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The Party of Ideas

[ 168 ] August 24, 2012 |

Finally, the Republicans — truly becoming the party of Paul Ryan with a little Ron Paul on the side — have the courage to consider some real solutions!

The Republican Party is set to call for the creation of a commission to look at restoring a link between the U.S. dollar and gold severed 40 years ago, the Financial Times reported on its website Thursday.

LGM has obtained advance copies of the platform, showing that the Republican Party want commissions to asses other important questions:

  • Does the sun revolve around the earth?
  • How many pet dinosaurs did families typically have in the first years of the Earth 6,000 years ago?
  • Do women have fewer teeth than men?  (A draft suggesting inquiry into the question of whether this gives women less decision-making capacity then men was rejected; the Republican platform has already answered that question in the affirmative.)
  • Can witches be identified by drowning?
  • Does Barack Obama have the brainpan of a stagecoach tilter?

Comments (168)

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  1. Malaclypse says:

    Because what an economy still recovering from a massive household debt crisis really needs is a deflationary spiral.

    Fuck me like a walrus, but these guys make GWB look sane and competent.

  2. NBarnes says:

    digby found a great quote from Ayn Rand on this one; “Gold money is a tangible value in itself and a token of wealth actually produced.”

    A token, you say? You mean, a marker that might then be exchanged for goods and services? So, if I were hungry and exposed to the elements, but had a large pile of gold in front of me, I might be able to trade some of that gold to someone else for food and shelter? And they would then… uh… well, you still can’t eat the gold, so they trade it on to someone else in exchange for goods and services, and so on and so forth.

    But that’s not money, because, according to Ayn Rand. “When you store your savings in the form of gold coins, they represent the goods which you have actually produced[.]”

    ‘Store your savings in the form of gold’ So… one would be using gold as some sort of store of value against wanting to redeem some of that value in the forms of goods and services which can fulfill needs that gold alone cannot?

    And, the final point… goldbugs would assert that script has no intrinsic value, unlike gold. Gold, as is obvious, is neither particularly useful (at least, no more so than many other trace metals used in some forms of electronics), nor can you eat it. Compare that to the US dollar; the intrinsic value of the US dollar is that the US federal government solemnly swears to accept your dollars in payment for your US taxes. You can assert that there’s no intrinsic value there because you still can’t eat dollars, but many, many people want dollars for this purpose, and to this end it is very, very easy to trade dollars for things you can eat. Easier than it is to trade gold in the same way. If that’s not intrinsic value, I don’t know what is.

    • ploeg says:

      Keynes deals with this with the appropriate level of ridicule:

      If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again… the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.

      The analogy between this expedient and the goldmines of the real world is complete. At periods when gold is available at suitable depths experience shows that the real wealth of the world increases rapidly; and when but little of it is so available our wealth suffers stagnation or decline. Thus gold-mines are of the greatest value and importance to civilisation. Just as wars have been the only form of large-scale loan expenditure which statesmen have thought justifiable, so gold-mining is the only pretext for digging holes in the ground which has recommended itself to bankers as sound finance; and each of these activities has played its part in progress — failing something better.

    • Gold, as is obvious, is neither particularly useful


    • Heron says:

      I prefer a simpler, though similar, argument. If gold has intrinsic value, then why can’t you use it to pay a bear to hunt for you?

      If gold had an intrinsic generalized utility that paper money did not then, in the case you lay out wherein one is isolated in a snowstorm, you could convert it instantly into “food” or “warmth” without needing exchange, for that utility would be part of its basic properties. That you cannot proves it for what it is; a symbol, a stand-in, something worthwhile not in and of itself but as a medium of exchange based on the willingness of others to accept it, nothing more.

      • sparks says:

        A bear needs no inducement to hunt for you. You may not like the outcome, but the bear will be well fed.

        • Heron says:

          Hmm, I suppose I should have phrased that “why can’t you pay a bear to bring you food” or “…to hunt on your behalf” to avoid any humorous ambiguity.

          • mark f says:

            Doesn’t that question kind of hinge on factors besides method of payment, though?

            • Heron says:

              The point is that gold is not, in itself, valuable. If gold possessed a general, before-all-things utility, then that value wouldn’t require significant intelligence to desire than desire for food, sex or shelter does; it would be something that every living thing needs, and thus, something every living thing would find valuable. If gold were possessed of a natural utility as a “store of value” or “method of exchange”, that quality would be independent of human behavior or contingent considerations like the presence of a counter party willing to exchange goods or services. It’s barely a step up from believing in alchemy. The argument that gold has a discrete value independent of human activity assumes that gold can be exchanged for anything you want at anytime anywhere; it is basically mystical.

