In principle, I prefer a commodity based currency. The catch is finding what commodity to base it on. Gold would be a bad choice, because Japan would never agree to it -- their reserves are too low in gold.JohnG@lt wrote:
Well, the alternative to the current fiat system is a gold or silver based system. Either way, it's a system that is rather hazy. The person on the other end of the trade would have to WANT your gold or silver in order for it to work. In a stable environment it works well. If there's a famine, no amount of gold, silver or paper currency in the world would convince a farmer to sell you his cow.
The idea that a currency has to be 'backed' by something is comforting to people but hardly necessary. However, I do appreciate backed currency for one simple reason, it's nigh on impossible to debase it without a revolt. Fiat money can be debased at will and the populace is none the wiser 99% of the time. I'm surprised though, you of all people I would expect to appreciate the built in 2% inflation rate that forces people to work until retirement age.
Silver might work, but I don't know as much about silver in terms of value or worldwide reserves.
As for the built in inflation... you see that with commodity based money as well, but it does work a bit differently....