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To: Toddsterpatriot
I can't think of a single country that still issues one.

This is because governments will always try to pay for things with fiat promises rather than gold. It's Gresham's Law in action (aka "Good Money Drives Out Bad").

If I have 2000 fiat dollars and an oz of Gold, and I want to buy Oil (or Wheat or Rice etc) from you - I will always offer you the fiat dollars (the 'Bad Money' first). If you accept my dollars, that's great. But I would never lead with the Gold first.

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The Ruble Gold peg isn't the introduction of a Gold-backed currency. While people still accept Fiat, Gresham's Law forbids a fully exhangeable Gold-backed currency. However the peg does establish a floor to the Gold price.

This means that it's no longer possible (assuming efficient arbitrage) for the Gold price to be artificially suppressed below ₽5000 per gram.

Gold prices have long been suppressed/controlled by the issuance of synthetic (promissory, paper, IOU) Gold. That suppression mechanism should no longer work - as long as arbitrage is not somehow encumbered, and the Ruble maintains its current strength.

28 posted on 04/03/2022 12:37:40 AM PDT by agere_contra
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To: agere_contra
This means that it's no longer possible (assuming efficient arbitrage) for the Gold price to be artificially suppressed below ₽5000 per gram.

The arbitrage will only work if someone is buying/selling at the peg. Doesn't that make it a gold-backed currency?

31 posted on 04/03/2022 8:08:01 AM PDT by Toddsterpatriot (TANSTAAFL)
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