Text 4474, 42 rader
Skriven 2010-02-04 06:32:26 av Robert Bashe (2:2448/44)
   Kommentar till text 4438 av Ward Dossche (2:292/854)
Ärende: Monetary theory
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Ward Dossche wrote to Robert Bashe on Wednesday February 03 2010 at 19:44:

WD> The Euro is not backed by gold. Governments may have gold somewhere,
WD> but there is no link with the Euro which is covered by a basket of
WD> balanced international financial instruments.

I know. The fact still remains that many countries, including Germany, have
more or less large gold reserves that by law are there to (partly) back the
currency. In essence, that indirectly backs the Euro as well, even if there is
no direct link, as you mention.

WD> The countries politically correct described as "nations on the road to
WD> development" (meaning the former Eastern block countries) have no
WD> significant gold reserves, yet they are joining the Euro-zone here and
WD> there ...

Being bankrupt has never been a hinderence to joining the Euro zone, see
Greece, Spain, Portugual...

WD> There is no gold behind the Euro, Bob, not in the economic context
WD> from days gone by as you describe.

No direct link.

WD> I'm sorry ... however, I could be wrong but will need to be proven
WD> wrong first.

You know, this whole thing started when Michiel claimed gold was essentially
worthless. Now we're off on a legal tangent whether the Euro is backed by gold
in any form. You say it's not, I agree that there is no direct backing. But I
do think there is an indirect form of backing, as the gold reserves of a
country quite naturally contribute to its financial stability and
creditworthiness.

That's where I would leave this. I disagree with Michiel because he ignores
human history and the demand for gold in times of monetary and political
crisis. In theory he's right, but in practice dead wrong.

Cheers, Bob

--- GoldED+/W32 1.1.5-0613
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