[OT] Ameros will clog the tubes - was Re: Network Neutrality

Von Fugal von at fugal.net
Thu Dec 4 21:23:17 MST 2008

<quote name="Michael Torrie" date="Thu,  4 Dec 2008 at 12:56 -0700">
> Von Fugal wrote:
> >> All this reminds me of Hitchhiker's Guide where the Golgafrinchams land
> >> on prehistoric earth and try to start a civilization.  After debating
> >> the color of the wheel, whether fire should be fitted nasally, and so
> >> forth, they turn to financial policy.  Since adopting the leaf as legal
> >> tender, they had, of course, all become fabulously rich.  This led to
> >> some major inflationary problems, owing to the ready availability of
> >> leaves.  Hence they embarked on a massive program of deforestation to
> >> prop up their currency.  Cue the closing scene of forests burning and
> >> Louis Armstrong singing "what a wonderful world."
> >
> > I'm really confused. How is this an argument _for_ green paper money
> > (leaves)??
> This is fascinating in light of what you have said about how gold would
> work as an economy grows.  Since the answer to the keynsian argument
> that there's only so much gold to go around lies in the idea of
> arbitrarily dividing the gold, then in reality, having gold-backed
> currency is no different than using leaves for currency.  While there
> are not an infinite number of atoms of gold, there probably are at least
> as many as leaves in a forest... And it solves none of the problems of
> fiat currency since the division of gold is arbitrary and artificial.
> No wonder they threw it out back in the day.

Just because you can subdivide gold indefinately doesn't mean you
magically have _more_ gold. The same quantities exist. It's like being
able to divide dollars. You wouldn't cut a dollar bill in half and have
two dollars! You would just have half dollars, the sum is the same.
The division may be arbitrary, but the quantity is not. The quantity of
fiat _is_ arbitrary (it's how much paper you choose put put the magic
ink on).

The problem with leaves in a forest is that leaves continually grow. It
is not so with gold. While it's true more gold can be mined, it can
only be mined so fast. Any inflation occuring from mining would be
negligible compared to what we experience with fiat money. And it's not
like I say "hey let's use gold" and you say "Great! I'll go pick some
gold atoms off a tree." The quantity of the "money" is not the issue,
it's the elasticity. Paper and leaves are extremely elastic. Gold is

Von Fugal
Government is a disease that masquerades as its own cure
-- Robert Lefevre
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