Xyrus

A Return to the Gold Standard? Forget About It!

Anyone who talks of commodity backed currencies and stability is either an idiot or ignorant.

Even when gold and silver were the primary currencies, recessions and depressions occurred and were often quite long and painful. The Great Depression still managed occurred, despite being on gold standards. The recession/depression of the late 19th century still occurred. Britain faced more than one financial crisis throughout it's long history despite being on a "gold standard" for most of it. The Roman Empire still managed to suffer a terminal financial collapse despite using gold and silver.

There is nothing magical about at commodity backed currency. It is just as prone to financial disaster, and in some cases can make them more pronounced.

There is also nothing inherently valuable about gold or silver. They're just metals. You might as well have a currency based on quartz or lead. The only value in those metals is what people agree to, which is the same principle as fiat currency. The only difference between gold and a fiat currency in this regard is that it's harder to manufacture gold (mining vs. printing).

Any money is just a convenient standardized way of expressing value, not value itself. Whether its metal or paper makes no difference, except when it comes to financial policy (in which case it's easier to deal with paper).

~X~