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<p>[QUOTE=&quot;The Eidolon, post: 8240502, member: 102103&quot;]It might be a little like a currency peg, but to gold instead of a different currency.</p><p>Currency pegs when they are strongly backed, like the Hong Kong Dollar, can be stable for a long time.&nbsp; It the peg is only moderately backed by reserves, such as the Argentine Peso to US dollar peg of 1991-2002, it can be quite unstable.&nbsp; As soon as people believe that the peg may break, they tend to pull their money out of the weaker currency, which can precipitate a collapse.</p><p><br /></p><p>Anyway, switching to a gold-backed currency would have similar problems.&nbsp; Probably better to use gold as an inflation target if one were to go in that direction.&nbsp; Also, with high population growth and real economic growth, precious metal-backed currencies would tend to be deflationary, which is hard on economic growth.&nbsp; Makes it very hard to borrow money if a currency is likely to be harder to pay back in the future.[/QUOTE]</p><p><br /></p>

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