Precious Metals
Precious Metals
Why dont we use gold and other precious metals as CURRENCY?
If we went back in time, to 1950 and started using coins with gold/silver in them that matches the face value printed on the coin.
Would we still have inflation?
Is this feasible?
Here is the biggest problem to using Gold/Silver as our currency. (Our Trade Deficit). As we import more than we export, we end up exporting our currency. Since Gold/Silver cannot be created without digging more out of the ground, eventually you'd have no money left within the US economy to run, as we would have exported our money to foreigners.
A fiat money system is the best when you have global trade. The only downside to fiat money is inflation will NEVER go away. All you can do is best limit the inflation to the smallest amount possible.
Gold makes sense in a closed economy that has no external trading. But in the 21st century of global trade, using gold as your currency is a straight shot ticket to poverty.
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