Quote:
Originally Posted by Platapus
Yes. Gold is worth a lot only because people agree that it is worth a lot
Gold is attractive because a lot of people agree that it is valuable, but, never the less, it is an agreement.
If you have a loaf of bread
I have a bar of gold
How much is my bar of gold worth?
Depends on how hungry I am. That bar of gold may be worth a loaf of bread if I am hungry enough
I can try to argue with you about how much my bar of gold is "supposed" to be worth, but in the end you are the one with the bread and I am the one hungry. 
All forms of currency are fiat. It would not work otherwise. |
Not really, while in a way you are right,too. But if you look back over the past many MILLENIA, you will see that at all these times people seem to have agreed that gold has a lasting appeal, and snippets of peper with number son them have not. Also the vlaue of gold is determined by market agreeemnts, as you correctly described. And yes, these cna and are being manipualted, the gold price today is artifically kept down so that a soaring price does not ring the alarm bell on how the status is wioth our paper money. But still, gold has an agree high value, no matter in what form it comes: tooth gold, ring, coins, bars, officially minted or not, it does not matter. Paper moeny is state controlled, the state estblished central banks that replaced the fiorgery done on minting silver coins before (adding other metals to reduce the content of silver). that is what they do by inflation now. Cental banks are called into life by politiians who needed a counterfeit currency that is not limited by the laws of economic, but allow snowball systems, in princple, and Ponzi schemes. Finbally, gold appeard to rise into the status of a wnated currency while ti was a bartered good ont be market beforr, in this way I want it to be understood when i say (and I just follow others there, it is not my idea) that money, a heaklthy commodity money is just a trading good. It doe snot mean that you invent an artifical paper money and then declare it to be a marekt good like any other. Papermoney is fraud conducted by states plannign to run deeper and deeper into bancrupcty and avoidjng it only by keeping the snowball system alive as long as they can.
Finally, with physical gold, you have sonthign in your hand that you can take and carry home and do with it as you please, becasue it kkeps its market value. Paper bank notes do not have that intrinsic market value, they cna be declared invalid at any time, and they cannot chnage their format, canot be smashed, mixed, newly dried and printed and keeping their claimed value. They are not value, but a certificates of indebtness, they are I.O.U.s, they are a claim that the other hopefully will fulfill, they are value that is expected to become reality (fiat=latin, "let", in the meaning of "it will become" in the future. It is no materialised value in itself. Gold is.
Everybody trying to argue that gold is not worth more or less than paper or any other item, has the experiences of all mankind in the past several thousands of years against him.
Including collapsing paper currencies. A paper moeny system enver lasts. it is based on a quick wear and tear design.
Thats why states want to prohibit the private possessiona of gold and thats why they lie about how useless it is - while they buy and keep it themselves.
Lastly, the mechanisms of paper money are a redistrubution scheme from bottom to top. Most famous is the Cantillard effect, every time the state inflates the amount of money in circulation and devaluing it by that, the frehs moeny is ijected at the top of the hierarchy, and there the winners are the first egttuing access to it and using it to trade it immediateky for real material value - at the old prices from befor ehte money injeciton. Then rpices adapt, anbd material items beocme more expensive, and the money tickles down the pyramide, and when it reaches the middle class, no additonal buying power is left. But the limited material welath in the world has been shifted a lttle bit more away from the bottom, and upwards to the top.