Not sure that matters. All youre doing is fixing a standard value measurement to the dollar, like fixing a standard measurement to your scales at home. When you dont change the standard measurement of your scales at home, you can rely on whats its telling you about whether youve lost or gained weight. In the same way, when you dont arbitrarily change the relative measurement of the dollar, you can rely on prices giving an accurate reading of value. Not sure you have to have the gold locked up somewhere. The only good that might do is possibly keep the value of the gold static I guess, but I dont think it would. Even on the gold standard, the gold itself would change relative value, but its relative to the market and dollar prices are still reliable. Reliable prices, like reliable weight measurement, is the point of having an external standard like the gold standard.
Well, I always thought that if you were on the gold standard, you had to have the gold to back up the paper in circulation.
And by your reckoning, wouldn’t the price of gold have to be fixed? Otherwise, you’d have to recall dollars as the price of gold fluctuated.
Right?
Look, I’m not a monetary guru. So what do I know?