Quote from: Leinaded on September 05, 2015, 10:45:28 AM

Quote from: BobK71 on July 29, 2015, 03:00:55 AM

Gold (or any other metal) may not be a perfect monetary system, but given the nature of the elites that humanity must deal with, it may be humanity's best hope. With the possible exception of Bitcoin, of course.

Hi I want to share my personal opinion about this. The problem here imo lies in the majority of the population don't know really well how money works in our economy.

Thanks for a thoughtful response. I agree that most people don't really understand money (and its relationship to the economy.)

Quote from: Leinaded on September 05, 2015, 10:45:28 AM

What makes a currency a source of prosperity?

We would certainly like currency to support prosperity, but in my opinion, trying to control currency to bring about prosperity is exactly equivalent to the argument for economic central planning that if we don't control food production, the population will starve.

In the rare modern examples of money that was not controlled by the state, i.e. the Italian Renaissance and the Scottish free banking era, there was great prosperity. When money and finance were left to market forces, there was also enough credit and financial innovation to support economic growth. The difference was that there was no artificial (government-driven) support for debt, so lenders took the full hit when borrowers couldn't repay. As a result, lenders were careful and there were none of the bubbles and financial crises we see today.

Quote from: Leinaded on September 05, 2015, 10:45:28 AM

Must ease the transaction of assets: for that it must be easily accesible, used worldwide by any person and be easily exchanged (gold does not fit in this rule since it has a limited quantity)

I think the key issue here is not limited quantity (which also applies to Bitcoin)) but fungeability (divisibility.) If gold becomes mainstream money, the market should provide 100% reserve gold banking that allows depositors to transact with electronic gold. This would solve the problem you describe.

Quote from: Leinaded on September 05, 2015, 10:45:28 AM

Its market capitalization, ie total volume of currency, and its rate of issuing by each country or entity must be tied to some form of quantifiable asset owned by the agent wanting to issue the currency...

....For that reason it is better to establish an inventory of the total of resources, enterprises and industries available to each country or corporation as a mean to establish its assets. Any other way is opening the door for speculation and repeat past mistakes. What leads me to my next point.

This is good in theory and in an ideal world. But the elites of this world don't support such an ideal. The amounts of dollars and closely related assets far outstrip any conceivable economic output of the US, at current prices (and the same could have been said about the issuance of paper sterling by Britain when it was dominant.) The reason is that issuance of money is an easy way to get "free" wealth and power, and to "solve" problems, for the elites, and no human being has proved to be able to resist the temptation to over-issue money.

While your idea is theoretically sound, there is no practical way to set up incentives to implement it. So we are now left with the second-best option, which is a limited-supply currency that no one can expand.

Given that there's no practical and ethical way to tie the quantity of money to real economic output, what medium money takes becomes really pretty arbitrary. I would agree that this facilitates speculation initially, but the steady state should see convergence to some standard with an ethical distribution of wealth. (If South Africa doesn't produce much real wealth, eventually, most of the diamonds would go to other countries and S. Africans would have to work for a living.)

Quote from: Leinaded on September 05, 2015, 10:45:28 AM

Must not be object of speculation: as I mentioned before when you tie the market cap to an accurate measure of a country assets you can't create artificial scarcities or flood the market with stocks to drive the price down (in this case the trackeability helps to fight this as well). You know something is wrong in the market when you can buy contracts for several tons of aluminum when you aren't going to use that metal for anything productive, just to speculate on the price. Is famous the story of Wall Street brokerage firm that bought several thousands heads of cattle to speculate on their price but forgot to sell them and they ended paying more than what they invested to rent a place to store the cattle and feed them. To avoid speculation a currency with a trackeable source is specially useful since it allows to know if the buyer is an enterprise in need of the resource or a speculative party. Gold is difficult to track and our paper money can be tracked but needs intervention by the government. Some cryptocurrencies allow a easier tracking by normal citizens and even its automatization and implementation of more security measures as they are open source and constantly evolving, adapting to the new needs of the population.

Speculators have an incentive to be right, since they lose money if they are wrong. Thus, they serve a socially-useful purpose by correcting bad market signals (and especially those sent out by governments to confuse the public.) For example, speculators in gold today are probably responsible for the US not issuing even more money (and thus destabilizing the world economy more.) When too many people want gold, it becomes difficult for the authorities to issue too much money and still keep gold prices down.

Traceability also has both pros and cons. Governments in modern times have, most of the time, engaged in some degree of financial repression. (A mild form is suppressing interest rates while issuing assets to drive inflation higher than interest -- thus making savers lose wealth automatically by staying in safe assets; a severe form would be capital controls as practised by China to stop savers dumping yuan to get into dollars, at present.) While traceability helps fight crime, it also helps financial repression, which ultimately helps the elites temporarily by propping up asset values, but also makes the eventual crash worse.