Christ -
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Originally Posted by Christ
I love that thesis LOL.
Yes, the "gold standard" has ended, and has been a naught topic for quite some time. Think about it though. If there wasn't some sort of back up to the dollar, it would be officially useless.
Would you accept a check written on a napkin? (there's a trick question there, PM me if you want to know it)
Would you accept an I.O.U. before accepting collateral? What is the collateral for the paper dollar?
The US has spent so much time trying to make money in the cheapest fashion possible, that they've made it essentially worthless. When we run out of money, we print more. Throughout history, this has been true. Now, we just mortgage everything, and expect that our credit is good enough to pay back our debts.
When "money" was first issued, it was worth exactly what it said it was worth... if $10 was printed on a gold note, it was worth $10. There was something backing it up, to make it worth that $10.
These days, scrap prices don't even back up our metal monies... A penny is worth far less in scrap metals than $0.01.
That was all I meant to say there.
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Ok. In my Dad's readings (I think Alexander Hamilton is on his recent dude-de-plume list), he came to the conclusion that *all* democracies end up printing money to solve their problems. Every democracy does it to varying degrees. Specifically, there is also an argument that the gold-standard was replaced by the oil-standard :
Forex Markets: The Dollar/Oil/Inflation Revolving Door - Seeking Alpha - November 24, 2008
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Something to think about though is that 40 years ago, the world’s currencies used to be pegged against the price of gold and ultimately the Dollar. Now it would not be a stretch to say that global currency is on an Oil Standard. When the U.S. Government made a deal with Saudi Arabia and OPEC to only trade oil in U.S. Dollars, their “partnership” effectively gave the USD a monopoly over all other currencies when it comes to oil trading.
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The gist of this argument is that foreign countries have kept hold of dollars (and thereby made them valuable) because they are "backed in oil".
But we digress ...
CarloSW2