[carsongross]

Can you outline the qualities that an ideal form of money should have?

Would, among those qualities, you list the ability of a privately owned bank to create as much of it as it sees fit?

Can you think of a way that shortcomings of physical gold coins could be overcome given the technologies available to us today?

[rayiner]

So a bank being able to create an unlimited amount of currency is bad, obviously, but limiting your currency growth to how fast you can mine gold out of the ground isn't much better.

Let's take a very simple example. Say there are two people on an island. The first can build boats, the latter can fish. There is no currency. What should happen?

Case 1: No transaction. Both die. Case 2: The first builds a boat (boats are very resource intensive!) and gives it to the second. The second fishes and has fish. The first dies because he has no fish. Case 3: The first agrees to build a boat and rent it to the second in return for part of the first's weekly catch for the next 10 years.

To support Case 3, you basically need contract law. But the contract in question is very inflexible. Does the boat maker enter into similar contracts to cover his needs for clothes, etc? Ideally the boat maker could just sell the fisherman the boat and use the money to buy fish or clothes or anything. So you need currency.

The key question is: how much currency do you need?

Obviously, you need enough to be able to serve as a proxy for the goods and services in your economy and promises thereof. The Fed may not be great at estimating that amount, but pegging it at how quickly you can mine gold out of the ground doesn't make any sense either.

[carsongross]

Would miners pull gold out of the ground more quickly (and start more projects) if the price of gold increased?

Would new entrants in the market attempt to find more efficient ways to extract gold?

Would alternatives to gold as a currency arise?

I'm not convinced that a gold standard would be perfect. I am quite convinced that the current private exponential issuance of debt-based fiat currency by a money printing madman is insane.

I really don't know. I just don't think that our academic betters know either, despite their pretenses. I tend to think that any idea that our friends in economics dismiss is worth considering carefully, given how wrong they've been in the last decade plus.

The U.S. grew at its fastest rate under a hard money gold standard, with heavily restricted immigration and almost no government, financed with tariffs, of all things. Does that mean we should adopt those policies? I dunno man. I do know we were industrializing at the time and, hey, look at that, there was a literally unbelievable explosion of goods, services and promises thereof.

So I try to keep an open mind on this stuff.