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tommyedison

Capitalism: The Unknown Ideal

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I have recently read the book Capitalism: The Unknown Ideal and I have found Ayn Rand's ideas to be irrefutable. But I cannot understand why was she rejected and still is because her ideas are perfectly practical.

Also I read on a site, that one of the prime problems with a gold standard in today's world would be that there is not enough gold to back up all the money in the world. And gold is also not unlimited and the end of the supply of gold (when the mines are exhausted) would mean that no more money could be created since money would have to be backed up 100% by gold under a gold standard (my own interpretation). Isn't there a solution to this problem?

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It doesn't really make sense to say that there isn't ebnough gold to back up all the money in the world, because gold does not have a fixed value. As it becomes scarcer and scarcer, and mines are exhausted, it will tend to rise in value. This means that prices (as measured in weight) would simply decrease.

Also, Objectivists are not in favor of government backed gold currency. Its just the best choice for banks. If for some reason there simply wasn't enough gold, or gold was no longer desireable, banks could substitute something else to back their currencies. If people preffered silver backed currency that is fine, or diamonds, or plutonium. The important issue is that there is something, something which is durable and easily dividable and homogenous, to back issued currency. What we currently have is currency by fiat. A Federal Reserve Note (what most people call dollars) has no intrinsic value, and is not redeemable for anything.

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Since money represents production, the supply of gold (let us assume it is fixed) is not adequate as a representation of production, which can expand immensely. The value of a commodity, say a bushel of potatoes, should be expressed in terms of how much you want that commodity, so if I want a bushel of potatoes to extent X today and want it to that extent a month later, the value of the bushel isn't changed by doubling the gold supply. Gold has the merit that it is, at least so far, impossible to counterfeit (unlike federal funny money), and the supply is relatively fixed, so it makes a reasonable standard for computing "value". Creating more money isn't the issue: what we need is a standard for expressing "value" for goods and services.

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