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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Skeeter Bug who wrote (251283)6/1/2010 4:08:24 PM
From: RetiredNowRead Replies (2) of 306849
 
skeeter, here's the problem I have with getting rid of fiat currencies entirely. Economies work based on flow. Sometimes economies have the potential to expand very rapidly because of a confluence of factors. However, if the currency supply is pegged to something finite like gold, then the currency supply cannot expand rapidly enough to allow for full potential growth of the economy. This problem is solved with fiat currencies, which can help us reach full potential employment.

Unfortunately, it allows for abuses as well, which is exactly what we've seen recently. So is the answer to peg the dollar to gold and give up the flexibility that fiat currencies allow? Maybe we've seen that the advantages are outweighed by the abuses. But maybe a peg to gold would mean institutionalizing 20% unemployment. I doubt many Americans would like that.
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