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View Full Version : If competing currencies would likely choose gold, why is Somalia still using fiat??




socialize_me
02-27-2009, 02:07 AM
Just curious...I'm reading/watching up on Somalia and find it fascinating...far more than meets the eye (how often have I had to say that in the past year and a half).

Anyway, my question is this..if Somalia is a genuine complete free market, why is it they are still using old Somali notes printed under the former government of Siad Barre?? Considering Gresham's Law doesn't apply as there are no legal tender laws, why hasn't the Somalian free market accepted Gold or Silver to replace Fiat Paper as Ron Paul has suggested, how Friedrich Hayek proposed, and how logic seems to agree with it?? I realize some private agencies have started creating currency in Somalia, but the ones I have come across are all fiat...

Where's the gold? Where's the silver? This is about as free market as you can get...why are they accepting worthless paper to purchase real goods??

nate895
02-27-2009, 03:00 AM
There is no gold or silver. I assume if you showed up with it, they would take it. Of course, if you showed up to buy anything anywhere and you showed up with gold, you'd be able to buy it.

idiom
02-27-2009, 03:14 AM
Also it is possible that enough time has not passed. In the absence of a treasury I would expect them to move to Euros or USD first before gold.

hugolp
02-27-2009, 03:20 AM
The point of using gold and silver as money is that is scarce. As long as those notes are scarce they are ok. They have the future problem of someone starting to print more. Then probably they will go worthless, but as long as that doesnt happen, they are ok.

Hugo