Can a country use silver, gold, and platinum as their currency?

[RandomPoster]

Can a country use silver, gold, and platinum as their currency? You would have 1 gram, 10 gram, 100 gram etc. coins of each metal. That TV costs 12 grams of gold or 600 dollars. All foreign trade would be our dollars for either your currency or rare metals. Eventually our citizens are conducting everyday domestic commerce in silver, gold, platinum, pesos, rubles, euros, various other foreign currencies, and occasionally dollars mixed in there. You pay your bill at the bar with 3 ounces of gold, 100 pesos, and 20 euros and the guy gives you 6 dollars, 100 rubles and a gram of silver in change. It would be a very flexible economy.

We would be resistant to the effects of hyper-inflation if we ever de-value our currency, as the international price of gold would not be effected by our fiscal policy, so the domestic economy could plow on in rare metals in times of inflation while we ignore our own currency and pretend it doesn't exist for a while, except for foreign commerce. Let's say we've reduced the value of the dollar to 2,500 dollars for an ounce of gold. Our citizens stop using dollars for domestic commerce until we can believably re-value our currency.

This would allow us to have more flexibility in economic policies as the domestic economy could be rendered temporarily immune to the effects of inflation, as the international price of rare metals would not be effected by what we have done to our currency.

 

[Mikeoxenormous]

Can a country use silver, gold, and platinum as their currency? You would have 1 gram, 10 gram, 100 gram etc. coins of each metal. That TV costs 12 grams of gold or 600 dollars. All foreign trade would be our dollars for either your currency or rare metals. Eventually our citizens are conducting everyday domestic commerce in silver, gold, platinum, pesos, rubles, euros, various other foreign currencies, and occasionally dollars mixed in there. You pay your bill at the bar with 3 ounces of gold, 100 pesos, and 20 euros and the guy gives you 6 dollars, 100 rubles and a gram of silver in change. It would be a very flexible economy.

We would be resistant to the effects of hyper-inflation if we ever de-value our currency, as the international price of gold would not be effected by our fiscal policy, so the domestic economy could plow on in rare metals in times of inflation while we ignore our own currency and pretend it doesn't exist for a while, except for foreign commerce. Let's say we've reduced the value of the dollar to 2,500 dollars for an ounce of gold. Our citizens stop using dollars for domestic commerce until we can believably re-value our currency.

This would allow us to have more flexibility in economic policies as the domestic economy could be rendered temporarily immune to the effects of inflation, as the international price of rare metals would not be effected by what we have done to our currency.

YEs, you can, but the problem is that then the government would have to live within its budget and could not give out money that wasn't backed by those precious metals, also, it would be very hard for Marxists to then bankrupt its society...

 

[MarathonMike]

On the macro scale I agree there are advantages. But it would be very difficult for an economy of any size to operate on precious metals. Checkouts at a grocery store would take forever. No electronic fund transfers. Counterfeiting would be rampant, you would need to weigh and analyze every coin. One good thing is it would force every business and every person to be armed to guard against theft.

 

[RandomPoster]

On the macro scale I agree there are advantages. But it would be very difficult for an economy of any size to operate on precious metals. Checkouts at a grocery store would take forever. No electronic fund transfers. Counterfeiting would be rampant, you would need to weigh and analyze every coin. One good thing is it would force every business and every person to be armed to guard against theft.

Electronic funds could be transferred by converting all of them into grams of silver. Your bank account would receive 1100.07 grams of silver. When you withdraw the money, it could be in any combination of precious metals and various currencies, which may or may not have any relation to what the individual deposited. Certain currencies, not only dollars, except any currency that has been deemed to have been recently destabilized could be temporarily de-prioritized, although not technically banned, when it comes to withdrawals.

You could pay with a credit card and have grams of electronic silver charged to your account.

 

[RandomPoster]

Can a country use silver, gold, and platinum as their currency? You would have 1 gram, 10 gram, 100 gram etc. coins of each metal. That TV costs 12 grams of gold or 600 dollars. All foreign trade would be our dollars for either your currency or rare metals. Eventually our citizens are conducting everyday domestic commerce in silver, gold, platinum, pesos, rubles, euros, various other foreign currencies, and occasionally dollars mixed in there. You pay your bill at the bar with 3 ounces of gold, 100 pesos, and 20 euros and the guy gives you 6 dollars, 100 rubles and a gram of silver in change. It would be a very flexible economy.

