Thursday, March 15, 2007

Questions on gold and money

If gold (or any other natural resource) is traded away, and its quantity decreases and becomes more scarce, does it not become more valuable as a result?

What is the impact of moving resources away from a local community on its ecology?

Is there a difference between a trade in natural resources and one specializing in finished goods? And what should be the basis of exchange, if it is not a barter system? Paper money? Or precious metal or some other resource?

What is the comparative value of using gold as the medium of exchange as opposed to salt?

If a country imports goods from another country and pays out in gold or silver (etc.), what effect does this have if the gold is also what backs the currency? What if the one importing is not the government but private individuals/companies?

If paper currency represents a certain unit of gold, but it is also treated as a commodity in itself, then if it becomes more scarce, will not deflation result? Prices, if dependent on the value of currency, will fall, but it should not have an impact on the standard of living? Unless other factors come into play?

Using gold from a private store vs. gold from a community's treasury
Even if gold is used from a private store, if the total amount of gold within the community is not replaced, will not the remainder within the community increase in value?

If paper currency is paid out for goods that are imported, and paper currency is a claim on x which is held in the community's treasury... how is it possible for a community to go into debt? What is being exchanged? If consumption replaces production? Where does the purchasing power originally come from though?

Certain things are made or services are exchanged--how are prices to be fixed? What is the basis of comparing value?

What makes fiat currency viable?

Trade and stratification: they are certainly features of certain societies, but how necessary are they?

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