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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: sea_urchin who wrote (20791)	4/26/2004 3:13:34 PM
From: The Vet	Read Replies (1) \| Respond to of 80941

Maybe it would work, to measure with a piece of elastic, but then what would be the point of it? That is exactly what I was suggesting, and the point would be that while every currency could be "stretched" almost infinitely, the anchor for all would be gold so the relative values and purchasing power of each currency would be obvious to all. Once any country "over stretched" its currency then the tendency of the market would be to convert that depreciated currency back to gold in order to retain stored value. It would become an elegant feed back mechanism where gold, which pays no interest in the classic sense would be preferred to any currency which, though it paid interest, was losing value at a faster rate than the interest could compensate. Thus it would become a market sensitive way to fairly control money production, interest rates and fair comparative valuations between different currencies. Your earlier example that quoted the South African experience wasn't an example of failure of the gold standard; it was just an example of attempting to misprice gold in respect to the local currency at the time.