Elroy-
<<There is not a shortage of gold - there is too much paper money.>>
I think this argument has a small flaw in it. If all of the gold ever mined in the history of the world could fit in a 20-yard cube, then wouldn't it be necessary to limit the population to a predetermined--and somehow interelated-- number. After all, each person on the face of the earth requires a certain amount of "wampum" to conduct their daily affairs. As the population expands, linking paper money to gold, or any precious metal, becomes less and less tenable.
Personally, I like the EU's idea of limiting deficits to a percentage of GDP, but that has flaws too and no politician is going to abide by such a rule anyway. A further flaw is that the final calculation in determining GDP is to deduct inflation--giving politicians a further reason to fudge the CPI numbers to the downside. Less inflation, greater GDP.
No system is perfect, but if you think our system is bad now, consider what it was like before 1862 when every bank in the country was printing their own notes! When traveling, your notes from, say Boston, would be discounted in Chicago at a rate directly proportionate to the size and prestige of your bank back home. God help the traveler from Pigsknuckle, Georgia.
schloss
AI
