On Mon, 19 Nov 2001 georgemw@speakeasy.net 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. 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. Sampo Syreeni, aka decoy - mailto:decoy@iki.fi, tel:+358-50-5756111 student/math+cs/helsinki university, http://www.iki.fi/~decoy/front openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2