If you understand supply and demand, you can peg a currency to gold even if there are no gold reserves at all. My own idiosyncratic system is the gold standard that involves no gold at all. There are no gold coins, and no government gold reserves. Gold bullion is freely traded on the open market, just as it is today. In my system, the currency manager (governments today) would adjust the supply of currency on a daily basis to maintain its value at the gold peg.
May 7th, 2008 | Nathan Lewis | 6 comments | ContinuedAll Posts Tagged With: "currency"
An International Currency Not Just on Paper
Once it was clear that Britain’s global position was fatally compromised by its poor finances, it took all of five years for the dollar to become the preferred international currency. It can happen fast when people have a real alternative.
April 14th, 2008 | Dan Denning | 2 comments | Continued
The Bear Stearns of the North Atlantic
“The foreign debts have reached 122pc of GDP in Latvia, 101pc in Estonia and 73pc in Lithuania, mostly in euros. For now the debtors are shielded by fixed exchange rates in Europe’s ERM system, but this could make the shock even worse should the currency pegs start to snap.”
March 31st, 2008 | Bill Bonner | 0 comments | Continued