Subject:
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Re: A hypothetical economics question...
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Newsgroups:
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lugnet.off-topic.debate
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Date:
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Tue, 5 Mar 2002 12:49:03 GMT
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Viewed:
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414 times
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In lugnet.off-topic.debate, Richard Marchetti writes:
> In lugnet.off-topic.debate, Christopher L. Weeks writes:
> > -- why the 20:1 ratio? It seems like a bad idea to have a ratio instead of
> > just gold certificates and silver certificates and maybe a daily exchange • rate.
> > Do you know the thinking behind the ratio?
>
> You raise an interesting point -- I gather you think the true value is best
> determined through daily market forces.
Unless there's a reason that I'm missing, that's kind of my default thought.
> I am pretty sure the point of a
> ratio rather than certificates traded for daily value has to do with making
> the value static. If one trades X ounces of gold for a thing, one wants to
> be pretty sure one is always getting the precise value one imagines.
Got that, but in a global economy it's a phantom concept. I could always trade
across the border. Maybe it made more sense way back when before instant
global information transmission was the norm.
> Allowing the figure to be traded daily would perhaps needlessly burden users
> of such a currency system with having to daily watch the commodities
> markets. Think of all the prices that could fluctuate daily if that were an
> issue -- certainly high priced items, but also smaller ones I should think.
I am not a savvy international traveller, but when I was fifteen I spent ten
days in Jamaica. At hotels, banks, the airport and some other places, they
kept daily track of the ratio of the Jamaican dollar to the $US. In terms of
$US, things did fluctuate daily and nothing particularly bad seemed to happen
from it. (Or maybe it did, but I don't know the economics?) I'd imagine we'd
just have small stuff priced in terms of silver and large stuff in terms of
gold and we'd sometimes transfer wealth from one to the other as the market
suggested.
> But again, would there even be gold and silver traded as commodities in such
> a market -- why would anyone do that when one could just go score some metal
> by trading in one's certificates?
Oh right. But there's still international trade. If gold becomes scare on the
world market (and we have a fixed ratio), it makes sense for me to trade all my
silver for gold and sell it out of the nation for silver which gives me more
buying power back home. Our local pricing would then have to account for these
kinds of fluctuations because I wouldn't be the only one doing this.
Unless I'm missing something. (Which I could be, I don't really know anything
about the global metals market.)
Chris
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Message is in Reply To:
 | | Re: A hypothetical economics question...
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| (...) You raise an interesting point -- I gather you think the true value is best determined through daily market forces. I am pretty sure the point of a ratio rather than certificates traded for daily value has to do with making the value static. (...) (22 years ago, 5-Mar-02, to lugnet.off-topic.debate)
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