We would be resistant to the effects of hyper-inflation if we ever de-value our currency, as the international price of gold would not be effected by our fiscal policy, so the domestic economy could plow on in rare metals in times of inflation while we ignore our own currency and pretend it doesn't exist for a while, except for foreign commerce. Let's say we've reduced the value of the dollar to 2,500 dollars for an ounce of gold. Our citizens stop using dollars for domestic commerce until we can believably re-value our currency.

This would allow us to have more flexibility in economic policies as the domestic economy could be rendered temporarily immune to the effects of inflation, as the international price of rare metals would not be effected by what we have done to our currency.

YEs, you can, but the problem is that then the government would have to live within its budget and could not give out money that wasn't backed by those precious metals, also, it would be very hard for Marxists to then bankrupt its society...

Technically, you could occasionally practice currency devaluation of the dollar and have the option of de-prioritizing dollars for domestic commerce until you can re-stabilize it.

 

[RandomPoster]

On the macro scale I agree there are advantages. But it would be very difficult for an economy of any size to operate on precious metals. Checkouts at a grocery store would take forever. No electronic fund transfers. Counterfeiting would be rampant, you would need to weigh and analyze every coin. One good thing is it would force every business and every person to be armed to guard against theft.

Why would it be easier to counterfeit a 1 gram coin of gold with a president's face and some design on it than, say a quarter?

Edit, there could be coin shaving.

 

[Likkmee]

Some have had that idea.

 

[MarathonMike]

On the macro scale I agree there are advantages. But it would be very difficult for an economy of any size to operate on precious metals. Checkouts at a grocery store would take forever. No electronic fund transfers. Counterfeiting would be rampant, you would need to weigh and analyze every coin. One good thing is it would force every business and every person to be armed to guard against theft.

Electronic funds could be transferred by converting all of them into grams of silver. Your bank account would receive 1100.07 grams of silver. When you withdraw the money, it could be in any combination of precious metals and various currencies, which may or may not have any relation to what the individual deposited. Certain currencies, not only dollars, except any currency that has been deemed to have been recently destabilized could be temporarily de-prioritized, although not technically banned, when it comes to withdrawals.

You could pay with a credit card and have grams of electronic silver charged to your account.

Ok I get that, but wouldn't be converting every single bank into a precious metals storage and tracking facility banking on top of banking responsibilities? I'm not a banker but it seems like that would be very complicated and require many more employees and more security.

 

[Andylusion]

Can a country use silver, gold, and platinum as their currency? You would have 1 gram, 10 gram, 100 gram etc. coins of each metal. That TV costs 12 grams of gold or 600 dollars. All foreign trade would be our dollars for either your currency or rare metals. Eventually our citizens are conducting everyday domestic commerce in silver, gold, platinum, pesos, rubles, euros, various other foreign currencies, and occasionally dollars mixed in there. You pay your bill at the bar with 3 ounces of gold, 100 pesos, and 20 euros and the guy gives you 6 dollars, 100 rubles and a gram of silver in change. It would be a very flexible economy.

We would be resistant to the effects of hyper-inflation if we ever de-value our currency, as the international price of gold would not be effected by our fiscal policy, so the domestic economy could plow on in rare metals in times of inflation while we ignore our own currency and pretend it doesn't exist for a while, except for foreign commerce. Let's say we've reduced the value of the dollar to 2,500 dollars for an ounce of gold. Our citizens stop using dollars for domestic commerce until we can believably re-value our currency.

This would allow us to have more flexibility in economic policies as the domestic economy could be rendered temporarily immune to the effects of inflation, as the international price of rare metals would not be effected by what we have done to our currency.

You can, provided you have zero interaction with other countries.

So allow me to explain.

You said in your post "We would be resistant to the effects of hyper-inflation if we ever de-value our currency" and you said "All foreign trade would be our dollars".

So say the dollar is devalued, and the TV from Japan costs $1,200 instead of $600 now. With, or without gold, you still have to pay $1,200 for the TV. Therefore inflation still effects the economy.

Now say you decide to pay with gold. Now you end up with the WW1 to WW2 French stock pile problem.

After World War 1, but before the WW2, France initiated a policy of stock piling Gold. The result was, when they sold stuff on the world market, they would covert that foreign currency into Gold. This resulted in the gold reserves of all other nations declining, while the gold reserves of France increased.

While for years, and even possible a decade, this we have little effect, eventually one country could bankrupt the other.

There is some evidence that this played a role in the great depression. No one suggests it was a key factor, or a cause, but it likely contributed.

The only way to avoid this problem, is to eliminate international trade. If you block off all contact with the outside world, then and only then, can you use gold as a medium for exchange.

