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Should the US Currency be pinned to a Standard like Weights and Measures are?

Should US Currency be pinned to a standard like weights and measures?

  • Yes. Then money would always have exactly the same value.

    Votes: 4 30.8%

  • No. Because then the government would not be able to print money it does not have.

    Votes: 5 38.5%

  • Don't know. This is way to complicated for me.

    Votes: 1 7.7%

  • Hmmm. What is a "standard"?

    Votes: 3 23.1%
  • Total voters
    13
cpwill said:
the problem is - what do you peg it to?
what if that item becomes naturally cheaper? more costly?
what if we pin it to bread, but then some scientific breakthrough reduces the cost of growing wheat and turning it into bread by 2/3rds? now our dollar's worth collapses as well.
Pinning it to something that is less volatile - like the supply of gold - is also a non starter, because there's not enough gold, and as production increases and gold does not, you get strong deflation.
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Adam Smith struggled with the same issue. He even made very similar argument. You are in very good company. I have pondered it as well. He suggested grain, such as wheat, because it retained its value from year to year. It is clear to me that any chosen item will vary its value over time.

cpwill said:
I would reduce the Feds' mandate to just holding down inflation, and subject it to more congressional oversight.
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I do not have a solution. But the idea of currency whose value remains fixed is interesting.
 
Misterveritis said:
Adam Smith struggled with the same issue. He even made very similar argument. You are in very good company. I have pondered it as well. He suggested grain, such as wheat, because it retained its value from year to year. It is clear to me that any chosen item will vary its value over time.


I do not have a solution. But the idea of currency whose value remains fixed is interesting.
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Yes, and the fundamental problem with respect to this issue is what do you fix/peg it to?
 
rathi said:
You have no idea how currency works.
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Nor have I made any pretentious claims that I do.
rathi said:
There is no such thing as stable value in the economic world, period. The value of anything changes depending on supply and demand. Mining gold increases supply just like printing money does. Fixed standards are impossible.
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“There are those who look at things the way they are, and ask why... I dream of things that never were, and ask why not?”
 
Misterveritis said:
Adam Smith struggled with the same issue. He even made very similar argument. You are in very good company. I have pondered it as well. He suggested grain, such as wheat, because it retained its value from year to year. It is clear to me that any chosen item will vary its value over time.


I do not have a solution. But the idea of currency whose value remains fixed is interesting.
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This subject fascinates me, but reasonable discussion is rare.

I only kind of get this subject, I believe its the "weights and measures" concept would be great but is impractical due to shifting values of various commodities upon which it might fixed, right? (More or less)

Is there a reason that it couldn't be pinned to an amount of "work"? Or "energy"?

When I designed my hot rod ebike, I commuted to work on a stock model for a year. I became very familiar with the amount of work I could expect from about 300 watts. (2 x 12v x 12 ah).

I'm pretty sure that one of the natural functions of currency is to carry energy, so would a currency based on a unit of energy address the unstable value of commodities issue?

A watt hour is a watt hour, fixed and agreed upon. Could we base a currency on this? Would it still have the issues of other "hard" currency proposals?
 
What if...? said:
This subject fascinates me, but reasonable discussion is rare.
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So far so good. Here. And now. But we are only 33 posts deep.

What if...? said:
I only kind of get this subject, I believe its the "weights and measures" concept would be great but is impractical due to shifting values of various commodities upon which it might fixed, right? (More or less)
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Do we agree, in principle, that the idea has merit? Adam Smith proposed it in 1775. So it is clearly a hard problem to solve.

