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A gold peg is all you need.

There need not be ANY gold or other PM in your currency system as long as the value of gold/PM is known.

You peg your paper currency to the value of the metal and it will work just fine.

Nathan Lewis wrote a book called "Gold: The Once and Future Money" which spells this out.

The below are essays from his blog at

http://www.newworldeconomics.com

http://www.newworldeconomics.com/archives/2007/081907.html

http://www.newworldeconomics.com/archives/2007/082607.html

So we need not worry about who has it and where it is. People could hoard it, banksters could hide it but as long as there is a value you can have a well functioning gold monetary system.

The problem with paper money isn't what it's made of, it's who issues it. This government, any government, with a monopoly on issue or protected by legal tender laws or both has no real reason to maintain the integrity of the money they produce. In fact the people in government often benefit from debasement.

In the productive sector, however, things would be different.

With competing currencies a person could switch from one to some other if the first one showed weakness. This competition will keep the currency healthy in general by defeating poorly managed products.

Of course if people want to pass metal around that is their right, the same as if they will only bank with a 100% reserve institution. There are many, myself included, that prefer paper money as being easier to handle and carry about and do not get worked up about fractional reserve banking. As long as I can take my bills to a gold seller and exchange paper for gold at par (minus whatever tiny percent the dealer takes as commission) I have a gold backed currency.

And that's all you need.

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Competition is the...

key, is it not. Competition and education.

Assert Your Authority

True. If you cannot force

True.

If you cannot force other people out of the business or force costs on them through various means then your only chance to remain in business is to provide a good product.

This is such a powerful concept it boggles me why it is not evident to more people.

Maybe, just maybe, if there was more competition IN education we would not be in this mess.

The bullseye is...

always the mark. What is freedom if it is not choice...in ALL things.

Assert Your Authority