> From: [EMAIL PROTECTED]
> > Many people make examples such as this to argue against either a > commodity-backed currency, the concept of credit and interest, or both. > It is a mistake to consider it a clever or wise argument, however. > > The illustration presents an impossible problem, not because any such > problem exists, but because the scenario itself is impossible. It is virtually impossible for someone to have "all the gold in the world" if the money being used is gold, any more possible than it is to have "all the money in the world" when you are dealing in paper money. The main issue with this argument is that even if someone had all the gold in the world, and gold was used as money, that person would most likely be using that gold to buy things and buy services. At that point it would re-enter the economy and be available to repay the interest. You do not need an expanding money supply to pay interest. If the amount of money or gold in the world was fixed, that only means that the money repaid to you as interest will have to come out of someone else's earned income or savings, and not from a magic money machine that makes new money. A fixed money supply works fine so long as there isn't a fractional reserve system in place. In that case, the interest you are to earn in gold would definitely come out of the income or savings of the individual who borrowed the money. If that person can not pay back the loan, then there is a default and someone, either the bank or you the depositor, will have to eat the loss. - John --- http://cambist.net --- 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.
