by Jp Cortez
Mises.org
Gold clause contracts provide an avenue for states to promote the use and acceptance of gold and silver, and undermine the Fed’s monopoly on money.
What Are Gold-Clause Contracts?
Assuming you had the money, would you loan $10,000 to be paid back over 30 years plus 3 percent interest?
What if price inflation skyrocketed? That would benefit the borrower and deeply harm you as the lender. Even if you were repaid, the declining value of those repayments wouldn’t come close to making up for your loss in purchasing power.
Given that today’s rates of price inflation are generally higher than interest rates, agreeing to be paid at a fixed rate over a longer period of time is a risky proposition.