The so-called Soviets and Bretton Woods

Good morning, once again, Sydney Grew, if only just! As you know, I am not convinced by your suggestion(s) above. Upon reflection, what I suggest that you do is try it out as an economic experiment in your own household. If it works, extend it to your local community! Yet what about the fundamental economic problem of scarcity, for example?

Wikipedia - Scarcity

If you just give everyone sufficient credit(s), prices for scarce resources will go through the roof! As for the Nixon Shock of 1971, Sydney Grew, it was a series of economic measures taken by US President Richard Nixon in 1971 including unilaterally cancelling the direct convertibility of the United States dollar to gold that essentially ended the existing Bretton Woods system of international financial exchange. The current world monetary system assigns no special role to gold; indeed, the Federal Reserve is not obliged to tie the dollar to anything. It can print as much or as little money as it deems appropriate. There are powerful advantages to such an unconstrained system. Above all, the Fed is free to respond to actual or threatened recessions by pumping in money.

To take only one example, that flexibility is the reason the stock market crash of 1987—which started out every bit as frightening as that of 1929—did not cause a slump in the real economy. While a freely floating national money has advantages, however, it also has risks. For one thing, it can create uncertainties for international traders and investors. Over the past five years, the ongoing global financial crisis has created a lot of volatility in financial markets around the world. The costs of this volatility are hard to measure (partly because sophisticated financial markets allow businesses to hedge much of that risk), but they must be significant. Furthermore, a system that leaves monetary managers free to do good also leaves them free to be irresponsible—and, in some countries, they have been quick to take the opportunity.

The return to a gold standard is supported by followers of the Austrian School of Economics, largely because they object to the role of the government in issuing fiat currency through central banks. They argue that printing money will lead to inflation, Sydney Grew. However, the Gold Standard is an economic myth. The legend of King Midas has been generally misunderstood. Most people think the curse that turned everything the old miser touched into gold, leaving him unable to eat or drink, was a lesson in the perils of avarice. But Midas's true sin was his failure to understand monetary economics. What the gods were really telling him is that gold is just a metal. If it sometimes seems to be more, that is only because society has found it convenient to use gold as a medium of exchange: a bridge between other, truly desirable, objects. There are other possible mediums of exchange, and it is silly to imagine that this pretty, but only moderately useful, substance has some irreplaceable significance.

But there are many people, nearly all of them ardent conservatives, who reject that lesson. They are dedicated to the belief that the key to prosperity is a return to the gold standard, which John Maynard Keynes pronounced a "barbarous relic" more than 60 years ago. With any luck, these latter-day Midases will never lay a finger on actual monetary policy. There is a case to be made for a return to the gold standard, Sydney Grew. It is not a very good case, and most sensible economists reject it, but the idea is not completely crazy. On the other hand, the ideas of our modern gold bugs are completely crazy. Their belief in gold is, it turns out, not pragmatic but mystical. Chelsea (Big C) wears gold as bling, so I tend to buy her some gold jewellery, although more for show than as an investment. I commend such a sensible approach to Neil McGowan!

FT - Blogs - Why gold jewellery won't drop with the dropping price of gold

One Member has for a second time invoked "scarcity"; which according to that Wikipædic entry is defined as "the fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources."

But I honestly see no insuperable difficulty there! Let us consider a typical scarce resource, namely residence in a house with a view of Silbury Hill from its kitchen window. There cannot I imagine be more than a dozen such houses, and so such residence must be a scarcity.

The solution uses four principles: 1) clarity of definition 2) desire 3) fairness and 4) randomness.

First we must define the scarce resource a little more closely in regard to time and place: what would be scarce but desirable would be "the granting to one person (who may or may not nominate not more than four others to join him) the quiet enjoyment of a clear and unimpeded view of Silbury Hill over a stated period (one year seems reasonable) from a kitchen window no more than one mile away." There! We have defined a scarce resource. In the future world there will be vast catalogues of scarce resources thus defined, ready for the punters to flick through and take their pick.

Now desire. Let us suppose that there are seven billion adults in the world. Out of those seven billion there will be, say, one million who register their desire for our scarce "Silbury-Hill kitchen view" resource. They will all go onto the waiting-list. So often the youth of to-day confuse their wants with their needs, but never mind that.

Next fairness. The principle of fairness stipulates - in principle - that each candidate in turn will be entitled to have his period of quiet enjoyment of a chosen resource. But some of the million will have to wait one million years (or 83333 years if there are a dozen such houses), and human life-span being what it is that is - at least for the present - out of the question.

So how to combine scarcity with fairness? The answer is: through randomness. Let a random draw (administered by incorruptible robots) decide who will have the house next! An entirely fair method, is it not, and one not unknown even in to-day's world, for example in the allocation of new flats in Hong Kong.

So, are there any further problems? I think not.

Note by the way that person A may after looking at the catalogue register his name for a thousand scarce resources, whereas person B may state his desire for far fewer. But if members will look at the mathematics they will see that this makes no difference to the fairness of the eventual outcome.

Well, hard work for some one else in return for "money" will - thankfully - no longer exist in the future. It is a remnant of slavery or serfdom is it not. Indeed the expression "wage-slave" is no joke.

Hard work for one's own personal satisfaction - or as an act of benevolence - will doubtless continue; but will have nothing to do with "money."