Quote:
Originally posted by Rekna
What exactly causes gold or silver to have value? Stockpiling it wouldn't do much good. If the economy colapased a loaf of bread or a sack of wheat would be much more valuable than a bar of gold.
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Historically, the scarcity of precious metals (which caused a natural control) coupled with the usefulness/beauty of the worked metal caused them to be useful "money".
Today they still have those quantities in addition to having no borders with regard to who will accept them and who won't.
Now of course you are right that if there is a total collapse, all the gold in the world won't buy you a loaf of bread if everyone is starving. But if it is something less than that, then precious metals will once again become the standard trading item, that and specialty manufactured goods, such as sewing needles, ammunitions and .... toilet paper!
Scipio:
Paper money is DIRECTLY related to the governement that issues it. This is basic economic theory.
Seriously, take out any denomination bill and look at it. Really look. It's just a piece of fancy paper. The value in it lies in the fact that you can give it to someone and they'll give you something you want in return.
But what if they say, "no thanks"?
Then your paper is worthless, except maybe to use in place of the above mentioned toilet paper.
And in the case of a govt. collapse, that is exactly what will happen.
Someone along the chain will realize that its just paper and demand something more substantial and then paper currency collapses.