<For the gold standard to truly come back into play, all of the current gold specie out there would have to be divided into the current value of global M1, M2, M3 components, not just the US. And assigning such an inanely low value to gold, like $20/ounce, would be highly deflationary, since the supply of gold is limited and thus would restrain economic potential for lack of capital.>
Indeed. A price approaching USD $6000 would make more sense
<Unfortunately, people just can't seem to deal with the fact that any financial system, whether backed Fiat, or backed by gold, is still nothing more than a system of financial obligations and legal contracts. A gold based system still uses fractional lending practices and not a one for one reserve ratio for outstanding loans.>
You are so right. However, an international accord on a gold standard that would allow each national bank to issue national currency at the same rate as the rate of growth in gold stocks plus or minus a specific percentage (say 2% for industrialized country and 5% for developing countries) which would depends on the local economy, coupled with the obligation to meet the growth rate in gold stocks over the long term would probably work. |
