Who Sets the Minimum Wage?

Debate in the political media about whether the Minimum Wage ought to be $15.00 per hour is silly. I italicized “minimum wage” above because we don’t know what that means, and we all believe we do. It has become “a Thing” instead of a price.

The wages of labor are paid by employers who have work to do and need someone to do it. Sometimes the employers need workers who are smarter than their managers and other times they need workers who are not smarter. They reward the workers accordingly.

Nobody can find anything wrong with that model of correct and moral behavior in the employer-employee relationship. Pay for work performed. Pay promptly. Pay in good “legal tender,” whatever that means.

The idea that a government should create a law telling employers, or potential employers, they are forbidden to pay anyone less than a certain floor price for labor will find itself creating an artificial surplus of labor at the lower supply-curve range. Elementary price theory, long known to be valid.

But what is “magical” about a Federal law? What is more logical about a local law? And what is most logical would be to let each employer decide for his own establishment what the starting or minimum (disliked) wage should be, as workers would want to increase it by demonstrating more quality and effort.

Is “inflation” the Only Answer to Exploding National Debt?

I wonder if those wild claims of people who sell bonds and gold coins can actually be true? I have my doubts, which I wrote about in 1985, published in Reason magazine.{tk] My claim is that it is not in the U.S. Congress nor Treasury’s self-interest “to inflate” nor even to make people worry about “an intention to inflate” the value of the U.S. currency – down to Zero value, or perhaps merely less than last decade.
[footnote TK: Reason headline writers assigned my essay a misleading title, “A Dubious Debt Doubt,” but that was just being playful.]

It is indeed not only dangerous to talk like that, or suggest it, but it is totally suicidal for a government running a fiscal deficit.

What can “to inflate away the debt” possibly mean, in today’s context?

In the fairy story the king has a big debt and he decided not to pay it off in the gold coins like he received when he sold his bonds. Instead he would print up little paper certificates, saying “this is a coin.” Then the bond owners would have to go away, receiving “payment” in this new “legal tender.” But that tells you about paying off the king’s debt.

What happens the next time the king wants to borrow from the money lenders?

The money-lenders’ demand for the king’s bonds is the dominant factor in this process. The king cannot force people to buy his bonds; they hide their wealth and pretend poverty. What is one supposed to do in confronting a tax on wealth?

The U.S. National Debt Must Be “Rolled Over” about every 6 Months.

In my 1985 article, I showed statistics current at that time about the maturity structure of the U.S. government debt held by the public. I have not done the updating research, but that is a simple search engine question. The situation is undoubtedly worse, with the government running up the entitlement spending.

Interest rates are determined by the Federal Reserve, in relationship to the international capital markets, so it is difficult (i.e. impossible) to predict any future rates, or values, there. Yet, there is a “model” of human behavior that tells me IF the government sent a signal it might “play with the idea” (run a scenario in a computer model?) of inflating away the national debt, indeed the free market, worldwide,

would WANT TO DUMP US TREASURIES AND NOT BUY ANY MORE.

Imagine what would happen to the foreign exchange rate of the U.S. Dollar? The recent years of a “strong dollar” and falling oil (priced in “dollars”) would be ancient history. Consider what has happened to the UK currency exchange rate, an instantaneous indicator of demand for a Unit of Accounting (“pound sterling”).

It would be sudden. No warnings. It would be a sudden “crash” one day, without warning, when something silly like a careless remark by the President – who really does not understand international finance – sends the whole “confidence game” into the toilet. The British experience on June 24 is a lesson worth learning, when a government’s Unit of Accounting falls out of favor with international bond traders.

Wait for it. It is in our future.

The Unit of Accounting

On October [tk] 1968, Mark Bickhard and I met in New York city at a “convention” Murray Rothbard had summoned to found his Radical Libertarian Alliance. Karl Hess was there, who left early to lead some confrontation with the military at Fort Dix in New Jersey as an anti-war gesture (“new left style”).

Mark and I visited other people in NYC, among them Murray Bookchin, a well known, published anarchist. Bookchin was expounding to us about his “system” for a communal society. He had some idea of the “distribution” of production using computers, but it was not choate.

    Mark Bickhard asked Murray Bookchin what was his “unit of information” in his imaginary computer economic-information system? (“Bits” of some variant; associated with “what value?”)

Mark Bickhard went on to become a Professor of Philosophy, Robotics, and Psychology at Lehigh University. He has published several books and articles further developing his early ideas.

