“BTW, the other problem with a currency tied to a particular commodity – especially a scarce commodity little tied to GDP as a whole – is that by it’s nature, any fixed relationship to that commodity will result in deflationary pressure”
why is this a problem? it makes sense to me that over time, manufactured goods and perhaps even services should decline in price because of increasing efficiency – seems like a good thing
“which harms investment (since dollars become more valuable over time if they are worth a fixed amount of a rare commodity). This occurs because productivity, due to technological enhancements and population increase goes up much faster over time than the commodity supply does.”
again, why is this a problem? perhaps the world’s economies only need to grow (or can accommodate) 2-3% growth rates (which seems like the annual limit on increasing the planet’s stash of above ground gold)
perhaps it is the implementation of fiat currencies that enables the push for growth rates of 5-6% and thereby enables the economic boom-bust cycles
