On 19 Nov 2001, at 17:40, Tim May wrote:
On Monday, November 19, 2001, at 05:03 PM, David Honig wrote:
Yes, but what this thread has ignored is that gold (and other densely precious things) were valued *in and of themselves* and so using them as money was not symbolic. You traded your goat for a goat's worth of gold; if trust evaporated overnight the gold is still worth something.
Not really. It was still a matter of belief that that gold coin, or gold nugget, would be worth something.
"In and of itself" is a very vague and intangible concept.
--Tim May
I understand your point, you can't eat gold, it won't keep you warm and dry in a storm, it really is mostly only good for you in that other people will also give you stuff for it BUT I think the other side is pretty clear also. Gold isn't like, say, the good will of the king, which becomes wortheless as soon as there's a new king. I suspect that it never ocurred to most people during gold standard days that gold could in principle become wothless (although alchemists understood perfectly well that being able to turn lead into gold is only the key to riches if you alone posess the secret). Anyway, there are very good reasons why gold is better than anything else as a basis of currency. I expect most of you have read this before, I've posted this before elsewhere, appy polly logies for the redundancy, but for those who maybe think choice of gold as a standard, here's why gold is good: 1) Gold is money dense (a small volume of gold is worth a lot). This is very important if you have to keep currency reserves. 2) Gold does not rust or decay. Again, very important if you have to keep reserves. 3) Gold is uniform. Diamonds are all different, oil comes in a plethora of types and grades. Tobacco was used as money in the early days of the american colonies, with the (easily predictable) result that people smokes the good stuff and used the crappiest stuff they could find to pay their debts. Nothing could be purer than pure gold. 4) Gold is elemental. It's much more plausible that somebody will come up with an economic way to synthesize, say, diamonds than gold. 5) Gold makes women sleep with you. I don't know why they like it, but they do. George
"As my father told me long ago, the objective is not to convince someone with your arguments but to provide the arguments with which he later convinces himself." -- David Friedman