What if...? said:
Is there a reason that it couldn't be pinned to an amount of "work"? Or "energy"?
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A. Smith initially described it pinned to an amount of one's daily necessities one could purchase with a given amount of currency. So if my daily salary was originally sufficient to buy three loaves, tow fishes, and a bottle of fine wine, then tomorrow the same salary should continue to buy the same amount of the same things.
What if...? said:
. . .
I'm pretty sure that one of the natural functions of currency is to carry energy, so would a currency based on a unit of energy address the unstable value of commodities issue?
A watt hour is a watt hour, fixed and agreed upon. Could we base a currency on this? Would it still have the issues of other "hard" currency proposals?
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It is a hard problem. I sense a Nobel prize in Economics for the one who solves it. :lol:
 
Misterveritis said:
So far so good. Here. And now. But we are only 33 posts deep.


Do we agree, in principle, that the idea has merit? Adam Smith proposed it in 1775. So it is clearly a hard problem to solve.


A. Smith initially described it pinned to an amount of one's daily necessities one could purchase with a given amount of currency. So if my daily salary was originally sufficient to buy three loaves, tow fishes, and a bottle of fine wine, then tomorrow the same salary should continue to buy the same amount of the same things.

It is a hard problem. I sense a Nobel prize in Economics for the one who solves it. :lol:
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I think its worthy of discussion.

And from the perspective of the Constitution, isn't the govt supposed to control the money supply and issue currency backed by gold and silver?

Those two things are the only economic instructions in the Constitution, right?

And both effectively gone as well if I understand correctly.
 
What if...? said:
I think its worthy of discussion.
And from the perspective of the Constitution, isn't the govt supposed to control the money supply and issue currency backed by gold and silver?
Those two things are the only economic instructions in the Constitution, right?
And both effectively gone as well if I understand correctly.
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This:
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

Yes. Congress has the authority to regulate the value of our money. In the second amendment well regulated means well trained or capable of hitting their mark. So the authority to regulate the vale of money might mean the authority to make sure that the value of the money ought to be consistent. But it could mean something else entirely. :)
 
Misterveritis said:
I do not have a solution. But the idea of currency whose value remains fixed is interesting.
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Currency by its very nature cannot have a fixed value because of its position as a univeral representation of the individual values of every commodity in existence. In other words, value in this sense does not make sense as it is a relation between two commodities and not an absolute, independent, thing.

You are basically begging the question as to how this exchange value is determined, which What If...? came pretty close to solving in his post above, namely, labour time as a representation of value.
 
Khayembii Communique said:
Currency by its very nature cannot have a fixed value because of its position as a univeral representation of the individual values of every commodity in existence. In other words, value in this sense does not make sense as it is a relation between two commodities and not an absolute, independent, thing.

You are basically begging the question as to how this exchange value is determined, which What If...? came pretty close to solving in his post above, namely, labour time as a representation of value.
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I was actually aiming at "work" in the engineering sense.

A kilowatt hour will run 10 100 watt light bulbs for one hour. Everywhere, all the time.

I think they do measure labor in some disciplines this way.

I think a loaf of bread could be "converted" to a number of kilowatt hours of energy, allowing for differences in commodity values without necessitating alteration of the basic dollars/kilowatt hours ratio.

I understand that this model would undermine currency trading, etc in our current structure. And that much of capitalism is the buying, selling, renting of money/debt. But wouldn't the recent financial crisis have been smaller if currency was more "fixed"?
 
Khayembii Communique said:
Currency by its very nature cannot have a fixed value because of its position as a univeral representation of the individual values of every commodity in existence. In other words, value in this sense does not make sense as it is a relation between two commodities and not an absolute, independent, thing.
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That just makes it a hard problem. Sometimes the best way to solve a hard problem is to solve a similar, simpler problem.

Khayembii Communique said:
You are basically begging the question as to how this exchange value is determined, which What If...? came pretty close to solving in his post above, namely, labour time as a representation of value.
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We trade something of value for a measure of that value. I trade my ability to solve other people's problems for currency, which is a measure, or store, of the value of my abilities to the people I work for. I think, so far, most people who have viewed this thread agree that maintaining currency at a constant value is a good thing. The easy question of "how" has a difficult answer. Or maybe no answer at all.
 
