From: cman@IO.COM (Douglas Barnes)
Date: Thu, 21 Oct 93 12:02:48 PDT
To: pmetzger@lehman.com
Subject: Re: backing
In-Reply-To: <9310211543.AA22017@snark.lehman.com>
Message-ID: <9310211855.AA09792@illuminati.IO.COM>
MIME-Version: 1.0
Content-Type: text/plain


> 
> A digital currency can be backed by gold held in some secure location
> like the Zurich Free Transit Warehouse. U.S. Dollars are backed by
> absolutely nothing other than blind faith in the U.S. Governement.
> Who's kidding whom?
> 

Actually, there is still an element of trust involved, that (as a
previous poster pointed out) the entity who actually holds your gold
won't run off with the gold, or give it to someone else, etc. Still
(in the best of all worlds) rather have more solidly-backed currency, 
but you still have to trust someone at some point. I'd rather have
US dollars than gold-backed currency from an even less trustworthy gov't.

The important freedom is being able to choose whom and what you trust,
without having to slide into a pure barter economy.

Also note that I can draw numerous (albeit somewhat outlandish) scenaria 
involving the depreciation of gold; while it's very, very unlikely, it
might pay to be at least moderately diversified. Note what happened to the 
value of gold and silver in the 16th c.

Doug

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