Large Changes In Fiscal Policy: Taxes Versus Spending

This paper by Alberto Alesina and Silvia Ardagna provides very good empirical research to confirm that what we expect a priori: that deficit cutting sets up a strong recovery, while deficit spending funded by tax increases does not. The abstract nicely summarises other aspects of the paper, and it is worthwhile for anyone to read who is involved or interested in public policy.

We examine the evidence on episodes of large stances in fiscal policy, both in cases of fiscal stimuli and in that of fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions. We confirm these results with simple regression analysis.

H/T to Sean Corrigan.

Is Inflationism Part of our Mindset? The Paper Pound & The Bullion Report

Most people have one principle “asset”: the house they live in. Long gone are the days when your physical house was simply your home and nothing to do with your financial assets. Indeed, as the last boom was manufactured by the low interest rate policies of most of the central banks in the Western World, cheap credit pushed up asset prices, notably houses, which you could then cash in, spending this newly minted credit, drawn down as money to buy the goods and services you desired. House prices, perversely, are one of the few key costs of living to be celebrated when they rise. If a man from Mars came down to earth, he should surely conclude that this trend was mad and that people supporting a cost of living increase, on such a stupendous scale, were surely punch drunk on inflationist ideology. Now governments around the world are fully committed to a policy of inflationism. This is when a policy of more cheap money, via exceptionally low interest rates and blatantly “printing” electronic money, is used to create a “recovery.” Please note: like some doctor of old prescribing a leech to suck out your blood if you had a disease and then doing so again when you started to faint as a result of blood loss, we have the cure of easy money being advocated as the cure for a past easy money policy blunder on a spectacular scale. This policy of inflationism ensures that the creditors of the world will eventually get their debts paid back in nominal terms, but with money of lower purchasing power. This fleecing of the thrifty, sensible and prudent is thoroughly dishonest. I would prefer to meet a highway robber who at leasts offers me a choice – “Your money or your life?” – rather than the theft of my purchasing power that is taking place now.

Is honest money a lost cause?

I recently read the Bullion Report of 1810, which has a fantastic introduction from the great economist and holder of the Economics Chair at the London School of Economics from 1895 to 1924, Edwin Cannan, prior to Lionel Robbins. He wrote his introduction to this most famous of House of Commons reports in 1919, after the end of the First World War. Then, our money was debased and the policy solutions were inflationism: dishonestly paying off debt by trying to pass it to the next few generations, covering the misdeeds of the current generation. This was a time in history very similar to the end of the Napoleonic Wars when our money, hitherto being indestructible gold, was replaced by inconvertible paper money and then switched back into convertibility at a lower rate after the conclusion of the peace. I will leave you with some quotes from Cannan in his Introduction,

But no government involved in a great war is willing to give up so potent an engine for surreptitiously fleecing it’s subjects as an inconvertible currency , whether in it’s own hands or in that of a bank it influences.

Joined with the determination of the public to accept notes, the Act placed in the hands of the Bank the power of creating money without limit for the benefit of it’s shareholders , or Proprietors , as they were called……the Directors had long managed the Bank with one eye indeed on the interest of the proprietors but with the other on that of the “monied interest” generally.

But the bank had found itself comfortable under the Suspension, and felt no enthusiasm for a return to a system which did not guarantee it against being asked to pay it’s debts at a possibly inconvenient moment.

Much as this was written 90 years ago, referring to events of 200 years ago, we should not become despondent that the cause of honest money is doomed: we certainly have sound economic reasoning on our side. We must find better and more persuasive ways to stick up for hard work, thirty management of your affairs and in general for liberty. This is a core part of the Cobden Centre’s mission and indeed why we set it up.

Mark Skousen's Contributions To Economics

Following my review of Mark Skousen‘s paper on GDE, I was pleased to discover this piece by Ken Schoolland, Professor of Economics, Hawaii Pacific University, chronicling Mark’s contributions to economics.

