As I was replying to Laura's post a thought came to me. (I know, people shocked and passing out on their keyboards right now.)
Imagine one wanted to create a new competing reserve currency that was based on a commodity like silver and gold. I would appreciate it if you emailed answers to me because I suspect the answers will be a little long for the comments section. For those students of Austrian Economics out there how would you address the following questions:
- What country could pull this off? Could it be a small country like Costa Rica or would it have to be established and strong economically like Switzerland?
- How would you transition from the current fiat currency to the new standard?
- How do you think other countries would react? Would they not care, denounce you, or begin military action?
- How would importing and exporting work if you had a relatively stable currency and the rest of the world continued to use dollars?
- Would the currency be stable? Or would it still fluctuate wildly as gold and silver do today?
- Would you allow paper notes in place of the actual metal?
- I'm sure there are other problems in its implementation and maintenance that I did not think of.