Posted on 06/17/2010 6:32:12 AM PDT by Big Bureaucracy
It is an honor for me to receive a response from Mr. Jesus Huerta de Soto regarding my opinion article concerning his vision about gold as the only world currency in the future. I am posting his response in full below:
Dear Ellie,Just two points on your “comments” on my proposal:
a) Printing the money necessary to consolidate current demand deposits and equivalents is not inflationary, as the new bank notes would be entirely “sterilized” as 100 per cent collateral to existing demand deposits.
b) In a sense you are right that my plan (as any other “practical” to go step by step from current socialism to a pure free market economy -anarchocapitalism-) is inevitably “constructivist” (in a Hayekian sense). The alternative, which I prefer in purely theoretical grounds, would be to abolish all central banks, see the whole current banking and monetary system to disappear (unable to give back the current deposits in an environment of lack of confidence) and see how from scratch a new purely private monetary system grows (I have no doubts it would be based on gold and 100 per cent reserve on demand deposits as it is impossible for a fractional reserve banking system to survive without central banks). Of course, the social cost of the “purist” transition would be immensely greater than the one associated with the practical proposal of my book.
Best regards,
Jesús Huerta de Soto
Catedrático de Economía Política
Universidad Rey Juan Carlos
(Excerpt) Read more at bigbureaucracy.com ...
Is he a different guy from Hernando de Soto, the Peruvian economist?
Given a liberal estimate of the amount of gold in the world, at least in the foreseeable future, that would work out to about 1/3rd of a gram of gold, about a .01 troy ounce for every person.
Current gold price is $1,250 a troy ounce, so this would work out to $12.50 per person.
The average wage in Africa is about $4,000. How can even these currencies be backed with gold? In short, they can’t.
No wonder the biggest supporters of the plan are from countries with royal courts stuffed with gold :)
Goldbug ping (sorry about the previous ping)
Here’s our earlier thread on his earlier article http://www.freerepublic.com/focus/f-bloggers/2529433/posts
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