“If I have been able to see farther than others, it was because I stood on the shoulders of giants.”  — Sir Isaac Newton

Carl Menger, Eugen Böhm-Bawerk, Ludwig von Mises, Friedrich Hayek, Murray N. Rothbard, Roger W. Garrison, and many others have laid the foundation for Austrian economics. One more deserves acknowledgement. Mark Skousen’s scholarship has been highly innovative and ambitious in dethroning and supplanting three principal forces in modern economics:  (1) the Keynesian macro model of big government; (2) Paul Samuelson’s popular Economics textbook, which promoted the welfare state, progressive taxation, and an anti-saving mentality; and (3) Robert Heilbroner’s Worldly Philosophers, whose favorite economists are Marx, Veblen, and Keynes.  Market-oriented economists have published numerous critiques of Keynesian economics, but the best way to fight a bad idea is by developing a better idea.  I see Skousen’s efforts as successful in accomplishing this and as a positive contribution to economics.


Here is a basic summary of his efforts over the past thirty years, followed by a more detailed explanation: 1.  Keynes mutiny:  The Structure of Production (1990, 2007) develops a universal four-stage macro model that challenges the Keynesian/monetarist monolith. Better than GDP:  As part of this 4-stage model, he introduces a new national income statistic, known as Gross Domestic Expenditures (GDE), that establishes the proper balance between consumption (the “use” economy) and production (the “make” economy), and demonstrates that business investment, not consumer spending, drives the economy (thus, confirming Say’s law over Keynes’s law). 2.  Exit Samuelson:  Economic Logic (2000, 2010) is an innovative new textbook that integrates powerful Austrian concepts into standard economics textbooks and re-establishes classical economic policy. 3.  Move over, Heilbroner:  The Making of Modern Economics (2001, 2009), a new history of economics, offers a bold running plot with Adam Smith and his “system of natural liberty” as the heroic figure. In short, Skousen attempted to supplant Keynes, Samuelson and Heilbroner – a triathlon feat in economics.  Here are the details.

The Structure of Production (1990, 2007)

Skousen’s first important work is The Structure of Production, published in hardback by New York University Press in 1990, and in paperback with a new introduction in 2007. Structure is a treatise in macroeconomics and a positive alternative to John Maynard Keynes’sGeneral Theory of Employment, Interest and Money (1936).   In the early 1980s Skousen addressed the need for an updated macro model of the economy that challenged the Keynesian/monetarist monolith and did a better job of analyzing economic activity and the business cycle. He was attracted to the Austrian idea, originating with Carl Menger and his intellectual descendants, of a time structure of production involving capital- and labor-using stages of production through time. With The Structure of Production, Skousen created a generalized four-stage macro model based on the ingenious stages-of-production model Hayek developed in his small book, Prices and Production (1931), known as Hayekian triangles.  However, if the Austrian macro model would ever challenge and replace the Keynesian neo-classical model, it required a theoretical approach that needed to be updated, one that would fit historical data and modern macroeconomic statistics.  Given that Hayek’s model never went beyond the purely theoretical level, Skousen created a 4-stage model that fit government statistics, such as price indices, inventories, employment, and national input-output data.  The generalized four-stage model of the economy is illustrated below: Figure 1. GDE measures spending at all stages of production. GDP measure final output only. This model fits well into price indices compiled by U. S. Commerce Department’s Bureau of Economic Analysis (BEA). For example, for the “resources” stage there is the raw commodity price index.  For the production and distribution stages one could use the producer price index (PPI).  And for the retail stage, there is the Consumer Price Index (CPI).

Aggregate Supply and Demand Vectors

Structure advances the Hayekian stages-of-production model with the introduction of the Aggregate Supply Vector (ASV) and the Aggregate Demand Vector (ADV) as a way of measuring macroeconomic equilibrium, disequilibrium, and the business cycle.  Here Skousen notes that the supply chain of production is a downward-sloping schedule that reflects distance and direction over time (thus a “vector”).  ASV is determined by productivity, the profit margins at each stage of production, and interest rates.  (See Structure, pp. 201-203, and Economic Logic, pp. 583-587.) The payment schedule for goods and services produced at each stage moves in an upward direction, which he calls the Aggregate Demand Vector (ADV).  ADV is influenced by time preference, the “natural” rate of interest based on the decision of individuals to consume or save their income. Macroeconomic equilibrium is achieved where ADS = ADV at each stage of production (similar to what Mises called the evenly-rotating economy).  When the market rate is artificially reduced to below the natural rate of interest, ADS and ADV move in different directions, and thus create a business cycle. The influence of The Structure of Production can be measured in several ways: as the underground bible for supply-side economics; a revival of Say’s law; an Austrian advance over the Keynesian macroeconomic model and the monetarist disequilibrium model of the business cycle; and a new tool for financial analysis. Its most important function is to serve as a theoretical counterpoint to the standard KeynesianWeltanschauung.  What drives the economy?  According to Keynesians and Keynes’s law, “demand creates supply.”  Consumption drives the production process; consumer spending is paramount, since it represents most economic activity (over 70% of GDP in the US).  On the other hand, according to supply-siders and Say’s law, “supply creates demand.”  Production drives consumption; saving and investment, technology and productivity, are paramount.  Which force is more important?

