Quote from: Etlase2 on November 04, 2011, 09:02:02 PM

Quote from: DeathAndTaxes on November 04, 2011, 08:43:47 PM

Splitting hairs. Gold has the potential as a currency and it has been used as a currency in the past. It is generally not used as currency for various reasons as outlined in the post that your replied to.

Gold has fallen out of favor as a medium or exchange because
* it can be counterfitted relativley easily
* the amount of gold in coin can be altered
* it is difficult to have small units of exchange. For example making a 1/1000th ounce coin would be inpractical.
* as a medium of exchange some value will be lost due to abrasion
* difficult to transport large amounts safely

Bitcoin doesn't have the issues that Gold has and thus would be a more viable global currency.

All of those issues are based on the actual metal and all are solved by using a currency backed by gold. Which, crazily enough, most of the world did until the great depression. Then the world stopped because it caused a deflationary spiral.

See, this is a perfect example. The term 'deflationary spiral' implies a negative feedback loop occurred, which was true on it's face. But that same feedback loop would not have occured if not for the monetary intervention of the Federal Reserve, which officially exists to temper the ridgidity of the gold standard. The depression of 1929-1930 occurred as a correction to the bubble of the 'roaring twenties', which was a bubble, in part, because of loose monetary policy by the Federal Reserve. It then became "Great" because of misguided fiscal & trade policies of Congress, with the added bad luck of a concurrent famine known as the "dustbowl". In short, if we were really on a gold standard (without fractional reserve lending to add 'flexibility') then the Great Depression wouldn't have been so great.