Reaction paper 5 Essay Example | Topics and Well Written Essays - 250 words

Reaction paper 5 - Essay Example Therefore, an alternative currency will help in restoring the confidence based on the dramatic rise in the price of gold. Additionally, the essence of gold is that no one can make more of it than what already is in the ground (Alan, Javier & Robin, 2010). As a result, this will help curb inflation. Another advantage of gold as a currency is in helping policymakers using it as a measure of investor’s concern about the fate of other currencies. Moreover, there has been increased investment in gold by new investors than before, and this has made it easier to buy and sell bullion (Alan, Javier & Robin, 2010). In addition, the gold as a currency has shown that it is not easy to be debased. On the other hand, there are arguments against the use of gold as a currency. The argument is that alternative currency will still have its own problems. For example, the Eurozone has fractured bond market while there is also no free trade on China’s renminbi (Alan, Javier & Robin, 2010). The other argument is that gold currency is prone to deflation based on its continuous rise in price. Consequently, such a high rise does not help in predicting a rise in the price of other