in praise of gold

[Anonymous]

[A repost of an earlier message regarding gold]

> It's true - so why not say it? A hundred years ago, the Federal Reserve
> "dollar" didn't exist, and a hundred years hence it won't be there. The
> gold will still exist. Which is the better standard of value?
>
> Marc de Piolenc

If you really want to look at 100 year time scales, gold is completely
unsuitable as a standard of value.

Over the next 100 years it is highly likely that we will develop new
technologies which will totally change what we think of as valuable.
Nanotechnology and similar methods will allow atom by atom restructuring
of matter.  Gold and other elements can be extracted from sea water
or from the soil.  Space mining will open access to mineral stores on
other planets.  Low cost, solar powered low-energy orbits can bring
these resources back to earth.

With all the changes that we are going to be seeing over the next
100 years, what are the chances that one particular metal is going to
turn out to have anywhere near the same value that it has today?  It is
far more likely that the relative prices of all the elements will vary
greatly from what we have known in the past.

Look at a chart of the abundances of the elements in the earth's crust,
and in the terrestrial planets.  These represent "supply" of matter in the
future.  Demand will come from how useful these elements are in supplying
people's needs.  Carbon may well turn out to be a highly valuable element
due to its great flexibility, strength, its biological role, and its
relative rarity.  Diamonds will be no more valuable than soot, of course,
but both will be excellent raw materials for nanotech construction.

Or they may not.  We don't know enough now.  But we can certainly say
that any money based on the rarity of an elemental commodity faces the
prospect of being highly unstable as we move into the nanotech regime.

On the other hand, fiat moneys can be based on contract and mutual
agreement.  With cryptographic protection, account balances are
transferred securely.  And as multiple money issuers (the US Fed among
others) compete in an international market, the global money supply will
be self adjusting, as predicted by economic models.

This is the true foundation for an economically stable future.  Atoms are
the past; bits are the future.  Money is becoming information, with
checks and balances already in place to control the global money supply.
In contrast, basing the future economic system on the spatial distribution
of metallic atoms would be foolish.