Yeah there is merit to that. Technically it's not that much simpler (defining and pricing an index is not a complicated thing), but conceptually it is simpler and it's an easy story to sell to users. The trade off is that silver is still a speculative commodity on its own, prone to large swings in price.
Pricing network debt in silver is a systemic risk, what if silver takes off in price?
That's true but not necessarily as much in purchasing power.
The best thing we can do in terms of stability, next to a basket of currencies, is a basket of commodities. If you choose any one commodity as an index, you will almost certainly increase the stability by adding a second commodity, even if that other commodity is less stable than the first. The reason for this is that idiosyncratic volatility of each commodity is balanced against the others, eliminating idiosyncratic risk but keeping market risk (which is very challenging to eliminate).
If there is a more stable alternative to a basket of commodities, by all means we should peg to that.
Yeah there is merit to that. Technically it's not that much simpler (defining and pricing an index is not a complicated thing), but conceptually it is simpler and it's an easy story to sell to users. The trade off is that silver is still a speculative commodity on its own, prone to large swings in price.
Pricing network debt in silver is a systemic risk, what if silver takes off in price?
If the USD goes down, all of those commodities will shoot up in price.
That's true but not necessarily as much in purchasing power.
The best thing we can do in terms of stability, next to a basket of currencies, is a basket of commodities. If you choose any one commodity as an index, you will almost certainly increase the stability by adding a second commodity, even if that other commodity is less stable than the first. The reason for this is that idiosyncratic volatility of each commodity is balanced against the others, eliminating idiosyncratic risk but keeping market risk (which is very challenging to eliminate).
If there is a more stable alternative to a basket of commodities, by all means we should peg to that.