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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: average joe who wrote (36429)	7/3/1999 6:56:00 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 116759

Interesting, that is the best argument I can think of in support of gold. Because otherwise it really does not make much sense. Welcome to the thread Joe!! I have to ask you exactly what is money for? What does it exactly represent? Is paper money merely a proxy for gold or does it represent something more than that?? Isn't money merely a tool that provides a convenient mechanism for exhanging goods and services?? If so, then isn't all that is important is the fact that both parties involved agree on the exchange value of those goods relative to the amount of money accepted in payment?? Where gold comes into play IMO, is when people no longer can easily make a determination on what the exact exchange value of goods and services should be relative to the paper currency they are making the transaction with. That is why, regardless of whether paper currency is backed FULLY by gold or is merely fiat money (backed by full faith and credit of the gov't), it does not prevent financials crises from arising. When people take gold-backed demand deposits out of the bank, they ask for gold and when not enough gold is available, the bank fails. So my main point is that gold backed or not, paper currency basically becomes worthless in the face of such a catastrophic economic crisis. Because I can guarantee you that the Fed would close down banks rather than see all of their gold reserves quickly transferred to John Q. Public and their paper currency made worthless. But as Zeev points out, tying the productivity of a nation's entire population to its production of gold, would cause inflation, stagnation, and massive unemployment. Why should your ability to get credit on a home, a business, or a car, be solely dependent upon how much gold is available?? Can you imagine how high interest rates would climb as consumers competed with businesses for credit?? Again, good to have you on the thread. Regards, Ron