ST Alpha - "Wouldn't inflation be insane right now if our $ was backed by gold?" (Reading a Post)

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Wouldn't inflation be insane right now if our $ was backed by gold?

Posted by TWuG Mar 30 '11, 07:37

Or am I not understanding how a gold-backed currency works?

If $1 = $1 in gold and gold is priced at $1400 an ounce, that $1 would be worth 1/1400 of an ounce of gold and as the gold price increases the value of the dollar would drop, correct?

And if Utah puts actual Gold and Silver coins into circulation, then a $1 coin would have to be either microscopic if 99.99 fine or barely gold at all.

So, what, exactly is this fondness for backing our currency with a precious metal?

Responses:

stability - Danedukenuuk Mar 30, 08:14
what's funny is that there's no practical reason it should be gold as opposed to anything else. - znufrii Mar 30, 07:43 8
- Gold has a few qualities that make it a decent choice - a relatively low smelter point, is easily alloyed and has low reactivity. - Reagen Mar 30, 07:58 4
  - scarcity works to its advantage too, as does density. -- nm - mafic Mar 30, 08:08 1
    - all of which are of pragmatic value, rather than intrinsic. - znufrii Mar 30, 08:11
  - the real quality that it has is that it's a commodity that has held value across many thousands of years and multiple cultures....nm - x Mar 30, 08:00 1
    - I would argue that that's a consequence of what I pointed out. - Reagen Mar 30, 08:03
- oil actually makes more sense. you can at least do stuff with it. -- nm - mafic Mar 30, 07:45 2
  - (from the intrinsic worth POV. it has myriad other problems). -- nm - mafic Mar 30, 08:03
  - exactly. -- nm - znufrii Mar 30, 07:48
silver has more than doubled since the start of the year, and gold is up like 30% -- nm - mafic Mar 30, 07:43 2
- silver is an "industrial use" metal also - Danedukenuuk Mar 30, 08:06
- that reminds me, my mom has a couple dozen silver coins sitting in a safe deposit box for me somewhere. - znufrii Mar 30, 07:45

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Wouldn't inflation be insane right now if our $ was backed by gold?

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