> Claude wrote
> I agree with this. But it could also be e-gold itself that issue those
> loans and then the digital currency system that is e-gold could
> become in default and go bankrupt.
This would be in direct violation of the user agreement. e-gold ltd.
cannot simply create e-gold out of thin air. e-gold ltd. does not and
cannot have any liabilities. This includes stock in other corporations,
any fiat currency, loans, etc...
What started this thread was the assumption that a 3rd party use of e-gold
as a basis for fractional reserve banking would damage e-gold and remove
it from it's lofty status as 100% backed. This is what I still do not
understand.
> CCS wrote
> The amount of e-gold in circulation would drop by [x amount] since its use as
> a currency reserve takes it out of circulation.
Out of general cirulation, yes. That gold does not show up in the velocity
stats anymore. However, it is still part of the e-gold in circulation.
e-gold can still claim to have 4 tons of gold in circulation even if 3
tons are used as the backing for various frac. reserve currencies.
> Claude wrote
> No matter what, if the case you suggest happens, the reputation
> and credibility of the e-gold system would be damaged. That in
> itself could present some risks.
Why should e-gold's reputation be damaged if Digigold or SR (in the
future), or any other frac. reserve, fails? e-gold didn't fail. e-gold
ltd. isn't bankrupt. The metal is still in the vault, and it is still
greater than the electronic metal in circulation. The backing that was
previously not in general circulation, now is. How does this damage
e-gold's reputation or credibility?
Viking Coder
________________
Worth Two Cents?
http://www.2cw.org/VikingCoder
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