On 2/7/2011 8:13 PM, Patrick Elliott wrote:
> Not sure which comments you are referring to there.. That said, they can
> fail, if the banks take complete control over them. But, basing it on
> commodities, of any sort, isn't going to help either, since you can't
> guarantee that the commodity will always stay at, or rise, in price
> either. (Not to mention someone managing to spill of lot of it into the
> pool, undermining the price.) If I said never, then I would be wrong.
> What I may have said is that basing it on something with no set price is
> nearly, if not more, stupid.
>
Mind, here is my reasoning in this.

Commodity based economy:

You - own a $10 note that says it is worth 10oz of the commodity.
Someone else - owns 10oz of the actual commodity.

The price goes up 10x. You now own the right to 1oz of the commodity, 
which is now worth $10. They own $100 worth, i.e., the same 10oz.

Economic collapse happens - You - now have a $10 note that isn't worth 
0.0001oz of the commodity. They still own 10oz, what ever that may be 
worth to someone else, whose money is still worth something.

Fiat based economy - Everyone owns a $10 note, some just have a lot more 
of them, which claims to be worth what ever that will buy. I.e., if 
things go wrong, everyone gets screwed.

Thus, the only real difference, unless you go around carrying coins that 
actually can be spent, made of the commodity, and can thus be melted and 
sold to someone that will take them, is that you and me get screwed 
***no matter** if the money is backed by gold/silver/tin or dog shit. 
For us, its just as valuable to have the $10 note if the economy fails. 
But, for the 5% of the people that where either paranoid enough to 
change it all into the commodity, or had a lot of it in a vault some 
place... those people *might* find themselves falling from high 
privilege to middle class in a single stroke, instead of from middle 
class to complete poverty. For the other 95% of society, its irrelevant 
whether or not its a fiat system or not, they are still *all* screwed.

In principle, this means everyone has something to lose, and some care 
may be taken to keep things controlled. In practice, some idiots have to 
screw the system up badly enough to result in laws being passed to do 
that. In a non-fiat system, however, the incentive for the ones that are 
left with anything at all to fix the problem, regardless of how broken 
it ends up being, is much lower. After all, they got through it, so they 
will the next one too, right?

In the end, unless you are running around with bags of gold dust, or 
diamonds, *every* system, even the ones that used coins made from 
metals, where, at least locally, fiat systems. That is just the reality 
of how such systems end up, once you say, "this stands for some value of 
that, unless the rarity of that changes significantly, and then your 
coin, no matter what the damn things is made of, isn't what it says it is."

-- 
void main () {
   If Schrödingers_cat is alive or version > 98 {
     if version = "Vista" {
       call slow_by_half();
       call DRM_everything();
     }
     call functional_code();
   }
   else
     call crash_windows();
}

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