Monday, June 21, 2010

Key To Restoring A Gold Standard

Paul Nathan notes that grafting a gold standard on to the current money-and-banking system will result in a mess, because the gold standard only works in a climate of fiscal and credit rectitude. Instead, he suggests a reform that would lead to gold being used as money all over the place: repeal of the legal-tender laws. He says that a future gold standard will be quite different from the gold standard of the past because of advances in technology. Instead of gold coins and gold-backed notes, a new gold standard will be digitized and electronic. Through digital gold, it's feasible to shell out 0.1 g of the metal to (say) buy a burger and fries.

Even if the legal-tender laws are not repealed, there still can be barter with gold. Given the way barter works, physical gold (and silver) would likely be at the centre of any bartering networks.


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