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Originally Posted by clowntable
Eh I'm willing to pay more money for something that I like more than something else. Does it matter if I pay for gold because I like how shiny it is or buy a Superbowl ticket because it provides me with entertainment?
If you say gold and diamonds are "artificially" expensive what do you propose to find out their real value?
And saying something is expensive because it's rare is somewhat of a stretch.
What is it used for outside jewelry and electronics?
And the other real problem, in addition to it not being in any way a staple of life, is that population is growing exponentially. With a gold standard, you have a fixed quantity of currency. As population increases, you either have to devalue it and print more or run out of money. Exponential growth is a hell of a thing. Also, you restrict economic growth greatly with such an artificial standard.
Whenever you tie your currency to something that is really needed (like wheat or energy) you end up right back at a market driven fiat system. And if you are on the gold standard, how does that help when say China decides gold doesn't matter anywhere nearly as much as oil (or other forms of energy) to it? Suddenly your gold backed paper is worthless except by the value in gold you put on your items that people really want. So once again you are back at a fiat currency, except with less flexibility and a high susceptibility to changing global demands.
The vulnerability is of course as population grows and the items such as food/energy/land become more in demand, you get caught a bit flat footed by being tied to a item with no intrinsic value.
Land is about the only long term asset that does not lose value, but how can you possibly tie a currency to that? (Variable cost due to location/quality of land and human needs at the time, that damned exponential human growth, etc.)
If humans needed gold to survive, then it could work, but they don't. I guess the best illustration of my point is that I personally have no use for gold. So me being able to trade currency at a permanent rate for gold only has value in other people needing or wanting gold. So again, we are back to depending on people placing value in something for no tangible reason.