepted widely, and anything can be used between consenting adults.

_

(....just a few questions for ludwig monetary theorists...what unit(s) will 'the government' use to 'do business?' collect taxes, etc.. ...in what unit(s) will government employees, soldiers, etc., be paid?...what unit(s) will be 'acceptable' in courts at law?..for damages when there is no contract, etc.?... 

...those of you who are pure, perfect 'anarchists' can make such ludwig theoretical 'competing currencies' statements...those who aren't are doing the ludwig shuffle....again...get real...

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## Bossobass

I believe gold and silver to be just 2 important resources. If I had any say, the US currency would be backed by all of its valuable resources. America has a couple trillions of tons of coal (50% of the world's known reserves), vast timber (17 billion cu ft/year), gold (8,000 tons, minimum and the 4th highest producer with 240 metric tons/year), silver, oil (on and offshore reserves of 1.2 trillion barrels), natural gas (6th in the world with 272 trillion ft^3) water (3rd in the world by total renewable water resources), iron ore (3.5 billion metric tons, 5th in the world), copper (world's 3rd highest producer), rare earth metals (2nd to China) etc.

In this age of super computers, such a system of currency backed by a basket of resources would be a snap and something I've thought about since the 90s after learning the debt based currency FRN scam.

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## presence

Elimination of legal tender laws.  Elimination of state printing presses.   Whatever dollars in circulation stay in circulation until they melt away.

From there, private individuals can mint competing currencies out of whatever they wish to mint from... be it gold, silver, copper, proprietary paper or plastic, etc. 

Along side these "competing currencies"; crypto currency, and other extraterritorial state fiats would still exist.

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## presence

> (....just a few questions for ludwig monetary theorists...what unit(s) will 'the government' use to 'do business?' collect taxes, etc.. ...in what unit(s) will government employees, soldiers, etc., be paid?...what unit(s) will be 'acceptable' in courts at law?..for damages when there is no contract, etc.?... 
> 
> ...those of you who are pure, perfect 'anarchists' can make such ludwig theoretical 'competing currencies' statements...those who aren't are doing the ludwig shuffle....again...get real...


suddenly when .gov can't print and tax their way out of their promises... they'll need to make less promises

such a pity

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## H. E. Panqui

_suddenly when .gov can't print and tax their way out of their promises... they'll need to make less promises

such a pity_

(...agreed about them making 'less promise$'...but 'gov.' doesn't 'print'...'the government' issues bonds (promises to pay)...the banksters 'create deposits' and acquire the bonds...the gov. then acts as 'tax collector' for the banksters as they get their bond interest, etc. ad nauseam, for nothing.... 

...i don't blame folks for being complete monetary ignoramuses...it's been going on for age$...

..to me thi$ issue is the 'dividing line'...monetary realists vs. the all-time undefeated home team world champions:...the monetary ignoramuses...and it's been an ugly ugly game for the EXTREMELY undermanned monetary realists....

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## Zippyjuan

Too tight of a money supply can squeeze and limit your economic growth.  But it also true that too much money is not good for an economy as well.  

Zimbabwe which used to have the "too much money" problem now has the opposite one.  

http://www.newzimbabwe.com/news-2857...less/news.aspx

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## acptulsa

> (....just a few questions for ludwig monetary theorists...what unit(s) will 'the government' use to 'do business?' collect taxes, etc.. ...in what unit(s) will government employees, soldiers, etc., be paid?...what unit(s) will be 'acceptable' in courts at law?..for damages when there is no contract, etc.?... 
> 
> ...those of you who are pure, perfect 'anarchists' can make such ludwig theoretical 'competing currencies' statements...those who aren't are doing the ludwig shuffle....again...get real...


What difference does it make?  One currency can be exchanged for another now, right?  Do you think it won't be possible under this system?




> I believe gold and silver to be just 2 important resources. If I had any say, the US currency would be backed by all of its valuable resources. America has a couple trillions of tons of coal (50% of the world's known reserves), vast timber (17 billion cu ft/year), gold (8,000 tons, minimum and the 4th highest producer with 240 metric tons/year), silver, oil (on and offshore reserves of 1.2 trillion barrels), natural gas (6th in the world with 272 trillion ft^3) water (3rd in the world by total renewable water resources), iron ore (3.5 billion metric tons, 5th in the world), copper (world's 3rd highest producer), rare earth metals (2nd to China) etc.