The Unit of Accounting

To me, his question introduced the concept of the “Unit of Accounting” as the key detail to the question about money and “the quantity of money.”

    The Unit of Accounting is ADDITIVE.

It can have a Sum Total. That becomes “the quantity.” It also becomes the basis for CREDIT. Credit is any form of “asset” based on a promise of future payments (the “liability” of some obligor), and of course those are traded as well as held to maturity. Some of those liquid assets are called “nearly money” by economists.

    For example, what your banker owes you on your current statement is called “money” because it is only one step removed. But it is not as fungible as BenFranklin F.R.$100 notes.

See further discussion of where this analysis of the Unit of Accounting, and its central role in “money,” are explored:

    A Flexible Exchange Rate World.

    Units of Accounting example: gold grams.

    A “Concrete” Unit of Accounting.

    Modest Proposal for Kilo Gold US Treasury bonds.

    Gold As a Parallel Currency.

Financial Planning Requires a “Concrete” Unit of Accounting

Financial Planning Requires a “Concrete” Unit of Accounting

If you want to see a financial system that promotes savings and investments, a society needs a “concrete” Unit of Accounting. Economists have taught for 100 years that “money” is just worth the trust people put into it. What happens when such trust fades?

    The conceptual “concrete” detail of this idea is that it makes the financial paper (bonds, deferred payments), which could use this Unit of Accounting seem “more trustworthy.”

Visualize the problem most people face when challenged by financial planning decisions, such as for a distant retirement. What is the frame of reference in which someone is supposed to weigh some future value (in “dollars”)?

    [ Pretend you are not as well-informed about finance and economics as the professionals you are consulting. How well can they predict the future?]

A lifetime of retirement beginning in 20 years, planned in “dollars,” cannot be compared to any standard of living referent (rental costs, food costs, taxation) in terms of familiar “dollars” today. The numbers do not allow a comparison of values because they have no relation except as the passage of time may reveal. You have to predict the Consumer Price Index 20-40 years from now.

    What will a dollar get you next year? Less?

No one can successfully do financial planning today in terms of “dollars.”
A gold coin would remain a gold coin and whatever your deferred-payment contract says, it would promise to pay you that equivalent way (in the same kind of gold coinage). Creditors could be paid in a gold coin, but more likely in some transfer of ownership of other paper assets to discharge the debt, but denominated in the gold coinage. Final settlements could be done by any other, different paper-credit methods (at the option of the obligee).

The supposed “stable price level” objective of measuring, would be knowing or trusting the relative value of something you want/need, and what you can trade to obtain it. We might not be able to predict the exchange rate of an ounce of gold vs. a pound of beef in 25 years, but it would not be a whim of imagination.

    I would be more comfortable thinking about coin vs. beef than about $100 today vs. $1,000,000 in 25 years, and wondering which would be more valuable?

Net present value calculations collapse to the shortest time horizon when future money values are uncertain. “Uncertainty” is subjective.

The “unit of accounting” in your mind should possess some “object permanence.” It ought to be a foundation of “Constitutional Money” to have the government’s Unit of Accounting be a concrete thing. In the old days of 1785 and 1792, the “dollar” was an object – a silver coin. Your property is your private ownership; so would a coin-object be;

    . . . but what is the status of the “account balance” your bankers owe you in promised bank-draft credit to pay your expenses? Do you use direct debits or checking? If your “account balance” happens to be denominated in government-accounting units ( “d-o-l-l-a-r-s” ), you should have a right to know if those are not shrinking or “melting away” as a matter of government (or Federal Reserve “central planning”) policy?

Your banker relies on Federal Reserve Accounting-Unit U$D, his reserves on deposit with the Fed.
“F.R.A.U.D.s” would be an insulting acronym for those accounting units.

See also Gold As a Parallel Currency.

Basic Budget and Appropriations Reform

Congress has only completed the full budget and appropriations process on deadline four times since 1977. It becomes more challenging in an election year when many members want to avoid politically sensitive issues — such as healthcare and the environment — which could scare off voters.

As we get closer to the Sept. 30 deadline and the Nov. 8 election, Congress will continue to forego the budget process. Instead they’ll pass a stopgap extension of current funding levels that could ignite another fiscal crisis, or government shutdown, later this year. It is the annual “Continuing Resolution” authorizing continued agency and payroll spending, and Social Security checks, without new Congressional action for the rest of this year.

