The stock markets are recovering quite well today, according to the newspapers I read this morning.

I don't know. I think its high time for discipline or Zeuro. With zeuro meaning zero euro. I'm not a big fan of Merkel, but she does a good job asking for more budget control upon these countries.

I'd say it's high time for the privatization of the monetary system. A return to the gold standard would greatly improve monetary stability, not to mention the positive effect of allowing interest rates to rebound to their market equilibriums. There's no reason why silver couldn't be used as a unit of exchange, either, assuming demand was high enough. I'm impartial to gold, however.

> Justinian I wrote:

> Naw. Lets have a land standard. Gold just doesn't match the value of our assets anymore.

Did you sleep through 2008? 

1: When the government does back currency with gold, the price of gold is much more stable because the flow of gold is controlled.  In addition, it creates an increased demand for gold, raising the price to where it could be competitive with land values.
2: As you said, gold just looks pretty.  It's always looked pretty, and it always will look pretty.  There's its value.
3: Land, in contrast, is highly unstable.  A hundred acres of land bordering a river would be very valuable.  What about if some guy upstream decides to build a factory or a cattle ranch, polluting the river?  How about a home
4: For an object to be an effective storage value unit for currency, it needs to be safeguarded.  Gold is simple in this regards, because it's simply a shiny brick.  We take our gold and stick it in a safe.  Land (especially in the amounts you're talking about) can't be secured.  Directly, land is susceptible to all sorts of risks, ranging from environmental concerns to something as simple as graffiti, all of which will hurt the land's value.
Indirectly, however, land use is a devaluing mechanism, depending on how it is used.  A factory, for example, will slowly damage the land surrounding it by decreasing vegetation.
If land used to back up currency is allowed to still be used, it is susceptible to these changes in the value.  If it's taken out of use, then you've just created a massive recession from private land being purchased en masse to just sit there (where I could argue that it would still be susceptible to problems, as per "problem of the commons" scenarios).
5: This is the part where I compare your proposal with xeno syndicated economics.  When the US currency was backed by gold and silver, that meant that you could go to a bank and literally exchange your money for gold and silver.  The very reason why backing worked was because, at any time, you could turn around and obtain a physical item.  How would you obtain land in this scenario, though?  You would get a document indicating that you own a square foot of land in Virginia?  Unlike gold, land is only usable in large quantities.  As a result, it's rare that an individual would even want to exchange their currency unless they were super-rich.  Two implications:
A: In effect, you didn't back the currency, because only a handful of the population can actually exchange the currency and benefit from it.
B: The ONLY currency fluctuations you would see, then, would be massive fluctuations of millions of dollars, since the only people that can possibly manipulate the currency are the few people with huge amounts of currency on hand.
6: I'd imagine that the very purchasing of land would be a massive social upheaval event.
7: If an individual wishes to exchange their currency for land, how do you value it?  How the hell do you value a small piece of land among a massive swath of land?  Land is solely valued by its utility.  As such, a square inch of land would be worth nothing, yet a square inch among a square mile of land would be worth infinitely more.  The system you propose would, in effect, create its own fluctuations in prices.

Gold is much better.  Once purified, gold is the same regardless of where it was mined, where it's currently located, etc.  You can find the value of your entire gold stockpile easily by simply looking at the price of gold, and multiplying.  Thus, it's an inherent value storage.  Your system would require land continual land value audits, based largely on speculation, in order to come up with a random guess.

I wasn't even being serious about the land standard. I just think a gold standard is not necessarily. The monetary system can be stable if you prevent systemic externalities. Our government, on the other hand, only creates them when it pushes for policies to increase "social justice" and home ownership. It should let banks make rational decisions, and only regulate when necessarily to prevent undesirable externalities, like pollution from factories or risky investments by banks. And don't say that the market corrects externalities, because a purely free market has never existed to test that claim, and it is unlikely that such a system will happen.

Justinian I: "I wasn't even being serious about the land standard. I just think a gold standard is not necessarily. The monetary system can be stable if you prevent systemic externalities. Our government, on the other hand, only creates them when it pushes for policies to increase "social justice" and home ownership."

The monetary system is inherently more stable when it is fixed to something tangible, rather than the whims of bankers who hold their meetings behind closed doors. The government has historically abused its ability to print currency, especially in times of war. The effects are equitable with counterfeiting, where the people who get to spend the "new" money first reap a greater reward than those who obtain the money last. By then, it has already depreciated in value due to inflation.

Although fractional reserve banking could very well happen in a free market on money, I don't have much faith in the business model. It's performance would have to be determined based on its own merits. I object to the fact that we are not given a choice in our unit of exchange.

"It should let banks make rational decisions, and only regulate when necessarily to prevent undesirable externalities, like pollution from factories or risky investments by banks. And don't say that the market corrects externalities, because a purely free market has never existed to test that claim, and it is unlikely that such a system will happen."

A purely free market doesn't /have/ to exist to test that claim. Externalities don't have much meaning in economics, anyway, as they can not be revealed through human action -- the foundation of economic science. An action merely reveals a preference, not the why or how. The reason an individual chooses a particular course of action over another is irrelevant. It's unimportant to the economist if an action is motivated by an externality or something else, whatever transactions result (if any) must be treated the same.

Take your pollution example, the most commonly given example of a negative externality. Let's say I own a factory making Whatsits, the byproducts of which pollute a nearby river much to the chagrin of the property owners downstream. Assuming the property owners have any actual claim to the river, then I should have to negotiate with them. It's impossible to predict what solution we may settle on. I may have to pay them restitution, I might have to move my factory elsewhere, I could pay /them/ to move, or better yet reduce the amount of pollution somehow; either by installing some sort of control device or using a different chemical for my Whatsits that release a less harmful byproduct. It doesn't matter which solution or how it is arrived at, from the perspective of the economist all that can be revealed is that everyone involved prefers the solution to the situation that existed beforehand.

Another example might be an airport that has an approach path over a crowded neighborhood. The residents might complain that the noise of approaching aircraft is detrimental to their quiet enjoyment. I won't get into the difficulty in determining the value of subjective conditions like happiness and satisfaction, however the airport has other options at their disposal than restitution. Such as changing their approach procedure to overfly a less densely populated area or where there are fewer residential neighborhoods. They could impose restrictions on aircraft performance, such as how fast they may go and at which altitudes they may cross specific intersections.

The point is that anything is possible, though I am the first to admit that the free market is no panacea. Individual people and private enterprise alike are wholly capable of making mistakes, and no one has the foresight to predict every possible outcome or consequence of an action. My position is merely that mistakes are more readily corrected for, and less pervasive, than those committed by government.

Apparently we're propping up the Euro with another $900 billion...Mr. Scott, full power to the printing presses!