> > but does egold expand the gold available? ... > > All I know is that e-gold claims that if I bail a gold bar into the > e-gold system, that gold bar sits in a vault and is not used to make a > loan or purchase of any kind. Thus, the gold bar itself no longer > functions as money except in the form of the e-gold grams representing > it, and therefore there is no increase in the money supply.
We come to a very interesting point here. Patrick argues that the gold sitting in a vault to back up the e-gold in circulation is no longer functioning as money (supply), because it is not supposed to ever come out of the vault and be used as a means of exchange in the economy. Instead the e-gold grams whose ownership changes electronically , is functioning as 'money' The same could be said about dollar bills sitting in a matress in India. As long as they are in the matress, they are not in fact part of the money supply. These dollars could sit in the matress for 20 years and never facilitate any exchange of goods during that period. Now if we go back to a 'gold only' economy. What happens if a Bill Gates there puts 20% of his gold earnings in a vault, with the idea of only using it when really necessary. This growing pile of gold could be untouched for the next 30 years, not facilitating any exchange of goods in the economy. Using the same reasoning as above, this gold in the vault is no longer part of the money supply, as long as it remains in Bill's vault. If only gold is used as money in this country, the inevitable result is that the available money supply is going down. Less money available to go round in the economy, will mean less economic activity. , the same money could start going round faster, but there are limits to how fast money can circulate... So, in a system like this , with a limited money supply (gold), saving becomes counterproductive because it decreases the availabe money supply causing economic decline. How can this problem be solved? Danny --- 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.
