Ok... Hybrid.
Lets do that and see what happens.
Right now... Gold is trading at about $850 and ounce.
To make things simpler... lets just say $1,000 an ounce.
So each dollar of yours is worth 1/1000 of an ounce of gold.
So for every $1,000 a bank has on it's balance sheet - it needs 1 once of gold READY to exchange with you on demand.
Ok... sounds like real money right?
Ok... so 3 rich business men from China come to a bank in South Dakota with $900 Million U.S. dollars and a truck.
They demand 900,000 ounces of gold.
Then 3 rich business men from Saudi Arabia come into a Wisconsin bank with $900 Milion U.S. dollars and a truck.
So they demand 900,000 ounces of gold.
Then China - the country - is like, forget this... The U.S. owes us 50 Trillion (whatever it is) - hell... might as well get gold for it.
Ok... so then... how long do you think it will be until we run out of gold?
The true anchor of money is NOT the commodity behind it.
It's a bridge for goods and services.
You don't need gold to anchor it.
You could anchor it to Big Macs.
A big mac used to cost 10 cents. Now it costs, what? $4.50?
Either way.. we've invented a piece of paper that one Big Mac costs us about 1/4 hour worth of labor if the average salary is about $20 a hour.
Back then... when Big Macs costed 10 cents - the average salary was probably 40 cents an hour.
It's all relative.
Con