Quote:
Originally Posted by nalkin
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Isn't it kind of weird how gold has value?
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Gold always emerges as a voluntary money in civilization - i.e. when legal tender laws or their equivalent do not exist. Always - it may emerge among competing currencies (and this is usually the case), but it's always one of the monies people prefer to use in a free system.
Often some king or ruler gets control of the money, starts shaving off the edges of coins and reducing their weight so he can pay for something they want but doesn't want to pay the exact amount requested...So he pays for it in diluted money. Since he's the first person to use this and individuals haven't had time to realize it, he gets addicted to it and does it until a crisis unfolds.
The odd thing isn't why Gold has value - it's why Gold has been so low in perceived value, or why people trust paper money (a notion people laughed at 150 years ago) based on the promises of an institution that has the power to make as many of that paper money as they want without even having to print it or tie that money to some kind of solid standard.
Since the 1970s the US was able to twist or break the trend of a few millenia of history...My guess is it's probably because oil continued to be denominated in dollars so there was kind of a de facto oil standard...