Misterveritis said:
That just makes it a hard problem. Sometimes the best way to solve a hard problem is to solve a similar, simpler problem.
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Squaring a circle is not a hard problem, it's impossible. Money doesn't have an absolute value, so it can't be "set".
 
Khayembii Communique said:
Squaring a circle is not a hard problem, it's impossible. Money doesn't have an absolute value, so it can't be "set".
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But one can develop a close approximation. For many problems that is good enough. So the solution need not be perfect. Just good enough.
 
Misterveritis said:
Adam Smith struggled with the same issue. He even made very similar argument. You are in very good company. I have pondered it as well. He suggested grain, such as wheat, because it retained its value from year to year. It is clear to me that any chosen item will vary its value over time.
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yeah, if wheat were all that stable there would be no futures market in it.

I do not have a solution. But the idea of currency whose value remains fixed is interesting.
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the problem is that against a rising economy, the "real" value of that currency would be depreciating.

which is why i like the notion of trying to peg it to the value of the rise somehow. I don't really like GDP as a measure though, and I cast about for something else.
 
cpwill said:
yeah, if wheat were all that stable there would be no futures market in it.
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Certainly. No one item would do it. I haven't read far enough to see what A. Smith's conclusion was. Still, not bad for 1775.
 
No, because if the currency is pinned then there can't be any wage increases, if someone increases their wage then someone else have to decrease their wage or you have to cut into companies profits and investments. If companies stop investing, then you will ruin the economy.

This was a problem under the gold standard. I'm quite sure public workers will keep giving themselves wage increases and never cut their own wage.
 
Camlon said:
No, because if the currency is pinned then there can't be any wage increases, if someone increases their wage then someone else have to decrease their wage or you have to cut into companies profits and investments.
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I do not follow your reasoning. How does maintaining the currency at a certain value lead to any of that? I do not believe it does or it would. It does imply that inflation would not occur. So pay increases would be based upon merit instead of inflation. Is that bad?
 
Misterveritis said:
I do not follow your reasoning. How does maintaining the currency at a certain value lead to any of that? I do not believe it does or it would. It does imply that inflation would not occur. So pay increases would be based upon merit instead of inflation. Is that bad?
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It depends on how you pin it. If you pin the amount of money available, then there will be deflation if there is any efficiency increases. Gold standard does that, because every single note is worth a certain amount of gold. So if you got 1000 bars of gold, and one paper note is worth one bar. Then you can only have 1000 notes. If efficiency increases you can still only have 1000 notes. Therefore we have a 50% deflation from 1800 to 1900. I would prefer this if it worked, because wages would be stable while prices increase or decrease depending on efficiency.

You can pin the value, but then you will have to control the money supply and increase and decrease it to make sure it fits with the production value. Problem is, this give them the power to actually have inflation. Secondly, I think an inflation target of 2.5% makes more sense than a 0% inflation target. We don't really want deflation.

If you pick the first one, you will have a problem because you can't have wage increases. But people won't get it and demand wage increases. This was a problem during the gold standard, especially during 1930-1940. Unions/politicans demand wage increases, and unemployment increases because companies can't afford it.

Even the second one with a 0% inflation target, people don't get that they shouldn't get 2% wage increses every single year when efficiency hardly increases.
 
Folks, has anyone seen the relatively old (1996) film "The Money Masters"?
I think it explains quite well the current monetary system. ;)
Any thoughts?
 
Misterveritis said:
I do not follow your reasoning. How does maintaining the currency at a certain value lead to any of that? I do not believe it does or it would. It does imply that inflation would not occur. So pay increases would be based upon merit instead of inflation. Is that bad?
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worse, it implies that deflation would occur at the same rate of economic growth.
 
cpwill said:
worse, it implies that deflation would occur at the same rate of economic growth.
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I guess it depends on the assumptions.

WE don't devalue each additional meter we measure because we have established that the value of a meter does not float.
 
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