Guess the future of the Human race

[SamuelRSmith]

Final-Fan said:

SamuelRSmith said:

Final-Fan said:

SamuelRSmith said:
The current financial crisis will ultimately result in the return to hard money, (that is, currency backed by some form of hard value store - like the gold standard of old), first, however, we will have long periods of austerity and inflation (for the most part of this decade).

And then the world economy implodes due to the explosion in the resource(s) the hard money is based on, causing massive devaluation?

No, the value of money increases. If you have a currency backed onto a commodity, and the commidity suddenly increases, if you maintain a tight monetary supply, then the value of money skyrockets, and you'll be able to buy a hell of a lot with a single dollar.

OK, I don't know that much about hard currency, but I find it pretty hard to swallow that actual purchasing power of a gold-backed dollar would increase because there was more gold out there.  Explain plz. 

But I think my initial claim was based on the idea that money supply would automatically increase to match gold supply (or whatever supply), which in retrospect is silly.

You have 5 dollars and 5 ounces of gold. A dollar buys an ounce of gold.

You have 5 dollars and 10 ounces of gold. A dollar buys 2 ounces of gold.

Therefore, the value of the dollar has increased thanks to an increase in the supply of gold.