A Redenomination of Value

A quick'n'dirty look at Freegold from the
perspective of Marx's Law of Value.

1. The social value of commodities in general, reduces during periods of economic contraction. (As a result of supply/demand dynamics.)
2. People continue with the same expectations for individual value. (They are unwilling to accept a pay cut, or "austerity".)
3. This disconnect results in tension between business owner/operators ('Capitalists': who must sell the production of their business at worst for break-even and optimally for a profit), and workers ('Labour': who are unwilling to accept a reduction in their individual value of labour — and, infact, expect to see a steady increase in it, at least nominally, over time).
4. This tension has always in turn eventually resulted in: sustained and stubborn deflation (an increase in the value of currency, in relation to goods and services in general); fear and uncertainty; economic turmoil — in the past ultimately only escaped by some form of catastrophic societal and currency collapse (depression, sometimes even revolution).

The euro-Freegold design circumvents this issue by enabling a redenomination of the denominator (currency), either upwards or downwards, to guide the social and individual values of commodities (including labour) into a constant state of relative equillibrium. Through the single and unwavering mandate of the ECB targeting — and so far achieving, it should be noted — an approximately 2%pa inflation in the HICP index of core consumer prices, adjusting the exchange value of the currency upwards/downwards to achieve that goal. The means to redenominate the denominator, is to adjust the currency against the ultimate globally-accepted benchmark of true and enduring value: gold. Gold is held as the primary reserve of the currency manager, and the ratio of their reserves (ounces of gold) to their liabilities (euros in the system) is the objective measure of their success.

Here is the fundamental difference between the euro and, say, the dollar:

• The dollar is not directly and objectively measurable against anything tangible and it is a debt backed security — as the promises break down, the backing for the currency disappears along with them.
• The euro is an objectively measurable, asset-backed security — the major promise of the ECB is that they will sell you their reserve gold, if necessary, at the €price they maintain to be the prevailing market €price.

You can see quite clearly that they have been making good on that promise for at least the last decade, right here.


^{You will, respect ma, austeratay!}