On 31/03/2008, Peter Todd <pete@petertodd.org> wrote:
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> On Sun, Mar 30, 2008 at 03:34:01PM -0400, Rich wrote:
> > Your expectations are realistic, Cedric.  Gold will likely continue to
> > increase.  If at some point a nation with huge stores of gold should dump a
> > large amount of gold on the market and drive down the price, that nation
> > could corner the market on gold.
>
> That's the problem with gold. You have two choices really, you either
> put government in charge of the economy (fiat currencies) or you put
> gold miners in charge. Heck, Spain and it's trading partners underwent
> severe inflation while they were busy getting all the gold they could in
> the New World. Now days one nation dumping gold on the market would
> severely distort the economy of completely unrelated nations who's
> currency was based on gold.
>
> That's the beauty of the current floating exchange rate system too.
> Currency is completely and transparently related, on the international
> level, to how much stuff, be it real goods or securities, a nation is
> exporting. The US can print money all they want, but from the
> perspective of other countries the problem fixes itself, either with a
> devalued currency, or, by having China buy you... Yet, the US can't
> screw up the economy of any country that isn't based on US dollars by
> printing more dollars.
>
> A decent tradeoff I think.
>
> - --
> peter[:-1]@petertodd.org http://petertodd.org

And there I was, thinking that the US dollar was based on oil :-)

RP
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