Zimbabwe gold backed dollar

Discussion in 'Currencies' started by Rinchin, May 24, 2011.

  1. goldpelican

    goldpelican Administrator Staff Member

    Joined:
    Jun 29, 2009
    Messages:
    17,766
    Likes Received:
    524
    Trophy Points:
    113
    That's pretty much how every gold backed currency has ever worked though. The ability to redeem creates the trust needed to avoid the run on specie - it doesn't need to be fully backed as long as it is redeemable.
     
  2. Yippe-Ki-Ya

    Yippe-Ki-Ya New Member

    Joined:
    Feb 23, 2011
    Messages:
    5,557
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    The Land of Guilty by Default
    ok, so you're saying that the banks then always created notes for which they knew there was no gold??

    a crime like that should be punishable by death :D

    if such a system came out and it was not fully backed, i'd be sure to go claim my gold at regular intervals...
     
  3. goldpelican

    goldpelican Administrator Staff Member

    Joined:
    Jun 29, 2009
    Messages:
    17,766
    Likes Received:
    524
    Trophy Points:
    113
    I suggest you do some research on the subject. "Gold: The Once and Future Money" is a good volume.
     
  4. Lovey80

    Lovey80 Well-Known Member

    Joined:
    May 9, 2011
    Messages:
    2,489
    Likes Received:
    139
    Trophy Points:
    63
    Location:
    Sunshine Coast, QLD
    I guess though that if you were going to go from an un backed currency to a fully backed currency, it would just require a rerating in that currency relevant to the amount of gold that country had at hand.

    For example if Australia had 2 Million ounces of Gold in the vault and they had 10 Trillion in currency in circulation(total) one ounce of gold would be effectively worth say $50,000 AUD. From that point on once fully backed the government would have to have an ounce of gold come into the vault before they could print another $50,000AUD.

    So you achieve the necessary outcome of increasing the money supply so there could be growth but in ounce relative terms and purchasing power terms the money supply holds it same value and the wealth of the nation as a whole could continue to grow without diluting the currency.

    Fractional Reserve Banking would have to cease at the time for it to work but it is achievable i think.
     

Share This Page