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You just pointed out one of the many reasons that world economies have moved past gold-based currency. Commodity based currency also runs risk to sudden discove
by galadriel 15y ago
You just pointed out one of the many reasons that world economies have moved past gold-based currency. Commodity based currency also runs risk to sudden discovery of new quantities of commodity (like South American Silver mines), which lead to economic impacts for no reason at all.
- nopassrecover 15y agoTo be fair, there should be economic impacts to the instant creation of valued resources.
- nopassrecover 15y agoI got downvoted here, so I thought I'd expand. If we replace "South American gold mine" with "the release of the iPhone" or "the creation of Google" perhaps my point is clearer - i.e. the creation of value should have economic impacts. Even in a fiat currency situation, the discovery of a massive South American gold mine would have an economic impact as someone now has access to more valuable resources than they did previously. Now, if the currency was based on a commodity that has no value, then maybe your argument makes some sense, but precious metals were chosen specifically because they are valued irrespective of their role in currency. Besides, if an enormous amount of gold was discovered, sovereigns and governments still had control of the currency through debasement.