Motley Fool

Hi there Thanks for the reply. This was the only logical path I could think of, but reasoned it could not be. I see a problem with this. If this is the case then all gold will first have to be spent by mines in order to reach the general population. That gives them a unique situation whereby they are in 'control' of the money supply. I would assume the mines itself ( owners thereof) make the bulk of the profit. What would they spent it on? If all the wealth in the world is represented by the available gold supply and all additional growth in the economy needs to be accounted for by movement of the 'price' of gold minus of course the inputs by the mines themselves then I have this nagging feeling there will be a problem. Are there relevant historical records of how this used to occur? Regards The Fool ps. You last statement requires a response as well. Explicitly marked valuation means nothing. The fact of the matter is a gold standard has use as there is intrinsic value in the medium of exchange. Current currency also has an explicit value, yet the intrinsic value is nowhere near the denoted value. That is one of the fundamental problems. I understand that for ease of trade explicit value can be useful, yet with gold weight is a better method of valuation. All your minting process does is guarantee two things. The first is that your coin has a specific weight. The second that when circulation reduces the weight beyond some specified level these coins are to be returned to the mint and reminted at government cost. This is the original meaning for the term legal tender, not the twisted one we use today where it is a force upon you as opposed to a right you possess.

Hello There is something I am unable to logically reason out. In a gold standard system how does gold move from the producers hands to the people. Mines cannot accept gold in payment for gold, that constitutes zero exchange. Would someone please enlighten me as to how this would work or how it used to work prior to 1913. Thanks in advance. The Fool