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Yakk · 09-09-2004, 11:38 AM

Currencies, including gold, only have the value which people ascribe to them.

When gold is used as a currency, there is nothing special about it, other than instead of requiring an act of government to create it, it takes an act of mining.

The difficulty of mining kept the supply of the gold currency from exploding as it became more valueable. But you had people wasting resources mining gold in order to create more currency: and every economic resource used to create a currency is a waste, ideally eliminated.

The current system relies on central banks having self control. They could print out tonnes of currency, but they don't in order to keep the supply of the currency in control and their economies working.

So, there is a limited supply of US currency just as there was a limited supply of gold.

Back in the day, if the US dollar fell, people would notice that the gold currency you could buy with the US dollar was worth more than the US dollar. So they bought gold from the US reserve with dollars. So, either the US ran out of gold or devalued the USD:gold exchange rate. Or, the "gold exhange rate" the US claims to have isn't real, because they won't actually give title to the gold.

All "backing" currency with gold does is provide a currency reserve that can reduce variation in currency exchange rates. All governments do this right now, they maintain foriegn currencies which they can use to float up their currency.

There is nothing holy about gold. In fact, it is a waste to use something with some uses (in electronics and jewelery) and some rarity as a currency. Currency systems should be as cheap as possible, they aren't wealth, they should expidite wealth as efficiently as possible.

Gold has value because people use it as a currency. The amount it is used as a currency has been falling for at least a century. In the long term, gold will go down.

09-09-2004, 11:38 AM	#15 (permalink)
Yakk Wehret Den Anfängen! Location: Ontario, Canada	Currencies, including gold, only have the value which people ascribe to them. When gold is used as a currency, there is nothing special about it, other than instead of requiring an act of government to create it, it takes an act of mining. The difficulty of mining kept the supply of the gold currency from exploding as it became more valueable. But you had people wasting resources mining gold in order to create more currency: and every economic resource used to create a currency is a waste, ideally eliminated. The current system relies on central banks having self control. They could print out tonnes of currency, but they don't in order to keep the supply of the currency in control and their economies working. So, there is a limited supply of US currency just as there was a limited supply of gold. Back in the day, if the US dollar fell, people would notice that the gold currency you could buy with the US dollar was worth more than the US dollar. So they bought gold from the US reserve with dollars. So, either the US ran out of gold or devalued the USD:gold exchange rate. Or, the "gold exhange rate" the US claims to have isn't real, because they won't actually give title to the gold. All "backing" currency with gold does is provide a currency reserve that can reduce variation in currency exchange rates. All governments do this right now, they maintain foriegn currencies which they can use to float up their currency. There is nothing holy about gold. In fact, it is a waste to use something with some uses (in electronics and jewelery) and some rarity as a currency. Currency systems should be as cheap as possible, they aren't wealth, they should expidite wealth as efficiently as possible. Gold has value because people use it as a currency. The amount it is used as a currency has been falling for at least a century. In the long term, gold will go down. __________________ Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.