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Source link: http://archive.mises.org/9794/calling-all-interior-decorators/

Calling all interior decorators

April 16, 2009 by

Note: Zimbabwe recently abandoned its own politically controlled currency after recording the highest level of inflation ever.

Via BoingBoing

{ 8 comments }

Raja April 16, 2009 at 8:24 am

“the Government adopted international hard currencies, mostly the United States dollar and the South African rand”

Hard currencies? Are they serious?

J Cortez April 16, 2009 at 8:40 am

The dollar as hard currency? That’s pretty funny. I guess that shows how horrible their own currency had gotten.

AJ Witoslawski April 16, 2009 at 8:47 am

Well, the USD has been strengthening the past couple of months, but the ZAR has been weak in the past and still is now.

Michael A. Clem April 16, 2009 at 9:39 am

So they finally figured out that they can’t print their way out of their financial troubles–When will the U.S., with its “relatively hard” currency, learn this lesson?

jl April 16, 2009 at 10:20 am

I wonder if Zimbabwe will also abandon price controls (or have they already?) That is another factor that has caused shortages.

Deefburger April 16, 2009 at 10:56 am

Many in Zimbabwe already use gold. They can’t get their hands on anything else. Gold would be a lot “harder” than any other currency available. The hardness of a currency is directly proportional to the trust it carries. Gold, Silver, Platinum, Paladium, rice and beans all carry intrinsic trust value, and are therefore “hard” currencies. Dollars, Euros, Yen etc. do not carry intrinsic value, and so do not carry intrinsic trust value either. The trust is in the bank that created the currency, rather than in the currency itself. The currency carries a value only, and without carrying trust value intrinsically, it is subject to daily re-evaluation, it’s trust is re-measured against the trust in the institution that created it. The monetary value it carries is then weighed against the trust value carried by the creating institution, and the relative value is revealed in the change in purchacing power of the currency.

When dealing with a monetary commodity like gold, the trust value is intrinsic in the commodity itself, and so requires no supporting institution to store it. Therfore, the stored value is trusted implicitly. It is this property of “hard” currency, this intrinsic trust value as well as monetary value, and the constancy of these values that render a currencies relative “hardness”. No Fiat currency can claim intrinsic value or intrinsic trust, and so all Fiat currencies are soft currencies, and as such, require continuous re-evaluation.

Currency is not just a storage device, or a transport device for Personal Value. It is also a measuring device for Personal Value. It is the measure used to evaluate the cost of a thing, or the cost of your personal time. Accurate measurement is not possible in the long term with anything but a “hard” standard. Fiat Currency makes a lousy measure unless it is backed 100% by a real hard currency such as gold, beans, rice or other set of intrinsic value commodities. Hard assets in 100% reserve behind the fiat currency allows for accurate measurement over time, and reduces the effects of long term investment evaluation mistakes due to the changing of the value of the measure.

So hard money is money that has intrinsic value,(I value it for itself, I value it for what I can do with it), intrinsic trust value, (I trust it is edible, or I trust it is real, I trust it is what it is), and consistency of measure, (I trust it will still weigh as much next year as it does today, I trust that it will still be what it is next year what it is today).

Everything else is soft money.

Stephen Grossman April 16, 2009 at 12:27 pm

“Gold, Silver, Platinum, Paladium, rice and beans”

Is that red, black or the infamous fava beans? And does rice appreciate in value with soy sauce?

Could Keynes be said to have an unsustainable theory, with insufficient intellectual capital, that booms and then busts?

Deefburger April 16, 2009 at 10:40 pm

I prefer red beans and rice myself. They have a higher intrinsic value for me and I trust they will be good!

Absolutely. Intrinsic value commodities are actual objects. They are not potentials like debt. Debt is in the future, and so it’s intrinsic value, the value it possesses, is not yet possessed. In other words, the value it has cannot be measured directly against another object, and must be inferred from its potential instead. The measurement of any future action is a probability, and so it is impossible to objectively evaluate the debt. It is not temporally possible, yet.

So, since the value of the debt itself is a relative unknown to everything and everyone in the here and now, the use of the debt as a measure in and of itself is risky at best and impossible in any objective fashion that does not involve risk. Add to this the unknown displacement of debt currency and you have a system of measurement for value, ie Dollars/Hr or Dollars/ea. that never has the same actual value twice. Not a very good way to take an accurate measurement of anything, let alone the sweat of your brow or the fruit of your field. Better by far to measure in your science with a metal ruler than with a rubber band.

This faux pas of logic in what is claimed by Keynes to be a science astounds me, and makes me sure that Keynes and his kind are not scientists. Scientists, at least, know how to measure.

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