| | A link to Dr. Reisman's article was posted on Objectivist Living, too. I'm posting here what I did there.
I largely agree with the article. He advocates a commodity-based currency in gold. I believe it should be wider -- a basket of commodities with gold being one item in the basket. A dollar could be an amount of gold plus an amount of silver plus an amount of crude oil plus probably some other commodities. Note I use "plus", not "or". The U.S. government's strategic petroleum reserve is now worth about $70 billion (link). Other candidates as components are paper (as used in a copier), wheat, corn, natural gas, and so forth.
A basket would result in more stable prices over time than a single commodity, like the price of a portfolio of common stocks, e.g. the S&P 500, is more stable than the price of one of its components, e.g. Alcoa or IBM. Over time the components could be occasionally adjusted to reflect their prevalence in the economy, just as the S&P 500 components are adjusted to reflect some companies becoming larger and others smaller.
At times I have thought about the silverite movement of the late 19th century. The proponents wanted to monetize silver with sixteen ounces of silver being equivalent to one ounce of gold. Monetizing silver was a big plank in William Jennings Bryan's run for the presidency in 1896 (link). They advocated an "or" method, not a "plus" method. If they had advocated the "plus" method and succeeded, it would have been the first step in making a basket.
(Edited by Merlin Jetton on 3/26, 11:18am)
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