FreeGold : A economic regime whereby the functions of money are split over multiple mediums. These mediums are freely exchangeable at a floating exchange rate and contracts are only enforceable in the Medium of Exchange.
Note - As evidenced by history, gold serves best as Store of Value, and fiat currency serves best as Medium of Exchange, due to their respective unique characteristics. The Unit of Account function can be served by either, depending on the time frame in question.
Having recently been engaged in some
conversations on the merits and demerits, in addition to the morality
of, hoarding, I thought it might be a good idea to take a closer look
at the matter.
The economic and moral charge leveled
is that hoarders deprive others in the economy of much needed goods
and capital.
Perhaps it's time we laid this old
warhorse to rest.
Let us start by defining what it is to
hoard.
hoard
[hawrd,hohrd]Show
IPA
noun
1.
a supply or accumulation that is hidden or carefully guarded
for preservation, future use, etc.: a vast hoard of silver.
verb (used with object)
2.
to accumulate for preservation, future use, etc., in a
hidden or carefullyguarded place: to hoard food during ashortage.
verb (used without object)
3.
to accumulate money, food, or the like, ina hidden or
carefully guarded place for preservation, future use, etc.
There are a few things to keep in mind
here.
Firstly that the world is finite, with
finite resources. Secondly, we require some of these resources in the
process of sustaining life.
There are two valid criticisms that can
be made against the act of hoarding. The first is that a hoard may
perish before the hoarder has the opportunity to use it, and as such
he destroys real wealth and deprives someone else of perhaps a meal
or a life.
The second being that hoarding is
generally an inefficient use of productive wealth. Such a hoard could
have been used to create more wealth and everyone would have been
richer for it.
Those who criticize the act of hoarding
extend this rationale to any thing hoarded, gold attracting
particular ire.
Before we look at the latter, let us
first look at a near equivalent : money.
What does it mean to hoard money? What
is money in terms of our needs for sustaining life?
Money represents a claim on the
productive economy. It is not wealth in and of itself. Remembering
that the world has finite resources, money is a force of directing
the use of such resources in certain enterprise rather than others.
Being an accounting mechanism, it does not have correlation with the
real wealth in the world (food, commodities, land, etc) at any one
snapshot in time. It does however have correlation with future real
wealth given it's function of directing production.
Being that money lubricates trade, the
hoarding thereof means that future investments are not directed by
productive savers; though in our modern economy it is debatable that
this could be the case at all.
In the modern economy loans for
productive investment are created out of thin air by banks. So a
stock of accounting stubs are not strictly required to fund
investment. Furthermore central banks that notice a decline in
velocity ( the effect of hoarding cash) simply compensate by creating
more fiat, and so the effect on society is negligible.
Sidenote : Central bankers believe they
can remove this excess liquidity, when people inevitably dishoard
the cash, in an orderly fashion. I remain unconvinced.
What then of gold?
“Maybe most remarkable in this is
that Gold is not itself something that is needed or consumed in
satisfaction of our basic material needs for survival. But due to it
being perfectly and uniquely suited for this universal role in trade
for any other person's available wealth as necessary to meet our own
specific needs, Gold has become such a near proxy for the real wealth
we require for life that many of us have permitted ourselves the
casual inclusion of Gold into our otherwise strict definition of
wealth.” - Aristotle
Gold, like money is not real wealth.
Casual inclusion of gold with real
productive wealth leads to the mistaken conclusion that saving in
gold removes value from the economy.
The reality is that either fiat or gold
is simply a claim for some real productive items in the future. Those
that hoard gold in fact do society a great service, not only do they
expend their productive ability in creating more than they produce,
in return they accept nothing but a promise that they may be repaid
in real wealth some day in the future.
Gold cannot be created out of thin air,
and so for the individual saver it is more sensible to hoard than
money as it is not continually debased.
In conclusion, feel free to pile your
shiny yellow rocks as high as you can without fear that you are doing
anyone a disservice.
