Quote from: TierNolan on July 13, 2011, 01:07:22 PM

Quote from: hugolp on July 13, 2011, 12:48:28 PM

If you dont have direct control of the supply, you wont be able to control it for long. You will eventually run out of funds, there are very clever speculators out there. This happens constantly when central banks try control the exchange rate of their currency. Because they dont control the supply of the other currency they get crashed. The chinese are able to do what they do because their economy is developing and the natural tendency of their currency is appreciation. Devaluating is easy and "free" (for the central bank). Increasing the value of a currency is expensive. If the chinese economy started to fail, their central bank would be unable to hold the value of the yuan to the dollar.

With a 100% backed currency, you can hold the value to almost anything.

In this example, if the price of the currency rises above (beer price) + 3%, then he could buy lots of cans of beer. He could then sell the beer if the price of the currency falls.

The fact that beer doesn't last that long would mean that he would have to cycle the cans out of his reserve.

Storage costs in general would add more expense. OTOH, if he bought in bulk, he could very easily buy the cans at lower than the high street price.

All he needs is for his reserves to be worth at least as much as the outstanding coins. Worst case, everyone turns in their coins and he ends up with whatever is left in his reserve.

If people paid $2 for a coin and he can buy cans for $1.50, then he can build up his reserve at less than the face cost.

TierNolan is correct with 100% backing you can hold the price of anything at any price. The one fault in his statement is that we don't really plan to hold beer we just hold assets of USD or ERO or treasuries and bonds in many different currencies in many different countries and many different banks to keep the possibilities of any one country or bank or entity from being able to lock us out of any or all of our assets. We just base the value on the commodity of beer to make it clear to the holders of "The Trust" the value of what they hold for each share. so we don't have a problem with aging or storage. what you may not even realize is that 90% or more of the world banks only hold 10% or less of the outstanding debt of there depositors. We have no plan to be as unstable as any of the known banks. Remember we have unlimited supply, we can sell as many shares as the market can bare and we can and will buy back any outstanding shares the market wishes to cash out to any degree needed to keep liquidity constant.

sacarlson

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