Re: backing

Perry wrote:
> > A digital currency can be backed by gold held in some secure location
> > like the Zurich Free Transit Warehouse. U.S. Dollars are backed by
> > absolutely nothing other than blind faith in the U.S. Governement.
> > Who's kidding whom?

Banks are contractually obligated to turn over mortgage notes in exchange
for U.S. dollars.  These contracts are valid over approximately 30
years, and provide unencumbered title to valuable property.  These and
similar contracts may be said to give value to dollars independent of
government promises.

Hal

Hal Finney says:
> Perry wrote:
> > > A digital currency can be backed by gold held in some secure location
> > > like the Zurich Free Transit Warehouse. U.S. Dollars are backed by
> > > absolutely nothing other than blind faith in the U.S. Governement.
> > > Who's kidding whom?
> 
> Banks are contractually obligated to turn over mortgage notes in exchange
> for U.S. dollars.  These contracts are valid over approximately 30
> years, and provide unencumbered title to valuable property.  These and
> similar contracts may be said to give value to dollars independent of
> government promises.

The mortgage contracts are not equivalent to the property -- in
particular, the property can rise rapidly in dollar denominated value
while the mortgage notes become worthless in a hyperinflation
situation.

Perry