| Come on, my friend, at $40,000/ounce, it makes sense to extract gold from the ocean, gosh, if you chose to extract from the mouth of the Columbia river (Northwest), it probably won't cost more than $16,000/ounce, and there is "in principle" an infinite amount of the stuff at those prices, thus the price will drop. You are assuming that gold at $40,000/ounce will have no other repercussions, at that price, it will force the world to limit its growth to the growth of gold extraction, a very bad scenario. Nations have accepted what you call "fiat" money, because it strongly enhance international trade, and its printing rate is easily adjusted to the real growth rate of the world economy (or each national or regional economy), with fluctuations around a median to allow for implementing "desired" monetary policies. The fact that we have free movement of currencies all around the world, assure that the CB will print these fiat currencies with some discipline. Forget about the old era of currencies backed by gold, that era was buried at Breton Woods years ago. |
