On Monday, November 19, 2001, at 03:27 PM, Sampo Syreeni wrote:

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.

I'm not religious about a gold standard, but the fluctuations in world supply of gold are quite small. Nearly all of the gold extant in the world has existed for a long time in the hands of man (and governments, companies, churches, etc.). Even those mining technology has gotten better, the riches veins of ore--and most of the nuggest sitting in streambeds, etc.--have long been exhausted. I'm sure that 10 or 15 minutes spent with a search engine, maybe much less, would show the number of tons of gold mined each year versus the total amount of gold already held.

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.

Money things are just objects with certain beliefs and expectations attached to them. --Tim May "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the Public Treasury. From that moment on, the majority always votes for the candidate promising the most benefits from the Public Treasury with the result that a democracy always collapses over loose fiscal policy always followed by dictatorship." --Alexander Fraser Tyler