              • Heron says:

                bah terrible editing on my part:

                …then that value wouldn’t require significant intelligence to desireanymore than the desire for food, sex or shelter does..

              • mark f says:

                No, I understand all that. I’m just not sure that the whole bear thing makes a lot of sense. I mean, I don’t think I’m going to get a bear to do much for me even if I offer him a lifetime supply of fresh salmon and a harem of sweet, subservient ladybears, but that doesn’t tell us anything useful about salmon meat or bear pussy.

      • Warren Terra says:

        Who wants a bear to hunt for them? After all, you probably know where you are anyway, and what happens once the bear finds you?

      • wengler says:

        I think from a conservative’s point of view, it’s not that gold has an great intrinsic value, it’s that the guv’ment can’t manipulate the value the gold.

        Which is ridiculous, because of course no one knows the exact supply of gold in the world, and therefore the supposed value of gold is easily manipulated.

        • Heron says:

          It’s even more ridiculous when you ask a simple question; why do states in a gold system hoard gold? To guarantee their currency against price shocks, of course, which is just a positive way of saying “to manipulate the local value of gold”.

    • mark f says:

      Also, if you prefer gold to straight cash, homie, what stops you from using your cash to buy gold?

    • Scott Lemieux says:

      Yeah, the idea that gold has an “objective” exchange value that paper money doesn’t has always been a special favorite of Rand’s nutty ideas for me.

    • wengler says:

      I can’t wait until those pesky scanners at the supermarket are replaced with coin scales. It’s about time we went with what worked!

    • DrDick says:

      Gold fetishism simply highlights the underlying insanity that is libertarianism. Gold has little or no intrinsic value. You cannot eat it, use it as fuel, or make anything useful out of it (except for a few electronics applications). Its value is almost entirely symbolic. It is valuable because we say it is and people will accept it in exchange for all sorts of goods and services. It is no different from any other form of money, be it paper dollars, Aztec cacao beans, or West African cowries.

      • NBarnes says:

        I would give even odds that the cacao bean industry is bigger than the gold industry.

      • Heron says:

        What’s even more frustrating about it is that, according to anthropologists who have researched the issue, metal money probably began as a way of counting debts, in other words, as a way of keeping track of credit. If that is the case, then the entire argument that gold and silver have value(metallists always seem to forget that copper was the primary bullion metal throughout human history) is founded on their use tracking that most invisible and relative of economic relations, the IOU. And why do the same anthropologists suspect these metals were initially used for currency? Because they were almost completely useless for anything else!

        • DrDick says:

          That is mainly David Graeber in his Debt: The First 5,000 Years. An interesting and provocative book, much of which is solidly grounded in established anthropological research, but which also indulges in considerable speculation, as here, and makes a few rather large leaps of faith.

          • As opposed to the historical mythology of economists, which is soundly based on as much evidence as the rest of their axiomatic assumptions.

            • DrDick says:

              This is not an either or proposition. Anthropology, which is my field, has disproved many of their assumptions, but there are still problems with Graeber’s book.

              • I understand that anytime you’re dealing with prehistory, a larger-than-comfortable amount of empathic imagination and ahistorical bridging assumptions are going to be necessary to construct an historical narrative from physical evidence.

                But the economists are just making stuff up, as opposed to building an argument. At that point, maybe it isn’t black-and-white, but it’s definitely either-or.

      • firefall says:

        Thats not actually true – a large part of its original value, which it retains, is that of decoration, i.e. jewellery. Of course, basing a currency on that is slightly less rational than basing it on the exchange of coturier dresses.

        • DrDick says:

          Actually it is completely true. Try buying groceries with that coturier dress. It’s value, even as jewelry is primarily symbolic. Gold and copper were originally used for jewelry because they were associated with the sun, while silver has generally been associated with the moon. The relative scarcity of gold and silver relative to copper made them more valuable because they were originally only available to elites, with whom they became associated. The same was true in Native North America and copper, which was associated with elites.

          • DrDick says:

            I should add that those three metals were also used as jewelry because they are soft and easily worked. Copper and gold are also commonly found in relatively pure nuggets.

    • John says:

      But gold actually is valuable, in the sense that diamonds are valuable, or that any other metal is valuable – it can be used for decoration and for some industrial purposes, right? And that value is independent of the existence of any government, right?

      Whereas paper currency is only valuable insofar as the government that creates it is stable.

      I’m not a gold bug by any means, but it seems to me there’s a real distinction. Especially since many governments in the past have not been stable, and have, through their policies, made their paper currency worthless.

