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Re: The Gold Standard

By: Decomposed in 6TH POPE | Recommend this post (0)
Mon, 21 Aug 23 11:43 PM | 51 view(s)
Boardmark this board | 6th Edition Pope Board 		Msg. 45178 of 60008
(This msg. is a reply to 45173 by micro)
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micro:

Re: “Just thinking out loud but I question why only Gold?”It isn't always gold. There's also silver. But two is actually a bad thing. With both in use, it's necessary to standardize on a conversion rate - like there being twenty nickels to a dollar. Both dollars and nickels are money, and nickels are ALWAYS a twentieth of a dollar. So, silver was defined as being one sixteenth the value of gold. But this caused major chaos as gold and silver both also had market values that were considerably different from that. If a certain amount of gold was worth $32 at the mint and the same amount of silver was worth $2, what happens when the market price of silver falls to $1 while there's no change in gold? You'd have miners bringing silver to the mint and demanding gold at effectively half of its market price, then selling it on the market for dollars that could be taken back to the mint and exchanged for double the original silver amount.

I suspect I fouled up that example, but the point is that it's far better to have a single commodity, no matter what it might be. As soon as there are two, disparities between mint valuations of the commodities and market valuations will cause people to go crazy buying an undervalued commodity on the market and selling it for more at the mint. This is a BAD thing.








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Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months

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Re: The Gold Standard
By: micro in 6TH POPE
Mon, 21 Aug 23 5:01 PM 		Msg. 45173 of 60008

Thanks nacl01!

While I ponder at least for a few minutes what is backing the currency of our country, it raises a question in my mind why does it just have to be one precious metal? Namely Gold.

WHY cannot it be a couple of different ones like Platinum for example? Could there be more than one stockpile of precious metals ? A combination Gold, platinum and silver in enough volume might be sufficient in availability to do the job so it all isn't just dependent on always having to find more gold..

Just thinking out loud but I question why only Gold?


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