Or any valuble standard set as the basis for a currency?
I mean, I can’t imagine that gold is being mined terribly fast compared to the amount of gold in circulation, nor lost at any large rate. If a ship with gold on it sinks, does it lie there? I imagine generally not - the first scavenger with divers will go and get it.
So what could contribute to large changes in the percieved value of gold? I know that it is not really worth nearly as much as it costs per gram (i.e. it’s not all that rare or hard to separate from its ores), due to the inflated human opinion of it. Much like diamonds, except that diamonds are expensive because of DeBeers’ stranglehold.
When and why did the US go off the gold standard?
Perhaps when the idea of international currency is respectable worldwide, we will go to a “credit” or something of the sort. Or perhaps the “dollar” will become the name of the basic unit of currency, like the American penny.
Any bank in the world that subscribes to the New Dollars will be required to give precisely one gram of gold for one million New Dollars.
Inflation is curtailed! Value of as New Dollar won’t decrease appreciably unless large amounts of gold are introduced into the marketplace.
So, on the first day of New Dollars (say 2010), a US$100.00 bag of groceries (dang inflation!) will be worth 1/5 of a gram of gold, or 200,000 New Dollars.
Some people would say, that’s a lot of zeros! I say, if you consider pennies, the US$99.97 bag of groceries costs N$199940. Just one magnitude of complexity greater - and it won’t change nearly as fast in prices. Plus, merchants won’t be able to pull that 9 tenths of a cent funniness in little type. I hate gas stations. Why gloss over prices?
Granted, the 999-effect will still be there, but I think merchants will have to be a little more honest.