Originally posted by Alric
It takes large amounts of gold to really have an effect on prices and as you just said, a lot of the time its just locally. So even if it loses its value in your country you can likely trade it to another country. Plus no matter what happens gold is going to keep some kind of value. Even if a huge stock floods the market, there will always be some demand for it.
Using your example, it took huges supplies and many years to have an impact, and even then people where still trading with gold because it had value. I would find it nearly impossible for gold to lose 98% of its value as the dollar has over the years. No amount of supply is going to do that. So while it may have its problems, its nothing compared to that of printing money that isn't worth anything.
The self-inflicted problems are always far worse. E-cash is even another step farther, in the wrong direction. Its also far easier to cheat people when money can be created with fancy bookkeeping. Atleast gold could impose some kind of limit, with paper, or e-cash that is not so. Just look at past examples of hyperinflation, nothing can compeat with it when it comes to destroying an economy.
Barter is actually the best system when it comes to fair trade. As you move from there, things become easier and more convenient yet more unstable and risky. Gold is a nice middle ground as it is still a commodity which can be used, while its also easy to trade in most cases. When you get farther away into e-cash, your entire savings can be wiped out within minutes. It only takes the government(or whoever is in charge) to hyperinflat the money. Why would they do it, because all that money is going to them.
well, if things really break down, then gold is terribly heavy, takes up a great deal of room, is difficult to conceal. And you are likely to have your throat cut by anybody with whom you would trade with it. Ordinary people would not trust it, not know how to value it, and would refuse it, and those who do know its value would rather just bump you over the head for it. But yes, gold would be significantly better than nothing. But my advice for the End Times... for when things really get bad, is a well stocked celler... canned foods and dry goods.
Wait, about hyper-inflation. The bankers don't like hyperinflations because everybody is allowed to pay off debts with cheap money. Yes, the currency becomes worthless, but EVERYBODY comes out with clear ownership of everything they have. That isn't so bad.
But, yes, it is the worst of disasters for banks. All their loans get settled... Oh Dear God!
But, yes, after a hyper-inflation one has to again settle on some value, and then life goes on. Where is the big problem? Germany was able to get over their Hyper-Inflation and was in relatively good shape when all of the rest of the world was bogged down in a Deflation.
Now, banks don't mind deflations, because they get to hold all the Deeds. All their loan accounts, though nobody is paying on them, the banks can pretend that the properties retain some of their value while they are impounded, confiscated, and foreclosed.
Now, ask a person who has had everything foreclosed whether an inflation is worse than a deflation. Hmmmmmm? Own everything, or own nothing. Not much of a choice there. So, yes, bankers would see inflation as a disaster, but the general public probably does not see the liquification of their loans as anything to wring their hands over.
Also, regarding E-money, if it is registered and tracked, then it would become Crime Proof. Remember, that thieves and politiicians do not have to account for their gold and their cash. Slavetraders, drugdealers, politicians all deal in cash. Now, yes, anarchists and libertarians and all of that ilk also believe that the Freedom to commit Crime is the most basic liberty, but I would argue that it would be a better world if we all had to justify where our incomes come from, and that could be the best thing about E-Cash.
yes, we have a great deal of Electric Money Fraud now, but only in a system where the money is converted somewhere somehow into currency accounts and then laundered off. In a strictly E-Economy where there would be a permanent record of transactions, always open for reveiw and retraction in the case of fraud, then we would effectively move to a crimeless society.
Well, the problem with freezing out all crime is that Society may not really wish to go that far. Many Transactions are made legally contraband so that Law Enforcement Officers and Politicians can enjoy a Monopoly or so they can informally licence such activities through various avenues of corruption. One the Drug Trade and Prostitituon really could be ended, with E-Cash review, then Society would have to really decide just how serious they are about making impossible what so many people seem to have always required.
Actually, barter can be sloppy and onesided. We know money is better because historically money enjoyed such an immediate revolutionary success over barter.
But, yes, I see the point about how Hard Tradeable Currencies must reflect some Real Value, and typically they. Now some of it is puzzling... for instance, the American contention that China is willing to give far too much value in exchange for the Dollar. It is easier to imagine that a particular currency would maneuver to be over-valued -- to buy more than it is intrinsically worth. That condition occurs when Trading Partners find themselves with stocks of a particular Currency and find their is nothing they can buy with it. This may be the ultimate fate of the U. S. Dollar. With American manufacturing shutting down and relocating to non-dollar economic zones, then the only avenue for Dollar return is through investment in Dollar Commodities or Dollar Equities. Oil is the largest Dollar Commodity, but this is an entirely artificial condition. If OPEC ever decided to trade in Euros or Yen, then much of the Dollars value would vanish. Now, as it stands, if a nation wishes to purchase oil, it needs to acquire actual dollars from somewhere, which supports the value of the dollar. But if ANY currency could be used for Oil...
So, it seems as though the Major Currencies are maneuvering sensibly so that their Interchangeability reflects some real value.
Now, if there was one World Currency.... well, the EURO has been a good Practice Run for a One Universal Currency. And so far the EURO has proved ... well... has anybody had any serious complaints. ?
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