    “Deadlines? We don’t respect no stinking deadlines!”
    – as might have been said in a famous Bogart film.

The majority, 73%, of American voters are against these kinds of shenanigans and don’t want Congress to increase spending. They know there ought to be a limit on how much money can be put on “America’s credit card.”

The folks in Washington — the president, Congress, Democrats, Republicans — they’re all to blame. But they don’t seem to care. It’s spend, spend, spend; we’ll spend what we want. The budget — what budget? — be damned.

An advocacy group sends out “Uncommon Wisdom Daily,” A Division of Weiss Research and write under the name “Uncommon Wisdom Daily Team.” Thank them for the opening four paragraphs of this message.

The Budget Process is Awkward – and Unnecesary

The United States Congress did not adopt a fiscal year (July 1 – June 30) until [tk] 1890. The law that set it up said the president would submit an annual budget for Congress to consider. The budget law has been changed since then but the idea of “budget planning” is still at the center.

Budget planning is the technique of private business and individuals to lay out numbers for spending and cash inflow for a future period. It is a different process from government fiscal planning. An individual prepares a forecast budget to use both to see how future payments might be divided and also to watch out for new things that violate planning assumptions. In other words, budgets are used to discover as you go along how far you are deviating from your plan.

Government budgets cannot perform that last function. Since appropriations are a law, Congress does not have any time “to modify” the spending except to increase it frequently during a fiscal year and regardless of results.

A Modest Proposal

I was fortunate to serve as a Senate staff member for a Senator on the Budget Committee, 1987-90 (Symms, R-ID). I watched the process and generally it is a systematic analysis and focused way “to plan” the new fiscal year. It controls appropriations, which come later from different committees. But it is never really followed.

What happens are continual “emergencies” and “supplemental” appropriations during the fiscal year, on-going, and at the end of every few years also a Debt Limit Increase confrontation.

Each September 30, the fiscal year ends. Appropriations Laws all expire. Agencies cannot keep paying their staff employees, and beneficiaries stop getting payments on October 1. That never happens because Congress always passes a “Continuing Resolution” to keep on keeping on as if the prior budget appropriations had not expired.

Stop!

My proposal is to stop at that enactment.
Let the “Continuing Resolution” become the full law governing appropriations for one more full year.

This gives time for the non-money side of Congress, all those Members who do not serve on the Budget Committee nor the Appropriations Committees, also to take some role in supervising and reviewing what their money is actually buying.

If a program is not performing, it deserves NO increase, and if the dollars appropriated shrink due to Federal Reserve policy, let that be the rate of cutting real spending.

Supplemental appropriations are going to happen anyway, for other programs. There is time to look at all the programs, EVERY YEAR, and to evaluate ex post facto how much to reward them for performance.

Government Accounting with Gold Grams

Questions have been raised:
Why the “gram of gold”?

Discussion: When the Unit of Accounting is, itself, a “policy instrument” there is no independent element for the voting public to look at, to rely upon, and specifically the buyers of US Treasury bonds should know they are being promised something in the future that is more than just “a policy instrument” of value.

Quote from Isaac Newton

    “Gentlemen, in applied mathematics you must describe your unit.” He instructed the Royal government.

Newton fixed the gold content of the British coinage, which is unchanged today although in 1931 the “paper pound” (GBP) became the UK government’s accounting unit and domestic legal tender.

[Cited by Isabel Patterson, The God of the Machine (1943), who was making a similar claim about unreliable “paper” (policy instrument) money.]

The gram of gold is a unit of mass (weight; density) and the Unit of Accounting would be just referencing something from the physical universe. “Gram” as a Unit happens to be convenient as the name of a measurement, and in financial affairs, “traditional” in the sense of gold having been so long used as money (along with silver). Social conservatives may insist on “troy ounce” and apothecaries measure, but those “names” are subject to “re-definition” moreso than the designation of mass in the Systeme International.

Why Not a Tabular Standard, with a diversified group of commodities?

Discussion: Proposals for a tabular standard have been around since Stanley Jevons and Simon Newcomb, and have never been taken seriously by the world of finance, or governments. Perhaps tabular standards are the “most rational” method of establishing a Unit of Accounting. I particularly like the Greenfield Fama Hall (GFH) commodity concept, which Greenfield and Yeager analyzed. The best part would be the government would not issue any of the “currency,” which might be created by banks for that Unit of Accounting, privately as credit (deposits).