      • Warren Terra says:

        It is true that a material good can have an intrinsic good that a piece of paper lacks. Still, this presupposes the notion that you’re actually trading in the medium of that material good (which is profoundly unlikely – you’d almost certainly be using paper or digital representations of that material good, and a serious economic shock could easily make these supposedly backed notes lose their value, as Argentinans discovered a decade ago).

        But there’s no reason to think gold is a useful bit of material to almost anyone. Unless you’re involved in certain types of electrical manufacture or artistic endeavor, the “intrinsic” value of gold is entirely a social construct, just like the value of greenbacks.

        And the value of gold (1) is really not stable – measure it over the last century against the dollar, or against the commodity of your choice; (2) gives really weird incentives and powers to those places where gold is sitting in the soil, especially in the Amazon basin; and (3) is at least as subject to transforming discoveries as is paper money (witness Spain in the 17th century).

        The only good thing to be said about gold as a depository of value is that it’s counter-cyclical; millions of people flee to gold for reasons that are entirely a shared delusion, so if you get there early it’s a good shelter in a storm. It’s more than a bit of an anchor in calm seas, though.

        • DrDick says:

          A piece of paper may also have intrinsic value in this since. An original signed copy of the Declaration of Independence, a signed letter from Washington, or an original Picasso for instance. The values of all these things, including gold and diamonds, is absolutely no different than the value of paper dollars. This is purely culturally constructed, symbolic value. It has value not in its own right, like wheat or meat, but simply because some culture says it does.

          • rea says:

            More important, though, money doesn’t need intrinsic value–intrinsic value is a distraction from the purpose of money. The purpose of money is to enable you to calculate how many chickens it takes to buy a cow.

          • John says:

            Are food products (wheat, meat, whatever you can give to a bear to get it to do your bidding(!)) the only things with intrinsic value? Does, for instance, steel have intrinsic value? Do diamonds?

            It seems to me that it’s a little more complicated than “food products have intrinsic value, (almost?) everything else is culturally created.” There’s a lot of variation. And it seems rather perverse to compare the value of a Picasso (which I’d agree is culturally created) to the value of paper money (which is created by our confidence in the government that issues it). That’s really not the same thing.

            • DrDick says:

              Anything which has a practical use (food, materials to construct tools & shelter, fuel, etc.) has intrinsic value. That is, it can be used to make something you need to live or which enables you to make something which you can use for that. All money, including gold, has only symbolic value (other goods also have symbolic, as well as intrinsic, values). The real distinction is that purely symbolic value is ultimately arbitrary, while intrinsic value can be calculated in terms how much it adds to survival and productivity.

              The “confidence in the government that issues it” is exactly the same thing as the value of a Picasso (which is based on our confidence in the ability of the artist and the uniqueness of the painting). Both are completely culturally constructed symbolic values.

            • rm says:

              There is no “intrinsic.”

      • sparks says:

        That should be “some few industrial/electronic purposes”. Gold isn’t terribly useful, diamonds aren’t useful above certain sizes. Neither is rare. Ornaments have no real intrinsic value and there are more rare minerals around which are much more useful to us.

        • Bill Murray says:

          Gold would have many more uses if it weren’t used as money and desired for ornamentation. Aluminum was in many places in Europe considered more valuable than gold until the Hall-Heroult process was developed.

      • Heron says:

        By the same logic paper money is still just as valuable due to the vast economic uses of paper, as well as the constituent materials “paper” money is created from. In the case of the US, that’s cotton and a whole host of other textiles. Without gold industry loses an extremely high-fidelity conductor, without paper and textiles many industries cease to exist.

    • ironic irony says:

      “Gold, as is obvious, is neither particularly useful….. nor can you eat it.”

      But you can drink it in a shot of Goldschlager! That has to count for something. ;-)

  3. Nom de Plume says:

    Can witches be identified by drowning?

    Can sheep’s bladders be employed to prevent earthquakes?

  4. mds says:

    Does the sun revolve around the earth?

    It does if the Bible is inerrant and literally true**. So, yes.

    How many pet dinosaurs did families typically have in the first years of the Earth 6,000 years ago?

    I’m pretty sure that this one is also in the platform.

    Does Barack Obama have the brainpan of a stagecoach tilter?

    If we freely assume that Mr. Burns actually meant “Negro,” then this one is already in there, too.

    **”literally true” shall not be taken to mean “literally true” in the context of the Beatitudes, jubilee years, rendering unto Caesar, camels passing through eyes of needles, the penalty for killing a fetus, the Song of Solomon, etc., etc., etc.

