CCS wrote:
>>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<<
Even this is not quite correct. Increasing or decreasing the supply of
"money" in circulation only causes deflation in an economy where the
money supply is manipulated without any true value backing. With a
currency like e-gold that is backed by an asset that's value is set
externally from the currency, the price levels at which things trade
is in no way related to the money supply.
Note that the amount of e-gold in supply constantly changes (it seems
to have grown in the last year!) but the price levels at which I trade
is totally unrelated and unaffected by that. The price level at which
I trade is governed by the gold price. If e-gold were in short supply,
it would probably adversely affect the gold economy, because people
would use alternative forms of payment, but the currency value (price
levels) would be unaffected.
Regards,
Sidd.
PS deflation and inflation are terms that are related to fiat
currencies only, and don't apply in an economy with asset backed
currency.
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