Many people would not realize what Greenspan was talking about. This is one example of the procedure he described, according to his words: The banker agrees to loan gold oz to a Borrower, who will spend it on production requirements. The bank notes say the bank owes gold oz, when the bank notes are redeemed.
The Unknown Ideal An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense - perhaps more clearly and subtly than many consistent defenders of laissez-faire - that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.
In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society. Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.
The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or Greenspan essay rand forced to live on self-sufficient farms and forgo the inestimable advantages of specialization.
If men had no means to store value, i. What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily.
First, the medium of exchange should be durable.
In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store.
But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal.
A metal is generally chosen because it is homogeneous and divisible: Precious jewels, for example, are neither homogeneous nor divisible. More important, the commodity chosen as a medium must be a luxury.
Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society.
Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury. The term "luxury good" implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron.
In the early stages of a developing money economy, several media of exchange might be used, since a wide variety of commodities would fulfill the foregoing conditions.
However, one of the commodities will gradually displace all others, by being more widely acceptable. Preferences on what to hold as a store of value, will shift to the most widely acceptable commodity, which, in turn, will make it still more acceptable.
The shift is progressive until that commodity becomes the sole medium of exchange. The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy.
In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one.
Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange.That pill-popping, boy-crazy nincompoop Ayn Rand has got a lot to answer for. Indeed, it’s not too much of a stretch to say that we owe at least part of the recent economic crisis to her and her philosophy of Objectivism, since former Fed chief Alan Greenspan was a lifelong disciple of both.
Alan Greenspan, Former Fed Chairman, Testifying to the House Oversight Committee on How He Got It Wrong, October 23, Greenspan not only worshiped at the feet of Rand but wrote essays for her “Objectivist” newsletter and contributed articles for her book Capitalism: The Unknown Ideal. Greenspan was born on March 6, , the time of the Great Depression in a Jewish immigrant community.
We will write a custom essay sample on The Life and Work of Alan Greenspan specifically for you for only $/page. Alan Greenspan A, parts I & II. In his famous essay “Gold and Economic Freedom”, Alan Greenspan presents a gold based banking system. i The way currency is created conflicts with Ayn Rand’s philosophy.
Part I: The banks’ creation of currency. Alan Greenspan took office June 19, , for a fifth term as Chairman of the Board of Governors of the Federal Reserve System.
Dr. Greenspan also serves as Chairman of the Federal Open Market Committee, the System's principal monetary policymaking body.4/4(1). Additional keywords: Ann Rand, Anne Rand, Any Rand, Allan Greenspan About the Objectivism Reference Center The philosophy of Ayn Rand, a twentieth-century novelist and philosopher, is .