When the government “defines” a Unit of Accounting for itself, which it uses in the bond market, then the private sector will create deposit accounts and private loans in the same Unit of Accounting. This is just “monkey see, monkey do” anthropology. The banks would also have assets denominated upon maturity in that Unit of Accounting, so their new credit liabilities would be “backed” sufficiently to promote “confidence.”

    When the “dollar” is just a “policy variable,” there is no basis for long-term confidence in it. No financial planner can tell a client, “you will have ‘X-value’ in the future.”
    Who knows?
    Its value is a “policy variable,” and policy can change.

If the payments system can already accommodate Visa and Mastercard, with FX transactions seamlessly executed, different Units of Accounting are already not any serious problem for a modern economy (and probably not for more primitive systems, where traders are very wary and alert). Local pricing would probably always be done in traditional, familiar customary (“dollar, euro, yen, yuan”) units and labor wage rates would optimally be local also to match the local pricing practices. Tourists don’t seem to have many problems with the payments system if they carry plastic.

So, “Why the Gram of Gold” and it is because it is a Unit that can serve for Accounting, and be independent from any government policy.

Why Not Fix the Dollar-price of gold?

Discussion: The fixed weight definition of “dollar” from 1900 was 1.5046 grams of gold, until F.D.R. debased it and Nixon abolished it in 1971 (it was a “policy instrument”).

Fixing the amount of gold defining ‘One Dollar’ is not technically different from defining dollars in terms of a composite of other commodity prices, as in a tabular standard, but a single tangible referent is “more concrete” in people’s minds, which begs the question: “Why not just use the weight of the metal to which the government’s Unit of Accounting is supposed to refer?”

The answer is that “defining” the “dollar” as something else leaves it as just a “policy instrument” with a value that can change with new policies. [Politicians and crony capitalists want the “flexibility” of that option.]

    What kind of “confidence” is that supposed to inspire? Does the motto on the paper money say “In God We Trust” because we cannot trust the money itself, or the government that issues it? [motto was first used in 1862 on paper currency; the Greenbacks; “god” instead of “gold” or silver to be trusted]

    [When will another president, like F.D.R. and Nixon, decide to break the promised, fixed XAUUSD exchange rate?]

My favorite acronym: F.R.A.U.D.= Federal Reserve Accounting Unit Dollar.

The Optimal Currency Area for Capital Markets is the World as a Whole

To step outside the question of whether a government should have a monopoly of some currency area, what might be an “optimal” currency area? Some things are traded mostly locally, and others are traded mostly globally. It might be useful to have a world-wide, single Unit of Accounting for capital assets and corporate balance sheets, particularly if the company has multinational operations.

The existing system of “national currencies” drives the current strength of the U.S. Dollar. But that is accidental.

To sensibly discuss and compare different values, a “standard” for measuring changes in relative financial values is essential: We have the SI for standards in all other fields, except accounting and finance. Measuring length or weight is standardized. Measuring “dollars” is variable. Measuring the same assets in euro, pounds, yen, or yuan is even more fuzzy.

In a world of floating exchange rates, and flexible commodity prices, to use the free market price in any currency Unit of Accounting, measured against the continuously changing “exchange rate” of a gram of gold, allows both flexible exchange rates among different Units of Accounting and a firm alternative basis for balance sheet accounting – eliminating “money policy” and exchange rate uncertainties.

    Governments, of course, should be discouraged from “fixing” their paper to the gram of gold because that would prevent any beneficial adjustments in the local labor market from flexible exchange rates. Governments should be encouraged to issue long-term bonds denominated only in kilograms of gold, not in paper Units of Accounting.

A single common Unit of Accounting in the capital markets (“gram”) would facilitate international diversification of equity ownership and remove capital movements measured in that Unit of Accounting largely from impacting floating exchange rate values, since “exchanging money” would be unnecessary when “trading” financial assets denominated in gold grams. As gold grams displaced other Units of Accounting in balance sheets, showing historical cost of assets in “gold gram” units, demand for some paper Units of Accounting might decline.

Theoretically a single world capital market based on gold-gram accounting could eliminate any transactions or exchange costs (with technology, e.g. blockchain) improving market performance. Issuing US Treasury bonds in Kilograms of fine gold would represent a dramatic innovation in the financial world, because the slow roll-over of maturing US Treasury bonds financed by the Kilogram bonds would not affect private wealth by a problematic “fixing” of a gold price for “Federal Reserve Accounting Unit Dollars.”

