QUOTE(Movax @ Nov 18 2009, 08:50 AM)
I don't understand your post. What you said is similar to what I said, yet you make it sound like I am wrong. I said "end of", yes, but I also said "new and different".
Oil is not a good currency. It has only been important for the last 100 to 200 years, and it gets used up. Gold has a track record of thousands of years as currency and has few uses outside of that.
Pegging the dollar to the euro = end of the US dollar. Simple idea, but it can't work as there are still many more dollars to be created. You can't peg unless you want to print a ton more euros too, then we are back at the beginning again.
i didnt quite understand your point, but i do now, as for the gold standard, it wouldnt work, the reason the US switched off the gold standard is that there simply wasnt enough to go around
currently there are over 800 billion US dollars in circulation, yet the US gold reserves are only about 250 billion, to fully back all US dollars with gold the value the dollar would have to be reduced by at least 2/3
but that only counts physical currency (paper and coins) the reserve requirement for US banks is 10%, which means when you deposit 100 dollars in the bank they are only required to keep 10, and the other 90 is then given out as loans or paid as interest into other accounts, when you account for this the US money supply is over 10 trillion, and the fact of the matter is there is no physical commodity that can back that (the only current commodity that could come close is our oil reserves, about 2 trillion)
the euro could never be commodity backed either, as the euro supply is about 8.5 trillion
although the more i look into the more it becomes clear that a fiat monetary system is one of the only things keeping the recession from being even worse