[Toddsterpatriot]

But the ASSET VALUE of gold is not restricted. Supply and demand in the market will set the value of gold as high as it needs to go.

But I thought that you'd have notes that say, for instance, this note redeemable for 1 ounce of gold? How does the increasing value of gold increase the money supply? You still have the same number of notes. Same number of ounces.

[Travis McGee]

The "value" of the note would be simply "one ounce of gold" or silver as the case may be. Supply and demand would set the value of the gold ounce.

Let's hear what this "simpleton" thought about it. Remember, from 1776 until the Constitution was ratified and the Coin Act enacted, our young country almost choked on worthless fiat paper "Continentals," leading to radical movements such as Shay's Rebellion.

"Specie is the most perfect medium because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war." --Thomas Jefferson to John Wayles Eppes, 1813. ME 13:430