Today we continue publishing a slightly modified version of the letter we sent to Virginia Delegate Bob Marshall on February 27, 2013 in our ongoing effort to get Bob to talk to CESJ president Norman Kurland about Bob’s proposal to study the feasibility of implementing an all-gold currency in Virginia.
Again,
if you think that Bob ought to be talking to Norm — tell him. Sending an e-mail to Bob at delegatebobmarshall
[at] Hotmail [dot] com is easier than teaching even a politician how to read
minds — and it doesn’t cost 46¢ for the first ounce, either.
In
any event, despite Keynesian economics and other myths to the contrary, even if
we had an all-gold government-issued currency,
much of the money supply would still
consist of privately issued bills of exchange and mortgages. This is one of the problems in so-called
“mainstream” economics: the experts insist on limiting “money” to currency or
currency substitutes.
Ordinary
people who rely on the currency to carry out transactions would be “starved”
for cash, while the rich who have throughout history carried out the bulk of
their transactions using bills of exchange and mortgages would still have all
the money they needed.
Lacking
new investment opportunities, the rich put their money into existing equity:
the stock market. Consequently, the rate
of growth in the secondary, non-productive sector increases rapidly — as does
the volatility of the market in response to massive infusions of cash unrelated
to current production. Growth in the
speculative, non-productive sector masks the lack of growth in the productive
sector that ultimately supports the non-productive sector, as it did in 1873,
1893, 1929, and the present day.
Stock
market speculation does not create jobs.
Because new jobs are not created and the number of existing jobs
shrinks, wage income declines. Dependent
on the existing money supply and generally not having the capacity to create
new money by offering bills backed by the present value of existing or future
marketable goods and services that they produced or expect to produce, ordinary
(non-rich) people have less money to spend.
Similarly,
a flawed monetary and financial system combined with rapidly advancing
technology causes a decline in the number of “quality” jobs due to
technological unemployment. This is
often masked by the creation of “lower quality” jobs as the value of labor
falls relative to that of advancing technology.
Simply
to generate some income, people become willing to take anything rather than not
work at all. Raising wages of “lower
quality” jobs artificially can reduce or eliminate this effect by making
technology more attractive on the basis of cost. “Lower quality” jobs begin disappearing at a
faster rate than “higher quality” jobs, as lower end wage workers usually have
less job security than higher end wage workers.
The
decline in consumption income as jobs disappear, or as “high quality” jobs are
replaced with “lower quality” jobs creates the illusion of a “money famine,” or
an insufficient money supply. The real
problem, of course, is that people who can no longer be productive or as
productive with their labor are not able to replace their lost productiveness
(and thus their consumption income) by owning the machines that are displacing
them.