> HK Kid wrote
> "What you say is true (altho it would violate the terms of governance
> of the e-gold system) but it is beside the point of what I understood
> to be the original topic. Namely, the assertion that the use by
> a 3rd party, such as SR, of e-gold to back another currency, such
> as AUG, would introduce risk to e-gold itself."
>
Why did you paraphrase two distinct, contradictory comments from two
different people into one quoted statement?
> 1. It will increase the supply of "gold" on paper - thus contributing to
> gold's loss of value against other goods and services, hurting all holders
> of gold, even if only infitesimally. The widespread adoption of this
> practice will most certainly keep the price of gold down just as gold
> derivatives on paper are assisting to keep the price down today.
>From what I understand...
The gold derivatives aren't driving the price of gold down anywhere near
as much as our governments doing strategic dumping of their gold reserves
on the market.
> To put it in the simplest terms - fractional reserve banking and/or
> derivatives will cause the total amount of gold in everyone's books to greatly
> exceed the actual amount of gold in the world.
However e-gold is 100% backed by gold. Not paper gold, the purty, heavy,
shiny variety.
> While the growth of the "ether-gold" supply will hurt the currency of the
> fractional-reserve institution the most, it will also hurt ALL holders of
> real gold by "adding dross" to dilute the pure metal. It is a subtle form
> of theft. It breaks the command "thou shalt not steal" which is fundamental
> to the success of a free-market economy.
There is no such commandment neccesary. The free-market economy is
capitalism with instant communication via the net and without government
intervention, right? Anybody who acts deceitfully will not be dealt with
anymore. Reputation is your most valuable commodity in a free-market
economy.
Capitalism succeeds because it is based upon one of humanity's greatest
failings... Greed. However, without sufficient communication, capitalism
can burn itself out because there are no feedback mechanisms. This is why
we have had government intervention. The government institutes law after
law to regulate Capitalism into some sort of Socialism. Socialism would be
a great system to live under, however it doesn't take into account the one
thing that Capitalism does; Greed.
However, now, with the instant world-wide communication provided by the
internet, the feedback mechanisms are now beginning to exist. Anybody who
doesn't ensure the purity of their product and passes it off as so will
not be in business for long.
If there is no government intervention, an added responsibility is needed.
"Caveat Emptor" becomes completely true again.
Viking Coder
________________
Worth Two Cents?
http://www.2cw.org/VikingCoder
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