Since “policy Units” of Accounting can “float,” A Unit that DOES NOT CHANGE is worthy of being used as a basic “relative-measure-referent” for Balance Sheet asset values (thus my recommendation for a SI referent, to the gram of gold and introduction of US Treasury Kilogram Bonds). The depreciation of paper makes balance sheet numbers over time less and less useful.

  1. The chemical element, Au, will not change (object permanence), and
  2. The measure of its mass in SI units will not change – by policy. The SI unit of mass is not a “policy variable.” It is ideal as the name of a Unit of Accounting for quoting and measuring relative prices for other assets. Offering the Kilogram bonds would establish a reserve asset for insurance, annuities, and private debentures. They would become the asset side of private balance sheets with liabilities similarly denominated.
  3. The exchange prices for gold in every other Unit of Accounting are available 24/7 as public information, in real time without delay or “statistical adjustments.”
  4. All the historical data needed for any tax calculations would be readily at hand.
  5. Any change in the future relative value of gold against other real goods and services is arguably more stable and predictable than government policy. As we wrote in my essay on financial planning,
      “We might not be able to predict the exchange rate of an ounce of gold vs. a pound of beef in 25 years, but it would not be a whim of imagination. I would be more comfortable thinking about coin vs. beef than about $100 today vs. $1,000,000 in 25 years, and wondering which would be more valuable?”

Although the Unit of Accounting is used centrally in the payments system – paying our bills by exchanging bankers’ debts – the “measurement function” of allowing balance sheet assets to be “historically-valued” over time, and traded, sold, or mortgaged is also critically important. Assets can be traded, and pledged for credit. Credit is liquid; most assets are not. All such pledges are made in the name of the credit-Unit of Accounting.

The “Flexible Gear” of Bank Credit

The “credit process” in action is the “flexible gear” in the economic system that Hayek discussed in The Pure Theory of Capital (1941). “Credit-money” spends itself just the same as “asset-money.” The trick is to assure it is honored in payments (a vanishingly small cost for someone with assets, connected to the ACH or card networks). Bankers know the risks and technology to assure payments are honored.

The Units of Accounting people may locally use (“euro, yen, dollar, yuan”) are not any difficulty, because they all exchange quickly with each other in the FX markets. The Visa and Mastercard networks, and others, seamlessly make foreign exchange conversions.

For its own payments and tax collections, the US Treasury has an Exchange Stabilization Fund (31 Stat. 5117) to be used for balancing foreign exchange, and that Fund could also be used to convert “dollars” to gold grams for internal accounting. The US holdings of IMF SDRs are in that Exchange Stabilization Fund, as assets held by the US Treasury, as well as other foreign currency and “gold certificates” issued by the Federal Reserve in 1934 when all gold was nationalized by Congress under F.D.R.

How to ‘Manage’ a $15/hr. Minimum Wage

The primary “practical” reason why a statutory Minimum Wage of $15.00/hr. is a bad idea is because some workers are “not worth” that much to some employer, who has to use the workers’ productivity somehow to get paid by a customer.

Employers discriminate against “losers.” They shun workers who do not meet minimum “qualifications,” which mostly the employers choose (barring race, et al.).

How to ‘Manage’ a $15/hr. Minimum Wage

Employers are not going to pay and continue to pay, after perhaps a trial probationary period, for an employee who “is not worth it.” But the “social welfare” aspect of the Minimum Wage seems to be outweighing, politically, the logic of economics.

How might a Political Economist solve this problem? It is clearly a problem for the School of Public Choice economists, of whom I am proud to have known some personally (Coase, Buchanan). A simple institutional structure might work here, to divide the “employment” part from the “welfare” part of the costs.

Under current law, every State has a “work training and unemployment compensation” system of some sort. Workers who apply for unemployment compensation after losing a job can apply for it but they have to attend training programs in most jurisdictions. It is a subsidized process.

Perhaps the solution is a structural reform, replacing the current Unemployment Insurance and job training programs.

Proposal for Handling the Minimum Wage

Let the Minimum Wage be paid to the workers directly by the State labor exchange, if they get their jobs that way. Otherwise no Minimum Wage shall be mandated. Employers do not have to pay any such thing any more, and we ought to hope the State governments follow this deregulation, and repeal their implicit excise taxes on hiring sub-par workers.

Employers Decide how much to Pay

Employers would submit a “bid” for workers, and the labor exchange would choose which ones to send for an interview, based on whatever they do “to train” workers about job-finding skills, and assessing their level of skill.

