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The always perceptive
investment manager John Hathawy has posted The "Real" Value of a Dollar on the
Tocqueville web site.
Hathaway makes a number of very Austrian-sounding points.
First, the importance
of money prices for economic calculation:
Whether or not to
buy, hire, produce, or invest depends on millions of daily calculations
measured in dollars.
The pretense of economic planners who believe that their judgments are
superior to market outcomes as expressed in prices:
The enticing question
is what information should the market utilize to assess the dollar? Should it
use the price of gold? Not according to Gov. Bernanke. Should it use exchange
rates? Again, the answer is no. Let us then turn to the mini-maestro for the
correct answer. He concludes his January 4th speech: [...Bernanke speech
omitted...] In other words, trust us to get it right. But is Bernanke’s confidence that the
Fed will act appropriately to maintain the dollar’s value enough to
dispel all doubts?
The inevitability that markets will prevail over the planners:
It is impossible for
anyone to write tomorrow’s headlines. What is absolutely
and irrefutably certain, however, is that oversupply, a term without which it
would be impossible to describe the dollar, will be corrected by market
forces in due course. The Fed, notwithstanding its privileged knowledge of
the true value of the dollar, is powerless to dictate that the dollar will
trade for one penny more than its market- clearing price.
A Misesean view of the purchasing power of money:
The value of money is
fundamentally different from all other daily necessities. Money is useful
both for its current transaction value and for its future purchasing power. While
its transaction value can be known at any given moment, future purchasing
power is a matter of speculation.
Robert Blumen
Robert Blumen is an independent
software developer based in San Francisco, California
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