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What would happen to an economy if physical precious metals were legal tender currency?

Imagine money that had intrinsic value. How would this affect banking, government spending, saving, and consumer spending?

Better or worse than fiat money?

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    Mar 15 2013: Africa would be the dominant economic force. This will of course never be allowed to happen. African countries are currently trying to create a resource backed bank,and one of the major countries which accepted payment for oil in gold only was a major player in this effort. But suddenly ,there was a rebelliion,and he was killed for being a tryrant. (Libia)Mistake,coincidence? Unlikely. So its an interesting idea,but no paper backed country will ever switch to resource backed for this very reason....why would it subject itself to economic suicide?
    • Mar 15 2013: Why Africa? Because they produce the most gold?
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      Mar 17 2013: 100% correct Carolyn..and not just african nations ( which includes Libya by the way) but also Iraq wanted to do that. That in combination with demanding that their petroleum be settled in their gold back currency would instantly devalue the UK and US currencies to a level that would shift the balance of power.

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