Gross Domestic Expenditures (GDE)

To answer this question, The Structure of Production introduces a new national income statistic, known as Gross Domestic Expenditures (GDE), which measures spending at all stages of production in the economy.  GDE is defined as follows:

GDE = Intermediate Production + GDP

Or in other words,

GDE = “Make” economy + “Use” economy

The creation of GDE is necessary because Gross Domestic Product (GDP), the most common denominator of economic activity, focuses solely on final output, the end product, or what is known as the “use” side of the economy.  It ignores to a large degree the “make” side of the production process, the goods-in-process at the intermediate stages of production.  As a result, GDP over-emphasizes consumption at the expense of saving and business investment.  By adding the intermediate stages, GDE establishes the proper balance between consumption and saving/investment, between the “use” economy and the “make” economy. Drawing from the annual input-output data compiled by the Bureau of Economic Analysis, gross business receipts from the IRS, and other sources, GDE estimates gross spending patterns in intermediate production (goods-in-process) and final output.  GDE should be the starting point for measuring aggregate spending in the economy.  It complements GDP and can easily be incorporated in standard national income accounting and macroeconomic analysis.  In the United States, Skousen’s research shows that GDE appears to be more than twice the size of GDP and he discovered that GDE is historically three times more volatile than GDP.  Thus, GDE serves as a better indicator of business cycle activity.  (See Skousen’s working paper, “Gross Domestic Expenditures (GDE): The Need for New National Aggregate Statistic,” 2010.) In developing GDE, Skousen behaved in a manner similar to Milton Friedman when Friedman added up components of the money supply to create M1 and M2 in The Monetary History of the United States (Princeton University Press, 1963).  Nobody had created the monetary aggregates M1 and M2 until Friedman came along.  In Skousen’s case, the IRS provided the raw data — the gross business receipts produced each year from tax returns of corporations, partnerships, sole proprietorships, and farms. By adding them all together, Skousen came up with GDE. GDE is useful in debunking the popular Keynesian myth that consumer spending drives the economy.  Granted, consumer spending represents 70% of GDP in the United States, but GDP accounts for “final output” only, and is therefore not fully representative of total spending in the economy.  Using GDE, Skousen found that consumption accounts for only approximately 30% of total economic activity, and that business investment (intermediate spending plus final capital investment) is, in fact, the largest sector of the economy.   This conclusion is more consistent with the leading economic indicators published by the Conference Board.   Again, Say’s law is validated.

Economic Logic (2000, 2010)

