Gold Beat? Standard.

[BCPVP]

All other first-time or AC-newbies could take a lesson from the OP... [img]/images/graemlins/smile.gif[/img]

[Brainwalter]

You're right that the money supply shouldn't be strictly (read restricted to) gold. I think when most of us argue for a gold standard it's shorthand for a completely free market- and commodity-based monetary system where all commodities and moneys float relative to each other on open markets, assuming that gold will be the de facto standard. This is of course not the same as the US gold-standard featuring fractional (and state-issued) banknotes, pegged 15:1 silver:dollar ratio, and legal-tender status of gold. Those who want to hedge their gold risk in silver, coffee, cocaine, or whatever else would certainly be able to do so, and there's no reason why there couldn't be more than one everyday money commodity, or as you say, private currencies backed by baskets of commodities.

[Borodog]

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Nothing much happens, other than the people who open the new mines become very rich. The general price level would eventually increase due to the inflation

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[img]/images/graemlins/confused.gif[/img] [img]/images/graemlins/confused.gif[/img] [img]/images/graemlins/confused.gif[/img] I thought the gold standard = no inflation?

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The desired state of absolutely no inflation . . .

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Such a state is not really "desired." There's nothing inherently wrong with real inflation or deflation of a commodity money supply. Either can lead to a lot of long and short term mess in an economy if they happen to occur very rapidly. However, since the world supply of gold only grows very slowly, that would never be a problem.

The problem with fiat money inflation is two-fold. 1) It can be extremely rapid, and 2) It's functionally indistinguishable from counterfeiting. The purpose of counterfeiting is to enrich yourself at the expense of others, and it works very, very well.

[hmkpoker]

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The desired state of absolutely no inflation . . .

[/ QUOTE ]Such a state is not really "desired." There's nothing inherently wrong with real inflation or deflation of a commodity money supply. Either can lead to a lot of long and short term mess in an economy if they happen to occur very rapidly. However, since the world supply of gold only grows very slowly, that would never be a problem.

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All other things being equal, the market will always tend to select a commodity that inflates less to one that inflates more as it currency. Gold is simply so good at being money that it's hard to concieve of a better currency.

[Borodog]

Yep.

[Skidoo]

What matters is that whatever is used to store value does the job in terms of the intrinsic marketability of its materials rather than some artificial capacity declared by fiat.

[Brainwalter]

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What matters is that whatever is used to store value does the job in terms of the intrinsic marketability of its materials rather than some artificial capacity declared by fiat.

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I wouldn't say intrinsic but yeah.