Quote from bearice:
Maybe that is the reason gold is not used as money because there is not enough gold in this world to support the world business/trade. [/B]
This idea that there is "not enough" gold to use as money is often repeated, but it just isn't true. As long as a monetary substance is evenly divisible, any amount of it will do for the purpose of measuring wealth. Money itself is not wealth itself, it is a measure of wealth, which is real things like goods and services. The amount of gold or paper money in existence does not directly change the amount of goods and services in existence, it just changes the scale on which you measure those goods or services.
For example, if the world were capitalist, and on a gold standard, it wouldn't really matter if a new suit cost an ounce of gold, or half an ounce, or even 1/1000 of an ounce. As long as the rate were relatively steady, the suit would still be produced and marketed, and the transaction would still take place. No loss of wealth, just a different amount of gold used for the transaction.
More explanation in the
second paragraph here.
In a debt-based monetary system, however, the amount of money in existence does need to constantly increase in an exponential fashion in order to pay the interest on the debts already accumulated.
As Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, noted in 1934: "We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. "
This writer proposes using the term 'credit-ism' as opposed to capitalism to describe our current economic system, which I think makes things more clear.
