Dear Patrick,
As Graham said, "it will only be a fraction of a fraction of a percentage of the worlds economies"! Gold simply can't back the world's economy! There isn't enough! Paper money can exactly because it can be printed (and destroyed)! Paper money doesn't need gold, and that is because it should back the economy not the gold. Paper money is supposed to be issued to cover the entire economic value of a country. If you would try to back the USD with gold, you would find it impossible to back the *entire* economic value of US with that USD. There just isn't enough gold in the world for that. *An economy has to grow! The amount of gold, in the entire world, can't grow (extracted from the ground) as fast as the world's economy, and certainly not in the same amount / volume.* Yes, paper money has no value, but guess what: neither does gold! Gold doesn't feed you or your family. Gold is good because of its security when economies crash, and because it can transcend governments and banks and people can use DGCs to easily transfer value anywhere in the world. The only reason I am interested in gold is because of DGCs. Paper money, gold and stock have value only as much as people give them. They have no intrinsic value. They don't feed you, they don't shelter you. Besides, paper is always good for fire, gold isn't good even for that (okay, okay, is good for electronic circuits). Let me put it another way... Say the fiat currency is backed by gold and the economy grows. That means the currency (/gold) is more valuable. What happens with stock when it becomes too valuable? It *looses* value because though people want to buy it, they just can't afford it. So, the stock has to split to have *liquidity*. You have the example of TGC with its shares: they are too valuable / expensive for people to buy them (sure, they have a reason for that). Would you do the same (split) with paper currencies? You can't afford that because then they wouldn't be backed by gold, and it would be like changing the money every few years. What a mess! So, what is there to be done? You slowly and constantly devaluate the paper money to fit / cover / back the entire economy, just as gold has to back the entire amount of DGCs. Or, if the economy slows down, you withdraw paper money, again to cover the entire economic value left. You can't do that with gold! Gold is, paper money is made! A different example... Say any of the merchants here would sell a CD for 1 gram of (e)gold - round value: 10 USD. But, they would say "wait a minute, gold's real value is 100 USD/gram, not 10!" What would the merchant do? Sell the CDs in gold grams, or in USD? Who would by a CD for 1 gram of gold valued by the merchant for 100 USD? Nobody! Why not? Because nobody values gold that much, since gold itself has no value. The paper money (10 USD) doesn't have value either, but most people value it only because the rest of people do the same and because there's plenty of paper around. If the merchant would sell for 0.1 grams of 100 USD/gram, you have the same price as normally is - 10 USD, so you've done nothing but went a different road to Rome. The final value of the CD remains the same. Regards, George Hara www.filematrix.xnet.ro ------------------------------------------------------- Xnet scaneaza automat toate mesajele impotriva virusilor folosind RAV AntiVirus. Xnet automatically scans all messages for viruses using RAV AntiVirus. Nota: RAV AntiVirus poate sa nu detecteze toti virusii noi sau toate variantele lor. Va rugam sa luati in considerare ca exista un risc de fiecare data cand deschideti fisiere atasate si ca MobiFon nu este responsabila pentru nici un prejudiciu cauzat de virusi. Disclaimer: RAV AntiVirus may not be able to detect all new viruses and variants. Please be aware that there is a risk involved whenever opening e-mail attachments to your computer and that MobiFon is not responsible for any damages caused by viruses. --- You are currently subscribed to e-gold-list as: [EMAIL PROTECTED] To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