Second, Skousen challenged Paul Samuelson and provided an alternative principles textbook to Samuelson’s popular Economics (1948), which forms the Keynesian basis of most modern-day courses in college economics.  Establishment textbooks, borrowing from Samuelson, use the perfect competition model in micro and the Aggregate Supply and Demand (AS-AD) model in macro, both of which are defective.  Using these models, economists and government officials often support anti-trust legislation, debt financing, excessive consumption, and progressive taxation (all Keynesian mainstays).  Skousen wanted to create a principles textbook that removed bad economic theories and replaced them with sound economic principles on a consistent basis.  He also wanted to write a textbook was based on his experience as a businessman and investor.  Too many economics textbooks are written by ivory-tower academics and are, therefore, too theoretical. Economic Logic (2000, 2010) establishes a logical step-by-step approach to teaching college economics—thus the title. Skousen’s background in business suggested a new pedagogy, beginning the micro chapters with the profit-and-loss income statement, followed by supply and demand.  His approach is distinctly Austrian, using Carl Menger’s “theory of the good,” which focuses on the quantity, quality, and variety of goods and services rather than earning income as the best measure of standard of living.  Economic Logic begins with the P&L statement (a Austrian-style two-stage micro model), followed by supply and demand analysis.  Classroom experience demonstrated that students preferred this innovative approach over the traditional pedagogy of introducing supply and demand first, followed by profit and loss.  It is also a good way to introduce economics students to business, finance, and accounting, which are often minimized in economics courses. The macro chapters incorporate Skousen’s 4-stage model of the economy (the first to appear in an economics textbook), and integrate GDE with GDP and standard aggregate statistics, and business-cycle theory.  GDE does not replace GDP, it complements it. He also introduced the Aggregate Supply Vector (ASV) and Aggregate Demand Vector (ADV) as a more accurate approach to the business cycle.  By integrating “Austrian” elements, his macro model more accurately reflects the dynamics of the global economy, including supply-side technological changes, asset bubbles and commodity inflation, and the boom-bust business cycle.  It also reestablishes the virtues of balanced budgets, thrift, and limited government that are absent in Samuelson-style textbooks. Economic Logic also has chapters missing in other textbooks:  the origin of money, and the pros and cons of an international gold standard, central banking, and inflation targeting; the Mises/Hayek theory of the business cycle; a full critique of the Keynesian Aggregate Supply and Demand (AS-AD) model; entrepreneurship, financial markets, and government regulation; a review of major schools of economics, including Austrian, Keynesians, Marxist, Chicago, and Public Choice. In sum, Economic Logic does something not previously achieved:  It integrates Austrian concepts into the standard economics textbook and has been adopted by a number of schools, such as the University of Detroit-Mercy and Universidad Francisco Marroquin in Guatemala.

The Making of Modern Economics (2001, 2009)

Third, and especially popular with students in my classes on the History of Economic Thought, isThe Making of Modern Economics (2001, 2009). This book reveals a new way to study the lives and ideas of the great economic thinkers.  In my estimation, it’s the most fascinating, entertaining and readable history I have seen, and I have encouraged translations abroad.  So far it has been translated into Chinese, Turkish, and Spanish. It is a bold history told for the first time as a running plot with a singular heroic figure, Adam Smith and his “system of natural liberty,” at the center of the discipline. Almost all histories of thought have previously been written by socialists, Marxists and Keynesians, with Robert Heilbroner’s classic title, The Worldly Philosophers, being a combination of all three.  His three favorite economists are Marx, Veblen, and Keynes. Heilbroner devotes a chapter to Joseph Schumpeter, but only because he is an enfant terrible of the Austrian school.  Sadly the sins of omission are too great to salvage Heilbroner.  He has virtually nothing to say about J. B. Say, Frederic Bastiat, Ludwig von Mises, Milton Friedman, and, like all other histories of thought, he has no running plot or single heroic figure. On a broader scale, Skousen’s history of economics breaks new ground by rejecting the standard political spectrum, what he calls the “pendulum” approach to identifying economists.  In the world of competing ideologies, the standard political spectrum has Adam Smith, advocate of laissez faire, on the extreme right; Karl Marx, the radical socialist on the extreme left; and John Maynard Keynes, supporter of big government, in the middle.  This pendulum approach is unsatisfactory since it equates Adam Smith with the extremism of Karl Marx and represents Keynes as the golden mean. In The Making of Modern Economics (and The Big Three in Economics, a shortened version), Skousen presents a unique alternative by creating a “Totem Pole of Economics,” where economists and their theories are measured  by their impact on economic freedom and growth.  In his ranking, Adam Smith is on top, followed by Keynes, and Marx is “low man” on the Totem Pole of Economics. Thus, the story of modern economics begins with Adam Smith, the heroic figure, and thereafter economists are ranked to the extent that they advanced or retarded Smith’s “system of natural liberty.”  Skousen showed how Karl Marx, Thorstein Veblen, John Maynard Keynes, and even some disciples such as Robert Malthus and David Ricardo detracted from the Smithian model of democratic capitalism during periods of economic failure and upheaval, while Carl Menger, Alfred Marshall, Irving Fisher, Ludwig von Mises, and Milton Friedman, among others, remodeled and improved upon Smithian economics as the world economy recovered and prospered. Especially novel, I think, is the contribution of chapter 10, in the middle of the book.  It follows the success of the marginalist revolution that advanced the Adam Smith model and established “neo-classical” economics as a formal science.  Heilbroner and other historians highlighted the sociology of Thorstein Veblen, a major American critic of “neo-classical” economics without providing a counterweight.  Skousen’s middle chapter juxtaposes the ingenious work of Max Weber, the German sociologist who offered a spirited defense of “rational” capitalism.  The two sociologists served as a perfect counterbalance. The Making of Modern Economics also breaks new ground by publishing a hundred illustrations, portraits, and photographs, and offering details and little-known anecdotes about the lives and ideas of the economists, including creative chapter titles and musical selections reflecting the spirit of each major thinker.  Skousen makes the lives and ideas of the great economists come alive like no other textbook, and my students find it especially refreshing. In sum, I salute Mark Skousen for advancing the theory and history of economics and encourage students and colleagues to study his textbooks and insights.

