Michael Redman
Illuminator
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"Illusion of value" is nonsensical.
How is US currency worth anything?
- Thread starter CaptainManacles
- Start date
I'm not so sure. I've talked to a lot of real marxists on the interwebs, they are impossible to convince. Theirs is a conspiracy theory and my opinion is variously either paid for by the "capital" or I'm just brainwashed by capitalist-controlled academia (which I am not. I left academia due to its brainwashing trend)
As far as I can tell, proponents of the gold standard simply don't know any better. I mean what have we got here, vulgar labour theory of value and the like. If I was a kid that didn't know anything about these things and how they work out, I'd subscribe to saying "stuff is intrinsically valuable" and I'd probably take ages to understand why we could use dog poo as money and why we don't.
But I would like to see a Ron Paul / Fractional Reserve Banking vs Me thread. I can already tell its a load of bull. There's some real issues in the system, but it's got nothing to do with fractional reserve banking.
As far as I can tell, proponents of the gold standard simply don't know any better. I mean what have we got here, vulgar labour theory of value and the like. If I was a kid that didn't know anything about these things and how they work out, I'd subscribe to saying "stuff is intrinsically valuable" and I'd probably take ages to understand why we could use dog poo as money and why we don't.
But I would like to see a Ron Paul / Fractional Reserve Banking vs Me thread. I can already tell its a load of bull. There's some real issues in the system, but it's got nothing to do with fractional reserve banking.
NobbyNobbs
Gazerbeam's Protege
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As I recall, and I could be wrong, gold was not the money of choice for American Indians. I remember reading that they were very puzzled when the Spaniards took such an interest in that yellow metal they had lying about.
I love it when someone praises one of my posts. Particularly when it's in a subject of which I am most decidedly not an expert.
It gives me a warm, cushy feeling.
Wasn't it the incas who perceived gold to be the blood of the gods?
My pleasure.
I love it when someone praises one of my posts. Particularly when it's in a subject of which I am most decidedly not an expert.
It gives me a warm, cushy feeling.
Rob Lister
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I've found that an easy way to shortcut the "intrinsic value" argument is to ask what that value is, and to be specific. What is the value of 1 ounce of gold? All possible answers negate the assertion.
CaptainManacles
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I never used the concept of intrinsic value, only subjective value. Please actually read what I wrote and try again.
Fair enough, but improper terms asside you just agreed with my premise, money is worth nothing.
So this terrible situation that deflation apparently causes is "how it should work"? Which is it? Is it a bad thing or a good thing?
Right, but why is it neccisary to avoid deflation?
Which is fundementally exactly what I said. You encourage pointless consumption. This gives rich people an excuse to invest their money in useless investments, and produces useless jobs, so you can create a welfare system without it looking like a wellfare system, wasting even more in that besides consuming the wealth of the rich, you're wasting the time of the poor.
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(@Rob Lister)Well you've probably talked only to noob LTV-believers then.
1 Ounce of gold is exactly worth as much as <whatever amount of 'work' is needed to extract 1 ounce of gold>
Basically, the LTV goes on that if that exact same amount of work is needed to produce anything else, say, a chair, then that chair would be worth exactly 1 ounce of gold. Marx went as far to predict that there would be inflation if technology was developed that faciliated the mining of gold.
1 Ounce of gold is exactly worth as much as <whatever amount of 'work' is needed to extract 1 ounce of gold>
Basically, the LTV goes on that if that exact same amount of work is needed to produce anything else, say, a chair, then that chair would be worth exactly 1 ounce of gold. Marx went as far to predict that there would be inflation if technology was developed that faciliated the mining of gold.
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Weren't talking about you. there's different people in this thread, yakno?
Worth? Money is without value, but fetches a high price. As I said: The value of money is best described by the quantity theory of money.
No, the situation causes deflation. And deflation is bad.
Alright. Deflation is bad because with deflation, money RISES in value. This means, nobody consumes anything but the bares necessities. It means, nobody invests anything ever because with the same amount of money, tomorrow, he'll have more buying power. Deflation is absolutely horrible for an economy. But even a stable 1-3% inflation is only slightly better than a deflationary crisis once the interest rates are down to the liquidity fee.
You're wasting the wealth and the time of the poor, and the rich get even richer (only at a slightly lower rate than before) without actually working. But it's not a welfare system, its a system meant to keep the economy running.
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CaptainManacles
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BS if I value something because I think my friend will want it and I'm incorrect then my evaluation of value was incorrect.
What in that situation has an "illusion of value"?
It looks to me like the object, whatever it is, does have value but you just made a poor appraisal, or falsely assumed how much use your friend had for it, which doesn't have anything to do with the item's actual value.
Michael Redman
Illuminator
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If you think that that means the value of that thing is an illusion, then you must believe that all value is an illusion, because you could be wrong about the value your friend would place on anything. (including gold, obviously)
So you really aren't supporting your point at all. The "value" of unbacked currency is exactly as real or as illusionary as the "value" of gold, or of anything else.
Has it occurred to you to wonder why the economy has not completely collapsed already?
Puppycow
Penultimate Amazing
You posted a link to a misleading graph. If I arbitrarily chose 5 currencies that the dollar beat in that same period, I could make a graph that shows the opposite.
Would you have been able to pick those strong currencies in 1969?