> Too tight of a money supply can squeeze and limit your economic growth.  But it also true that too much money is not good for an economy as well.


Two more good reasons for competing currencies.  They can utilize any or all of those things of value, and they are always sufficient to keep the economy perking along without shedding value--or if they do drop in value too much, there's another thing to exchange with handy and not illegal to use.

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## H. E. Panqui

_What difference does it make? One currency can be exchanged for another now, right? Do you think it won't be possible under this system?_

...in 'this [stinking rotten misunderstood] system', sure, you can 'exchange one currency for the other'...BUT WHEN YOU GO TO PAY THE TAXMAN SO AS TO REMAIN IN 'YOUR' AMERICAN HOUSE AND USE 'YOUR' CAR, BUY SOME CLOTHES, TAKE YOUR SWEETHEART TO THE MOVIES AND DINNER, ETC. AD GD NAU$EAM, YOU'D BETTER HAVE ENOUGH 'DOLLARS'...OR GO WITHOUT...(NOT TRUE ABOUT ANY OF YOUR THEORETICAL 'COMPETING CURRENCIES!'...

....sorry for 'yelling'..but sheesh!..get real...quit with the ludwiggery already... 

...you're like the people who say, '!we need a gold money system...get rid of your dollars and buy gold!!'...so i ask them, why you buying all the gold?...they say, essentially, 'because it will be worth a lot more dollars in the future'...well, that leads me into all kinds of fun que$tions...

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## acptulsa

> ...you're like the people who say, '!we need a gold money system...get rid of your dollars and buy gold!!'...so i ask them, why you buying all the gold?...they say, essentially, 'because it will be worth a lot more dollars in the future'...well, that leads me into all kinds of fun que$tions...


Like what's wrong with that...?

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## DamianTV

I'll throw something at the OP...

The threat of elimination of Cash, and thereby all Financial Privacy is close at hand.  The mentioned requirements could be distorted to include purely digital currency.  I would have to say two additional prerequisites, necessitated by Freedom, would have to include both Privacy and Tangibility (touchable, physical, like cash).  This would also hopefully allow Competing Currencies that are not controlled by issue of the Banks, but given value by the People.

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## presence

> ...you're like the people who say, '!we need a gold money system...get rid of your dollars and buy gold!!'...so i ask them, why you buying all the gold?...they say, essentially, 'because it will be worth a lot more dollars in the future'...well, that leads me into all kinds of fun que$tions...


If we took my suggestion of "stop printing and allow those notes outstanding in the market" it might actually lead to a deflationary trend as decaying legacy dollars are "destroyed" over time without replacement; whereby the dollar becomes more valuable than gold.

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## H. E. Panqui

> If we took my suggestion of "stop printing and allow those notes outstanding in the market" it might actually lead to a deflationary trend as decaying legacy dollars are "destroyed" over time without replacement; whereby the dollar becomes more valuable than gold.




(it seems to me, historical reality reveals  'deflation' (a decrease in the supply of money) has always been a really really bad thing for 'the little guy'..it also seems to me if you are filthy rich, 'deflation' would be freaking great!..(of course i'm willing to hear your 'theorie$' here) 

..can you elaborate some historical reality as to when 'deflation' has ever been a good thing for the broad population? 

...(just trying to fight through the ludwiggery, folks)

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## presence

> (it seems to me, historical reality reveals  'deflation' (a decrease in the supply of money) has always been a really really bad thing for 'the little guy'..it also seems to me if you are filthy rich, 'deflation' would be freaking great!..(of course i'm willing to hear your 'theorie$' here) 
> 
> ..can you elaborate some historical reality as to when 'deflation' has ever been a good thing for the broad population?


the primary reason why deflation is "bad" is because loans default.  undoubtedly $#@!ty loans have been made on the fiat system. 

those loans SHOULD default; or there should be strong incentive for creditors to renegotiate... because there should be no lender of last resort; ala .gov

as deflation via dollars destroyed would make legacy fiat currency more valuable, and creditors would have little other options and without "last resort" there would be incentive to renegotiate.   something or nothing... creditors will choose something.

so what you might see is loans repackaged under new rates and terms; perhaps also _redenominated_ in gold terms... or some other mutually agreeable free market currency terms. 

In all my reading... the Austrians have always alluded to 6-12 months of pain before balance can be restored via market forces; and a large part of that painful period is loan defaults and refinancing.

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## erowe1

> inherit value


Neither any cryptocurrencies nor any commodities have inherent value. Value is inherently subjective.

