> >It is a good thing that an understanding of money (or >derivative
> >markets) is not necessary for trading >e-gold.
>
> Seems I have offended you, for that I apologize.
??? Of course, you did not offend me!
> >> In the world of money, "Redeam" and "Trade" have the
> >>same meaning.
>
> >No, they are not. Redeem means to fulfill the contract (in the
> >promissory note).
>
> Excuse me, I did not mean the dictionary definition, I meant that
> they could both have equal effects.
But they do not have equal effects. Redemption extinuishes
a monetary instrument. Trade perpetuates its circulation.
> >> No, but you can trade it to GoldFinger Coin for an ounce of
> >>physical metal.
>
> >And the only reason GoldFinger will continue to do that is the
> >expectation that the redemption pledge will be honored. If it
> >ever appears that that pledge will not be honored no one will
> >trade anything for an ounce of e-gold any longer.
>
> I doubt that GoldFinger is saving up the gold so he can redeem
> a 400oz bar.
I did not say he was. I said the only reason he will trade for e-gold
is (a consequence of) the expectation that it CAN be used to do so.
> Every time that somebody redeems(using dictionary definition here) any
> form of currency they are hurting their economy. They are decreasing
> the amount of money in circulation and causing lower demand levels
> and deflation.
Hardly. It might tend to decrease the amount of money in circulation
and cause deflation. But that, per se, is irrelevant to the health of
the economy or to the level of demand. It would only change the price
levels at which trade takes place. To the extent that some persons are
not aware that the deflation is taking place they may make incorrect
economic decisions because of their ignorance. The worst possible
result of this would be less economic efficiency. But this is not a
consequence of redemption of currency but of ignorance and error.
> Money is a medium of exchange, it does not matter what its backed by
> or what it can be redeemed for just as long as it can be traded
> for something.
Do you suppose there might be a connection between what it is backed
by and/or what it can be redeemed for and the (long term) willingness
of people to accept it in trade?
CCS
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