    Let the employers come to the State labor exchange to interview workers, or workers can be sent to interviews, and the employers would be inviting them. Guaranteed interview, and possibly a guaranteed job.

    The employer would reply directly to the State labor exchange whether s/he wanted to take on that employee for a trial 30-days and option to renew the worker for a year at an agreed fee (like a temp agency contract). The wage will be paid to the State labor exchange and the State would pay the worker his or her $15/hr. It would also do all the Social Security withholding, etc. including ACH compliance (Medicaid) and workers compensation, and any other local taxes on employers who hire workers.

The implicit Excise Tax on an employer, who hires workers whose productivity may be sub-par with experienced and better trained workers, would be eliminated – and paid by the taxpayers through the labor exchange “minimum wage” – as all welfare payments ought to be paid, not mandated on others to pay.

And . . . the Moral Argument

Finally, the primary “ethical/moral” reason why a statutory Minimum Wage of $15.00/hr. is a bad idea is because the government does not have any legitimate right to command an employer to pay any particular worker any particular amount that the worker has not earned that day.

But retired intellectuals like me can understand why most people want to survive in a world dominated by State laws. This “compromise” idea would give everyone a way out of the Minimum Wage issue, and separate (i) the “welfare” part from (ii) the wage an employer pays. [The social democrats get their “living wage” paid (social justice?) and employers get a more free labor market with no wage controls.]

The Philosophical Argument (phronesis)

It is precisely that “wedge” from the elementary supply & demand graph (the “burden” of welfare), imposed by the government on the private employer; this causes “unemployment.” Since the employer can choose not to hire, that law causes unemployment. [law of demand – demanders move upward on the curve, for a smaller quantity demanded] It is an implicit Excise Tax on employers who hire sub-par workers, thus fewer of those workers are hired.

Yet if we could divide the welfare payment from the wages paid by an employer, then “unemployment” goes away. Taxpayers would pay the “welfare” part of $15/hr. and the employer would pay to the State labor exchange what the employee is worth. The employer’s payments would be under a contract with the State labor exchange; it would pay $15/hr. to the formerly “unemployed worker.”

“Unemployment” goes away. That’s a good result. Employers might figure out how “to chisel” the system by bidding low to get a good worker, and pay the employee less than the $15 the taxpayer is stuck with, but why care about that? Workers get jobs, employers get workers to train, and social democrats get higher taxes “to redistribute wealth” without requiring employers to pay all those taxes themselves, which a mandated Minimum Wage like today’s does do.

Today’s Minimum Wage laws are just a form of Excise Tax on an employer who might hire workers whose productivity is sub-par compared with experienced and better trained workers. When we tax something, we get less of it. Stop taxing job creation.

Note: Nothing in this proposal would restrict direct employer hiring of a worker, and no minimum wage laws would apply when such “Excise Taxes” have been repealed. Workers who do not want the State $15/hr. wage could work for less directly with an employer.

Creating a New Currency

THIS IS THE PRIMARY ARTICLE

    Link: A review of Warren Coats’ new book.
    (see a list of his articles and books)

ADDITIONAL LINKS of Interest:

Stronger currencies despite central bank policies to weaken

Gold as a Parallel Currency Shows Promise in Foreign Exchange transactions, using the technology of a Blockchain.

Why Dollar-Alternatives Are Non-Starters, e.g. the SDR.

The Appeal of the Gold Standard

The appeal of the Gold Standard is that classic image of the Gold Coin in the minds of people. It is a concrete mental picture. Our paper money system is something else. People know the Federal Reserve dollars are slowly losing value (“inflating”). The gold coin you see in your mind’s eye is more than just a physical object; it is a belief in permanence, a belief in objective reality (and in some sense, “natural law” i.e. chemistry, mechanics).

31.1g AU coin
31.1g AU coin

Economists would want to promise a “Stable Price Level” as a monetary standard. It is not believable. The Federal Reserve cannot even “manage expectations” about their plans for interest rates in 2016. Seeking this elusive ideal, government “planning” crowds out financial planning by individual families and businesses, because “the language of future prices/values” becomes fuzzy. The ideal of their success – a “stable price level” – is not believable (another example, perhaps, of believing in unicorns).

    [ from the page on this site, “Gold as a Parallel Currency,” — continuing to “A Modest Proposal” — Gold kilogram 50-yr.Treasury bonds. ]