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That's already built into our understanding of what "$44b" is. If not, then all values should be inflated by 10x, which would keep the $44b at the same ratio of
by thinkloop 9y ago
That's already built into our understanding of what "$44b" is. If not, then all values should be inflated by 10x, which would keep the $44b at the same ratio of the total pie - which is to say nothing.
- mcbits 9y agoNo, in fact it is not. To help you understand why, if the US were to switch back to a gold-backed currency and somehow do it relatively seamlessly, it would need to find enough gold to back a money supply of about $7 trillion dollars (or $20+ trillion, depending...). All the gold in the world is currently "worth" less than $7 trillion dollars, and the US would be lucky to land 15% of that, or about 25,000 tonnes. In this scenario, that 1,200 tonnes would be worth $336 billion, and probably a lot more because "seamlessly" is a huge assumption.
- xyzzyz 9y agoThat's completely irrelevant. The issue at hand is whether the US is able to pony up 1200 tons of gold, not whether they can back their whole currency base with gold at current exchange rate.
- mcbits 9y agoIt's relevant to the hypothetical state stealing enormous quantities of gold from other states. They wouldn't do it to give all the citizens fancy necklaces and dental implants. The reason would be to shore up their currency. The economics of gold changes under that hypothetical scenario, and it's the current market price of gold that is completely irrelevant.
- thesumofall 9y agoReplace "gold" in your statement by any other physical asset (silver, shells, rubies, ...) and you realize that this doesn't make much sense. If the world were to switch to a water-based currency and all other uses for gold would disappear 1200 tons of gold would be worthless