The Problem with Gold-Backed Currencies
http://www.financialsense.com/charles-hugh-smith/problem-gold-backed-currencies
Feb 24, 2017
Any currency is only truly "backed by gold" if it is convertible to gold.
>>( This is a fairly lengthy article. I found it interesting.)>>
>>( Down at the bottom of the article. . .)
Any nation issuing a gold-backed currency can't control the global price of gold, and so that nation's currency is hostage to fluctuations beyond its control. If the issuing nation sets a peg to gold, that peg is subject to the whims of the central bank and state—in other words, the peg is simply another flavor of fiat currency.
Simply put, there is no way to back a reserve currency or a fractional reserve banking system with gold. It's easy to say that a world with very little credit would be a good world, but it would be a world with limited debt-based consumption, i.e. a world with little "growth." And without "growth," the system implodes.
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Zim.
Mad Poet Strikes Again.
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