You can lease the stuff out too!?
From a pure theory point of view, gold is only worth what people are willing to pay for it.
If everyone suddenly decided that gold was worthless, then it would be just that.
A more specific question, which has already been answered somewhat, is; Why do people think gold is worth anything?
With this question its the supply side of the equation that comes into play.
It seems to me that the next level of global currency control could be technological - some sort of high-security computer that controlled the amount of money in circulation (mostly in the form of "credits").
Such a computer would need to be secure, with multiple redundant units running in parallel in separate locations around the world, and require concurrent authorisation from a number of selected people to adjust its operation (which should be rare, and could therefore be based on some relatively arduous political/financial process requiring agreement from a quorum of members around the world).
I think the technology for this is already available, but trying to get political agreement from all the world's countries as to how it would operate, without one or more countries trying to sneak back-door entries into the system for their own use, would probably be very difficult.
GP
That's why it would need to be secure with highly regulated control.There is 1 problem with that, those that are in power of such a device can easy manipulate it uses
That's what they have riot police, tear gas, and prisons for.And no i dont believe the government would be able to confiscate all gold again as they did previously since people today would revolt. (i know i would)
That's why it would need to be secure with highly regulated control.
That's what they have riot police, tear gas, and prisons for.
GP
That's why it would need to be secure with highly regulated control.
That's what they have riot police, tear gas, and prisons for.
GP
That would include the gold price then.Anything that is regulated by man can be manipulated
That would include the gold price then.
GP
Thing is, if the whole world economy collapses, surely the worth of gold collapses with it. I mean you can't eat gold. Gold doesn't keep you warm or is a good material to create shelter out of. So what good is it really......?????
The $50 in your wallet is worth $50 because most people accept it is worth that much and they have faith in the monetary authorities. A currency needn't be necessary for some industrial purpose for it to have value. Paper money cannot be used for anything but it functions as money. What gold has over paper money is difficulty of government manipulation.Just because it has been used to represent money, doesn't mean its worth anything.
This is the Labor Theory of Value and it is the achilles heel of communist theory.Something that has value (or real wealth) requires labour to produce it
So it's best to hold physical precious metal than having a trade certificate?
Through tradition and because of the properties of the metal, it will become the de facto currency. E.g. rice cannot be used as a currency because eventually it decays.
What gold has over paper money is difficulty of government manipulation
That would include the gold price then.
If gold is used as a backing for currency, that only works if the price is fixed, otherwise to print more money all they'd have to do is say that the price of gold is now higher. If they made the price so high that there was far more gold available than the amount of currency it was backing (say $100 trillion per ounce), then it would have supply-side issues as well.
GP
In economics, there is no such thing as "intrinsic" value. This is true for the simple reason that value does not reside in the atoms, molecules, chemical composition, or structure of an economic good. It resides, always, in the MIND of the individual perceiving the good. When looking to acquire an economic good, an individual must decide how much time, or effort, or other economic goods he or she is willing to offer in exchange. That decision determines the value of that economic good, at that particular time, to that unique individual.
This is a crucial distinction. Value is not in what is beheld, it is in the eye (and mind) of the beholder. The reason why some goods evolve into money while most others do not has nothing to do with the "intrinsic value" of the goods so favoured. It is because a large number of individuals have realised that goods used as money have a unique usefulness. Unlike all other goods, they can be exchanged easily, and at any time, for anything.
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