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<p>[QUOTE=&quot;GDJMSP, post: 706012, member: 112&quot;]I think you just contradicted yourself about 3 times there. If currency isn&#039;t backed by gold, then how can it be freely converted to gold or silver ? And how do you allow gold and silver to circulate as money without controling the price of the metal ? And how do you prohibit fractional reserve banking without backing the currency ?</p><p><br /></p><p>None of this can be done in today&#039;s world. First of all, there isn&#039;t enough gold and silver on the entire planet to back the currency of this country alone, let alone every other national currency. </p><p><br /></p><p>That is precisely why the entire world switched to a fiat currency 45 years ago. There wasn&#039;t enough then either, and they (the govts.) were scared to death that the people would figure that out and that there would be world wide economic chaos.</p><p><br /></p><p>Having a currency, or all currencies, backed by anything is no longer feasible. The only purpose of money to begin with is to facilitate commerce. And as long as people are willing to accept paper currency as money, which they obviously are, then commerce goes on. And that is all that is needed.</p><p><br /></p><p>And it is utterly rediculous to speculate that the cost of good and services (inflation) would not occur if currency were backed with precious metals, or anything else. Even when currency was precious metals inflation existed. Prices for goods and services have been going up for thousands of years. And during all that time gold and silver freely circulated as money. </p><p><br /></p><p>In the mere 50 years that the world has existed with fiat currencies - nothing in that regard has changed. Prices keep on going up. And they will never stop going up until people world wide agree to stop insisting on pay raises. Pay raises bring about increased prices, and increased prices bring about pay raises. It&#039;s a self perpetuating cycle.</p><p><br /></p><p>It you want it stop then get every person on the planet to agree to a frozen wage and get every business in the world to agree to frozen prices for everything. That is the only thing that will stop it. Of course it would mean the end of the free market system. So it aint gonna happen.[/QUOTE]</p><p><br /></p>

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