Also: It's important to remember that you can put your money in a simple savings account or even invest in bonds. These do not earn the same interest rate in each country. Then, in 5 years, you will have more dollars to offset the fact that each dollar is worth less.
(You can even buy inflation-indexed bonds which are guaranteed to make a small profit.)
UserGoogol
Master Poster
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Prettiness is to a significant degree a socially constructed idea. What one person finds pretty another person might not, and whether they do or don't is heavily effected by where they live. Thus, you want gold because other people want gold, and because growing up among those other people managed to persuade you that gold is in fact a pretty neat looking metal. Of course, there's also a degree to which our monkey brains are naturally stimulated by shiny bits of metal, but so much that makes people like Gold is socially constructed in nature.
Unalienable
Critical Thinker
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I've heard it quipped that the inscription on USA money "FEDERAL RESERVE NOTE" is a triple lie. It's not federal, there is no "reserve" of anything, and by legal definitions, because it is not redeemable for anything at any time, it is not a "note".
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Unalienable
Critical Thinker
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Reasons why gold is the ideal material to use for money:
#1. It's pretty, and therefore desirable. Women will coo over gold jewelry today just like they did 3000 years ago. And let's face it, the power to win over women's affection is what makes the world turn 'round, right?
#2. Flowers and seashells are very pretty too, but they are too commonplace to be used for currency. The above would be worthless if it wasn't for one simple fact: It's rare, and it's hard to acquire.
#3. Gold represents work that has already been accomplished. If you own gold it's impossible to get cheated out of your value, as opposed to an I.O.U. which could turn worthless if the debtor goes bankrupt.
#4. Gemstones like diamonds meet all of the requirements 1-3 above, but they are a very poor form of money, for one simple reason: you can't break them in half without destroying their value. Because gold is a metal, it's virtually infinitely divisible. If you own one ounce of gold you can easily exchange it for two half-ounce coins, or ten 10th ounce coins, etc.
#5. It's very easy to recognize gold without any special training. It's virtually impossible to counterfeit, and even a dullard can spot fake gold. If you've ever held a good amount of gold in your hand you know what I am talking about--it has a density which is not found in nature very often. Don't think you can make a fake gold coin by plating lead, it's not that easy. Gold is MUCH more dense than lead.
#6. It's non corrosive. You don't need to worry about taking care of your gold, it lasts virtually forever. The gold that they took out of the Egyptian pyramids shined as brilliantly as the day it was entombed.
#7. It provides some valuable functions in science and technology, for example it's been said that an ounce of gold can be stretched into a thin wire many miles long, whereas with copper or tin you're lucky to get more than a few yards. This helps lend to its value but is secondary to the 6 reasons above.
#1. It's pretty, and therefore desirable. Women will coo over gold jewelry today just like they did 3000 years ago. And let's face it, the power to win over women's affection is what makes the world turn 'round, right?
#2. Flowers and seashells are very pretty too, but they are too commonplace to be used for currency. The above would be worthless if it wasn't for one simple fact: It's rare, and it's hard to acquire.
#3. Gold represents work that has already been accomplished. If you own gold it's impossible to get cheated out of your value, as opposed to an I.O.U. which could turn worthless if the debtor goes bankrupt.
#4. Gemstones like diamonds meet all of the requirements 1-3 above, but they are a very poor form of money, for one simple reason: you can't break them in half without destroying their value. Because gold is a metal, it's virtually infinitely divisible. If you own one ounce of gold you can easily exchange it for two half-ounce coins, or ten 10th ounce coins, etc.
#5. It's very easy to recognize gold without any special training. It's virtually impossible to counterfeit, and even a dullard can spot fake gold. If you've ever held a good amount of gold in your hand you know what I am talking about--it has a density which is not found in nature very often. Don't think you can make a fake gold coin by plating lead, it's not that easy. Gold is MUCH more dense than lead.
#6. It's non corrosive. You don't need to worry about taking care of your gold, it lasts virtually forever. The gold that they took out of the Egyptian pyramids shined as brilliantly as the day it was entombed.
#7. It provides some valuable functions in science and technology, for example it's been said that an ounce of gold can be stretched into a thin wire many miles long, whereas with copper or tin you're lucky to get more than a few yards. This helps lend to its value but is secondary to the 6 reasons above.
CaptainManacles
Muse
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Illusion, mistaken, incorrect value. Someone thought something had more value then it really did. Simply thinking something is valuable does not make it valuable.
And the reasons why gold shouldn't be used as currency
#There's simply not enough of it to replace all currency. As neat your pro-gold reasons sound, this simply kills it.
#if the gold price rises too high (which will happen if a 100% gold currency will be reinstated in the US) instead of doing useful work, everyone will be in the shores and streams washing gold.
#Not even the government can randomly produce more gold if the economy booms
#it doesn't lose value. That's actually a bad thing, a small amount of storage cost is desireable in a currency, as it keeps the turnover rate up.
#There's simply not enough of it to replace all currency. As neat your pro-gold reasons sound, this simply kills it.
#if the gold price rises too high (which will happen if a 100% gold currency will be reinstated in the US) instead of doing useful work, everyone will be in the shores and streams washing gold.
#Not even the government can randomly produce more gold if the economy booms
#it doesn't lose value. That's actually a bad thing, a small amount of storage cost is desireable in a currency, as it keeps the turnover rate up.