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## CaptUSA

> Neither any cryptocurrencies nor any commodities have inherent value. Value is inherently subjective.


Cryptocurrenices do not have inherit value, but commodities do.  By the very definition, it means that commodities can be used for a purpose other than just a means of exchange.

Cryptocurrencies are basically bank notes that operate similar to fiat, but there is no government decree.  I'd argue that they are superior to fiat, but they still do not meet all the criteria of "sound money".

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## presence

> Cryptocurrenices do not have inherit value, but commodities do.


Nothing has "inherent value"; value is subjective to your ability to unload your junk on someone else.  It doesn't matter if that junk is gold or crypto, or a used car with a rusted chassis... its still valueless junk until you sell it. 

Valuation is instantaneous and fleeting. 




> The *subjective theory of value* is a theory of value  which advances the idea that the value of a good is not determined by  any inherent property of the good, nor by the amount of labor necessary  to produce the good, but instead value is determined by the importance  an acting individual places on a good for the achievement of his desired  ends.
> 
> []
> 
> in the Austrian school of economics,  prices are not meant to be a quantification of marginal value. On the  contrary, a buyer will only buy a good if he subjectively values the  good more than the price he has to pay for it, and this subjective  profit will tend to diminish with each unit of good the buyer decides to  buy.


https://en.wikipedia.org/wiki/Subjec...heory_of_value

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## PierzStyx

> _I still like Ron Paul's idea--competing currencies. Those with real world merit will be accepted widely, and anything can be used between consenting adults.
> 
> _
> 
> (....just a few questions for ludwig monetary theorists...what unit(s) will 'the government' use to 'do business?' collect taxes, etc.. ...in what unit(s) will government employees, soldiers, etc., be paid?...what unit(s) will be 'acceptable' in courts at law?..for damages when there is no contract, etc.?... 
> 
> ...those of you who are pure, perfect 'anarchists' can make such ludwig theoretical 'competing currencies' statements...those who aren't are doing the ludwig shuffle....again...get real...


1. Competing currencies doesn't mean the government can't have its own currency, just that it can't compel anyone to use it it alone.

2. The US government got along quite well with competing currencies for the first 1/3-1/2 of its existence. It would do so again.

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## PierzStyx

> Nothing has "inherent value"; value is subjective to your ability to unload your junk on someone else.  It doesn't matter if that junk is gold or crypto, or a used car with a rusted chassis... its still valueless junk until you sell it. 
> 
> Valuation is instantaneous and fleeting. 
> 
> 
> 
> https://en.wikipedia.org/wiki/Subjec...heory_of_value


Technically true. But gold has historically been a default that everyone across the world has placed value in, even when starving people have been willing to trade food for gold. It is as close to having inherent value as anything can have it.

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## erowe1

> By the very definition, it means that commodities can be used for a purpose other than just a means of exchange.


That is not what the definition of value is.

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## presence

> It is as close to having inherent value as anything can have it.


If you take two men that meet in the desert, one has water and the other has gold... you'll find the "inherent value" proposition to be much weaker.   That is, the tendency to price gouge given extreme circumstances destroys the notion of "inherent value"; value is subjective to party desire, relative to circumstance, and fleeting from the last known transaction; never inherent.

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## kfarnan

> Cryptocurrencies are basically bank notes that operate similar to fiat, but there is no government decree.  I'd argue that they are superior to fiat, but they still do not meet all the criteria of "sound money".


Bank notes operate nothing like CC.  They're exactly opposite.

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## H. E. Panqui

..as one wag put it, ...'alas, it seems only when all the trees have been cut down, all the soil ruined with industrial agriculture and chemicals, all the waters polluted, all the air unsafe to breathe...only then will the gd fool republicrat ludwiggers discover you cannot eat money...

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## otherone

> suddenly when .gov can't print and tax their way out of their promises... they'll need to make less promises
> 
> such a pity


All the slimy little creatures will be flopping about the muck in the bottom of the drained swamp, suffocating in the sunlight.

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## presence

> ..as one wag put it, ...'alas, it seems only when all the trees have been cut down, all the soil ruined with industrial agriculture and chemicals, all the waters polluted, all the air unsafe to breathe...only then will the gd fool republicrat ludwiggers discover you cannot eat money...


yes it would be much better for all if only politically connected socialists obtain permits for such wanton destruction, at least then nobody can be sued

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## kfarnan

> ..as one wag put it, ...'alas, it seems only when all the trees have been cut down, all the soil ruined with industrial agriculture and chemicals, all the waters polluted, all the air unsafe to breathe...only then will the gd fool republicrat ludwiggers discover you cannot eat money...


