Re: [OPE-L] recent references on 'problem' of money commodity?

From: Akira MATSUMOTO (amatsu@LL.EHIME-U.AC.JP)
Date: Wed Dec 01 2004 - 19:01:17 EST

Dear member

I rewrote a paper for the Korean Journal of Political Economy, vol.2, 2004 on monetization on gold

title: Monetization of Gold and the de facto Standard of Price: Estimating the Depreciation
Rate of the Dollar

Please see it.

At 4:39 PM -0200 04.12.1, cmgermer@UFPR.BR wrote:
>In a reply to Paul B, Jerry wrote:
>Some time ago (on November 19) you wrote:
>As a matter of fact Fred, I know of no one who would not be prepared to
>accept a certain quantity of gold for any of their property , ( should
>they wish to sell it, even if they later had to exchange it for paper for
>other reasons), that is to say that this commodity remains the money
>commodity, par excellence..  <<<
>Interesting, since I know of no one  (save, possibly, Claus, Akira, or
>yourself) who would be prepared to accept a certain quantity of gold in
>exchange for their property.  I know that if I wanted to sell property
>like a house (which I don't own) or a boat (which I do) I wouldn't accept
>gold as payment.  To begin with, I would have no confidence that it was
>real or that it was 'pure'.  I certainly wouldn't want to pay the extra
>expense and put up with a delay to hire an appraiser. Also, I would feel
>very uncomfortable accepting gold from a security perspective (I'd much
>rather receive a bank check).  And then I'd have the  hassle and delay of
>selling the gold.  And -- given the frequent fluctuations  in the price of
>gold (yes, gold _does_ have a price) -- I would feel  uncomfortable
>holding on to the gold since I am not interested in gold  speculation. And
>-- more to the point -- I know of no one in my  community who would accept
>gold as payment for property of any  significant worth.  If someone went
>to my landlord's office and proposed to pay for real estate in gold, s/he
>would get laughed out of the office.
>You might be right in claiming that gold is no longer money today, but
>your arguments are unconvincing and don't support your claim. The essence
>of your argument is that gold is not money because it does not circulate
>as money. Well, such an argument is only acceptable in a quantity theory
>framework, because according to this theory money has only one function -
>that of means of circulation - and for this reason money cannot have value
>of its own. In the framework of Marx's theory your argument is
>unsustainable, because in this case the prevalence of the function of
>means of payment and the development of an integrated banking system imply
>that money does NOT need to circulate in person, without being displaced
>from its role as money.
>I think in normal conditions I would not accept (and I guess no one would)
>an uncertified piece of gold in the example you gave. I wouldn't because
>gold coins are not issued for the the usual functions of means of
>circulation and of payment. This doesn't prove your point either, because
>gold is issued in certified bars which perform very specific functions of
>money, allowed by the nature of the global monetary system (credit system
>in Marx's terms). Thus, the fact that you and I don't use gold bars in our
>activities does not prove that they don't perform functions of money.

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