Books by Mark Skousen

  • Economics of a Pure Gold Standard (Foundation for Economic Education, 1988, 1996, 2010).
  • The Structure of Production (New York University Press, 1990).
  • Economics on Trial (Irwin McGraw Hill, 1991; 2nd edition, 1993). Translated into Japanese.
  • Dissent on Keynes, editor (Praeger Publishing, 1992).
  • Puzzles and Paradoxes in Economics, co-authored with Kenna C. Taylor (Edward Elgar, 1997). Translated into Korean and Chinese.
  • Economic Logic (Capitol Publishers, 2000, 2010).  Translated into Chinese and Turkish.
  • The Making of Modern Economics (M. E. Sharpe Publishers, 2001, 2009).  Now in its 2ndedition; translated into Chinese, Turkish, Mongolian, and Spanish.
  • The Power of Economic Thinking (Foundation for Economic Education, 2002). Translated into Chinese.
  • Vienna and Chicago: A Tale of Two Schools of Free-Market Economics (Capital Press, 2005).  Translated into Chinese.
  • The Power of Economic Thinking (Foundation for Economic Education, 2002). Translated into Chinese.
  • The Big Three in Economics: Adam Smith, Marx, and Keynes (M. E. Sharpe, 2007).
  • EconoPower:  How a New Generation of Economists is Transforming the World (Wiley & Sons, 2008).  Translated into Chinese, Korean and Portuguese.

About Ken Schoolland

Ken Schoolland is Associate Professor of Economics and Political Science at Hawaii Pacific University, and author of the acclaimed work “The Adventures of Jonathan Gullible.” See

The War On The Poor

The gigantic sums of credit created out of nothing, causing a doubling and in some cases tripling of the money supplies of Western Governments, over the two-decade boom that we have just experienced, have consequences. Unless you were living at the bottom of the ocean, or on planet Zog for the last three years, the most obvious consequence is that this boom was unsustainable, as they all are. The bust has wreaked havoc across the developed world. The poorest members of society will be forced to pay for the errors of their political masters, and the richest members of society will benefit. During the boom, our nominal prices were pretty stable, i.e. general price inflation was viewed by mainstream economists and the press to be under control. The reality was quite different. Great productivity gains in all sectors of the economy during this period should have been delivering up much more purchasing power for a given amount of money, i.e. lower prices. We saw this in the Industrial Revolution, and the Technological Revolution we are living through should be no different. Entrepreneurs have been mixing up the factors of production in better combinations to deliver up more goods and services with those same factors of production. These productivity gains have been squandered by an inflating money supply. What some of us have known to be happening in the last two decades is now evident even to those with room temperature IQ. The productivity gains have slowed as the bust bites, and money inflation is now picking up a big head of steam. We are told by our political masters that “a dose of rapid inflation will clear out the system in the least painful way.” How many times have you heard that said? Even members of the Fed question this reasoning (albeit a minority). Take a look at this speechby Richard Fisher, the following section in particular:

As to the proposition that higher prices of financial assets will liberate those most in need, I wondered aloud if that were indeed true. We are already seeing the beginnings of speculative activity in stocks, bonds, buyouts and commodity markets. The rich and the quick are certainly able to exploit these circumstances to get richer. I have no problem with market operators making money; I did so myself in my previous life as a funds manager (before I took the vow of financial chastity and joined the Fed!). But I take no comfort, and see considerable risk, in conducting monetary policy that has the consequence of transferring income from the poor and the worker and the saver to the rich. Senior citizens and others who saved and played by the rules are earning nothing on their savings, while big debtors and too-big-to-fail oligopoly banks benefit from their subsidy. I know of no presidential administration or Congress, Republican or Democrat, that will tolerate, let alone advocate for, that dynamic for long, and I expressed my worry that this could come back to bite us and possibly threaten our independence.