Yes, go back to bartering livestock and nuts. Lol

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## erowe1

> ..can you elaborate some historical reality as to when 'deflation' has ever been a good thing for the broad population?


https://en.wikipedia.org/wiki/The_Great_Deflation

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## presence

> Yes, go back to bartering livestock and nuts.


yes but if you trade $100 worth of nuts you collected for nothing for $100 goat your neighbor free ranged you each owe $30 in capital gains and $8 in sales tax on the barter

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## CPUd

There is a disappointing lack of oyarde in this thread.

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## erowe1

> ..as one wag put it, ...'alas, it seems only when all the trees have been cut down, all the soil ruined with industrial agriculture and chemicals, all the waters polluted, all the air unsafe to breathe...only then will the gd fool republicrat ludwiggers discover you cannot eat money...


Sarcasm, right?

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## oyarde

> Too tight of a money supply can squeeze and limit your economic growth.  But it also true that too much money is not good for an economy as well.  
> 
> Zimbabwe which used to have the "too much money" problem now has the opposite one.  
> 
> http://www.newzimbabwe.com/news-2857...less/news.aspx


Rhodesia was nice .

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## oyarde

> There is a disappointing lack of oyarde in this thread.


Gold and silver are real money . You may need to use something less valuable to back one competing currency , say lead , nickel , copper etc

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## oyarde

> yes but if you trade $100 worth of nuts you collected for nothing for $100 goat your neighbor free ranged you each owe $30 in capital gains and $8 in sales tax on the barter


If you drink enough apple beer you may forget about all of your free walnut monies .

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## CPUd

> Gold and silver are real money . You may need to use something less valuable to back one competing currency , say lead , nickel , copper etc


I prefer chickens, because they can multiply, and they are tasty.

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## oyarde

> I prefer chickens, because they can multiply, and they are tasty.


 I raise chickens but they are not for sale . I can sell some eggs though .

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## Henry Rogue

I agree value is subjective, but I think the part about value being fleeting is optional.  Unless you mean specifically a quantitative value, then I agree it is only at that point of the exchange agreement. But a hoarder may value something for a long period of time. In that sense it isn't fleeting, although I guess, the hoader's utility may change.


> Nothing has "inherent value"; value is subjective to your ability to unload your junk on someone else.  It doesn't matter if that junk is gold or crypto, or a used car with a rusted chassis... its still valueless junk until you sell it. 
> 
> Valuation is instantaneous and fleeting. 
> 
> 
> 
> https://en.wikipedia.org/wiki/Subjec...heory_of_value

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## H. E. Panqui

> Gold and silver are real money . You may need to use something less valuable to back one competing currency , say lead , nickel , copper etc




...umm, sir, it's waaaaaaaaaaaaaaaay past time to 'get real'...'money' has been, for a long long time, many things other than 'gold and silver':...

_"...what is commonly understood as money has always consisted, tangibly, of a number of pieces of some material, marked by public authority and named or understood in the laws or customs: that its palpable characteristic was its mark of authority; its essential characteristic, the possession of value, defined by law; and its function, the legal power to pay debts and taxes and the mechanical power to facilitate the exchange of other objects possessing value..."_ (attributed to a. del mar)

...so let's stop with the wordplay...

(if he continues, i will insist oyarde cease peddling 'money bombs' for his favorite republicrat politicians...i will insist he cease the hypocrisy and start telling people the/his/her truth: ...these aren't 'money bombs'..they are 'currency bombs' and/or 'fiduciary media bombs'... (btw, this might be an interesting tactic)

...get real, man!!...quit with the quibbling, learn the history, THE REALITY, and cease with the theoretical ludwiggery!..

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## oyarde

I prefer to call them what they are , FRN's . No , I do not keep them I basically unload them as fast as I receive them. They are mostly converted to land , fruit trees , copper , lead , aluminum , silver  , gold  ,weapons , tools , livestock etc

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## oyarde

FRN Bomb, lol , that is what I would call it .