 

[RandomPoster]

Can a country use silver, gold, and platinum as their currency? You would have 1 gram, 10 gram, 100 gram etc. coins of each metal. That TV costs 12 grams of gold or 600 dollars. All foreign trade would be our dollars for either your currency or rare metals. Eventually our citizens are conducting everyday domestic commerce in silver, gold, platinum, pesos, rubles, euros, various other foreign currencies, and occasionally dollars mixed in there. You pay your bill at the bar with 3 ounces of gold, 100 pesos, and 20 euros and the guy gives you 6 dollars, 100 rubles and a gram of silver in change. It would be a very flexible economy.

We would be resistant to the effects of hyper-inflation if we ever de-value our currency, as the international price of gold would not be effected by our fiscal policy, so the domestic economy could plow on in rare metals in times of inflation while we ignore our own currency and pretend it doesn't exist for a while, except for foreign commerce. Let's say we've reduced the value of the dollar to 2,500 dollars for an ounce of gold. Our citizens stop using dollars for domestic commerce until we can believably re-value our currency.

This would allow us to have more flexibility in economic policies as the domestic economy could be rendered temporarily immune to the effects of inflation, as the international price of rare metals would not be effected by what we have done to our currency.

You can, provided you have zero interaction with other countries.

So allow me to explain.

You said in your post "We would be resistant to the effects of hyper-inflation if we ever de-value our currency" and you said "All foreign trade would be our dollars".

So say the dollar is devalued, and the TV from Japan costs $1,200 instead of $600 now. With, or without gold, you still have to pay $1,200 for the TV. Therefore inflation still effects the economy.

Now say you decide to pay with gold. Now you end up with the WW1 to WW2 French stock pile problem.

After World War 1, but before the WW2, France initiated a policy of stock piling Gold. The result was, when they sold stuff on the world market, they would covert that foreign currency into Gold. This resulted in the gold reserves of all other nations declining, while the gold reserves of France increased.

While for years, and even possible a decade, this we have little effect, eventually one country could bankrupt the other.

There is some evidence that this played a role in the great depression. No one suggests it was a key factor, or a cause, but it likely contributed.

The only way to avoid this problem, is to eliminate international trade. If you block off all contact with the outside world, then and only then, can you use gold as a medium for exchange.

An American TV would still be one ounce of gold. Domestic commerce never used the dollar, so the store could mark it as a million dollars and no one would care. It only plays in if you want to purchase a foreign TV, where you pay dollars, never gold.

The dollar should almost never be used in America. We have no use for our own currency and will ship it overseas without much concern. For example, if Japan tried to buy a shipment of automobiles from us and pay us in dollars, we would refuse the deal and insist they pay us in yen or euros or gold or anything other than dollars. If a Canadian businessman visiting the US tried to pay for something in dollars, he would get the run around and they would try to coerce him into paying with Canadian dollars. Americans would politely reject their own currency if offered it.

You could still sell goods to foreign countries and you could still purchase foreign goods with your devalued dollars.

I'm not sure if France was refusing to use its currency in its own country or refusing to accept their own currency as payment. Could a Frenchman spend Franks in France during that time?

 

[RandomPoster]

On the macro scale I agree there are advantages. But it would be very difficult for an economy of any size to operate on precious metals. Checkouts at a grocery store would take forever. No electronic fund transfers. Counterfeiting would be rampant, you would need to weigh and analyze every coin. One good thing is it would force every business and every person to be armed to guard against theft.

Electronic funds could be transferred by converting all of them into grams of silver. Your bank account would receive 1100.07 grams of silver. When you withdraw the money, it could be in any combination of precious metals and various currencies, which may or may not have any relation to what the individual deposited. Certain currencies, not only dollars, except any currency that has been deemed to have been recently destabilized could be temporarily de-prioritized, although not technically banned, when it comes to withdrawals.

You could pay with a credit card and have grams of electronic silver charged to your account.

Ok I get that, but wouldn't be converting every single bank into a precious metals storage and tracking facility banking on top of banking responsibilities? I'm not a banker but it seems like that would be very complicated and require many more employees and more security.

The bank would do very little conventional banking. They would deal almost exclusively in electronic silver and store metal in a vault instead of money. It would get tricky with tourists, except easy for the bank and tricky for the tourist. A Canadian enters the country. He can not convert his money into dollars. He converts 2000 Canadian dollars to electronic silver on a card. If he has 15% of it left after his stay, he can not get that 15% back in Canadian money. He can get it back in American dollars as he leaves the country and has to convert it to Canadian dollars in Canada.

There would be a bank at the Canadian border on their side. If a Canadian is found attempting to enter America with American dollars, he has to step across to the Canadian side and convert it to Canadian money before we will let him in. He then does the conversion to electronic silver.