I concur fully with these sentiments. Make no mistake here, policies of inflationism allow the governments of the world to unleash a vile pestilence on the poorest members of society, and the rich and nimble will profit from this. Like the man from the Fed, I blame no one for seeking to take opportunities to protect his or her savings and deploy them to take advantage of this situation, and I will do my best to make sure as little of my purchasing power is robbed from me as possible. We must remember that this policy destroys the purchasing power of people who need to live off their savings and who are on fixed or low incomes, largely pensioners and the poor. The War on the Poor was not unleashed by the current crop of governments around the world, but by their predecessors. I suspect there are no politicians who will point out that what they are actually doing is a soft default. We must remember that the levels of inflation we are experiencing, and will continue to experience, constitute a sovereign default in all but name. It is an acknowledgement that we will never pay back the debt owed in the public and the private sector at real purchasing power terms, but we will do it in nominal terms by letting inflation extract wealth from the population at large. A hard default would cause turmoil, no doubt, as it has in Iceland, but the War on the Poor would stop and a reallocation of resources from the profligate and imprudent to the more prudent and wiser users of capital would take place. Iceland is well down this road, and they will prosper quicker as a result. Our experiment with inflation could be two decades long, just as long as the boom! We may well rue the day we did not opt to let our banks go bust. Our politicians will tell us that there is no policy of inflation. They will say inflation results from the rise in foreign prices of commodities, the massive costs of imports, and trade unions pushing up wages. Inflation is always a monetary phenomenon, and the root of all control of the money supply goes right back to the government. They have a monopoly on the issue of currency, and power over the issue of credit via their control of the reserve ratio, and control of interest rates (the price of loanable funds). A simple example will show why the government’s role is essential. If a Russian or Arab puts up the price of oil, as there is more demand and or they have constrained supply, the Englishman buying will pay more to the Russian and the Arab. Thus a wealth transfer is achieved from the Englishman, who now has less to spend on other things. His reduced demand for other goods means that no overall price inflation can occur. Inflation can only happen with regard to commodity price rises if the person buying the commodity is determined to continue spending on other goods at his previous rate, and is able to get more credit from his bank (i.e. more money). Governments committed to inflationism are dishonest in what they do. I accept that a level of economic ignorance may well dominate the upper echelons of the governments of the world, and most politicians seem to be blissfully ignorant that what they are promoting is the mass extraction of wealth from the largest part of the voting population, to give to a minority. Even more baffling is that left wingers seem as happy with this as right wingers. Our job on this site is to try to make all aware that their policies will impoverish the weakest and most vulnerable, and weaken a recovery. If the War on the Poor is waged unwittingly, that will be small comfort to those affected.

Some Virginia Legislators Worry about Hyperinflation!

A good article from Robert Jackson Smith:

Some legislators in the Commonwealth of Virginia are worried about hyperinflation!  See House Joint Resolution No. 557.  Should the Commonwealth adopt a currency to serve as an alternative to the currency distributed by the Federal Reserve System?  Could an alternative currency avoid or mitigate many of the economic, social, and political shocks to be expected to arise from hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System?  These are the questions some Virginia legislators are asking.  They’re even proposing to appoint a joint subcommittee to study whether the Commonwealth should adopt a currency to serve as an alternative to the currency distributed by the Federal Reserve! In my opinion yes, an alternative currency would help to avoid and/or mitigate many of the economic, social, and political shocks arising from a breakdown of the Federal Reserve System.  The thing is, however, that an alternative currency already exists.  It’s called gold/silver, and it’s available in several forms.  Gold and silver have been used as money for thousands of years.  They have proven themselves to be reliable as media of exchange, stores of value, and units of measure for as long as man has recorded history.

Read the whole article.