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## BV2

> On this site, even those of us who don't wholeheartedly embrace some implementation of a gold standard are somewhat familiar with the arguments advanced in favor of gold as money, as a unit of value, as a bulwark against inflation and hidden taxation, etc. Historically, even those who have agreed that pure fiat monetary regimes are unacceptable have differed on specific policies when it comes to sound money (bimetallic standards, for example). Is gold an ideal store of value? Or could we imagine a better substance on which to build a currency regime? I'd like to see what criteria people would set for an ideal non-fiat system. Here's what I've come up with so far:
> 
> 1. Durable; 
> 2. Limited in natural supply, all natural reserves discovered, and impossible to produce artificially;
> 3. Following on (2), widely perceived as valuable or even essential for reasons not dependent on the current state of technology (other than the technology to theoretically create it, which per (2) should be impossible;
> 4. Distinguishable from other substances;
> 5. Easily transported, yet difficult to confiscate.
> 
> Would anyone else disagree with or add anything to the above? I'm wondering whether cryptocurrencies are not superior to gold.


You should add: Readily divisible, use not necessarily precluding other forms of money.  Also, deeply important, is that its highly valuated by a large number of people.

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## osan

> I still like Ron Paul's idea--competing currencies.


To a point, yes.  Beyond that point, a definite no.  Why?  Because markets are prone to manipulation of a sort that can cause severe problems for the people trading in them.  Such manipulations are probably and at least mostly criminal in nature.  So-called "pump and dump" schemes, for example, are clearly felonious in that they are incontestably fraudulent in many cases and at best, the product of ignorance and mania in the rest.  I subscribe not only to "caveat emptor, but "caveat vendor" as well.  All parties to contractual transactions are bound to honesty, if not minimal competence.





> Those with real world merit will be accepted widely,


Um... not necessarily.  Firstly, it depends on what is meant by "merit" in any given case.  This ties closely into questions of transactor competency.  A nation of narrow-'tween-the eyes dullards (remind you of anyone?) could be, and in fact have been, convinced to accept bull-vapors as meritorious money/currency.  Go back ca. 2008 for a really large set of superb examples of this sort of thing.  Acceptance, in and of itself, is no sufficient arbiter of merit.




> We don't need no stinking gold standard, or any other standard.


Not sure I can agree with this.  Standards regarding certain issues is not perforce a bad idea.  The issue turns on questions of what the standards shall be, who will determine them, upon what basis are they to be accepted as "authoritative", and how and by whom they will be administered.  Such standards should speak to the line between valid and criminal activity.  They should be demonstrably non-arbitrary insofar as the goals to which they have been designed to support are concerned.  Finally, their administration must comport in accord with the non-arbitrary nature of the standards in their application such that those charged with that task act such as to do so rightfully, non-arbitrarily, non-criminally, and in a manner that begets respect, rather than fear and hate, which is the vastly common case today.




> Let the market pick the winners,


In order for this to happen, the market must be competent to so pick.  As things stand today, the markets are not by a very long shot.  Government is the primary reason for this.  Why?  For one thing, they bail out the fools and other losers who play in a sandbox not of their understanding.  "Too big to fail" is a god example of how governments destroy the fundamental goodness of the marketplace by giving players no incentive to play competently, rationally, and responsibly.

Therefore, short of outright criminal activity, governments have no place sticking their noses into the affairs of the markets.  If we were to have such circumstances where the market chooses, it would only work out well if all governmental nosery were strictly confined to clearly defined criminal acts.  All else would be on the table insofar as market operations were concerned.

In the beginning, the transition would lead to very bad results for many.  I do, however, anticipate that this would not go through more than two or maybe three iterations on any scale worthy of mention.  Why?  Because when the first bubble would burst and all the losers were left with their dicks in the dirt and completely SOL, they would have a simple choice before them: wise up, or take it in the neck again.  "Wising up" could mean either leaving a given market completely, or deciding to get some education prior to one's next round of involvement.  Those stoopid enough to fall a second time with no safety net will likely learn the lessons.  Those too stoopid or corrupt to learn will simply be consumed, ending up under a bridge, eating a bullet, being killed by mafia creditors, or what have you.

But when the wave of insanity damped into equilibrium, you would then presumably have a populace now nominally qualified to operate in a given market, armed with the knowledge that if they pooch, they burn with no hope of rescue from the public sector.  This is absolutely required in order to live in a world where the market decides winners and losers, if those winners are to make any rational sense.

As for "trying them all" - no thanks.  I have no interest in trying the "shove knives through your own eyes" candidate.  Some ideas suck prima facie.

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