"Everyone knows where we have been. Let's see where we are going!" -Another
FREEGOLD: HOW IT WORKS
Physical gold is a wealth reserve asset, thus it represents payment in full, whereas fiat currency is a debt based medium that represents a claim in the monetary system.
Claims in the system are claims on assets.
In this light, the preservation of wealth simply means - he who holds gold has already been paid.
Freegold is a gold-based currency valuation system where the currency is not
tied to a fixed amount of gold.
In Freegold; gold will value all currencies individually and the exchange value of each currency will still be relative to every other currency.
1 Gold gram = Euro 1
1 Gold gram = Yuan 1.5
Therefore, Euro 1 = Yuan 1.5
It's a triangulation.
As the exchange rate between physical gold and currency is established, the relative value of everthing else is known.
If there is too much money printing by a currency issuer, the exchange value of that currency will decrease.
Likewise, as governments quantitatively tighten, that exchange value in gold will increase.
To put it simply, the rate of exchange between all fiat currencies and physical gold is set free to float.
But lets look at where we are right now.
1971 The Nixon Shock
By removing the dollar from the "Gold Standard"
It essentially combined the previously separated functions of money.
Medium of Exchange $ Unit of Account $ Store of Value
Enabling the USG to spend to infinity, as the Fed prints more money, decreasing the
value of every other Dollar.
So then what about the gold standard?
The Gold Standard would work perfectly, except for time. As an economy grows or
expands over time, fiat currency will naturally lose value, as the currency base
But if we break the bonds of that triangle, the Store of Value, Gold, is then free to
re-value currency as it changes.
The three monetary functions are now each being performed by the best "tool" for the respective "job".
This is Freegold !!
And it's coming....
http://forafistfulofdollars.blogspot.com (blog no longer exists)
The concept and graphics illustrating the Freegold Quadrangle are the intellectual property of FOFOA. They first appeared in his 3 part series titled "Gold is Money"
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