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Jul 25, 2010

Martian Gold

Fred:  Gold! The Martians are paying about one ounce per day to work for them.
Mike:  I'm in. That's over $1,000 per day.
Fred:  Last week. Gold is $100 per ounce this week.
Mike:  That's OK. What will gold be worth next week?
Fred:  Who knows? But it's gold; how could we lose?

Future News:

It has been three years since the Martians arrived, smiling and giving gold coins to whoever would help them establish their "humanitarian aid colonies" around the world.

Government economists applauded, predicting that this injection of gold into the economy would make everyone rich and end the recession. Certainly gold is better than cash. Multitudes around the world are fully employed building the Martian colonies, raising the special foods that Martians love, and providing the Martian creatures with sighteseeing tours of the Earth.

Everyone has seen these coins in circulation. Government economists said that this was proof of the multiplier effect, as the coins are passed around, stimulating production in each passing.

Puzzling Effects

Some irritating private economists have noted puzzling effects. The value of gold is falling fast as more shows up in trade. The Martians respond by manufacturing even more of it with their secret process, handing out as much as needed to keep resources flowing to their projects.

The price of human goods is rising, in dollars and gold, as people realize that more of world agricultural and manufacturing capacity is going toward Martian needs. Some clearly confused people are complaining that "Everyone is working for the Martians" and "We can't eat gold, so what good is it?". Government and Martian economists have responded that economics is complicated, they are trained to think about these things, and that this should be left to the experts, not to the "peasants".

New Legislation

Pending legislation would direct the US  Treasury to print up as much money as needed to buy the Martian gold.

A Treasury offical:  The public would be more comfortable with dollars. We will buy the Martian gold, providing them with dollars. Then they can spend the dollars in the usual way. This is quite similar to stimulus spending on new projects.

The media have not noticed the comments of some fringe economists.

The flood of both gold and dollars is directing resources toward Martian needs. Humans hold vast quantities of dollars and Martian coins. These people want real things in the future. Why will people work in the future to deliver human goods to these people, in exchange only for those coins and dollars?

Coins or dollars, what is the difference now? They are both worthless in themselves. They are only IOU's.

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What happens when Martians or our government manufacture money? They receive real resources. The citizen or peasant gets an IOU.

A large part of the populace works for the government or on government supported projects, for money that has been borrowed or newly printed. The government is not building much of value to the public. So, what will those dollars and debts be worth in the future, when there is little of value to humans to exchange back for the dollars?

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