Tuesday, November 26, 2013
Chapter 11
The different "standards" struck me as interesting. I think it so shocking that our (and all modern societies) money isn't backed up by real gold—which, now that I think about it, it isn't too shabby of an idea because people could steal the gold, but wait that is just the same as stealing money (sorry for the tangent). It is a lot easier when our money has intristic value because the trading (and exchange) of money and as Wheelan said "$35 U.S.A. dollars would simply equal $350 francs in France" (Wheelan 254). My question is that say we have 100 (unrealistic but its an even number) blocks of gold, and the rest of the world has gold somewhere in their banks. Why can't we just cut inflation and go back to the "Gold Standard"? Am I naive for saying that? It just makes a lot more sense to me. It is a lot of trust when we simply put trust in everyone (STRANGERS).
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I also thought that the standards of money are interesting. The dollar has value because we give it value, and the same goes for any other form of currency. We trust in the dollar or the euro or the pound. What I also found interesting was when Kagan said, "currencies are no different than any other good; the exchange rate, or the "price" of one currency relative to another is determined by supply relative to demand (p. 244)." When trying to understand currencies, we can look at them as goods! I thought this was really interesting. (Question 6)
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