Re:How the Man finally brought e-gold down
by byrneseyeview on Tuesday July 22, 2008 @11:25PM
(#253997)
The problem with picking just one asset with which to back your currency is that you have two options:
a) pick something your country is a net producer of, knowing that producers will create more than the industrial demand to accommodate savings (this is the case with gold).
b) pick something you're a net consumer of, so saving more money hurts consumption (if some people are right and oil is being used as a proxy currency to hedge against the dollar, this is happening now).
I don't know what the solution is -- I see nothing wrong with highly liquid index funds, against which someone can write checks denominated in whatever unit they choose. But a deregulated market would probably out-innovate me pretty fast.
a) pick something your country is a net producer of, knowing that producers will create more than the industrial demand to accommodate savings (this is the case with gold).
b) pick something you're a net consumer of, so saving more money hurts consumption (if some people are right and oil is being used as a proxy currency to hedge against the dollar, this is happening now).
I don't know what the solution is -- I see nothing wrong with highly liquid index funds, against which someone can write checks denominated in whatever unit they choose. But a deregulated market would probably out-innovate me pretty fast.