Contrarian Thinking about the Gold Standard and Fiat currencies:

I am floating this to effect discourse on some of the ideas we have all accepted to be true.  None of these are supposed to subvert any of the TSU ideas or concepts, but is a place to think outside of the box.

For example: "The Gold Standard system of banking is better, is real, or superior to the current system".

What about that? Maxims like: "The Central Bank's printing of money neccesarily causes inflation";  or "Inflation should be kept low or close to zero";  "Who benefits in times of deflation?" how much water do those assumptions really hold?

Let me begin by asking a few questions of what we take as "given":

1) Gold is the "real" currency because an ounce of gold is worth an ounce of gold.  As the price of gold rises, fiat currencies become worth less.
Response: ok, but by the same logic a dollar is worth a dollar.  So whether we work for gold or we work for cash, the value is not the gold and is not the cash, but it is the perceived value for which we **work**.  The value is the indentured servitude of the unwashed masses.  (ok that was a bit hystrionic)   So long as a miner will dig for gold, his time is worth the gold he mines.  Overly simplistic?  The gold standard is that.  The gold miner becomes the money maker.  *(in this scenario the simplistic given is that every miner works for himself.)  Once the gold is out of the ground, it can circulate.  Therefore since gold is the base, the economy can only expand in a real way if that country produces more gold, and it is in direct relation to the amount of gold in circulation.

Implications: on a global basis the various currencies are valued according to the perceived value agreed to by all.  In a real way wealth creation occurs on the forex market, to the extend that the people who work in those economies are willing to accept value for their work.  So if a phone maker pays its workers $10.00/phone from raw material to wholesale, the real value of that phone is 10.00  Until it is sold at wholesale to retailers where the value becomes multiplied.  A retailer might have a cost of 100.00/phone to stock, market and sell each phone it buys for 500.00 wholesle.  It sells it for 200.00.  800.00 might be the exorbinant price a 3 year contract pays out before interest.  So what happens to the value of that phone?  A 10.00 phone becomes 800.00 in your market boutique.  I am asking that we look at this a bit differently in the hope of catching this...  Pretend with me that the 10.00 per phone becomes 10.00/week take home pay in China.  40.00 per month.  And then pretend the 800.00 phone represents one week's work in North America.   What is the real value of the phone?

Ok, easy easy, I know there are a million and one holes in this.  I would be interested if anyone has done any actual analysis of this in the real market.  I would guess, that there is a disparity of value around the world, that directly effects the value of the currencies as traded, and aids it's dynamism, momentum and volitility.  I could get off on various other implications, like why would a peasant in India feel rich with 40.00/month (hypotheical figure)?  The wealth they create is by the sweat of their brow, and goes with the goods produced into the global market place.  The cost of the wealth is the indentured servitude, but the value of the wealth comes through the market place.  So, (and here is a leap I don't know if you can follow, but I make it only for brevity,) in fiat currencies, the creation of wealth has moved out of the gold mines of the world, into the meta values of Forex.  Is there a book that takes this tack I don't know about?  The creation of the value of money has now moved out of the hands of individual governments who may strike the coinage, out of even the Central Banks, into the multi trillion dollar trade of the Forex market.  Consider this: The entire US debt is only 4 days worth of currency trade.  No central bank, maybe with the loan exception of the US Fed can afford to effect value of their currency.  Japan is attempting to devalue its currency, in times past Canada has attempted to do the same, inevitably it cost that country far more because the ebb and the flow of the currency markets are so vast and untameable, it remeains to be seen if even the US Fed can withstand it.