At 01:27 AM 11/20/01 +0200, Sampo Syreeni wrote: >On Mon, 19 Nov 2001 [EMAIL PROTECTED] wrote: > >>It's amazing how many people assert this, even though it's clearly >>wrong. A gold standard does NOT mean that the amount of currency in >>circulation equals the amount of gold in the vaults, it means that the >>currency is exchangeable for gold at a fixed rate. Obviously, there can >>be more gold in the vaults than you need to actually exchange every >>dollar for the correct amount of gold. Less obviously, there can be >>less. > >Of course, the system also exposes the currency to fluctuations in world >wide supply of gold. It's not sane policy to tie one's unit of currency to >any particular good -- think about what it would mean if the chosen good >was unrefined oil, a particular crop or electrical power. One'll get the >picture fairly soon.
Yes, but what this thread has ignored is that gold (and other densely precious things) were valued *in and of themselves* and so using them as money was not symbolic. You traded your goat for a goat's worth of gold; if trust evaporated overnight the gold is still worth something. Similarly with barrels of oil. If you discover a lot of it under your topsoil, you get wealth because the substance itself has utility. >It's not really sane to opt for a tie-in to the supply of a particular >currency, either -- that's actually even worse, since the people printing >the bills can cause fluctuations in the exchange rate even easier than >they could if they were just digging up precious metals up from the crust. > >Hence, private, floating currency, which, again, is old news on the list. Clearly stated.
