humans being imperfect, it would never be effectual or permitted. Yet shoes and socks and eggs find their way from the producers to us under these imperfect conditions.

And exactly the same applies to the money system.

Governments are made up of people with exactly the same imperfections as people generally. They have *no* superior knowledge, capacity or goodness.

The market uses information about local knowledge and subjective values scales from hundreds of millions of people, which is almost completely unavailable to the officials in the central planning office. How are they going to obtain this dispersed information from millions of people? Answer: they can’t.

Yet without this information, government has no way of knowing whether it would be more economical for a certain factor of production in a given transaction to be used in a certain way, or for something else. It has no way of knowing whether, or how to balance a given supply and demand. Without the signals from the masses of people as consumers as to which values and purposes they consider most urgent as against which others, government is incapable of economic calculation and is flying blind. The results of all its grand plans can only ever be more or less planned chaos, which explains both the problems of the old USSR, and the current GFC.

The use of mathematics adds *nothing* to our understanding of these problems in reality.

Worse, it actively hinders our understanding by providing a cover for the fabulous fictional *assumptions* of omnipotent government that underlie all interventionism.

The problems that the Bretton Woods Agreement Mark II is trying to solve are themselves the *unavoidable* results of central planning.

There is no evidence or reason for the mere assumption that government can deliver a money system that is either economically more productive or ethically fairer than would otherwise obtain. Certainly fraud should be illegal – especially institutionalized governmental fraud!

If government control of the money supply were abolished, there would be no more crisis in the world money ‘system’, than there is now in the world shoe system.

Interesting article on how government control of the money supply, by its endless addiction to inflationary finance, removes from everyone the option of saving for their retirement, and forces the whole population in trying to provide for their old age, into speculating on rising equity markets, which has caused the GFC: http://www.lewrockwell.com/woods/woods118.html

we need fixed exchange rates established by international agreement for the following reasons

1. failure to fix leads to competitive devaluations to address current account deficits, all these are are defacto tariffs placed on other nations. the devaluations lead to deflation and threaten the financial stability.

2. floating exchange rates have led to overvaluations of up to 50% when comparing baskets of goods in the differing economies (PPP)
3. general equilibrium not possible unless one of the variables is removed making the differential equations representing all markets solvable.
4. floating exchanges divert economic resources from production to speculation

The reference you provide contains a familiar flaw, Wing Ah Ling.

In it, Thomas E Woods postulates that:

>>Under a commodity standard, people could save for the future simply by accumulating precious-metal coins – which, back when they functioned as money, held or even increased their value. No one has that option any longer.<<

Of course they have the option, Wing Ah Ling. They simply buy gold, or silver, or whatever "precious metal coin" their little heart desires.

And when they want to spend it, they simply convert it back into the money that the rest of the world uses.

In one of the YouTube pieces that Arjay pointed me to recently, we saw Ron "Audit the Fed" Paul stumble over this exact problem.

"How would you buy stuff, under a gold standard system", he was asked

"I guess you'd have gold certificates, or silver or whatever..."

Given that a certificate is only a token, and a dollar bill is just a token, and the bits-and-bytes in my bank account are simply tokens - where does the "standard" system win out?

If it is the creation of unlimited credit that you are worried about, then returning to the gold standard would certainly stick a fork into that. And in the process, create an entirely new "world order"...

http://en.wikipedia.org/wiki/List_of_countries_by_gold_production

Mind you, we'd have to face the problem that actually, there ain't enough gold in them thar hills to support a fraction of world trade.

If, on the other hand, it is "saving for retirement" that you are worried about Wing Ah Ling, and you believe that gold is a hedge against inflation, there is absolutely nothing stopping you going out and buying the stuff.

Nothing at all.