In response to the most fanatical and interesting debate in recent monetary times, I published the following rant on the LD. (You should read the prior announcement to pick up the context, and also the 3 score or so responses, if you can get the archives of DGCChat.)
I don't claim to have nailed it, but nothing that was said later or before shook my suspicion that Liberty Dollar have architectured a flimflam currency, and are headed for a fall, some way, some day.
-------- Original Message --------
Subject: [dgc.chat] Liberty Bimetallism
Date: Sun, 11 Apr 2004 16:20:03 -0400
From: Ian Grigg
To: dgcchat@lists.goldmoney.com
It seems to me that Liberty Dollars are Bimetallic.
One metal is the silver, and the other is the USD.
Ignoring the fact that there isn't any more metal in a USD than a shiny strip these days, the notion of a currency trying to balance itself between the movements of two diverging metals may explain the turmoil.
Bimetallic currencies all come to a bad end, some day. This notion of trying to maintain the face value of the Liberty Dollar at something above the cost of silver, and around the price of dollars, has to have a bad end, according to anything I've ever read or heard about.
It's nice that a distribution chain can take a margin of approximately 100% before getting to the user. Really good that someone has figured out how to sell the concept of metallic currencies to the users out there, in a nice easy pretty package.
But, that doesn't mean that we should all drop our economic marbles and squeal for joy like a bunch of teenagers. There's more to music than a good looking pop star.
Apparently, the face value can go up, and we are exhorted to rush in and collect up the old ones. Because, when the change happens - phones ringing hot, must be soon now - we can all change our old notes to new notes. And, *double* our face value, in one deal.
Now, it seems to be a good deal. We seem to gain, coz the users will then take the face value and give us twice the benefit. Sellers are obligated to do some trading, so there is support at some level for this face value.
Great deal. The problem is, if there is money made by some, then there is money *lost* by others. Hence, this is a non-productive move of wealth from one group to another.
As it is non-productive, then it can't be sustainable. It flies against the sense of economic thought much prized in these places; on the face of it, and it is very much a facial issue, this is no better than the taxes, scams, cons and other evils that we bemoan.
Why is Liberty Dollar offering something for nothing?
Or, am I wrong? Is there any viable case to be made, in an economic sense, to support the notion that a solid, important currency can just turn around and rewrite a number from 10 to 20?
iang
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