  5. Mike says:

    Asses is right. Like Charlie Pierce said, they’re trying to give Paul Krugman a stroke.

    • DrDick says:

      And that would be the whole point, since he is one of the few highly visible public figures willing to say outright that they are delusional and lying and to document it.

  6. Furious Jorge says:

    Does Barack Obama have the brainpan of a stagecoach tilter?

    No, but he certainly does have the sloping brow and cranial bumpage of the career criminal …

  7. JP Stormcrow says:

    Can witches be identified by drowning?

    There is currently a subcommittee of the RNC tossing very small rocks into a pond.

  8. Bill Murray says:

    Shouldn’t there be one about women and their number of ribs?

  9. rm says:

    Say what you will about the planks of the Republican Party Platform, at least they have ideas.

  10. Izzy says:

    Jesus. Let’s have Angelina Jolie hang out in a lake and hand President Obama a sword. Then everything will be nice and legit.

  11. Snarki, child of Loki says:

    I can’t believe that the GOP is giving Obama a chance to give an updated version of the “Cross of Gold” speech.

  12. jon says:

    I, for one, am relieved that the Republican party has finally come to their senses and repudiated the rash, radical left wing communistic actions of Richard Nixon. That’s the last time they’ll permit a Quaker, or some other fringe minority religious group to run at the head of their ticket!

  13. Malaclypse says:

    Does the sun revolve around the earth?

    The Great A’Tuin would like a word with you, heretic.

  14. vacuumslayer says:

    Gold, as is obvious, is neither particularly useful


  15. Steve S. says:

    “the Republican Party want commissions to asses…”

    I had to read this a few times. My brain kept stopping in mid-sentence and wondering what this odd idiomatic phrase meant.

  16. Manju says:

    They were also looking into Bimetallism, curiously enough, but weren’t sure how the Christian fundamentalists would react…as they appear quite confused.

  17. Walt says:

    There are two possibilities here:

    1) It’s just a commission to humor the nutjobs in their base, or

    2) They’re really going to do it, from which we can only conclude that they are deep cover communists whose plan to destroy capitalism is coming to fruition. Nothing would revive the fortunes of communism quite as effectively as a return to the gold standard.

  18. Manta says:

    I don’t think that the idea that we should go back to the gold standard is in the same categories of the other ideas (e.g., creationism): the other ideas contradict science (geology, astronomy, etc.), while the gold standard contradicts only economy, which is no more scientific (or fact-based) than astrology.

  19. Anonymous says:

    I’ve read the comments and it appears for all of the frothing at the mouths they’ve forgotten that gold has been used as a medium of exchange an value for eons. Governments come and go, but gold and other precious metals values endure.

    It’s simply a matter of limited supply that give gold it’s value. All of the gold known to exist would fit in a cube of 68 feet.

    Why would anyone criticize an immutable standard such as this? 1) Simple. It is a ‘money’ that cannot be created nor destroyed since it’s an element and therefore is not subject to the political whims as our fiat money is. There can be no “monetary easing” which is a fancy term for inflating the currency.

    This is particularly troublesome for those politicians who wish to spend irresponsibly to buy votes from their constituent groups. They wish to spend and then later look for an easy way out of the debt.

    There is no mystery why this idea is not welcome with contemporary liberals.

    • DrDick says:

      And you are a complete idiot who knows nothing of economics or the nature of money. The very properties you mention make it a poor medium for money in a modern economy. Now if you wish to return to the Middle Ages, then it would be fine.

      • Anonymous says:

        We’ll meet again,
        Don’t know where,don’t know when.
        But I know we’ll meet again, some sunny day.

        • Malaclypse says:

          What’s so poor about the stability of value?

          So we can add “the value of gold” to the long list of things you opine on without knowledge. Good to know.

          Again, no reasoning…just knee-jerk assertion. an actual awareness of the history of macroeconomics.

          Fixed for you, Jennie.

    • It’s the flexibility of fiat currency which makes economic growth possible. It’s the flexibility of fiat currencies that make international trade coherent. It’s the flexibility of fiat currency that keeps economic downturns from becoming civilization-ending catastrophes. It’s the flexibility of fiat currencies that keep Marxist predictions from coming true, and the wealthy being destroyed in a paroxsym of revolution.

      Oh, never mind. DrDick is right: you’re an idiot who thinks that your stash of gold coins will put you in the driver’s seat when we all start eating each other.

    • Hogan says:

      Natural law shows with geometric logic that the economy should be run for my benefit and no one else’s.

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