What I mean is what criteria are used to determined how much gold a country needs in a heavily guarded Reserve in order to start printing money to put out in the streets?
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January 10th, 2009 at 6:49 am
erm…the gold standard was thrown out many many years ago lol
January 10th, 2009 at 6:49 am
Money need not be backed by gold. For example, a US $20 bill is a claim on the Federal Reserve Bank for $20.
Fortunately, McDonalds will exchange it for Two Big Macs, a large fries and a chocolate shake.
January 10th, 2009 at 6:49 am
Countries should use gold to back their currency to fight inflation. A lot of countries don't use this method anymore! http://en.wikipedia.org/wiki/Gold_standard
Some countries peg their currency to U.S dollars. That means their "gold in the vaults" is actually U.S dollars. They really would be screwed if the U.S dollar becomes worthless.
All countries have converted to a fiat system.
http://en.wikipedia.org/wiki/Fiat_currency
So print away the monopoly money!
Basically money currently in use is only as valuable as the paper its printed on. Of course it is widely accepted and will buy a lot more then a 6.14×2.61sheet of cotton and paper would.