Reply To: Why should a fixed value be placed on gold to the dollar?

#18342

Okay, that makes a lot of sense. But didn’t this pose a small problem when even the 100 percent fractional reserve banks sprouted up? Gold could fluctuate in value, but didn’t the denominated bank notes that they could be redeemed with stay at a fixed value? So if the price of gold went up or down, the value of the bank notes stayed the same, causing either deflation or inflation?

EDIT: I think I understand what you’re saying now. The bank notes would be written out for a certain number of gold ounces, and not a fixed DOLLAR amount. Thank you for that clarification.