Q: Are the issuers legally allowed to put out more contracts than there are underlying assets?
A: Perhaps so, but then the perception of risk might discount the currency.
While this improves on the current system in that it replaces an unredeemable currency with redeemable ones, the fact that you have multiple currencies being issued by multiple parties who do not need to have backing for their currencies takes away all of the benefit that I see…unless I am missing something. Also the concept of discount (from what?) is somewhat disconcerting.
As I understand it, you depart from a commodity standard in the first place due to the fact that technology makes commodities more substitutable (#300). To me, (if anything) that strengthens rather than weakens the argument in favor of adopting a metallic monetary standard. But, even if the commodity used as the monetary standard has industrial uses for which there are no substitutes (which in the case of gold is miniscule relative to the above ground supply), I fail to see the reason for concern.
Interesting isn't it? Glad you took the time to consider it.
On balance, (so far), I remain unpersuaded that the system you propose is as good as a gold standard would be. But I’m willing to listen to your addressing my concerns.
There isn't necessarily a maturity date on an option.
Without a maturity date it’s called a warrant, I believe. In any event, while I now get your point, I’m suggesting that the option terminology is not a useful one for explaining what you have in mind. To most people it conjures up a right to buy or sell at a fixed price an asset whose value (based on some other unit of account) fluctuates.