Monday, December 10, 2012

Fiat is miraculous? No. It's Called the Return-on-Coordination

commentary by Roger Erickson

Aka, the amazing things that coordinated teams, including public initiative, can generate.

"For the naïve mind there is something miraculous in the issuance of fiat money. A magic word spoken by the government creates out of nothing a thing which can be exchanged against any merchandise a man would like to get. How pale is the art of sorcerers, witches, and conjurors when compared."Ludwig von Mises


How on earth does the economics profession fail to teach something so trivially obvious as the fundamentals of organizational dynamics - which so many other professions recognized as an axiom, beginning thousands of years ago? From physics to evolution to anthropology to sports to entertainment to military science, the dynamic value of teamwork - return on coordination - is a given (see auto-catalysis).

How can the same people act so intelligently in one situation, then walk across the street and act so ignorantly in another setting?

Am I missing something here, or is the entire economics profession displaying symptoms of moon-madness?

Unlimited "fiat" flows from the inexhaustible potential return on scalable coordination. We can't run out of that source until something as momentous as, say, the next Big Bang occurs - either that or we all get too stupid or ignorant to pursue that accessible source. Ignorance can only occur as a policy choice, as the opposite of situational awareness.


miller B said...

what intrinsic value does gold have?

is it at all useful? since it's only value is derived from what useful things others will exchange it for. how is that different than fiat.

Tom Hickey said...

The value of gold is what it costs to mine it, refine it and assay it. Unless it is shaped into jewelry so come other value is added, the exchange value of bullion in excess of cost is purely subjective.

Of course gold coin is worth the stamped value unless the bullion value exceed that. However, when coins are minted the metal value is less than the stamped value, and the difference is the seigniorage that goes to the sovereign.

Tom Hickey said...

Kimball Corson, Worried Republicans Stocking Up on Gold Coins