GOLD BARS suppose people everywhere insisted on being paid in bits of pure gold metal: weight alone would count , so long as there was a guarantee of its purity . Then buying a car in Britain would merely require payment in gold at a price expressed in ounces of gold; and buying grain in Chicago would involve the same kind of payment . By definition , there would be no foreign-exchange-rate problem .
GOLD COINS since slivers and blobs of gold are inconvenient to carry and to assay for purity and for weight, it became customary for the state-in earlier days, the prince- to stamp out in coin from a specified number of ounces of gold carrying the seal of the state to guarantee purity and weight . ( the edges were milled to reveal light weight and fraud . Even so , since gold rubs off , merchants weighed the coins.)
with golds coins as the exchange medium , would not foreign trade still be like domestic trade? Yes, essentially . But with some minor differences : IF we used ounces and Britain used grams to measure weight ,you would merely have to have a table of units’ conversion . And the same problem would arise if Queen Victoria chose to make her coins about 25% ounce of gold ( the " sovereign ") and President McKinley chose to make his (1/20)ounce of gold (the dollar).
Thursday, April 9, 2009
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment