Achilles, if the amount of gold does not increase in proportion to the economy, it will cause economic contraction, that is why I termed gold a "straight jacket" or a "Sodom Bed" on the economy, but since the population grows and the GDP of the world grows, more money in circulation will need to be provided to support that growth, and since additional gold resources are available only at increasing extraction costs, the price of gold to support this economic growth will increase and thus we will have inflationary pressures, IMHO. If we do not provide expansion in the money supply (gold) we precipitate the world into an economic contraction. That is why IMHO, backing currencies with gold is a lousy idea. By the way, and in jest, I am also against gold as a currency backing for "religious reasons", my ancestors (the Leviites) were punished severely for their "golden calf", I would hate o see a repeat of the same calamity on all of us (VBG).
Zeev |
